The paper "Extending Starbucks’ Global Reach through Adaptive Standardization" is a good example of a case study on marketing. In a period that is acknowledged to be extremely unfavorable to the food & beverage industry, Starbucks’ cost-cutting measures during 2008 have allowed the company to remain relatively healthy and capable of continuing its objective of global expansion. Despite the company’ s overall good condition, the continuing economic recession has reduced consumer spending and forced the global restaurant industry to rely on cost- and price-cutting to maintain viability. (Baertlein, 2009) In addition to this, Starbucks is facing strong competitive threats in both domestic and international markets.
While we agree that expansion, as part of a continuing multi-faceted strategy of cost reduction, process improvements, and product diversification (Starbucks, 18 March 2009) is the most effective strategy for growth and profitability, the potential obstacles of current conditions and competition require a careful examination and measured implementation of expansion plans. This report will address three key issues – cultural concerns, standardization and adaptation, and Starbucks’ internationalization model – that must be prioritized in the company’ s expansion program.
A recommendation about how to best respond to and employ these concepts in the expansion program will be made in the form of a new model for Starbucks’ international expansion, which we call the Adaptive Standardization Model. Table 1 – Summary of Starbucks Financial Position and Market Coverage (through Q2 2009) Consolidated Revenue $2.3 billion Revenue from International Stores $434 million Total Stores 16,862 International Stores 5,416 New International Stores in 2009 (projected net) 380 International Stores added to date 2009 347 (sources: Starbucks, 20091,2,4, Baertlein, 2009, Mitchell, 2009) SWOT Analysis The following SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of Starbucks is not exhaustive but focuses on those factors most pertinent to the company’ s international expansion objectives.
There are several factors that are worthy of particular attention. First, the exceptional brand strength of Starbucks is perhaps the company’ s greatest attribute, to the extent that a cup of Starbucks coffee is preferred by knowledgeable, objective customers even when a less-expensive, quality alternative is readily available. (Katsenelson, 2008)The strong brand, however, has also become a focal point for some controversy, which can lead to cultural and political complications in entering new markets. The competitive threat, particularly from low-cost outlets like McDonald’ s McCafé , is also a formidable potential obstacle to Starbucks’ growth, particularly in recessionary times.
This may be more acute in foreign markets where there is no strong coffee-drinking tradition, such as the consumer attitudes encountered when Starbucks first entered the tea-dependent Japanese and Chinese markets. (Giovetti, 2008)