STARBUCKS 19 STARBUCKS Strategic Management in the Global Context [Starbucks]

Running head: STARBUCKS
Strategic Management in the Global Context
[Starbucks]
Name of the student:
Name of the university:
Author note:

1STARBUCKS
Table of Contents
Company background:.....................................................................................................................2
The global business strategy of Starbucks:......................................................................................3
Initial location strategy:...................................................................................................................5
Economic profile:............................................................................................................................6
Mode of entry:.................................................................................................................................7
Cultural profiles:............................................................................................................................11
Political risk:..................................................................................................................................12
Legal issues:...................................................................................................................................13
HRM/labor relations:.....................................................................................................................14
Recommendation:..........................................................................................................................17
Conclusion:....................................................................................................................................18
Bibliography:.................................................................................................................................19

2STARBUCKS
Company background:
Starbucks Corporation is an American based company which had come into existence in
1971 in Seattle, Washington in the United States1. They have their coffee shops in many
countries across the globe; however, there are still a few potential countries that are still
untouched. They had a unique image in their home country which other coffee shops do not
have. They are unique in offering darkly roasted coffee which is tasteful and also high in quality.
They have been able to create a very good customer response as well. The list of products
includes the follows2:
- Whole-bean coffee
- Hot and cold drinks
- Micro ground instant coffee that is also known as VIA
- Full- and loose-leaf teas that also includes tea products of Teavana
- Espresso and caffe latte
- Frappuccino beverages
- Evolution Fresh juices
- La Boulange pastries
- Snacks that include crackers & chips, Pumpkin Spice Latte
1 Thompson, Craig J., and Zeynep Arsel. "The Starbucks brandscape and consumers'(anticorporate) experiences of
glocalization." Journal of consumer research 31.3 (2014): 631-642.
2 MacDonald, Kate. "Globalising justice within coffee supply chains? Fair Trade, Starbucks and the transformation
of supply chain governance." Third World Quarterly 28.4 (2012): 793-812.

3STARBUCKS
Many stores do also sell the pre-packaged products like the varied range of food items such as
cold & hot sandwiches, and drinkware. Starbucks branded items like coffee, ice cream and cold
coffee drinks in bottle format are also being sold at the various grocery stores.
At present, Starbucks operates in many locations in the different continent such as Africa,
Europe, Asia, North America, Oceania and South America3. They have their presence in most
parts of the world but still, they are yet to enter a few potential locations. Such locations include
but are not limited to like Italy and Pakistan. This particular study is also aimed at understanding
the possibilities of operation of Starbucks in both Italy and Pakistan.
The business model of Starbucks is majorly the wholly-owned subsidiaries. Unlike
McDonald and Burger King, they mostly rely on incorporating the concept of wholly owned
business when there is a plan for business expansion in different parts of the world4.
The study in specific analyzes the possibility of business expansions of Starbucks in Italy
and Pakistan. In course of the action, the study analyzes the existing business model of Starbucks
to the company in finding the scope for business expansion. In doing so, the study examined the
various challenging factors which might disrupt the plan. It also recommends a few import points
which are necessary for avoiding any business failure in Italy and Pakistan.
The global business strategy of Starbucks:
Starbucks is the world most renowned coffee chains. The organizational structure that the
company has had helped it in past. The organizational structure motivates its leaders and
3 Venkatraman, Meera, and Teresa Nelson. "From servicescape to consumptionscape: A photo-elicitation study of
Starbucks in the New China." Journal of International Business Studies39.6 (2013): 1010-1026.
4 Venkatraman, Meera, and Teresa Nelson. "From servicescape to consumptionscape: A photo-elicitation study of
Starbucks in the New China." Journal of International Business Studies39.6 (2013): 1010-1026.

4STARBUCKS
managers and encourages them to explore the best in them. Starbucks follows a matrix
organizational structure which consists of several other basic types of structure5. Following are
the features of organizational culture that Starbucks follows6:
1. Functional structure: The structure means an alienation of works based on different kinds of
functions. They follow a hierarchy where corporate headquarter controls the functions of major
departments like the managing human resource activities, the marketing activities, and the
financial activities. This means they follow a wholly owned service concept in most cases.
2. Geographic divisions: They are geographically dispersed in different locations and controls
the varied activities assigned to such locations by aligning a senior vice president in the different
geographical location. They are geographically based in China and Asia-Pacific, Europe,
Americas, Middle East, Russia, and Africa. There are further divisions in the United States like
the Western, Southeast, Northwest and Northeast. In those regions also, senior vice presidents
are aligned to different regions. It means the Starbucks manager need to report to two senior
heads such as the senior vice president in their geographical area and the corporate HR Manager.
3. Product-based divisions: They also make division based on products such as they have one
division looking into the coffee and the related products. Product based division has been done to
concentrate on particular product and take necessary actions if needed.
4. Teams: It means setting up a team at every café center of Starbucks. The strategy behind such
division is the development o a unit at the every coffee house, so that, best customer service
could be delivered.
5 Moon, Youngme, and John Quelch. Starbucks: delivering customer service. Harvard Business School, 2013.
6 Chang, Chia Yu. Visualizing brand personality and personal branding: case analysis on Starbucks and Nike's
brand value co-creation on Instagram. The University of Iowa, 2014.