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Starbuck´s FDI. Maria Risholm , Salomon Sacal , Kamel Ait El Hadj , Geraldo Carvalho & Yanee Zhang. Starbucks. Mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time Who? Seattle 1971 1984 coffehouse consept IPO in 1992

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slide1

Starbuck´s FDI

MariaRisholm, SalomonSacal, KamelAit El Hadj, Geraldo Carvalho & YaneeZhang

starbucks
Starbucks
  • Mission:
    • to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time
  • Who?
    • Seattle 1971
    • 1984 coffehouse consept
    • IPO in 1992
    • Market Capitalization: US $18.6Bn
  • Where?
    • More than 50 countries and 16,700 stores

Source: www.starbucks.com, http://finance.yahoo.com/

starbucks success formula
Starbucks’ Success Formula
  • Motivated employees = superior customer service
    • Focus on recruiting & developing
    • Attractive compensation policies
      • Stock options
      • Medical benefits
internationalization
Internationalization
  • Licensing Lack of control
  • Strategy Alternatives
    • Local Joint-Venture (licensed format)
    • Acquisition (Wholly owned)
    • Greenfield investment (Wholly owned)

Local joint venture = Preferred Strategy

slide5

Control

  • A facility entry into foreign market
  • Sharedfixedcosts &  associaterisks
  • Local partner’s knowledge
    • Competitive conditions, Culture, Political system, etc.

Local Joint-Venture Advantages

slide6

Approaches and Acquisitions in Countries such as : (EMEA)

Japan – “スターバックス (transliteration: sutābakkusu), and the abbreviation スタバ is also used as slang”

Thailand – ” สตาร์บัคส์ pronounced [satāːbākʰ]”

Europe

- Joint Ventures and Parameters

“International operating margin

improved to 7.7%, from 1.4% in

Q2 FY09”

Source: http://news.starbucks.com/article_display.cfm?article_id=378

slide7

Starbucks in China:

  • Objective:

Develop the largest overseas market in China

Current Situation:

700 coffee stores in Greater China(PRChina, HK, Macau, Taiwan) , including over 360 in mainland China (2009)

10% of Starbucks’ US$ 6.4 global sales (2005)

A growth of 30% in Beijing recent years and in Shanghai, less than 2 years, net profit reached 4 million dollars

ownership structure
Ownership Structure:
  • Licensing and Joint Venture

Beijing Meida Coffee Co Ltd

Shanghai Uni-President Starbucks Coffee Ltd

Maxim's Caterers Ltd

problems
Problems:

Licensing:

  • Unable to regulate the cash flow

Joint Venture:

  • Lack of controlling stakes results in the weak management control
  • The three individual companies work independently within their own regions. Unable to help to achieve Starbucks' national expansion plans.
solutions
Solutions:
  • Whole ownership: Changzhou, Chengdu, Chongqing, Dalian, Dongguan, Foshan, Hangzhou, Kunshan, Nanjing, Ningbo, Qingdao, Shaoxin, Shenyang, Shenzhen, Suzhou, Tianjin, Wuxi, Wuhan and Xi’an.
  • Starbucks Greater China Support Center in Shanghai (2005)
other advice for the expansion
Other advice for the expansion:
  • Develop new products

Tea drinks

  • Social responsibilities:
  • Starbucks China Education Project (US$5 million)

China Soong Ching Ling Foundation

China Women Development Foundation

Chengdu Education Foundation

  • 2008 Sichuan Earthquake relief ($100,000)
theoretical patterns
Theoretical patterns

Internalization/market imperfections theory

  • Licensing system is flawed: (1) limited or no control over the licensee and (2) Starbucks’ specific culture cannot be licensed

Greenfield investments

Dunning’s Eclectic paradigm

Source: International Business, Charles W.L. Hill, McGraw-Hill 7th ed.

conclusion
Conclusion
  • No strategy fits all models
  • Main factors to take into consideration when selecting a course of action: (1) immaterial elements (2) level of control