...Chapter 9 Assignment: Starbucks vs. McDonald’s Strategies | 1. How does Starbucks enter foreign markets? Do you agree with its rapid growth strategy? (Consider what has happened to the number of stores and locations during the last few years in answering this question). Consider where Starbucks is located, and markets that will be advantageous to Starbucks in the future in answering this question. Discuss how Starbucks entry approach is different/similar from strategies that McDonald’s uses to enter foreign markets. Are both companies currently competing head-to-head in certain markets? Explain. Be specific in your explanation and consider recent press releases and information from annual reports in responding to these questions. (9 points) Starbucks expands into global markets through joint ventures. A joint venture is, “an agreement under which two or more partners own or control a business” (Luthans & Doh, 2012 p. 625). Two businesses partners come together to pursue the same goal and opportunity. Starbucks entered a joint venture with Tata Global Beverages to begin opening and operating Starbucks cafes throughout India. An article titled Strategies for Researching Global Markets says, “In the U.S. close to two-thirds of Starbucks cafes are owned by Starbucks while outside the U.S. about two-thirds of their stores are partnerships” (Virginia’s Community Colleges, p. 1). We agree that Starbucks rapid growth strategy to join international joint ventures is...
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... 08 Fall 08 Fall Exercise A - Starbucks in US: strategies and core competencies GROUP 6 Exercise A - Starbucks in US: strategies and core competencies GROUP 6 Thijs Bavelaar - 091698 Carlijn Swagemakers - 120014 Sam Verlaat - 111449 Bas Vliegen - 122959 Thijs Bavelaar - 091698 Carlijn Swagemakers - 120014 Sam Verlaat - 111449 Bas Vliegen - 122959 Executive summary Within this report the Starbuck’s Corporation is being analyzed, in this way the company can be positioned on how they are performing within the competitive set. Through research Starbucks’ core competencies are found, and on elaborated. Those competencies are researched in the competitive set with the main competitors of Starbucks’ as well, via basic benchmarking there has been determined where Starbucks is within the market. Table of Contents Introduction 4 Core competencies 5 Key competitors 9 Competitive advantages 11 Communication within organization 12 Competency - strategy matrix 13 Conclusion and recommendations 14 Bibliography 15 Appendices 19 Appendix 1: Value chain analysis 19 Appendix 2: SWOT analysis 22 Appendix 3: Functional analysis 25 Appendix 4: VRIO analysis 26 Introduction The purpose of this paper is to analyze both Starbucks’ strategies and core competencies, and use this analysis to assess the degree of synergy between the two. First, the core competencies of Starbucks, specified to the US, are identified and presented...
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...Case Analysis Project, McDonald’s Corp, Introduction McDonald’s Corporation franchises and operates McDonald's restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. The company was founded by brothers Richard and Maurice McDonald when they opened their first restaurant in San Bernadino California in 1948. At the time, McDonald’s core business was inexpensive and fast food, burgers, fries and shakes. The present corporation dates its founding to the opening of a franchised restaurant by businessman Ray Kroc, in Des Plaines, Illinois, on April 15, 1955, the ninth McDonald's restaurant overall. Kroc later purchased the McDonald brothers' equity in the company and led its worldwide expansion, and the company became listed on the public stock markets in 1965. Today McDonald’s has grown to become is the world's largest chain of hamburger fast food restaurants, serving more than 70 million customers daily in 119 countries across the globe. As of December 31, 2013, the company operated 35,429 restaurants, including 28,691 franchised and 6,738 company-operated restaurants. It ranks 111 in Fortunes top 500 companies, with revenues of usd$28.1B at the end of calendar year 2013. Problem Statement McDonald’s problems started in the 1990s as a result of rapid global expansion at the expense of service, cleanness, and quality. Solving for cleaning up stores and improving service were short term fixes. CEO Skinner realized...
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...Fall 2009 Starbucks in Tiawan [pic] History of Starbucks The first Starbucks was opened in Seattle in 1970s by three partners: Jerry Baldwin, Zev Siegel and Gordon Bowker. The name of Starbucks came from Herman Melville’s Moby Dick, a classic American novel about the 19th century whaling industry. The seafaring name seems appropriate for a store that imports the world’s finest coffees to the cold, thirsty people of Seattle. (Starbucks Coffee Company, 2009) Entrepreneur Howard Schultz joined the company in 1982. While taking a business trip in Italy, he visited Milan’s famous espresso bars. He was so impressed with their culture and popularity, he thought he could bring this idea to the United States, this idea would be successful. He was right, Seattle became coffee-crazy after trying lattes and mochas. (Starbucks Coffee Company, 2009) The development of Starbucks expanded beyond Seattle in 1990s. First, they expanded their stores to all states in the United States, and then extended to the world. The U.S. Starbucks stores around the world are based on different market conditions and different organizational structure. There are four kinds of structure which Starbucks uses to expand their stores around the world: own self-employed, joint venture, license agreement, authorized to operate. Moreover, they were the first firm which offered stock options to their part-time employees. Starbucks becomes a publicly traded company. (Starbucks Coffee Company...
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...McDonald's McCafé Takes Aim at Starbucks in Europe Low-cost expansion is helping McDonald's vie with Starbucks as the Continent's No. 1 coffee chain McDonald's Trafani in a Paris McCafé, where lower prices are helping to nab Starbucks loyalists Ed Alcock PARIS — The Left Bank café is furnished with sleek wood paneling and leather armchairs. Patrons sip espresso from china cups and nibble on croissants and pastries. So what are those golden arches doing on the sign outside the door? The coffee shop on rue Linois is one of 200 "McCafés" McDonald's is opening in Europe this year. By yearend, McDonald's (MCD) hopes to have some 1,100 of the cafés across Europe. The cafés are located inside existing restaurants but with a separate counter, comfy furnishings, and nary a Big Mac in sight. Next year, the company plans 200 more, with an eye toward becoming "the No. 1 coffee seller in Europe," says Jerome Tafani, the company's chief financial officer for the region. That's a grande order. Starbucks (SBUX) is currently Europe's top coffee chain with nearly 1,200 stores. But McDonald's strategy of opening McCafés in existing franchises gives it a leg up over the Seattle-based java king. A stand-alone Starbucks in Europe requires an investment of $350,000-plus, at least triple what a McCafé costs, says Jeffrey Young, managing director of London management consultancy Allegra Strategies. "McDonald's finally woke up and smelled the coffee," says Young. "With the number of outlets...
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...Starbucks Change in Strategy By Brandon L. Chow Dr. Darryl Mitry National University School of Business & Information Management October 22, 2008 Executive Summary The following report and presentation is an inside look at Starbucks Corporation’s strategy and how it is currently affecting their sales and the long-term results. This will be accomplished by exploring four concepts of strategic business, the process for crafting a strategy, components of a macro-environment, five forces of competition and a SWOT Analysis. Analyzing the information and making recommendations based on the information gathered will show how Starbucks should keep or change their strategic plans. Focusing on principle concepts will systematically uncover what Starbucks has done well in the past, what current areas could be improved, and if the new changes ultimately weaken Starbuck’s market share in the long term or strengthen them. OVERVIEW Starbucks Corporation: Starbucks is constantly reinventing their stores to keep and attract customers. With coffee houses popping up in every nook and cranny, Starbucks has to be fresh and innovative. New technology that allows coffee customers to download the music playing in Starbucks stores to their iPhones is just the start of a wave of options for impulse purchases. Starbucks has roasters and brands of specialty coffee operating in North America, Latin...
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...Starbucks has been opening its doors to millions of people for coffee, but it is more than the overpriced coffee that brings people in day after day. Starbucks offers a unique ambiance, friendly and helpful baristas to assist customers in any concerns they might have with the coffee or service. People buy Starbucks for what it represents and the status symbol that comes along with it. What makes Starbucks unique from its competitors and how does its marketing strategy tick? Background It all started when Gerald Baldwin, Gordon Bowker, and Ziev Siegl opened its first Seattle coffee shop in 1971. Since then, Starbucks Coffee Company established itself as the leader in the coffee industry with continuous market growth and expansion. With 17, 003 stores in 58 countries, the company’s main objective is to establish Starbucks as the “most recognized and respected brand in the world.” (Starbucks, 2011) Currently, Starbucks is relying on retail expansion, product innovation, and service innovation to achieve a long-term goal once set by current chairman Howard Schultz: “The idea was to create a chain of coffeehouses that would become America’s “third place.” At the time, most Americans had two places in their lives – home and work. But I believed that people needed another place, a place where they could go to relax and enjoy others, or just be by themselves. I envisioned a place that would be separate from home or work, a place that would...
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...................................................3 Business Objectives ................................................................................3 S.W.O.T analysis in Vietnam’s Market .......................................................4 Advantages & disadvantages McDonald’s franchise ....................................5 Investment Decision ...................................................................................6 Summary ...................................................................................................7 Reference ..................................................................................................7 I. Background McDonald's is a huge multi-national restaurant chain. There are restaurants all over the world that are willing to sell you a Big Mac and fries. Indeed, you would probably be hard-pushed to find a country that does not contain a few McDonald's restaurants somewhere within its borders. The company is now so big that you could be forgiven for thinking that it has always existed. But it hasn't. It was started in the first half of the 20th Century by two brothers - neither of whom was named Ronald. 1. History 1940: The first McDonald's was built in 1940 by the McDonald...
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...STARBUCKS Global Communication’s main focus was to cut costs to return profitability and to introduce new products and services. Many companies are going through the same situation as Global Communication is going through. One useful example of similar incident would be Starbucks. Starbucks is a fast growing profitable organization in which it earns $600 million in 2004 (Horovitz, 2009). Like Global Communication, Starbucks have competitors and Starbucks’ biggest competitors are McDonald’s and other fast-food companies. McDonald’s sell cheap food and beverage, especially when they introduced the new McCafe coffee bar. The economy is not doing well for the past few years and people have shift their buying habits from Starbucks luxury coffees into fast-food lower-priced coffees, lattes, and cappuccinos. After 2008 first-quarter results reflected a 10% drop, CEO of Starbucks, Howard Schultz, announced that Starbucks plan to cut jobs, close stores, slow growth all over the world (Horovitz, 2009). Starbucks plan to open 140 new stores in United States when they usually open 200 stores a year. Starbucks also plan to open 170 new stores globally when the number should be 270 (Austin Business Journal, 2009). Starbucks is making a smart move by lowering their target goal. The corporation went through a financial analysis quarterly and noticed the drops of profits. Something needs to be done so they put a push into it by downsizing stores and employees. Global Communication...
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...business to more effectively compete. A realistic assessment also prevents strategic blunders like entering a market with products that are clearly inferior to what well-entrenched competitors are offering. Continuous improvement in all areas of a company’s operations is an important aspect of staying ahead of competitors. Weaknesses and opportunities can--and must--be turned into future strengths. PURPOSE OF A SWOT ANALYSIS 3 Strengths, weaknesses, opportunities, and threats (SWOT) analysis is a necessary, straightforward standard that assists in direction and serves as a foundation for the development of business’s marketing strategy. It brings about this process through assessment of the organization’s strengths (what it can do) and weaknesses (what it cannot do) in addition to...
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...Starbucks’ Target Market Abstract/Synopsis Perhaps the most important task for marketing is identifying the consumer base. This is done through market segmentation or STP analysis. Being people oriented is essential because developing long time relationships is what drives successful businesses. Understanding who it is that a company is trying to reach is essential as not everyone is interested in every product or service (Grewal, p.245). While there are many ways to establish a segmenting strategy, as outlined by Grewal and Levy, depending on the company’s unique product line or service, there may be a variety of viable strategies to consider. Starbucks has been successful in part because of their ability to identify who their majority of consumers is, with relation to demographic and psychograpic segmentation, and worked to target those types of individuals in an effort to establish long term relationships. Primary Target Market To identify Starbucks’ target audience for their brand-name, high quality coffee roast, one may look at the demographic distribution of Starbucks consumption. One important demographic-segmentation characterizing within a company’s consumer base is customer income. When a company produces a product, they must market the product price in accordance with their target audience (Grewal, p250). Porsche for example would not market their automobiles on billboards in low-income neighborhoods, because their target audience has to be able to afford...
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...order copies or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright © 2010, Richard Ivey School of Business Foundation Version: 2012-02-22 By 2009, Starbucks had achieved a global reach of almost 17,000 stores in 56 countries. The company had enjoyed tremendous growth over the previous two decades. Between 2007 and 2009, however, Starbucks’ relentless march had been slowed by three forces: increasingly intense competition, rising coffee bean prices and a global economic recession. To remain profitable, the company started to scale back its overseas operations. In 2010, as the world gradually emerged from the economic downturn and as prospects for growth improved, Starbucks was faced with a critical strategic decision: Should the company resume its international expansion and once again intensify its commitments in overseas markets? If so, what approach should the company take? Had the pace of Starbucks’ internationalization (i.e. the rate of opening new stores...
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...are assuming the costs rather than increasing the cost of food for consumers. According to Jim Yin (n.d.), CFA, “Year to date through February 17, the S&P Restaurants Index was up 4.4% versus an 8.7% increase for the S&P 1500 Index. In 2011, the sub-industry index outperformed the 1500, with a gain of 27.9% versus a 0.3% decline.” Financial Position of McDonald’s Corporation (MCD) McDonald’s Corporation (MCD) is the leader in global foodservice retail with more than 33,000 restaurants worldwide and 1.7 million employees in 119 countries (“McDonald’s Corporation”, 2012). Approximately 68 million people eat at McDonald’s each day (“McDonald’s Corporation”, 2012). With international growth and globalization on the rise for many quick service restaurants, such as Starbucks and Yum!, McDonald’s Corporation has also taken advantage of worldwide global growth. McDonald’s has grown their market in China, India, and other foreign countries (Murphy, 2011). According to Standard and Poor’s (2012), McDonald’s Corporation revenues have increased from $22.7 million in 2009 to $27 million in 2011. Additionally, McDonald’s operating income has increased since 2006 and their cash flow and current assets have increased steadily since 2009 (Standard and Poor’s, 2012)....
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...INTERNATIONAL MARKETING Case Study Report How Starbucks Corp. should improve its business Syndicate Group Number 1 24/08/2007 The following group assignment report was prepared for a business unit at Macquarie University, Sydney. The information given does not need to be correct. The suggestions given and conclusions drawn remain (as the whole report in itself does, too) the intellectual property of the authors. Do not use this report for plagiarism. Do not copy this report. Do not print this report. Do not hand this report in as your own! Authors and Copyright: Tanya Shahi Jorge Omar Martin Aufschläger Timo Schmerling Stefan Gassner tanyashahi@gmail.com canogeorge@hotmail.com martinaufschlaeger@gmail.com timo_schmerling@web.de mail@stefan-gassner.de 2 Case Study Report: Starbucks Corp. Table of Contents Table of Contents ....................................................................................................... 2 1. Introduction ............................................................................................................. 3 1.1 Company Profile ................................................................................................ 3 1.2 Case Summary.................................................................................................. 3 1.3 Current Situation .................................................................................................
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...loyal to starbucks through Loyalty programs, with a majority of 63% saying they would return just for the rewards program (Horn, 2013) * Digital storefront promotion for teas proved to be successful (Laird, 2011) * Partnership with evergreen encourages Canadians to “go green” (Starbucks Encourages Canadians to Pledge to do some Green, 2010) * Partnership with AT&T Inc. to include free and paid wireless internet coffee shops in the united states (Associated press, 2008) * Partnership with Bell Canada to include free wireless internet in over 650 locations in Canada (Laird, 2008) * Leads specialist coffee shop sales in most countries (Starbucks Corp. (food), 2012) Weaknesses * Share price fell by 43% due to commercializing the business (Passikoff, 2008) * Price senstaive customers choosing other places to get their coffee (Starbucks Corp. (food), 2012) * Overall weak performance in the UK (Starbucks Corp. (food), 2012) * Starbucks cut back on new store openings in the United states (Janet, 2007) * Risky TV camping (Kang, 2007) * Competition from McDonald’s and Dunkin Donuts caused profits to decline in the United States (Lynn, 2008) * Overpriced coffee causes consumers to not purchase during recession. (Bryson, 2009) Threats * Fast food places moving into the coffee market segment provides a threat for Starbucks (Starbucks Corp. (food), 2012) * Starbucks holds 0.7% of market share for coffee (Starbucks Corp. (food)...
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