starbucks international strategy case study

• International Marketing

Starbucks’ International Strategy: A Comprehensive Analysis

• January 25, 2024

Table of Contents

Unveiling the success of starbucks’ international strategy, starbucks’ adaptability to diverse cultures, multi-domestic strategy: balancing local responsiveness and global integration, factors contributing to starbucks’ international success, starbucks’ expansion phases and emerging markets, lessons learned and future outlook, faqs about starbucks’ international strategy.

In the heart of Seattle, Washington, a small coffee shop named Starbucks opened its doors in 1971, offering a haven for coffee enthusiasts seeking an exceptional cup of joe. Little did they know that this humble beginning would transform into a global phenomenon, with over 32,000 stores spanning over 80 countries , serving billions of customers annually (Schultz, 2019). Starbucks’ remarkable international expansion stands as a testament to its astute strategy , unwavering commitment to quality, and ability to adapt to diverse cultures worldwide.

Starbucks’ international strategy, dubbed the “multi-domestic approach,” strikes a delicate balance between global standardization and local responsiveness . This strategy recognizes the importance of maintaining a consistent brand identity across all locations while simultaneously tailoring offerings to meet local preferences. Starbucks has successfully navigated this delicate balance by delegating decision-making to local franchisees, adapting menu items, and customizing marketing campaigns (Keegan, 2019).

A prime example of Starbucks’ adaptability is evident in its Japanese stores, where it offers matcha-infused beverages and traditional Japanese décor to resonate with local tastes and customs (Nishiyama, 2023). In China, Starbucks has embraced the concept of “social drinking,” creating a welcoming atmosphere that encourages customers to linger and socialize (Sang, 2018). This cultural sensitivity has been instrumental in Starbucks’ success in these markets , demonstrating its ability to connect with customers on a deeper level.

Key factors contributing to Starbucks’ international success include its premium positioning, strong brand identity, and customer-centric approach. The company has consistently maintained its premium brand image , charging slightly higher prices than its competitors, while simultaneously offering a unique and differentiated customer experience (Berman, 2018). Starbucks’ strong brand identity is evident in its sleek store designs, recognizable logos, and loyal customer base.

Starbucks’ commitment to customer satisfaction has been a driving force behind its success. The company has consistently invested in training its baristas to deliver exceptional customer service , ensuring a consistent and welcoming experience across all locations (Nishiyama, 2023). Additionally, Starbucks has embraced social responsibility initiatives, such as fair trade practices and sustainable sourcing, further strengthening its brand reputation and attracting socially conscious consumers.

Starbucks’ international expansion journey has unfolded in distinct phases, with its initial focus on North America followed by a foray into Europe and Asia. The company has faced challenges and opportunities along the way, particularly in emerging markets such as China and India, where it has partnered with local companies to gain a foothold and adapt to local regulations (Schultz, 2019).

Starbucks’ global strategy reflects its understanding of the intricate interplay between local customs and global trends. By balancing local responsiveness with global integration, Starbucks has successfully captured the hearts and palates of coffee enthusiasts worldwide . As the company continues to expand into new markets , it will undoubtedly face new challenges and opportunities. However, with its proven track record of adaptability, cultural sensitivity, and strategic decision-making, Starbucks is well-positioned to continue its remarkable global journey.

In its relentless pursuit of global domination, Starbucks has mastered the art of cultural sensitivity, seamlessly blending its core brand identity with local customs and preferences to create a truly inviting and authentic experience for its patrons worldwide. This deep cultural understanding has been instrumental in Starbucks’ remarkable success in expanding into diverse markets, from the traditional tea-drinking culture of Japan to the vibrant coffee scene of Italy.

Harnessing Regional Flavors and Traditions

One of Starbucks’ most effective strategies for adapting to local cultures is its incorporation of regional ingredients, flavors, and design elements into its international stores. In Japan, for instance, Starbucks has introduced matcha-infused beverages, a nod to the country’s deep-rooted tea culture. Similarly, in France, the company has introduced Vienesse coffee, as well as foie gras and brioche sandwiches.

Beyond beverages and pastries, Starbucks has also embraced local design elements to create a sense of place in its international locations . In China, Starbucks stores often feature traditional Chinese décor, such as red lanterns and bamboo accents, while in Korea, stores may feature Korean-style seating arrangements and traditional artwork .

Understanding Local Customs and Traditions

Beyond menu items and décor, Starbucks’ cultural sensitivity extends to understanding and respecting local customs and traditions . In China, where social gatherings are a significant part of the culture, Starbucks has created a welcoming atmosphere that encourages customers to linger and socialize. In Japan, where politeness and respect are paramount, Starbucks staff is trained to greet customers with a bow and maintain a respectful demeanor.

Balancing Global Standardization with Local Responsiveness

Starbucks’ ability to balance global standardization with local responsiveness is a key factor behind its success in diverse markets. The company maintains a core set of brand standards , ensuring consistency in quality and customer experience across all locations . However, it also delegates decision-making to local franchisees, allowing them to tailor offerings to meet local preferences. This approach allows Starbucks to leverage its global brand while adapting to the unique nuances of each market.

In India, for instance, Starbucks has adapted its menu to incorporate chai , a traditional Indian tea, as well as local bakery items. In the United Arab Emirates, the company has partnered with a local coffee roaster to source premium Arabica beans, catering to the region’s preference for strong coffee. By striking this delicate balance, Starbucks has successfully navigated the cultural landscape of each market , winning over new customers and solidifying its position as a global coffee leader.

Starbucks’ international expansion strategy is characterized by its ability to strike a delicate balance between global standardization and local responsiveness, a concept known as the multi-domestic strategy. This approach allows Starbucks to maintain its core brand identity and operational standards while simultaneously adapting its offerings and marketing strategies to meet the unique preferences and customs of each market.

Delegation of Decision-Making

At the heart of Starbucks’ multi-domestic strategy lies the delegation of decision-making power to local franchisees . This localization approach empowers local partners to understand and respond to the specific needs of their respective markets. By giving franchisees the autonomy to adapt menu items, design elements, and marketing campaigns, Starbucks ensures that its presence in each market feels authentic and resonates with local tastes.

Examples of Local Adaptation

In India, where tea is a deeply ingrained cultural beverage, Starbucks has introduced chai-infused drinks and partnered with local tea suppliers to offer authentic Indian tea experiences. In Japan, the company has incorporated matcha-flavored beverages and traditional Japanese décor to cater to the country’s tea-drinking culture . These examples demonstrate Starbucks’ ability to seamlessly integrate local flavors and customs into its global brand identity .

Customizing Marketing Campaigns

Starbucks’ marketing efforts are equally tailored to local markets. In China, where social gatherings are commonplace, Starbucks has launched campaigns that promote its stores as a gathering place for friends and families. In Japan, where politeness and respect are highly valued, Starbucks has emphasized its commitment to providing a welcoming and customer-centric experience .

Balancing Standardization with Responsiveness

The multi-domestic strategy presents a delicate balancing act , requiring Starbucks to maintain a consistent brand identity while adapting to local preferences. The company achieves this balance by setting clear global standards for quality, service, and customer experience , while simultaneously delegating decision-making on non-essential aspects to local franchisees.

Starbucks’ remarkable international expansion is not merely a matter of luck or coincidence. The company’s success can be attributed to a combination of strategic decisions, cultural sensitivity, and a commitment to providing an exceptional customer experience .

Premium Positioning and Strong Brand Identity

Starbucks has successfully positioned itself as a premium coffee brand , charging slightly higher prices than its competitors. This premium positioning has allowed the company to maintain a consistent and differentiated customer experience across all international locations. Starbucks’ strong brand identity, characterized by its iconic logo, sleek store designs, and consistent quality, has further solidified its position as a global leader in the coffee industry (Berman, 2018).

Consistent Quality and Brand Standards

Despite operating in diverse markets, Starbucks has maintained a high level of consistency in terms of product quality and brand standards . The company’s global quality assurance program ensures that its coffee beans are sourced sustainably and roasted to a consistent standard. Additionally, Starbucks’ training programs for baristas help maintain consistent customer service and beverage quality across all locations (Keegan, 2019).

Effective Marketing Strategies and Social Responsibility Initiatives

Starbucks has effectively leveraged marketing campaigns to connect with customers and enhance its brand image. The company’s “Share a Cup of Happiness” campaign, for instance, tapped into the emotional appeal of coffee as a social and cultural beverage. Starbucks has also demonstrated a commitment to social responsibility, supporting initiatives such as fair trade practices and environmental sustainability . These efforts have further bolstered the company’s reputation and attracted socially conscious consumers (Nishiyama, 2023).

Starbucks’ international expansion has unfolded in distinct phases, reflecting the company’s evolving strategy and market opportunities. From its initial focus on North America, Starbucks has steadily expanded its presence across Europe, Asia, and more recently, emerging markets like China and India. Each phase has brought unique challenges and opportunities, requiring the company to adapt its approach and leverage strategic partnerships to succeed in these diverse markets.

Early Expansion in North America: Laying the Foundation

Starbucks’ international journey began in 1996 with its first store in Japan , marking the company’s foray beyond its home market of Seattle, Washington. This initial expansion was followed by a steady growth in North America, with Starbucks establishing a strong foothold in the United States and Canada. During this phase, the company focused on replicating its successful formula of premium coffee, comfortable ambiance, and exceptional customer service .

European Expansion: Adapting to Local Tastes

In 2000, Starbucks entered the European market, targeting major cities like London, Paris, and Milan. However, the company faced challenges adapting its American-centric approach to the European market , where coffee culture is deeply rooted and preferences vary significantly from country to country. To address these challenges, Starbucks adopted a more localized approach, tailoring its menu items and store designs to suit local tastes and preferences. For instance, in Italy, Starbucks introduced espresso-based beverages and partnered with local coffee roasters to source premium Italian beans.

Asian Expansion: Navigating Diverse Markets

Starbucks’ expansion into Asia presented another set of challenges, with the region encompassing diverse cultures, tastes, and market conditions. In China, Starbucks encountered a market where tea is deeply ingrained in the culture . To cater to local preferences, Starbucks introduced chai lattes and adapted its store designs to incorporate Chinese elements . In India, where coffee consumption is relatively low, Starbucks partnered with local tea companies to offer chai-infused beverages and adapt its menu to align with local tastes.

Emerging Markets: Strategic Partnerships and Cultural Sensitivity

Starbucks’ expansion into emerging markets like China and India has highlighted the importance of cultural sensitivity and strategic partnerships . In China, Starbucks has partnered with local conglomerate Alibaba to leverage its e-commerce platform and expand its reach. In India, the company has partnered with Tata Consumer Products , a leading Indian consumer goods company, to gain access to local distribution networks and consumer insights.

Throughout its international expansion, Starbucks has demonstrated a remarkable ability to balance global standardization with local responsiveness, adapting its approach to suit the unique nuances of each market. The company’s success in emerging markets like China and India is a testament to its commitment to cultural sensitivity and its ability to form strategic partnerships that leverage local expertise and resources.

Starbucks’ remarkable international expansion journey has been marked by a series of strategic decisions, cultural adaptations, and strategic partnerships that have propelled the company to become a global coffee giant . As Starbucks continues to expand its reach, it is crucial to reflect on the lessons learned from its past experiences and identify key factors that will shape its future growth.

Key Takeaways from Starbucks’ International Strategy

Throughout its international expansion, Starbucks has accumulated valuable insights that serve as valuable lessons for other businesses seeking to venture into new markets. These lessons include:

• Adaptability and Cultural Sensitivity: Starbucks’ success hinges on its ability to adapt its offerings and marketing strategies to align with local customs and preferences. Understanding the nuances of each market is essential for building a strong brand presence and fostering customer loyalty.
• Balance of Global Standardization and Local Responsiveness: Starbucks has successfully navigated the delicate balance between maintaining global consistency and adapting to local preferences. This requires a multi-domestic strategy that empowers local franchisees to make decisions while adhering to core brand standards.
• Strategic Partnerships: Starbucks has leveraged strategic partnerships to gain access to local expertise, distribution channels, and consumer insights. These partnerships have been instrumental in the company’s success in emerging markets like China and India.
• Commitment to Quality and Customer Experience: Starbucks has consistently maintained its focus on providing high-quality products and exceptional customer service across all international locations. This commitment has been a cornerstone of the company’s success in building a loyal customer base.

Future Outlook and Potential for Further Growth

Starbucks is well-positioned for continued international growth , with over 32,000 stores spanning over 80 countries. The company’s strong brand reputation, customer-centric approach, and ability to adapt to local markets are key factors that will drive its future success.

However, Starbucks faces several challenges in its quest for further international expansion. These challenges include:

• Evolving Consumer Preferences: The coffee industry is constantly evolving, with changing consumer preferences and the emergence of new competitors. Starbucks will need to remain agile and adapt its offerings to stay ahead of the curve.
• Economic and Political Factors: Economic and political instability in certain markets can pose significant challenges for Starbucks’ operations and growth prospects. The company will need to carefully assess these risks and tailor its expansion strategies accordingly.
• Competition from Local Coffee Brands: Starbucks faces stiff competition from local coffee brands that possess a deep understanding of their respective markets. The company will need to differentiate itself through its brand image, product quality, and customer service to maintain its competitive edge.

Despite these challenges, Starbucks is poised to remain a dominant player in the global coffee industry . The company’s strong brand, customer focus, and adaptability will continue to drive its growth in new markets. Starbucks is well-positioned to capitalize on emerging trends in the coffee industry, such as the increasing demand for specialty coffee and the growing popularity of mobile ordering and delivery.

Starbucks’ international strategy is a multi-domestic strategy, which means that the company adapts its products, marketing, and operations to local preferences in each market it enters. This approach allows Starbucks to maintain its core brand identity while resonating with customers in diverse cultures.

Several factors contribute to Starbucks’ international success, including: • Cultural Mindfulness : Starbucks carefully considers local customs, tastes, and preferences to tailor its offerings and marketing strategies accordingly. This cultural sensitivity has enabled the company to gain a foothold in markets with varying coffee cultures. • Market Research : Starbucks conducts extensive market research to gain a deep understanding of each market’s unique characteristics, consumer demographics, and competitive landscape. This data-driven approach informs strategic decisions and ensures that Starbucks’ offerings are relevant to local customers. • Local Partnerships : Starbucks forms strategic partnerships with local companies and experts to gain access to market insights, distribution channels, and cultural understanding. These partnerships have been instrumental in Starbucks’ success in emerging markets like China and India. • Strong Brand Integrity : Despite adapting to local preferences, Starbucks maintains a strong and consistent brand identity across all international locations. This consistency reinforces the brand’s reputation for quality, innovation, and customer service.

No, Starbucks is not using a translational strategy. A translational strategy involves imposing a standardized approach across all international markets, regardless of local differences. Starbucks’ multi-domestic strategy, on the other hand, emphasizes adaptability and customization to suit local preferences .

Starbucks employs three strategies for market entry: 1. Wholly-Owned Subsidiaries : Starbucks directly owns and operates its stores in these markets, allowing for complete control over operations and brand consistency. 2. Joint Ventures : Starbucks partners with local companies to jointly own and operate stores, leveraging local expertise and market knowledge. 3. Licensing : Starbucks grants local companies the right to use its brand and operate stores in exchange for royalties and fees . This approach expands Starbucks’ reach without the need for direct investment.

Starbucks’ multi-domestic strategy has been a key driver of its global success by enabling the company to seamlessly integrate into diverse markets while maintaining its core brand identity. The company’s commitment to cultural mindfulness, market research, local partnerships, and strong brand integrity has allowed it to cultivate a loyal customer base worldwide.

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Starbucks is a coffee chain founded in Seatle, USA, in 1971. The company is famous for its premium coffee accompanied by top-notch customer service.  With a mission to inspire one person, one cup, one neighbourhood at a time, Starbucks not only changed the way coffee is consumed in the USA but also gradually introduce the Western coffee culture to multiple parts of the world.  As of 2020, there are 33,833 Starbucks stores all over the globe, serving more than 100 million customers. 1

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Starbucks is a coffee chain founded in Seatle, USA, in 1971. The company is famous for its premium coffee accompanied by top-notch customer service. With a mission to inspire one person, one cup, one neighbourhood at a time, Starbucks not only changed the way coffee is consumed in the USA but also gradually introduce the Western coffee culture to multiple parts of the world. As of 2020, there are 33,833 Starbucks stores all over the globe, serving more than 100 million customers. 1

One contributing factor to this major success is Starbucks' international strategy and its ability to adapt to each market. In this article, we'll learn more about how Starbucks' internationalization process, including the overall global penetration method, the type of market entry , as well as pricing strategy.

What is Starbucks' international strategy?

Bartlett & Ghoshal Matrix is a framework for determining the type of international strategy pursued by a business based on two criteria: global integration and local responsiveness.

A high level of global integration means that the business wants to try to reduce costs as much as possible through standardized products and economies of scale. On the other hand , a high level of local responsiveness indicates a business's tendency to adapt its products and services to local needs. T hese two factors create four types of international strategy: global strategy, transnational strategy, international strategy, multi-domestic strategies . 2

The multi-domestic strategy is adopted by Starbucks when expanding overseas. It is characterized by low integration and high responsiveness. Accordingly, the company tailors its products to the specific needs of the local customers. T he structure of the organization is highly decentralized, which allows subsidiaries to operate autonomously and independently from the headquarter. 3

Figure 1. Types of International Strategy

Starbucks market entry strategy

When it comes to market entry strategy, Starbucks employs three strategies: wholly-owned subsidiaries, joint ventures, and licensing:

The w holly-owned subsidiaries strategy is carried out when the company has extensive knowledge of the market, such as that in the US or Canada. Joint ventures come in handy when Starbucks wants to initiate business in a new market. Finally, t he licensing strategy allows the coffee chain to quickly expand in a specific country. 3

The Asia Pacific has always been a fruitful market for Starbucks due to the increasing young population who are eager to adopt a Western lifestyle:

In Japan , Starbucks set up a joint venture with Sazaby League Ltd - a local designer and retailer of handbags, clothing and accessories which also operates restaurants and coffee shops under the name Afternoon Tea. The partnership starting in 1995 has allowed Starbucks to win over Japan, making it one of the company's top-performing markets internationally. Since 2014, the company has taken full control of a Japanese Subsidiary for $ 914M. 4

In China, Starbucks made its debut under a licensing agreement with Beijing Mei Da Coffee Co. Ltd in 1998. In the following years, the company expanded its influence by forming joint ventures with Uni-President Group and Mei-Xin International Ltd to operate in Shanghai, Hong Kong, Shenzhen, Macau, and other parts of southern China.

Starbucks international pricing strategy

Starbucks adopts value-based pricing for its products all across the globe.

Value-based pricing is the value perceived by the customer rather than its actual costs.

However, most Starbucks customers - who belong to the middle and upper social class are happy to pay the extra price for the premium coffee and top-notch customer service. This pricing strategy has allowed the company to maximize its income while building a premium brand image to differentiate itself from the competitors.

The price of Starbucks not only varies based on the size and type of coffee but also on the country or region it operates in. This variation can be narrowed down to various factors such as spending power, tariffs, exchange rates, local market needs, and competition in different countries. 6

Figure 2 shows the price of the same Starbucks coffee in different parts of the world (in £ equivalent):

Figure 2. Price for the same cup of Starbucks coffee around the world, based on Voucherbox

Prices are typically higher for countries outside the US. For example, Bern in Switzerland has the highest price Starbucks coffee with Cappuccino costs £ 4.58 a cup compared to the UK whose price is £ 2.45. Bangkok's Starbucks costs the least at around £ 2.37 for a cappuccino. Between different types of coffee, there's an average price difference of 20-30 cents.

An analysis of Starbucks international strategy

Starbucks' success in its internationalization process comes down to its cultural mindfulness and intensive research of the host market.

In China, tea is considered the national drink. Thus, to break into the market, the company has included a lot of products made from green tea on its menu. As people became more familiar with the brand, they began to introduce more coffee flavours to promote the American coffee-drinking culture. Knowing the Chinese like to sit in a large group, Starbucks has also designed tables that can be put together to accommodate more people.

Local partnerships also contribute enormously to the success of Starbucks' internationalization process.

Starbucks partnered with Beijing Mei Da with penetrating the northern Chinese market. In the east, it associates with Uni-President and in the South, Maxim Caterers. Through these partners, Starbucks learns to adapt and expand its product portfolio to better suit the local customers' preferences.

While focusing on adaptation, Starbucks maintains strong brand integrity. It sets a clear standard of how the products and brand image should be perceived by the customers. As a result, those who wish to become Starbucks partners must adhere to its explicit guidelines. In addition, all baristas in the host country have to undertake the same training as those in the US.

Starbucks international strategy relies on low integration and high responsiveness (multi-domestic), which is best reflected in Entry Modes and Pricing Strategies. The goal is to spread Starbucks' coffee culture while adapting to local tastes and preferences. Instead of competing with global brands, Starbucks establishes itself as a friendly choice among the many food and beverage options in the host country. This has endeared the brand to the local people and allowed it to enjoy global success.

Starbucks International Strategy - Key takeaways

• Starbucks is a coffee chain founded in Seattle, USA, in 1971, famous for its premium coffee accompanied by top-notch customer service.
• Starbucks is classified as a multi-domestic company due to the high level of local responsiveness and low level of global integration.
• Starbucks' products are customized to suit local tastes and preferences.
• In terms of market entry, Starbucks adopts three main approaches: wholly-owned subsidiaries, joint ventures, and licensing.
• Value-based pricing is adopted for markets worldwide which contributes to Starbucks premium image.
• Cultural mindfulness, market research , local partnership, and strong brand integrity are critical factors determining the success of Starbucks international strategy.

1. Statista, Number of Starbucks stores worldwide from 2003 to 2021 , 2021.

2. Lars de Bruin, International Business Strategy , 2017.

3. Christine Nyandat, Starbucks International Strategy, 2019.

4. Starbucks Stories & News, Starbucks Poised for Continued Growth in Japan Through Full Ownership of Market , 2014.

5. MBA Knowledge Base, Case Study on Marketing Strategy: Starbucks Entry to China , n.d.

6. Abhiyash Jain, Starbucks prices products on value not cost . Why , 2020.

Frequently Asked Questions about Starbucks International Strategy

--> what is starbucks' international strategy.

Starbucks' internationalisation strategy is a multi-domestic strategy.

--> Why is Starbucks so successful internationally? 

Cultural mindfulness, market research, local partnership, and strong brand integrity are critical factors determining the success of Starbucks' international strategy. 

--> Is Starbucks using a transnational strategy? 

No, Starbucks is using a multi-domestic strategy. 

--> What are the types of international strategies used by Starbucks?

Starbucks employs three strategies for market entry: wholly-owned subsidiaries, joint ventures, and licensing.

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What is Starbucks International Strategy?

A high level of local responsiveness indicates a business's tendency to adapt its products and services to local needs. 

A high level of global integration means that the business will try to reduce costs through...

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Multi-domestic strategy

What type of international strategy does Starbucks adopt?

Multi-domestic strategy 

What is Bartlett & Ghoshal Matrix used for?

What are two key criteria for determining international strategies using the Bartlett & Ghoshal Matrix?

Global integration and local responsiveness

What does high global integration mean?

The company tries to reduce costs as much as possible through standardized products and economies of scale. 

What does it mean if the company has high local responsiveness?

The company is adaptive to the local tastes and preferences. For example, include in its menu a type of drink unique to the region. 

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International Strategies of Starbucks Company

Starbucks competitive strategies, starbucks corporate strategy, global marketing mix strategy, starbucks international expansion, starbucks market opportunities in india and middle east.

Starbucks Corporation earns above average returns because it found unique ways to differentiate and deliver superior food value to its clients. Starbucks gained competitive advantage in the entire ready to drink coffee industry through the inimitable market strategies (Aaker, 2012). These include the appealing store ambiance, superior client services, flavorful coffee drinks and convenient locations that make it to stand out amongst other market competitors that sell coffee.

Through selecting unique differentiation strategies to offer superior value to the clients while determined to attain operative excellence, Starbucks is able to achieve long-term brand-loyalty. This rather makes it very hard for other competing companies to succeed by just replicating Starbucks strategic international market approach (Welsh, Raven & Al-Mutair, 1998).

Indeed, the strategies dubbed as “Me Too” as applied by other corporations can hardly be anticipated to provide stellar performances and competitive advantage lest the copycats possess competencies and resources which allow them to offer superior values to the clients.

It is via the unique differentiation strategy that Starbucks has managed to proffer a wide range of valued and unique products to the clients. The pace at which Starbucks fared its market ascension materialized to be as incredible as the alterations the corporation designed in the customary brand marketing outset.

The company is renowned to take the global oldest products and modify them into differentiated, value laden and lasting brands. Besides, most Starbucks products are differentiated to attract low costs which further offer a source of potential and sustainable competitive advantage to the company.

At the international markets, the low cost of producing the imitable differentiated products makes Starbucks to overcome the external environmental changes (Biederman, 2005). The differentiated products are difficult to replicate because they are of; unusual positive brand image, based on technological capability, innovative design, extraordinary service and exceptionally high quality. These clearly validate the premium prices charged on each coffee cup which surpasses the differentiation costs.

Starbucks corporate strategy appertains to the maximization of market penetration, creation of great networking environments, realization of profitability while offering high quality products and providing socially attractive and relaxing environment. When Starbucks became public, merely one hundred and sixty five stores surrounded Seattle and its environs.

The company has however exceeded the targeted one hundred thousand store outlets globally. The acknowledged business model for this corporation was to spread out its outlets in a given region and saturate the market in order to maintain profit margins (Kaplan & Woznicki, 1999).

The supply chain retail outlets are strategically located and focused on increasing Starbucks foot traffics in a particular area. Rather than being worried that the new stores would eat up each one’s business space and market share, the corporation aimed at cutting down the management times and the corporation’s delivery while shortening the waiting queues for clients at all stores.

This optimistically increased the overall clients’ traffic. Despite being risky, the corporate strategy adopted by Starbucks paid off because the regionally clustered stores helped the corporation to rapidly gain global market dominance (Theodore, 2002).

Starbucks corporate strategy neglects the excessive use of the generated revenues to advertise its products. Most marketing are carried by word of mouth ads. Besides crowding its retail outlets, the company follows smart joint business ventures with companies deemed to be right while rolling out novel and fresh initiatives like newfangled product lines (Taylor, 2011).

Starbucks hardly markets its products using posters, newspapers, ad spaces or billboards as is apparent with other global corporations such as McDonalds (Talpau & Boscor, 2011). In fact, Starbucks does not just employ unconventional marketing strategies merely for fun.

The marketing mix strategy perfectly matches the concept Starbucks yearned to exhibit (Perera et al., 2009). To display its current incredible level of success, the company uses strategic marketing techniques that have attracted millions of individuals globally and these are as subsequently outlined.

Clients’ satisfaction : With Starbucks, client satisfaction is considered very essential. Starting from entering the retail stores to the latter coffee drip, it is clear that clients have a sensation of distinctiveness as they consume coffees made Starbucks Corporation. Undeniable, coffees from Starbucks Corporation provides every reason why client servicing is essential (Talpau & Boscor, 2011).

Brand marketing: The marketing mix approach for Starbucks often centers on the word-of-mouth ads. This technique lets the Starbucks high quality services and products to express and market themselves. The company has been very successful based on this viral marketing strategy which allows clients to admit that Starbucks makes its own brands and runs the market with them (Taylor, 2011).

Perfect and innovative coffee cups: The history of Starbucks clear depicts that the company places more weight on the quality of products offered. While the coffees tendered are a bit more dear than anticipated, Starbucks coffees are famous for quenching the client thirst with their appealing, rich scent and flavor.

The coffee cups comprise of innovative and creative ideas that add value to Starbucks services and products. Through innovation, Starbucks has managed to add different aromas to its coffees, additional foodstuffs to its menu besides becoming first in offering internet capabilities in its retail stores (Weber, 2005).

Third place : Since its inauguration, the marketing mix plan for this corporation has been tailored towards the creation of third-place for each client going amid homestead and workplace. The creation of such a calming and distinctive atmosphere and experience for individuals and groups materializes to be very important for this corporation as it is the resilient model that Starbucks has used to strongly attract and retain most of its customers.

Smart partnerships and the creation of Starbucks communities : This Corporation is recognized for its strategic creation of partnerships. This implies that to increase its global market dominance, the smart business partners that Starbucks has formed helps it to augment its annual sales.

Furthermore, the marketing approach adopted by Starbucks has been extended to produce a community about its various coffee products. For instance, people have been fortified to give their views and experiences as regards to the history of Starbucks on this company’s website. The company has been part and parcel of such discussions (Talpau & Boscor, 2011).

Before expanding its business into any new country, Starbucks ideally conducts meticulous quantitative market studies. The company develops extensive focused group interviews to obtain a pulse of the market and its potentiality.

After realizing that even big companies cannot fill the new market gaps unaided in serving the demands of its target market, Starbucks resorts into seeking the help of another company or entrepreneur with whom it can work and share the financial risks (Taylor, 2011). Starbucks strategic partners helps it penetrate into new markets, keep abreast with the technological innovation advancements, achieve objectives and amicably obtain the services and products available in those markets very quickly.

To realize its global business expansion missions, Starbucks ensures that it selects local business partners who are ideal business leaders. Thereafter, Starbucks jointly with its strategic partner tries to acclimatize its business traditions to that local market.

It is also evident that Starbucks attachment to the internationalization business process varies in the mode of licensing, wholly owned subsidiary and joint-ventures. This is because Starbucks is persistently informed with operators to stay abreast of the lucrative marketplaces (Holmes et al., 2003).

This is implies that, the strategic choices that Starbucks has to make while expanding into the international markets are in line with the consideration of the international business partners. The company seeks to ensure that its local partners will positively share its commitments and values into bringing the Starbucks experience to the global clients.

Therefore, the strategic choices may include: partners who share its corporate culture and value; partners with strategic fits to Starbucks business; local business leaders; individual with premium brands and concepts as well as experience in managing license. Such strategic market choices are made because Starbucks believes that the success of any company is based on conducting ethical business and striving to execute all that is vital to accomplish the client demands (Aaker, 2012).

Both India and Middle East appear to be emerging markets for Starbucks products. For instance, India is densely populated and the younger Indian generations and the classy individuals from Middle East always look for cool and relaxing places to study and meet friends.

The wider market base, the financial potentiality of these people and the availability of potential business partners in both India and Middle East provides lucrative business opportunities for Starbucks to expand its global market operation to these regions. These factors are critical in upholding the success rate that Starbucks currently enjoys (Taylor, 2011).

Aaker, D. (2012). Remove Negatives to Remain Relevant. Marketing News , 46(1), 14-14.

Biederman, P. S. (2005). Commentary on Expo Fling a North American Concept to Asia: Starbucks in China. Cornell Hotel and Restaurant Administration Quarterly , 46(2), 288-290.

Holmes, S., Kunii, I. M., Ewing, J. & Capell, K. (2003). For Starbucks, There’s no Place Like Home. BusinessWeek , 3836, 48-49.

Kaplan, D. A. & Woznicki, K. (1999). Trouble Brewing. Newsweek , 134(3), 40.

Perera, L. C., Kerr, R. B., Kimura, H. L. & Lima, F. G. (2009). Case Study: Starbucks- Adding Value to Brand Equity through an Innovative Brand Image. Journal of the Academy of Business & Economics , 9(4), 174-185.

Talpau, A. & Boscor, D. (2011). Customer-Oriented Marketing – A Strategy that Guarantees Success: Starbucks and Mcdonald’s. Bulletin of the Transilvania University of Brasov. Series V: Economic Sciences , 4(1), 51-58.

Taylor, D. (2011). Siren’s call: Is Starbucks Steering its Brand Identity onto the Rocks? Central Penn Business Journal , 27(3), 13-13.

Theodore, S. (2002). Expanding the Coffee Experience. Beverage Industry , 93(10), 56.

Weber, G. (2005). Preserving the Counter Culture. Workforce Management , 84(2), 28-34.

Welsh, D. H., Raven, P. & Al-Mutair, N. (1998). Starbucks International Enters Kuwait. Journal of Consumer Marketing , 15(2), 191-197.

• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2022, July 31). International Strategies of Starbucks Company. https://ivypanda.com/essays/international-strategies-of-starbucks-company/

"International Strategies of Starbucks Company." IvyPanda , 31 July 2022, ivypanda.com/essays/international-strategies-of-starbucks-company/.

IvyPanda . (2022) 'International Strategies of Starbucks Company'. 31 July.

IvyPanda . 2022. "International Strategies of Starbucks Company." July 31, 2022. https://ivypanda.com/essays/international-strategies-of-starbucks-company/.

1. IvyPanda . "International Strategies of Starbucks Company." July 31, 2022. https://ivypanda.com/essays/international-strategies-of-starbucks-company/.

Bibliography

IvyPanda . "International Strategies of Starbucks Company." July 31, 2022. https://ivypanda.com/essays/international-strategies-of-starbucks-company/.

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How Starbucks Became Everyone's Cup Of Coffee

Table of contents.

Starbucks Coffee Company boasts impressive stats:

• Owns 40% share of US Coffee Market
• Earns $24,72 billion worldwide
• Has 29,324 stores worldwide in 72 countries
• Over 14,000 of total stores in the United States / over 27,000 worldwide
• Conducts over 90 million transactions per week
• So popular in China, a new store opens every 15 hours
• Following McDonald's as the most valuable fast food brand worldwide (valued at $44.5 billion)

It will be very hard to achieve something Starbucks did since 1971 when the company started. There’s a lot of firsts when it comes to the company. First to introduce the new coffee culture, the first privately owned company which offered all their employees health insurance AND the share of the company.

The CEO, Howard Schultz, who might even run for president at some point , achieved something that is almost impossible — appeal to shareholders, employees, and customers at the same time. This is my giant case study on how to achieve world domination in case you want to bring an old product to the new market.

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The Starbucks Idea

The coffee culture in the United States before the 80s was nonexistent. 

Americans were used to huge cans of ground coffee and they couldn’t care less about the flavor. Even if you’d go outside your household to a dinner you would be met with a generic drip coffee or styrofoam cups of foul-tasting joe at the workplace. No one even thought about the flavor, the origin, or anything more sophisticated tied to the drink.

The 70s coffee culture didn’t exist at all.

In 1970 three college friends: Gordon Bowker, Jerry Baldwin, Zev Siegl went into the coffee business together. They set up a shop and sold roasted beans. They received the knowledge from a man named Alfred Peet (if that rings a bell, yes he is the owner of Peet’s Coffee). Alfred was one of the most knowledgeable people in the country about coffee. He knew where to source it, how to roast it. He was the first to introduce dark roasted and french roasted beans.

In 1971, the three friends opened the roastery and bean shop in Pike’s Place, Seattle’s famous tourist destination known for the Pike’s Public Market Center. Peet helped the young entrepreneurs by providing them with beans and connecting them with reliable bean providers.

The name Starbucks stuck because it’s easy to say, impossible to misspell, and has a vaguely British overtone to it. Really, we picked it because our lawyer called and told us we had to submit papers and needed a name. We didn’t know at the time, but Starbuck is the name of the first mate on the Pequod in Moby Dick. That might explain the siren logo. Some might even say it comes from Mount Rainier's Mining company Starbo . According to Gordon Bowker, they were initially going for the name Cargo House Coffee .

The business was successful enough for the trio so they opened 4 more shops in Seattle. However, no coffee drinks were being served. This was still a roasted bean retail shop intended for home use.

At that time Starbucks was competing against instant coffee cans. The quality was stark and thus the business went well. Things were about to change when the founders hired the head of marketing and sales, Howard Schultz in 1982.

The Inclination for Grit and Determination Fix Social Injustice

Howard Schultz was a child raised in poverty. After seeing his father injuring himself doing grueling manual labor, he decided he wanted to get rid of the injustice of the working class. An idea of creating and striving for an environment where employees are fairly compensated and taken care of has been set in.

In Masters of Scale interview with Reid Hoffman, Schultz described seeing his father stretched out on the sofa after suffering an injury. Howard Schultz swore to himself to make a company his father had never worked for.

“I saw my father losing his sense of dignity and self-respect. I am sure that this was caused mostly by the fact that he has been treated as an ordinary working man.” – Howard Schultz, AstrumPeople article

Schultz started working at the age of 12 selling newspapers. Since he was being athletic, Howard earned an athletic scholarship at Northern Michigan University where he received his Bachelor’s degree in Communications in 1975.

After his graduation, Howard Schultz spent three years as a sales manager at Xerox, and then he started working at a Swedish company Hammarplast , where he was selling home appliances, including coffee grinders to businesses like Starbucks.

The Starbucks founder trio took him amidst to grow the company.

In 1983, Howard Schultz gets an epiphany. He travels to Milan, Italy for some sort of conference and what he sees there changes his perception of coffee forever. In certain European countries, especially Italy, coffee was one of the more important things in life. It served as a social lubricant and the third place of dwelling between home and work. Schultz discovered what it means to have a high-quality espresso served in a proper way in a relaxed environment.

He was determined to bring this piece of coffee culture back to the United States. The founders gave in after continuous pressure from Schultz to open an espresso bar. Eventually, they gave him an opportunity to open up a coffee bar inside a store. It was incredibly popular. But the owners didn’t want to turn the coffee retail business into a cafe.

“After Milan I flew back to the United States, excited to share what I experienced. But my bosses, the first founders of Starbucks, for whom I had tremendous respect, did not share my dream of re-creating the coffee bar experience in Seattle. I was crushed, but my belief was so powerful that, in April 1986, I left Starbucks and raised money from local investors to found my own retail coffee company. I named it Il Giornale after Milan’s daily newspaper.

In 1985 Howard Schultz opened his own cafe chain - Il Giornale . He wanted to pursue the dream and went back to Starbucks owners and offered to buy all 6 stores that were operational at that time. With the help of raised venture capital he succeeded and became the CEO after the successful acquisition with $3.6M.

The hyper-growth began.

Key takeaway #1 — change is good

The determination and unrelenting belief to change the current situation is not just a helpful attribute but a prerequisite for cultural change. Staying true to the “one thing” without flinching will be the cause and the driver of change.

“An Old Product in the New Market”

Whenever something works out on an incredible scale in one market, there’s a potential of seeing it succeed in a new one. This is called introducing an old product to a new market.

For example, Uber and Lyft built an incredible business about ride-sharing. Because they have to contain the growth before they are spread too thin, that gives the opportunity to copy-cats in different markets. In the United Arab Emirates, you have Careem ( just recently acquired by Uber ), in Croatia you’ve got have Cammeo and in India, you’ve got sRide .

After something experiences great success, there is only a matter of time before someone else sees the potential and brings it back to the new market, and starts eating out the market share

Coffee was a big opportunity in the United States at that time. Howard Schultz saw with his own eyes how effective and important it is in Italy and he knew he could do something similar in the United States. To perform a similar innovative (for the new market) service you would need to take the entire concept and localize it to the new market.

Even the trends from 2004 to this day shows an upward trend in coffee:

This go-to-market product strategy was first introduced In 1957 by Russian American mathematician and business manager Igor Ansoff. The Ansoff Matrix was published in Harvard Business Review in the article “Strategies for Diversification”. In his opinion, there are only two ways to develop a growth strategy — varying what is sold (product growth) and to whom it is sold (market growth).

Market development — new market, existing product

The Starbucks go-to strategy was to bring the already established product in different cultural and geographical spaces into the new market — the coffee-culture deprived United States.

Howard Schultz’s task was to closely observe how Italians treat the product and figure out a way to bring it home with minor changes. It was impossible to expect that the new market is going to slurp macchiatos from tiny espresso cups but everyone could understand comfort and better quality. That was going to be Starbucks’s trump card.

Market penetration — old market, old product

The most obvious strategy is to sell the existing product to the existing market. With this concept there’s a little risk since the companies don’t have to educate the market with the new product, however, the growth is inhibited by competition or decreasing trends.

Diversification - new market, new product

By far the riskiest approach is introducing a new product in new markets. Not only the product needs to provide clear values, but it also has to educate its use in the new market.

Imagine bringing augmented reality technology to a country where there’s no practical use for it yet. Since there’s a great risk, it can also result in amazing success where you’re the only provider in the blue ocean market.

Most of the startups are banking on this strategy.

Product development - old market, new product

This strategy is most often used by established brands that are already known as leaders in their field. If a washing machine company introduces a new technology that also folds your clothes after washing and drying, that would be much easier to understand and adapt to their existing users.

Key takeaway #2 — do market research

When developing the new market, learn as much as possible about the product itself in the location where it’s mostly used and established. Identify all the major benefits and think of the most significant values that would succeed in the new market

Eco-Conscious, Friendly People, and Profitable — Starbucks’ Triple balancing act

Howard Schultz had an idea to build something that is almost impossible to imagine and can exist only in Utopia. From the start, he wanted to serve with equal importance towards customers and employees.

This is almost impossible to achieve since on one end the business investors want to see money coming in, which in most cases means lean running staff with lower wages and higher-priced products. The staff, or “ partners ” as Howard Schultz calls its employees, are not only compensated a fair wage ( between $10 to $15/hour according to Glassdoor ) but also have healthcare insurance and discounted stock options for company shares.

Howard went even further, offering full tuition coverage through Arizona State University's online degree program .

This idea was most likely outrageous to shareholders. Everyone will get a piece of the company’s pie?

In a Tim Ferriss interview with Jim Collins, the author of Built to Last and Good to Great mentioned the final lesson of his mentor and all-around management superhero Peter Drucker:

“The management isn’t about being more efficient all the time, but it’s also being more humane at the same time.

Striving for workplace quality for the employees was thus one of the main values the CEO implemented in the company.

The interesting analogy is Jordan Peterson’s theory of order and chaos (yin and yang) where one side represents the profit that company must achieve by ruthlessly cutting back the cost in the workforce and the other side where the conscience of doing the right thing for your people brings satisfaction and peace to the workplace which is a proven necessity for customer-facing businesses.

Key takeaway #3 — happy employees make happy clients

Treat your people well. When you’re in the service industry the customer satisfaction and treatment are at times more important than the actual product. And happy employees make happy clients.

The Product

Better coffee.

To coffee drinkers, there are not a lot of things more important than a good coffee in the morning or during the day. By today’s standards, Starbucks drinks aren’t at the level of barista artisans and coffee aficionados. But when the shops started opening in the early 70s, 80s, and 90s, the espressos and lattes were vastly different from all the other stuff people were drinking.

Coffee is generally roasted in three ways: light, medium, or dark, depending on the time dedicated to the coffee beans’ roasting.

In a light roast, you would notice a fruity and acidic taste. Coffee beans are actually considered fruit and are sometimes called cherries. That is the reason you taste light roast as acidic with fruit notes.

In Medium roast, the coffee tastes the sweetest. The glucose levels reach the point where the glucose starts to break. Coffee roasters would say the medium roast is the most balanced since it’s not bitter nor acidic but something in between.

In dark roast, you can taste the bitterness due to burned beans.

Coffee quality comparison

Starbucks predominantly use dark roast coffee which also represents the majority of the coffee that is being consumed in North America. As mentioned, the coffee quality was much better than instant abominations in the early 80s; however, it definitely cannot measure up to artisan roasters.

There are two main reasons:

1— Dark roast is cheaper and can be produced in mass quantities. Similarly to green tea, the light roast-worthy beans are grown in shady, high-altitudes where it produces the most sweetness. High-quality matcha (powdered green tea leaves) is intentionally kept in the shade so it produces more photosynthesis and better taste. Since Starbucks has to supply tens of thousands of shops, they have to bring the mass supply to the cafes. Brian Stoffel from El Toledo roastery in Costa Rica says: “It would be financially stupid for a large chain to buy high-quality coffee beans and use them for dark roast coffee.”

This brings us to…

2— The coffee has to taste the same across the cafes to guarantee uniformity. With dark roast, the flavors of the beans are getting covered up in the same way as overseasoning a dish or overcooking a steak.

But it wasn’t just about the coffee alone. The branding kicks in and people pay for something they want to eventually become. Drinking Starbucks drinks meant they are sophisticated, culturally progressive individuals who enjoyed the premium experience of coffee-drinking culture from fashionable Milano streets.

The slim and elegant takeaway cups proudly wore the green siren logo so the passers-by noticed the person drinking that exact coffee. These cups were different from styrofoam cups in the office or fast food joints.

A similar tactic was used by Apple with the launch of iPods and white earbuds. The iPod was a cool new gadget you had to wear to be relevant in modern society. Apple made it in such a way that people noticed which users had iPods — because they plugged white earbuds into them.

This was a genius idea because the users were immediately differentiated from other less-cool mp3 gadget-using people. Secondly, this was a perfect silent word-of-mouth strategy. If local influencers were seen using white earbuds, everyone else wanted to get on that trend. This strategy is viral in concept and is used by many companies; however, it’s harder to implement it on a distinctive level.

Later on, Starbucks adapted to the marketing with something called “horizontal offer”. It wasn’t just about the dark roast and espresso shots. Young budding students wanted something sweet and mocha just hit the note between coffee and rich chocolate fudge. Why not having both in one product?

Later on, Starbucks started offering teas and snacks. Snack is bringing in a substantial amount of revenue. The shops are using the display of sweet pastry or savory egg sandwiches like any expert pastry shop in Europe. And there are not many people who can resist a croissant, cinnamon roll, or blueberry muffin with their americano or latte.

The food is bringing in more than 20% of all revenue . The pasty was the start, but the company followed up by offering breakfast sandwiches. The adaptation to the market goes even further.

With the recent diet trends in health and fitness, Starbucks has you covered with gluten-free, protein-rich snacks.

With all the addition and expansions to serve a larger audience, it’s inevitable to create resistance groups who blame Starbucks as a commodity coffee provider. And they would be right, it has become that because their system of sourcing beans has to ensure the stock supplies for thousands of shops. But by becoming the main coffee dealer to the masses all the micro-roasters and man-bun wearing, tattoo-sleeved barista artists can fall on their knees and thank the mighty green Siren for creating a market for them.

The need for coffee has increased substantially with the introduction of better coffee, so it created another pocket of niche providers of premium roasted bean roasters.

The price of a cup

Most of the coffee shops live well because they can afford hefty margins. An 80% markup is a standard in the coffee business, especially on the higher-end brews. According to the Small Business Development Center’s 2012 report, food costs take up about 15 percent of revenues on average. The average coffee shop then has a gross margin of 85 percent.

Starbucks margins must be pretty loaded then since they buy tons of coffee from a few sources. According to Coffee Makers USA, the actual coffee in a grande Starbucks cappuccino costs about 31 cents.

For a commodity product such as coffee, Starbucks drinks are quite up there on the more expensive tier ranging from $2.15 for a tall drip to $5.95 for a seasonal frappuccino concoction. But taking into consideration the physical positioning ( Chapter 5 — Coffee Locations ), paying off employees and staff the actual margin per coffee sold are 7% .

Historically, Starbucks has been raising the prices per cup over the years. Since it has poured a lot of equity into maintaining the brand image, it can afford to have a steeper price than its competitors (McDonald's and Dunkin Donuts). Instead of losing the price-sensitive customers, Starbucks differentiates itself from the before-mentioned companies and thus keeping the brand image of a premium java provider.

However, as Tucker Dawson from PriceIntelligently mentions, the prices aren’t increased across the whole product offering . The high-margin items have stayed the same.

Product differentiation

By having a strong and recognizable brand, the company can afford to put out merchandise. Starbucks holiday-themed mugs and localized artwork on them are a big part of the exposure. The merch cabinets and tables are usually near the counters or areas where there’s a longer dwelling time.

The revenue isn’t coming just from the beverages alone. Starbucks did an amazing job of offering non-caffeinated beverages including kids drinks and teas which were introduced after partnerships or acquisitions of Tazo and Teavana.

Starbucks started to diversify its products, pushed them into retail space, and also added teas.

The big drivers are also snacks, wholesale beans, before-mentioned merch, and coffee equipment.

Key takeaway #4 — diversify and expand

While the product is one of the key components of a successful business think about its potential upgrades. Keeping the core you can diversify the offering (and acquire new revenue channels) by expanding into different verticals but staying inside your core company values.

Experience is More Important Than The Product Itself

With a distinctive brand identity, Starbucks shops are easily recognizable anywhere in the World. For a global brand, this is one of the mandatory elements. Each franchise is slightly different than the other — Starbucks in the posh downtown area will have a different feel than the one on the Student campus or at an airport.

But each store follows certain guidelines which are prescribed. In tech and startups, product development follows a concept called minimal acceptance criteria . In other words, what are the lowest common denominators the dev team needs to do before it can be rolled out as a published version.

For Starbucks Cafes, even though the store managers have a certain freedom to run and maintain the facility, they have to ensure to deliver the core Starbucks qualities.

• Indie playing music
• Comfortable (community) tables for remote work
• Reliable wireless connection
• Charging Outlets

These shouldn’t just be taken for granted. People love some sense of predictability in their lives. How many times have you been on the lookout for Starbucks when visiting a new country just to take advantage of their wi-fi connection and use of restroom? From that perspective, Starbucks serves as a transactional facility offering other services which don’t have much to do with coffee.

The main idea is, coffee is not the product that is being sold at Starbucks cafes — the whole thing is a social experiment of creating a meeting place between people. It serves as some sort of oasis for meeting up with friends, having a snack and a cup of coffee in a comfy chair while listening to the latest Indie playlists . Starbucks is less in the coffee business as is in people’s business as well.

“It’s not Starbucks coffee you are getting, it’s the Starbucks experience. “

By calling your name and writing it on the cup, it doesn’t just inform the customer that their drink is ready. It allows a more personalized service since we love hearing and seeing our name.

Smells and sounds

Starbucks Sounds

Chances are when you go to Starbucks you don’t ever hear the music. But it plays an important role nevertheless. Starbucks playlists are carefully curated to help create that ambiance of a neighborhood coffee shop.

It has been a piece of the Starbucks experience for over 40 years already . The songs and tracks are carefully curated way ahead of time. These handcrafted playlists usually consist of indie, feel-good songs, pop, alt-country to season-themed or even classical playlists during holidays.

In 1999, Starbucks even acquired a Bay Area music store to launch its own branded coffeehouse and later on, even a record label. In the early 2000s, Starbucks sold CDs in the store until the format decline. In 2016, Starbucks partnered with Spotify . Through the mobile app integration, Spotify plays music as part of the app. In-store listeners can take a look inside to identify the artists and save the tracks to their playlists.

Holly Hinton and David Legry, the in-house music curators, are responsible for what gets played. What sounds like the best job in the world, actually is. Their sole work is searching for the right tracks and artists that they can see are fit to be played in the coffee shop.

In an interview with Fast Company , Holy Hinton said:

“We want our customers to walk in and have a ‘What’s that song?’ moment. We want them to hear interesting, cool music that they might not hear when they turn the radio on. It’s music that we think is cool and would sound beautiful in the coffee shop. It’s the music that we’d want to hear on Sunday morning when we’re reading the paper and drinking coffee. It’s a friend-to-friend personal. And we’re lucky to be able to be a part of that.”

To localize the experience, every region is slightly customized regarding the music, while still carrying the same vibe Starbucks customers are used to. This way, whenever a customer comes to the cafe, within the first few seconds, they feel accustomed based on the music alone.

The interior design

Every piece of furniture and interior is carefully planned to conform to the standards of the homey coffee place.

To get their store right, Starbucks interviewed hundreds of coffee drinkers to get as much information which they could use to build a perfect coffee shop. The overwhelming consensus actually had nothing to do with coffee; what consumers sought was a place of relaxation, a place of belonging.

If we go back to Howard Schultz’s deciding moment from the Milanese coffee shops, it shows he managed to do just that. Create a community space as a second home. It’s somewhere where people meet, it’s where you can take someone for a first date or even get some work done at the large community table.

In the book Starbucked, freelance journalist Taylor Clark claims, that “The round tables in a Starbucks store were strategically created in an effort to protect self-esteem for those coffee-drinkers flying solo. After all, there are no “empty” seats at a round table.”

If we looked at the interior, the counters, chairs, and wardrobes are built out of natural materials like warm woods and stone. In some stores, you would find cozy armchairs as well. With the Shared Planet initiative , they doubled down with environmental sustainability in mind and employing local craftsmen to do the job. The stores are built from reused and recycled materials wherever possible.

Most of the new stores that are being built are a part of the LEED Certification program (Leadership in Energy and Environmental Design).

Starbucks differentiates from three general looks with the addition of concept designs:

• Heritage coffee houses reflect the history of the place where the store is located. At Pike Place, the coffee shop reflects the merchant trading roots with worn wood, stained concrete or tiled floors, metal stools, and factory-inspired lighting. Even more sophisticated is the New Orleans inspired coffeehouse showing the rich music history.
• A “Louisian merchant in the early 1900s” inspired heritage coffeehouse with vintage trombones light fixtures. Located in French Quarter, New Orleans.
• Artisan stores echo the industrial past of urban markets, taking inspiration from the Modernism of the 1930s. This motif celebrates simple materials like exposed steel beams, masonry walls, factory casement glass, and hand-polished woodwork in a creative gathering place for culture and the arts.

• Regional Modern are localized stylized coffee shops. The interior is spacious. comfortable and welcoming. The bright, loft-like, light-filled spaces punctuated with regionally inspired furniture and culturally relevant fabrics create a calm and contemporary respite from the clamor of the fast-paced world.

• Experimental — with growth and a plethora of locations comes more daring and innovative designs. Unique designs such as the reimagined drive-thru in Colorado , the Swiss Train contemporary mobile coffee space from Geneva Airport to St. Gallen or one of the beautiful Shinto shrine-inspired coffee shops in Japan

‍ Starbucks Reserve

To combat the upscale coffee market which ironically has to thank Starbucks for creating fertile grounds of demand for premium coffee, Starbucks started opening up so-called Starbucks Reserve stores. These are luxurious, beautiful, and magnificent stores where they roast premium, rare beans and experiment with different brewing techniques.

CNN Money described the store concept as "an open, marketplace-style" with a Princi bakery counter, a full liquor bar, and a Reserve coffee bar, with tables, lounge areas, and two fireplaces.

"Our Reserve store takes the best of coffee craft as well as artisan baking and layers in a marketplace-style customer experience creating a space that has both energy and moments of intimacy," — Liz Muller, VP of Creative, Global Design & Innovation at Starbucks

Coffee shop locations

In any high-traffic area in the city where Starbucks is located, you almost have a feeling their shops are everywhere. You would be partially right — Starbucks are strategically located in areas with high appeal. Similarly to Walgreens, Starbucks chose the concept of the convenience store, always located in an area of larger foot-traffic .

Source | A snapshot of Starbucks shops in Seattle

Arthur Rubinfeld who is responsible for Starbucks’ location selection, explained there are about 20 or so analytic experts around the world who are assessing different factors of the appropriate area for the new Starbucks shop .

Key takeaway #5 — spoil your customers

Think beyond the product and identify what else can you do for the customer to add you in their daily, weekly routine. Customer support excellence is mandatory, so think further and in the direction of the place’s ambiance including smells and sounds.

Breaking down the Brand and Messaging

Bill Macaitis, former CMO of Slack said it best - “The brand is the sum of all customer touchpoints your customers have with you at any point”. With the food and beverage category, this is even more important.

By introducing and creating a culture of coffee drinking, Starbucks had a major opportunity to create intimacy with the customer. In Italy, coffee culture is a part of every day and the same culture was slowly getting familiar to the new audience.

Because of the personal nature of coffee and frequency of visits, this relationship-bonding happened much faster than in other fast-food joints, especially since in the early years of Starbucks there was no competition.

Brand and product

The bright white cups with the green siren are the first noticeable brand. But it goes beyond that. You will notice that Starbucks never offers any sort of discounts or actions like buy-one-get-one-free. That’s sort of action dilutes the premium feel of the brand. You can get a free coffee drink for your birthday, but the underlying reason for that is for a customer to develop a positive connection with the brand and company.

The most valuable assets of the regular Starbucks coffee shop can be broken down:

☕Free reliable Wifi - besides oxygen, water, and sleep, the online connection has become a necessity in modern civilization. Whenever you’re in a new place and you need to connect, one of the first options would be a Starbucks shop.

☕Comfortable seats and community tables - whether you’re there to take a breather or putting some hours of online work or organizing an impromptu study group, there’s a Starbucks location that can provide those demands. Most of the Starbucks are generously equipped with charging outlets as well, so you can get another drink after your focus is starting to drop… and then another… And another...

☕Friendly baristas - customer service is ingrained in the retail work description yet rarely done the right way. With L.A.T.T.E. method (Chapter 8 - Disciplined Action) and general training of Starbucks partners , each interaction with the customer is there to provide a positive experience. Calling people by their name, timely service, and the patience of crafting ridiculously complex drink orders .

☕Brand colors and materials — the nature-influenced interior with dark colors and wood finishes are giving a feel of hominess. Sometimes a Starbuck visit is just a pause you take in a day to relax your eyes.

☕Music and smells — coffee and snacks just smell amazing. Let’s take that for granted. The music serves a purpose as well as bringing an ambiance that is great for having a conversation or focusing on work (or your date).

Key takeaway #6 — positive interactions

The brand is the sum of all touchpoints the customer has with the company. This goes beyond the product and customer service. Think about every single interaction customers have with you and make them positive.

Starbucks Master Example of Mobile Retention and App Rewards

Starbucks mastered the mobile game at the right time. Dabbling with mobile technology since 2007, Adam Brotman spearheaded the platform to maximize the effect. The big challenge was to align it with the brand.

“We don't look at mobile in a vacuum. We have an overall digital strategy that's all about building relationships with our customers, and that strategy runs across a number of digital touchpoints. We're looking at mobile, Web and social to think more holistically about how we engage with our customers and tell our story." — Adam Brotman, Chief Digital Officer

In the Manifest survey in 2018, 500 smartphone owners rated their satisfaction using food apps. Starbucks had the most popular and regularly used loyalty rewards app — 48% of users used it on a daily basis.

Four years later, Starbucks remains one of the most popular apps, ranking number 6 on the list of most downloaded Food & Drink apps. 

The mobile switch paid dividends with time. Instead of support and enhancing physical visits to the store, the channel began bringing in 23% of all the revenue.

Ordering ahead of time and user experience

For a food mobile app to be successful, it must bring value to the user, be easy or even fun to use and it should have entertaining, dynamic content.

The design has to adhere to rules of the brand, achieve a consistent visual look and continuity across all touchpoints.

The mobile app design is no different than the rest of the materials Starbucks uses.

Digital Engagement paid tremendous dividends for the company.

Starbucks CFO Scott Maw said almost all of the company’s same-store sales growth has come from customers that have digital relationships with the company and those that are in the Starbucks Rewards program.

User-friendly design

This is the minimal and easiest thing to leverage on. With a strong brand, it should not be hard to create an appealing visual interface and create logic flow and transitions or continuation to the desired action.

Engaging loyalty program

Retention is the name of the game. If a customer trusts you well enough to download your app, you have a unique opportunity to convert him or her to be a regular user.

Starbucks has a similar strategy with the reward system. Every day there’s a slight reward, whether it’s collecting points or showing the current mouth-watering warm drink inside the app. It’s sticky and you can’t help but wish for a warm beverage.

Mobile pay and ordering

The North American market is known for heavy mobile use . By prepaying and using the device to quickly go through the ordering process, the customers feel more efficient and slightly more an advantage than the other poor souls who still buy their coffee with credit cards or cash.

Integration with other platforms and services

Partnerships are ways to get tons of new users with one big swoop. Spotify acquired one million users a few days after partnering with Facebook (Source) and Facebook had one sexy product update from it as well. For similar reasons, Starbucks used Spotify to enrich the experience of the mobile app.

Now playing highlight in Starbucks stores (Music is a big part of the brand and having perennial "Shazam" embedded brings seemingly insignificant, yet positive experience.

UX/UI — breaking down the mobile app design

Out of this world personalized experience.

The app remembers your favorite order. This is ingenious. We’ve mentioned how coffee represents a daily habit - if Starbucks manages to infiltrate itself into your habit loop, they’ve won. They have become a part of your daily routine. Stacy always stops at the same drive-through Starbucks, orders her Grande Latte with Soy Milk at 6:15 am before she checks-in at her job. When that’s her daily or even only a few time per week routine, the LTV for that kind of customer is absolutely amazing!

Every little detail counts. For instance, here’s the customized greeting each time a user opens the app’s Home tab.

Gamification

Most addictive phone games always give you something to do if you’re not using them for a while. From Candy Crush Saga to Supercell’s engineered mobile drugs like Clash of Clans and Boom Beach, the mechanics of engagement are carefully predicted for maximum time and cash spend. These games start with low difficulty. They are fun, colorful, and offer an entertaining introduction to their mechanics. But you can play all day, and after a while (on a free tier) you’re locked out of the game.

To continue playing, you can either (literally) buy your time or increase your chances of success with extra loot, power levels, or something similar.

Starbucks uses a similar principle of gamifying its mobile app. There’s a lot of value upfront (pay with a card, skip the line, earn credits for free drinks) but it serves the company’s profit. You get hooked to those stars (credits) which are stacking in your beautifully designed mobile app.

There are also challenges for extra Starbucks points (who can say no to double credit days?)

With the app, Starbucks gets you to try new products and thus increase the range of products you are consuming AND it gives the company an opportunity to increase the average order revenue per customer.

There’s a thin line between being overbearing and being just enough engaging. And at the same time, they have to be very strategic on the number of features offered. Sean Ellis , the OG Growth hacker said the product is ready to ship once all the unnecessary features are taken away (kind of the same mentality as per good design). Luckily with MILLIONS of users, Starbucks can apply some Data Science magic and figure those timings for every type of person.

Personalization goes even further - it tries to give a similar experience as to visiting the store ( source )

Starbucks Loyalty Program on triple-caffeine nitro power

The Starbucks Rewards are dead simple - the more you spend the more stars you get. Besides the stars, the rewards program offers birthday rewards, phone payments, paying ahead, free in-store refills and special offers and events for members. As expected the experience is personalized for each user.

The Rewards work like gangbusters! More than 14.2 million active members in the U.S. are invested in the loyalty program and the mobile strategy has seen an 11% growth in users in Q2 2018 . The gamification of the program and “spend more, earn more” in some cases represent 39% of the entire chain's sales .

Here’s what’s ingenious about the mobile program. Even though there are people who prefer to have the minimum number of apps on their phone and think twice before opening the doors for the elite club on their smartphone storage, the Starbucks app is a trojan horse of benefits - even if you don’t care about collecting stars, it’s tough to say no to the free birthday drink or the convenient mobile pay.

Online Ordering and easy payments flatten the friction of getting the product. Just like the Amazon 1-click purchase or Slack’s onboarding sequence , the same goes for picking up a mocha and Petite Vanilla Bean Scone. At first, Starbucks had some issues, since the mobile members had to wait in line just like the others, but Starbucks responded by adding dedicated stations for mobile order-ahead customers.

Members can skip the waiting line and enjoy the jealous looks while feeling elite of themselves.

The beauty of the app isn’t giving one big benefit of a quicker caffeine shot to the member, but it serves as an upsell marketing tool. The Starbucks app is a delivery method for presenting new items ahead of time. These generate interest and coupled with email notifications, it gives their customers something to look forward to.

To keep the retention flat, the Rewards program has “punishment” traits tied into it. If you’re not using the stars for visiting the cafes you start losing them. This psychological trick, known as The Endowment Effect , helps to nudge those people who are affected more about losing something they already have.

The Mobile part is one of the main drivers of customer retention and has proven to raise the average order size per customer. Since the frequency of orders and visits is so high, the LTV per customer contributes to that impressive double-digit growth in the first years.

Key takeaway #7 - APP A mobile app for a product that is being used on a daily basis and is in the lifestyle category is not a nice to have, but almost mandatory. If you want to stay a part of your customer's daily lives, bring the entertainment, rewards, and gamification to keep retention and customer satisfaction high. You will be rewarded with increased LTV.

The Success Flywheel of Starbucks

The easiest way to figure out and identify the success of a company is to apply the try-and-true framework. Jim Collins, the author of Good to Great, Built to Last claims all mega-successful companies have to figure out the Flywheel principle .

To become an unstoppable juggernaut in its own field, Starbucks had to align 5-6 different elements in three categories:

• Disciplined People
• Level 5 Leadership
• First Who… Then What
• Disciplined Thought
• Face the Reality
• Hedgehog Concept
• Disciplined Action

Culture of Discipline

• Leveraging the Technology

Imagine the concepts as drivers of one giant flywheel. Let’s say you’d want to move a giant stone wheel that sits on an axle. It would take a lot of effort to get it moving at first. After gaining speed it would need less and less power to keep it going. After gaining momentum, the same wheel would run on its own with little interaction. Just like the extremely simplified quote says; “If it ain’t broke, don’t fix it.”

Disciplined people - Starbucks Level 5 Leadership

Excerpt from Good to Great -> “Level 5 leaders display a powerful mixture of personal humility and indomitable will. They're incredibly ambitious, but their ambition is first and foremost for the cause, for the organization and its purpose, not themselves. While Level 5 leaders can come in many personality packages, they are often self-effacing, quiet, reserved, and even shy. Every good-to-great transition in our research began with a Level 5 leader who motivated the enterprise more with inspired standards than inspiring personality.”

There’s no doubt, Starbucks CEO Howard Schultz possesses the characteristics and personality traits of a Level 5 leader. The ambition alone to introduce a new cultural concept in a new market sounds incredibly daunting, but to play it right with the shareholders, customers and their own people sounds impossible.

But that was the initial idea, a moral standard. The mission statement of Starbucks is:

“to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”

Let’s break this down into two pieces.

Inspire and nurture the human spirit .

The people, customers, and partners (staff) are the most important assets of any company. The first part of the mission statement explains that in a split-second. The relationships within the company have to be nurtured and supported while exuding warmth and friendliness.

Howard Schultz has shown respect for the mission by developing programs for their own people, which include free education, health insurance and even a share in the Starbucks company.

“One person, one cup and one neighborhood at a time .”

The second part stresses the importance of gradual improvement. Each interaction with a customer, each cup of coffee made hold a large amount of responsibility to deliver the right experience. The neighborhood part reminds the staff and the customers that the stores pay special respect and attention to the place where they are located.

In the article Inside Starbucks’s $35 Million Mission , author Sarah Kessler describes how Starbucks runs the “ Leadership Lab ” — part leadership, part training conference for 10,000 store managers.

Disciplined thought

Face the Reality — When stuff gets hard, leaders don’t turn away from the problem or worse, get busy with mundane tasks, deceiving themselves they are working. Closing your eyes to the reality means you’re on a great way to a downward spiral.

In 2008, Howard Schultz got reinstated by the board as CEO. The sales and shares were dropping. The brand and the culture of Starbucks were deteriorating rapidly. The magical experience was a shadow of its former self.

Schultz decided on a radical idea to close all the stores and retrain in order to inflict the importance of the Starbucks vision and mission. Tied into this transition was closing numerous shops and letting go of hundreds of employees. The ordeal cost the company 6 to 7 million dollars .

In 2018, Starbucks closed the doors again in order to put the staff through racial anti-bias training. The temporary closure cost the company between $15 - $20 million dollars

But it was necessary and long needed. The company picked up from the bottom just like in Drake’s song and has been rapidly growing in the world’s map as well as on index stock charts.

The Hedgehog Concept

The term Hedgehog concept introduced by Collins is some sort of a marriage consisting of a Venn diagram and three major ideas. Jim Collins thinks that in order to have a chance to be the best in the world you have to possess all three:

• The Elite Skill - You will have to be the best in your area of expertise. Constant learning, innovating and moving the boundaries are expected from the movers and shakers of the world.
• Deep Passion - Someone who grows a business will eventually (and continuously) encounter major obstacles where the skill isn’t going to be enough. The grit, powered with a deep passion and a reason why is arguably even more important than the knowledge alone.
• Ability to generate revenue - Understanding of what drives the economic engine is the third piece of the puzzle that completes the concept. No business can survive without sustaining itself and its people financially.

Schultz possesses all three: the Stanford education armed him to become shrewd and dangerous in the business world with a deep understanding of the economic machine while he stayed in love with the company and continued to deeply care for its people and the customers.

The second part of the hedgehog concept is the sheer simplicity of your objective. When it comes to specializing and becoming the best in the world, you need one clear statement which completely prevails over all the others.

The hedgehog is the exact opposite of the fox concept. Foxes are cunning, smart and resourceful animals who take any opportunity to get ahead using any tactic they can think off. Yet when they encounter and attack the hedgehog, the hedgehog simply rolls up into a ball and protects itself with its spiky hide.

The hedgehog companies have one major driving goal that is ingrained as the cornerstone of its business. In Starbucks, it’s not the coffee quality, but it’s the deep desire to create an experience for their customers. Everything is tied into this.

Sometimes, achieving massive rapid growth for the growth sake reveals cracks in the system if it’s not solid. In 2008, when the company was on the decline, Schulz looked at the strategy of the past few years and, in a letter penned company-wide, explained that Starbucks had “invested in infrastructure ahead of the growth curve” and it was time to “shift our emphasis back onto customer-facing initiatives.”

Imagine, the Starbucks insane growth pace required to hire 1,500 new employees a week.

Disciplined action

The success of anything in our lives is in the hands of people. It always is the #1 element in any company.

“In determining the right people, the good-to-great companies placed greater weight on character attributes than on specific educational background, practical skills, specialized knowledge, or work experience.”

When the quality of the work started slipping. Schultz had to close down hundreds of shops for a training day. It was a necessary decision to refocus, restructure and boost Starbucks employees to work and deliver on the right things and to deliver the experience as it was intended in the first place.

When faced with a difficult customer or a problem, the Starbucks partners (employees) are taught customer service by using a L.A.T.T.E. system. The acronym helps baristas deal with any situation in the store.

• L isten to the customer
• A cknowledge the problem/situation
• T ake actions and solve the problem
• T hank the customer
• E xplain what you did

The simple system isn’t there just to provide clear guidelines but it also boosts motivation and willpower among employers. In the book, The Power of Habit , Charles Duhigg wrote that the LATTE system prevented the customer service meltdown , and sustained willpower throughout the day.

In the end, customer service is there to deliver and exceed the experience which is tied to the brand. Nothing is as important as delivering the service. 

“[Employees] are the true ambassadors of our brand, the real merchants of romance and theater, and as such the primary catalysts for delighting customers. Give them reasons to believe in their work and that they’re part of a larger mission, the theory goes, and they’ll in turn personally elevate the experience for each customer–something you can hardly accomplish with a billboard or a 30-second spot.” — Excerpt from book Onward, Howard Schultz

Technology Accelerators

For a globally recognizable brand like Starbucks technology plays a major role in the expansion. The Starbucks app and the emails alone played a significant role in the company’s growth.

According to Collins, technology accelerators have to be carefully selected. Companies had to sift through the emerging technology, identify and select the right ones and gradually introduce them in the business model.

The Hedgehog Concept would drive the use of technology, not the other way around — Jim Collins

Companies that jumped the gun burned badly.

In fact, Jim Collins discovered that more than 80% of great companies didn't rank technology as one of the top five ranking factors for success.

“Those that stay true to these fundamentals and maintain their balance, even in times of great change and disruption, will accumulate the momentum that creates breakthrough momentum. — Jim Collins

Down to the core, Starbucks has one secret ingredient to thank for — knowing their customers. Data analytics. According to Starbucks, this function uses “ methodologies ranging from ethnography to big data analytics … that help support Starbucks pricing strategy, real estate development planning, product development, trade promotion optimization, and marketing strategy.”

Starbucks contracts with a location-analytics company called Esri to use its technology platform that helps analyze maps and retail locations. It uses data like population density, average incomes, and traffic patterns to identify target areas for a new store.

The Crawl, Walk, Run Concept

The gradual introduction of technology is a part of the hedgehog concept. Technology is a major proponent of business growth however if it doesn’t tie into the one simple concept , the company has to be disciplined enough to say no to new opportunities.

Eventually, they can adapt the technology in their concept which turns the massive flywheel forward.

In Starbucks sense, they seem like they embrace technology. They started out with gift cards and pay-ahead mobile purchases. The next step was adding the Starbucks Rewards program to cultivate upsells and raise the LTV per customer. And today with big data, AI, and predictable algorithms they maximize the relationship with the customers.

Key takeaway #8 — the flywheel concept

Successful companies that persevered and thrived with time have found and adopted the Flywheel concept. Focusing on the essentials of the business, working with the right people in the right places, and maintaining discipline is the only way for continued sustainable growth.

Starbucks Vs the World

Competitors.

Starbucks enjoyed the blue ocean marketplace as a premium coffee culture experience provider. 

But as soon as competitors noticed Starbucks discovering a new opportunity they had to react quickly. McDonald's and Dunkin’ Donuts were the big ones that introduced their own versions of coffee-to-go. Better than instant coffee and convenient while on the go, the two competitors did enjoy new revenue stream of introducing coffee; however, as companies, they had to keep the focus on what they are good at — McDonald's with their fast food burgers and fries and Dunkin’ Donuts with well… donuts. DD does serve coffee but had no intention to put more emphasis on it until the late 1990s .

Starbucks kept the lead in the coffee concept because of its focus on the coffee culture and holistic concept of their brand, especially customer service. This point can be seen as soon as you look at international markets. Dunkin' Donuts’ international revenue in 2018 contributed less than 4% of total sales, while roughly 30% of Starbucks' consolidated net revenues in the same period were attributed to markets outside America.

When international expansion goes right

When you get it right and you know you have the brand, processes, and culture down, you can move outside. When Starbucks expanded its adopted “Coffee culture” to new markets it could follow its own tracks again. In many countries, especially Asian nations the idea of a coffee culture was new, fresh, and exciting.

To overcome the culture gap, Starbucks sought partnership through direct investments and joint ventures instead of direct franchising . This solved two major problems.

First, they relied on local retailers who already had experience and experience in the local markets. They married the coffee culture idea with market research of the new areas to discover regional customers’ tastes and preferences. After that, they just had to deliver the employee training, workflows, and the product itself.

Secondly, they acquired and absorbed the entire pieces of coffee markets , such as Coffee Partners in Thailand and Bonstar in Singapore. All in one big swoop.

But even today a Starbucks café is opened every 15th hour in China. It already operates more than 3,000 stores in China and plans to add 2,000 more by 2021 . Seoul has the most Starbucks cafes in any city ( 284 ).

Starbucks is present in 6 continents and in more than 72 countries and territories. But it wasn’t always smooth sailing for the old Starbuck.

And when it doesn’t go so well

While Starbucks had amazing success in Asian countries, they hit a snag in Australia.

In 2008, they closed two-thirds of all stores.

The reason?

Australia is already known as one of the hardest markets to get into in the first place and they are very proud of their coffee culture. The flat whites, coffee art in ceramic lattes have been served for dozens of years at beloved local cafes and by baristas who knew what they are doing.

What Starbucks was doing in the United States was introducing the coffee culture in the new market because it was non-existent before. But in Australia, this model didn’t fit in at all.

In 2008, Starbucks closed two-thirds of all the stores. The prices of Starbucks’ relatively common-tasting coffee (compared to established coffee shops) were pricier than the local solutions and managed by young students who didn’t have the level of appreciation of either the coffee culture and/or Starbucks as a brand.

Key takeaway #9 — establish yourself

Follow the winning formula of developing the markets first and turning into a product innovator after you have established yourself. Forcing the innovation where it’s not perceived as such, is waging a losing battle.

Starbucks on Social Media

The website is simply designed with an intention to present the latest seasonal product in the Starbucks shops in the first fold. The focus of the homepage is also on advertising the Starbucks Rewards program.

According to SimilarWeb, it attracts 18.9M visits per month, with an average of 2 minutes and 3.2 page views per session. Starbucks site is the 9th top ranked site for Food and Drink category in the world

The Youtube channel was established at the end of 2005. After 16 years it managed to acquire 335,000 subscribers, which isn't’ that much if we take the size of the company into consideration.

The most successful videos are close to 10 million views; however, they are short, 15-seconds clips of the product. The channel moderators are not participating in the comment sections.

Luckily there’s not much competition on YouTube; however, as a highly visual channel, Starbucks could advertise their mobile app and Starbucks reward program using socially-conscious values, product innovation, or sustainability programs.

On the other hand, Instagram is doing absolutely amazing. Naturally, since the best Starbucks customers are the ones who have been using their mobile devices for ordering and participating in the Starbucks Rewards program

Starbucks Instagram uses a mix of images and video clips mostly displaying their well-designed cups. The posts are mostly re-shared (“regrams”) of other Instagram users. With this tactic, Starbucks incentivizes UGC (user-generated content), since Instagram users have the chance to be regrammed and have their Starbucks shot seen by 17.8 million followers.

Pinterest is another great visual platform where images are split into different categories: from coffee recipes, coffee photography to store designs and world-recognized Starbucks cups.

Pinterest receives 10+ million monthly views and has 443,600 followers.

Even though their daily support is dropping, Facebook is still being used as one of the channels where Starbucks shows its videos and posts.

On Twitter , Starbucks shares its globally conscious ideas, news, and stories about the company and its products. Twitter also serves as a chance to (as in Instagram) retweet other users’ posts.

Starbucks likes to reshare the positive messages of happy users who had a positive experience at one of their stores

Since Starbucks' success mainly lies in their visual branding, they use social media for their brand awareness and in a Facebook sense, pushing the mobile app downloads.

Key takeaway #10 — delegate your resources

When using social media, identify which social media platform brings the best results. If your users are primarily on mobile devices, Instagram would be a smart choice. Delegate your resources to the best-performing channel.

Starbucks Corp. has become a worldwide success by sticking to its hedgehog concept. The realization of being customer-centric in the practical, not just theoretical sense laid the foundation of expansion in North American markets as well as international ones.

When all of the decisions are catered to the concept of serving their customers, including using technology as accelerators, there’s nothing to worry about in their future.

Brought to you by:

Resuming Internationalization at Starbucks

By: Rob Alkema, Mario Koster, Christopher Williams

Starbucks enjoyed tremendous growth over the previous two decades. In 2007, it had a global reach of over 17,000 stores in 56 countries. Between 2007 and 2009, however, Starbucks' relentless march…

• Length: 17 page(s)
• Publication Date: Sep 17, 2010
• Discipline: General Management
• Product #: 910M73-PDF-ENG

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Starbucks enjoyed tremendous growth over the previous two decades. In 2007, it had a global reach of over 17,000 stores in 56 countries. Between 2007 and 2009, however, Starbucks' relentless march was slowed by three forces: increasingly intense competition, rising coffee bean prices and a global economic recession. In order to remain profitable, the company started to scale back its overseas operations. In 2010, 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 abroad), the rhythm of its internationalization (i.e. the regularity by which stores were opened abroad) and geographical scope of its internationalization (i.e. number of new countries entered) had an impact on the company's performance in previous years? Could Starbucks learn from its prior internationalization within the coffee industry in order to guide its future international strategy?

Learning Objectives

The objectives of this case are to: Explore international strategy from the perspective of pace, rhythm and scope of foreign expansion; Analyse the pros and cons of being aggressive in international expansion; Analyse the issue of resuming international expansion following a period of abstention or retreat. This case is appropriate for a global strategy, international strategy or internationalization course, where it can be used to discuss the relationship between internationalization and performance. The case illustrates how the overall pattern of internationalization (in terms of pace, rhythm and scope) relates to performance. The case can complement additional case analysis at the level of individual markets, such as entry mode and organizational issues in specific countries or product areas. The focus of this case is broader because it covers data regarding both domestic and international investments. Performance analysis is at the level of the company, rather than at the level of the individual unit or product. This platform is ideal for analysing and discussing strategic issues relating to the constraints on the firm when internationalization is a central strategy. The learning objectives are to: help students understand international strategy from the point of view of the process and pattern of internationalization; facilitate a student discussion on whether firms can be too aggressive in their internationalization and to evaluate the role of company strategy in protecting the firm from the threats that can arise many years after the internationalization process has begun; Explore the idea that firms may take a break from their international expansion (or at least slow down their international expansion in a difficult economic climate or for other reasons), only to resume their expansion when the conditions are right.

Sep 17, 2010 (Revised: May 4, 2017)

Discipline:

General Management

Geographies:

United States

Ivey Publishing

910M73-PDF-ENG

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Please note you do not have access to teaching notes, starbucks: global brand in emerging markets.

Publication date: 4 December 2018

Teaching notes

Learning outcomes.

Students after reading the case will learn about the issues and challenges of expansion in emerging markets. Global expansion versus multinational expansion. Stardardization versus localization. Socio-cultural aspects in international marketing. Leadership succession in multinational companies.

Case overview/synopsis

The case is about Starbucks’ journey of global expansion. It focuses on challenges in emerging markets. It also talks about the challenges to new CEO Kevin Johnson post stepping down of iconic leader Howard Schultz.

Complexity academic level

MBA Executive MBA Specialisation in Strategy, International Marketing.

Supplementary materials

Teaching Note are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes.

Subject code

CSS 5: International Business.

• Competitive strategy
• Customer relationship management
• Global marketing strategy
• International market entry

Acknowledgements

Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision-making. The authors may have disguised names; financial and other recognizable information to protect confidentiality.

Gupta, P. , Nagpal, A. and Malik, D. (2018), "Starbucks: global brand in emerging markets", , Vol. 8 No. 4. https://doi.org/10.1108/EEMCS-03-2018-0044

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

You do not currently have access to these teaching notes. Teaching notes are available for teaching faculty at subscribing institutions. Teaching notes accompany case studies with suggested learning objectives, classroom methods and potential assignment questions. They support dynamic classroom discussion to help develop student's analytical skills.

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How Starbucks’s Culture Brings Its Strategy to Life

• Paul Leinwand
• Varya Davidson

They focus on a few positive attributes and amplify them.

In most organizations, culture and strategy tend to be discussed in separate conversations. Executives know that culture is important and that a negative culture can hurt company performance, but they often don’t know what to do about it. Or they attempt to improve the situation by launching a culture initiative to “make the workplace more positive.” What most executive teams typically fail to do is to connect the company’s culture with how the company makes its strategy work.

• Paul Leinwand is a principal at PwC U.S., a global managing director at Strategy&, and an adjunct professor at Northwestern’s Kellogg School. He is a coauthor, with Mahadeva Matt Mani, of Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future (HBR Press, 2022).
• Varya Davidson leads the people and organization business for Strategy& in Australia, Southeast Asia, and New Zealand and sits on the Katzenbach Center’s global leadership team. She is a partner with PwC Australia, and has worked with leading public and private sector organizations across Europe, the Middle East, North and South America and Asia-Pacific.

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4 Starbucks—The ‘Coffee House’ Experts: A Case Study in Cultural and Strategic Alignment

• Published: June 2022
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Because of rapid globalization over recent years, the competition around the world becomes, more intense, especially for the service industry with similar products. The most critical point for business to succeed is not only the quality of products they supply, but the atmosphere of cooperating and the amount that teamwork yields in retail sales. The employees who always touch with customers and can realize what customers really need are first-line staff. Therefore, it is essential for companies to motivate, reward, and train their employees to be the best quality personnel. Starbucks Corporation, the most famous chain of retail coffee shops in the world, mainly benefits from roasting, selling special coffee beans and various kinds of coffee or tea drinks. It owns about 4000 branches in the whole world. Moreover, it has been one of the most rapid growing corporations in America as well. The reasons why Starbucks is popular worldwide are not only the quality of coffee, but also its customer service and cosy environment. Starbucks establishes comfortable surroundings for people to socialize with a fair price, which attracts all age ranges of consumers to get into the stores. Besides, it is also noted for its satisfaction of employees. The turnover rate of employees at Starbucks was 65% and the turnover rate of managers was 25% a year. However, the rates of other national chain retailers are 150% to 400% and 50% respectively. Compared with them, the turnover rate of Starbucks is much lower than other industries on an average. As a result, Starbucks would be one of the optimal business models for understanding the strategies of employee motivation, customer satisfaction, and cooperation of teamwork.

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How Starbucks Brought Coffee to China

A Case Study of Market Research

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Starbucks has developed an internationalization strategy to enable the company to open stores and franchises in countries across the globe. Market research is at the core of many of the market entry strategies Starbucks is employing. This case study will consider how market research has strengthened Starbucks entry into the Chinese markets.

Starbucks International Business Strategy

Starbucks entry into emerging and developed markets is informed by market research. Starbucks conducted market research to enable a deeper understanding of the Chinese markets, and the way that capitalism functions in the People's Republic of China (PRC). China contains a number of distinct regionally-based markets, a factor that makes market research crucial to launching new stores and franchises in China.

A deep understanding of intellectual property right laws is critical to successful market entry in emerging markets. Starbucks articulated an entry strategy that would address the dominant Chinese markets and that was designed to be as inoffensive with respect to the Chinese culture as possible.

Instead of taking the conventional approach to advertising and promotions—which could have been seen by potential Chinese consumers as attacking their culture of drinking tea—they positioned stores in high-traffic and high visibility locations.

Moreover, Starbucks very deliberately began to bridge the gap between the tea drinking culture and the coffee drinking culture by introducing beverages in the Chinese stores that included local tea-based ingredients.

Market research supported the development of Starbucks' competitive internationalization strategy. The overarching competitive strategy was to create an aspirational brand. Prospective Starbucks customers in China could look forward to what Starbucks refers to as The Third Place experience.

The Starbucks experience conveys status that is highly appealing to those aspiring to Western standards or to climbing the ladder in their own culture. Market research indicates that brand consistency is important to Starbucks' customers. When Starbucks opens a new store in an emerging market like China, the best baristas are sent for the launch and to conduct training of the baristas who will carry on when once the launch has completed.

Market Research Addresses the Emerging Market Political Environment

Market research helped to identify the attributes of capitalism in the Peoples' Republic of China (PRC). The middle class in China has rapidly accepted Western standards as an acceptable standard of the bourgeois class. Moreover, Chinese consumers accept purchases of luxury goods as a means of pursuing quality lifestyles.

Under the influence of Communism, the Chinese considered conspicuous consumption to be decadent or indicative of a lack of a nationalistic orientation. Capitalism in The Peoples' Republic of China supports the status-conscious population that manifests its interest in keeping up with the Jones' through excessive luxury consumption.

The Chinese government's support of luxury consumption is particularly apparent in certain cities in China. The second-tier city of Chengdu serves as a market research case study in Chinese governmental support of capitalism. Chengdu promotes capitalism at a level evidenced by the presence of stores like Louis Vuitton and Cartier in its downtown.

According to the Chengdu Retail Industry Association, stores selling 80 percent of international luxury brands are located in Chengdu, and the city ranks just third in luxury sales after Beijing and Shanghai. It is easy to see how this national orientation toward luxury goods extends to the Starbucks brand, which is characterized by a certain degree of exclusivity.

Market Research Reveals Attributes of Emerging Market Legal Environment

It is essential to understand the intellectual property rights laws and licensing issues when planning market entry in an emerging market. Starbucks has used intellectual protection laws to prevent its business model and brand from being illegally copied in China.

Four years after opening its first café in China in 1999, Starbucks had registered all its major trademarks in China. A number of Chinese businesses have overstepped legal bounds in their efforts to mimic the successful Starbucks model.

The organization and structure of Starbucks' global operations were informed by market research. The organizational strategies employed by Starbucks were derived from Starbucks' experiences in other emerging markets supported an early recognition that China is not one homogeneous market.

The organizational strategies employed by Starbucks addressed the many Chinese markets. The culture dominant in northern China differs radically from the culture in the eastern parts of China, as reflected in the differences in consumer spending power inland which is considerably lower than the spending power in coastal cities.

The complexity of the Chinese markets led to regional partnerships to aid in Starbucks' plans for expansion in China; the partnerships provided consumer insight into Chinese tastes and preferences that helped Starbucks localize to the diverse markets.

• Northern China - a joint venture with Beijing Mei Da coffee company.
• Eastern China - partnered with Taiwan-based Uni-President.
• Southern China - worked with Maxim's Caterers in Hong Kong.

Starbucks' competitive advantage is built on product, service, and brand attributes, many of which have been shown through market research to be important to Starbucks' customers. Western brands have an advantage over local Chinese brands because of a commonly accepted reputation for consistently higher quality products and services, a factor that establishes the Western brands as premium brands in the minds of consumers.

When Western brands attempt to increase market share by cutting prices, they erode the very competitive strategy that gives them an edge in consumer perceptions. Moreover, Western brands cannot effectively maintain a lower pricing strategy than local Chinese brands.

Maintain brand integrity in new markets. Starbucks' global brand is valuable and maintaining brand integrity is a fundamental focus in Starbucks' internationalization efforts. The baristas in China acted as brand ambassadors to help embed the Starbucks culture in the new market and ensure that high standards for customer service and product quality are maintained at each new and established local store.

Starbucks' ability to address changing markets is honed by effective and ongoing market research. Establishing and maintaining a global Starbucks brand does not mean having a global platform or uniform global products. Starbucks marketing strategy in China was based on customization in response to diverse Chinese consumer target segmentation.

Starbucks created extensive consumer taste profile analyses that are sufficiently agile to enable them to change with the market and to create an attractive East meets West product mix. Moreover, the localization effort is sufficiently flexible to permit each store to have the flexibility to choose from a wide beverage portfolio.

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Inside Starbucks: A Case Study on Talent Management

Starbucks, the brand synonymous with ‘coffee’ shines not just for its iconic drinks and unique experience but also for its exceptional talent management strategies. From innovative recruitment practices to a strong focus on diversity and inclusion, the cafe chain prioritizes building a workforce that reflects its values and serves its diverse customer base.

The company’s emphasis on continuous learning makes sure that employees are equipped with the skills needed to thrive in their respective roles. This case study explores the core elements of Starbucks’ talent acquisition, training, performance management, and succession planning methods.

Starbucks: A Brief Overview

Since its inception in 1971, Starbucks has grown into a global powerhouse, boasting over 32000 stores in 80 countries worldwide. This coffee giant has redefined the coffee experience, setting itself apart with its commitment to quality and community.

What distinguishes Starbucks is not just its coffee but also its culture, grounded in the mission to inspire and nurture the human spirit. This ethos is evident in the coffee giant’s core values, which prioritize creating a culture of warmth and belonging, ensuring that everyone feels welcome.

Starbucks' success is not solely measured by its revenue, which reached USD $29.46 billion in 2023 , but also by its impact on people and the planet. The company has made significant strides in sustainability, with initiatives like the Greener Stores framework and a commitment to reducing carbon emissions by 50% by 2030. This dedication to ethical sourcing and environmental stewardship positions the company as a leader in corporate responsibility within the coffee industry.

As it continues to expand, its dedication to quality, community, and sustainability remains steadfast. The Starbucks experience transcends borders and cultures, fostering connections that enrich lives worldwide.

Talent Acquisition at Starbucks

Starbucks' talent acquisition strategy underscores its commitment to excellence and inclusivity. This helps in setting a high standard in the industry. It leverages technology to access a diverse pool of candidates through innovative recruitment techniques.

The company's forward-thinking approach has yielded impressive results, with a global retail workforce boasting 53% gender diversity and 23.5% representation of people of color in retail and manufacturing roles. This achievement speaks to Starbucks' dedication to diversity and inclusion, setting a benchmark for others to follow.

Inclusion in Hiring Practices

• Starbucks places a strong emphasis on inclusion in its hiring practices. The company strives to create an environment where every employee feels valued and respected, regardless of their background or identity.
• This inclusive approach not only fosters a sense of belonging among employees but also enables the brand to better understand and serve its diverse customer base, driving business success.

Commitment to Learning and Development

• Central to Starbucks' talent acquisition strategy is its commitment to continuous learning and development. This further ensures employees have the skills and knowledge needed to excel.
• The company offers a range of training programs aimed at enhancing employees' skills and advancing their careers. On average, Starbucks employees receive 20 hours of training per year, a testament to the company's investment in its workforce.
• The coffee giant’s dedication to learning and development not only contributes to its success but also sets a standard of excellence in talent acquisition across industries, showcasing its thought leadership in the field.

Training and Development Programs

Starbucks’ commitment to excellence extends beyond its products to its training and development programs. These programs are designed to cultivate skilled and knowledgeable employees who embody the brand’s values.

Comprehensive Training Approach

• Starbucks' training programs are designed to be comprehensive and engaging. This makes sure that employees/partners are equipped with the skills and knowledge needed to excel in their roles.
• The company follows the 70/20/10 model of learning, where 70% of learning happens through on-the-job experiences, 20% through feedback and mentorship, and 10% through formal training programs.

Initial Training Process

• New partners undergo a thorough training process that includes the Starbucks Experience classes, covering the company's history, legacy of social responsibility, and culture.
• These classes are taught by dedicated trainers responsible for ensuring that each partner understands and embodies the Starbucks ethos.

Ongoing Training and Support

• Each store has a learning coach for new joiners. A partner who has shown a passion for training, to guide new hires through the Barista Basics hands-on training program.

Potential Enhancements

• Starbucks could incorporate video-based learning to provide a consistent learning experience across all stores and enable social learning among partners.
• This approach would further enhance the training programs, allowing the company to continue delivering exceptional customer experiences that keep customers coming back.

Overall Impact

• The training and development programs of the brand exemplify its dedication to its employees' success and its commitment to delivering outstanding customer experiences.
• By investing in its employees and fostering a culture of continuous learning, Starbucks has built a talented workforce that drives the company's success.

Performance Management

Starbucks' performance management is a strategic process, integral to fostering excellence, driving growth, and ensuring every partner is equipped to succeed. Unlike traditional reviews, its approach is continuous and inclusive. It emphasizes regular feedback, coaching, and goal setting to empower partners to achieve their full potential.

Some insights into Starbucks’ performance management are as follows:

• Continuous Improvement: The company's emphasis on continuous feedback and coaching helps partners understand their performance, recognize achievements, and identify areas for improvement. This culture of continuous improvement is key to Starbucks' success.
• Utilization of Performance Metrics: It uses performance metrics, such as customer satisfaction scores, to evaluate individual and team performance. These metrics ensure alignment with the company's goals and values, driving overall success.
• Inclusive and Transparent Practices: Partners are actively involved in setting their performance goals, fostering a sense of ownership and accountability. This inclusive approach promotes trust and collaboration, key pillars of Starbucks' organizational culture.
• Extensive Training and Development: The cafe chain provides extensive training and development opportunities. This makes sure that partners have the skills and knowledge needed to excel. The company is highly committed to partner development.
• Motivating Compensation and Benefits: Starbucks offers competitive compensation and benefits packages, motivating partners to perform at their best. This commitment to partner well-being further contributes to the company's overall success.
• Commitment to Partner Success: Starbucks' performance management system reflects its dedication to partner success. By fostering a culture of feedback, accountability, and continuous improvement, it ensures partners are engaged, motivated, and empowered to deliver exceptional results.

Succession Planning and Leadership Development

Succession planning and leadership development at Starbucks are integral components of the company's talent management strategy. These initiatives are designed to identify and cultivate future leaders within the organization. This ensures a strong leadership pipeline and a diverse and inclusive workforce.

The key aspects of succession planning and leadership development at Starbucks are as follows:

• Strategic Succession Planning: The company’s talent management strategy is deeply rooted in identifying and nurturing high-potential employees for future leadership roles. This comprehensive process ensures a consistent pipeline of capable leaders ready to assume key positions as they become available.
• Internal Promotion Emphasis: Starbucks strongly believes in promoting from within its workforce whenever feasible. This approach not only motivates employees but also cultivates leaders who possess a profound understanding of the company's culture and values, fostering continuity and stability.
• Diversity and Inclusion Commitment: Starbucks is dedicated to fostering diversity and inclusion within its leadership ranks. With 47% gender diversity and 18.5% BIPOC (Black, Indigenous, and People of Color) representation in corporate roles as of 2023, the brand is actively building a leadership team that mirrors the diversity of its customer base.
• Comprehensive Leadership Development Programs: Starbucks offers a diverse range of leadership development initiatives, including the Starbucks Leadership Experience program. These programs are designed to equip participants with the necessary skills, knowledge, and practical experience to excel in leadership roles within the organization.
• Cultivation of a Learning Culture: Starbucks promotes a culture of continuous learning among its employees. Through its tuition reimbursement program, partners are encouraged to pursue higher education and professional development opportunities, further enhancing their leadership capabilities.
• Commitment to Talent Nurturing: Starbucks' approach to succession planning and leadership development underscores its dedication to nurturing talent and cultivating a diverse and inclusive leadership team. By empowering its employees to succeed and grow within the organization, it ensures its continued success and growth in the future.

Starbucks' talent management strategy stands as a testament to the power of investing in people. From its innovative recruitment methods to its comprehensive training and development programs, the company exemplifies excellence in talent acquisition and management.

The company's commitment to diversity and inclusion is reflected in its workforce demographics, with significant representation of women and BIPOC individuals in key roles. This dedication not only mirrors the brand’s core values but also enhances its ability to connect with a diverse customer base.

Furthermore, Starbucks' emphasis on continuous learning and development underscores its belief in the potential of its employees. By offering abundant opportunities for growth and advancement, it ensures that its partners are equipped with the skills and knowledge necessary to excel in their roles.

As Starbucks continues to expand globally, its talent management practices will be instrumental in shaping its future. By remaining steadfast in its values and investing in its most valuable asset, its people, Starbucks is poised to uphold its legacy of success for years to come.

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Starbucks partnership offers new global experiences for students to study coffee, sustainability in Costa Rica

ASU student ambassadors, including Katie Hogan (back, in glasses), on the October 2023 visit to Costa Rica. Photo courtesy the ASU Global Institute of Sustainability and Innovation

Before her trip to Hacienda Alsacia, Starbucks' first and only company-owned-and-operated coffee farm, Katie Hogan thought she knew a lot about coffee.

A graduate student in Arizona State University’s College of Global Futures , Hogan had worked as a Starbucks licensee partner and brand standards leader for years. But during a recent student ambassador trip to Costa Rica, where Hacienda Alsacia is located, Hogan was able to experience firsthand what it was like to be on the coffee farm, pick coffee cherries and taste coffee in the very place it was grown.

“This trip has changed my perspective on coffee, Starbucks and the deeper meaning of sustainability,” Hogan said. “I used to take these things for granted, but this immersion has reinforced why I chose to get a master’s degree in sustainable food systems .”

Now, ASU's School of Sustainability , within the College of Global Futures, is offering a new study abroad program for students to immerse themselves in rich Costa Rican culture and learn about global coffee sustainability firsthand at Hacienda Alsacia. This international experience runs from Dec. 15–22, and participants will have plenty of opportunities for hands-on learning at the farm.

The program will be led by Dave White , director of ASU's Global Institute of Sustainability and Innovation (GIOSI), and Lauren Bataska , GIOSI program manager.

In addition to being an incredible place to learn about coffee development, sustainable agriculture and future-proof coffee innovation, Hacienda Alsacia is the planned site of the Starbucks sustainability learning and innovation lab . The new lab will be a hub for both hands-on and virtual learning opportunities for Starbucks partners, industry leaders, students and researchers.

The study abroad program highlights coffee sustainability and the looming challenges facing the industry due to climate change, including decreased crop yields and vulnerability to threats like disease and pests. In addition to exploring Starbucks' research on creating scalable solutions that could be implemented across the coffee belt, students will get to experience a behind-the-scenes tour with leading experts in coffee sustainability, plant and dedicate a coffee bush, enjoy a coffee tasting and tour important natural and cultural sites around Costa Rica’s nearby capital, San José.

While the program focuses on coffee, Hogan sees it as a transdisciplinary experience that offers even more insight into our natural world.

“It’s so much more than just growing coffee,” she said. “It’s having a relationship with the land, listening to it and learning from it."

The program is open to students from any major who meet the admission criteria and GPA requirements. More information on the program and instructions to apply can be found on the ASU Global Education website .

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10 popular McDonald's menu items that cost up to 168% more now than a decade ago

• McDonald's has increased prices the quickest of 12 fast-food chains since 2014, a new report found.
• Collectively, the cost of a group of the most popular McDonald's items has doubled in that time.
• Price increases at Starbucks and Subway were much closer to inflation.

Your favorite McDonald's meal might cost twice as much as it did 10 years ago.

Collectively, a selection of McDonald's most popular items, from the Big Mac to a medium order of fries, doubled in price between 2014 and 2024, a report by FinanceBuzz found. That increase was the most of several major fast-food chains that FinanceBuzz, a finance-news and -research website, examined.

Over the same period, inflation rose 31%, per the report.

Among the biggest McDonald's price hikes was for the McDouble sandwich, which went from an average price of $1.19 in 2014 to $3.19 in 2024 — a 168% increase. The cost of a Quarter Pounder with cheese meal also more than doubled, from an average of $5.39 in 2014 to $11.99 this year, according to the report.

A McDonald's spokesperson said the numbers were "not an accurate representation of pricing at McDonald's restaurants" but did not provide alternative estimates of how much the chain had raised prices.

"As the article itself notes, pricing is set by individual franchisees and varies by restaurant," the spokesperson said, referencing the FinanceBuzz report.

Burger King told Business Insider that it had "always offered quality food at affordable prices, and we will continue to be very thoughtful about making sure our guests receive great value for the money they spend with us."

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A Starbucks spokesperson said that the chain was "evaluating and adjusting prices on an ongoing basis."

Spokespeople for the other nine restaurants mentioned in the study did not immediately respond to requests for comment from BI.

FinanceBuzz looked at the prices of 10 menu items from each restaurant examined in the study. It collected historical pricing data and, in the case of McDonald's, adjusted for the variety of pricing strategies used by franchisees, it said.

McDonald's has increased prices multiple times over the past decade. One of the most visible examples is the demise of its dollar menu , which now includes items that cost up to $3 — and few, if any, that actually sell for $1.

Executives acknowledged in February that McDonald's price increases had put off customers who made $45,000 a year or below. Many are ordering less at the chain's restaurants and eating at home more often, they said.

But other restaurants raised prices nearly as much during the decade. The fried-chicken chain Popeyes increased prices by 86%, while Taco Bell hiked them by 81%, the study found.

Not all chains were as aggressive with their increases. Both Subway and Starbucks increased prices by 39%. At Starbucks, the menu price of some products rose slower than broader inflation: The average cost of a caramel macchiato went up just 17% over the decade, for example.

Inflation has slowed in recent months, and some restaurant chains have indicated they plan to slow price increases in 2024.

But other costs, such as employee pay , remain high.

Inflation is still increasing, which means higher prices at many fast-food restaurants are here to stay, Daniel Roccato, a clinical professor of finance at the University of San Diego's Knauss School of Business, said.

"We won't see prices drop, but we can expect a pause," he said in FinanceBuzz's report.

Do you work at McDonald's or another restaurant chain and have a story idea? Reach out to this reporter at [email protected].

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India Will Not Be Sanctioned For Purchasing Russian Oil: USA

I n a world where geopolitics directly influences energy security, India’s strategic navigation through the complexities of international sanctions, oil imports, and diplomatic relations offers a compelling case study. Amidst evolving global dynamics, particularly concerning sanctions on Russian oil, India has maintained a balanced approach, ensuring its energy security without compromising its diplomatic and strategic autonomy.

The U.S. Clarification and India’s Stand

The explanations made recently by U.S. Treasury officials highlight a critical juncture in comprehending the global perspective of oil sanctions and price limits. Recognizing India’s vital position in the world energy scene, the US has made it clear that there are no penalties for India importing and processing Russian oil . This position is a component of a larger plan to restrict Kremlin income while guaranteeing steady energy supply across the world. These elucidations not only reinforce India’s strategic standing in the international arena but also underscore the sophisticated diplomacy in operation.

India’s Energy Security at the Forefront

Energy security has always been the one constant that drives India’s decisions over oil imports. The Ministry of External Affairs and other official entities stress that buying oil is a business endeavor with the goal of obtaining the most affordable supply on the global market. This practical strategy highlights India’s commitment to protecting its energy requirements in the face of shifting global political dynamics and commercial forces.

The Price Cap Strategy and Its Implications

The $60 per barrel price ceiling on Russian oil set by the G7 is a major attempt to control the dynamics of the world oil market and restrict Russia’s oil income. India’s skillful navigating of these limitations demonstrates its capacity to adjust to global regulations while giving precedence to its own energy need. The cap and the restrictions on oil shipping firms provide a challenging situation for the world’s oil commerce, which India is resolving through diplomatic outreach and strategic procurement.

Strategic Autonomy and International Collaboration

The evolving global narratives around energy security and geopolitical sanctions have brought India’s significant import of Russian oil under scrutiny. Vladimir Putin, the president of Russia, has commended the nation for its autonomous foreign policy, which demonstrates the careful balancing act between upholding national sovereignty and participating in global diplomacy. India’s strategic insight and diplomatic skill are demonstrated by its capacity to pursue its aims for energy security in the face of opportunity and pressure from the outside world.

Looking Ahead: Adapting to Global Changes

India’s Energy Security strategy exemplifies the delicate dance of preserving energy security while participating in international diplomacy, as seen by its flexible reaction to international sanctions, price controls, and diplomatic demands. India’s future lies on keeping up with strategy adjustments, negotiating advantageous terms, and looking for ways to diversify and sustainably source its energy.

In addition to illuminating the country’s strategic orientation, the events surrounding “India’s Energy Security and Diplomacy” also have wider ramifications for international energy politics. India’s actions will surely continue to provide insights into the challenges of meeting energy requirements in a globalized world as it navigates these seas.