Business plan: Starbucks - Assignment Example

?Business plan: Starbucks. Objectives: This particular study will focus on the business planning of Starbucks on the global prospective. The opportunity and threats towards the US and new market in global prospective are described properly. The SWOT analysis of the Starbucks is also described wisely with many examples. It is very true that for grabbing an opportunity in an international market there are many factors are involved in the process. This paper has given the ultimate options for integrated marketing communications, positioning, marketing mix and market entry methods for the new global market. The unconventional selling approaches are also described to show the shift of paradigm in the field of cafe business in the global market. Starbucks is the chosen brand. And the paper will try to find out the best possible way to succeed in the domestic and global market. In this paper the chosen MNC is the Starbucks Corporation. The paper focuses on the new market opportunities in many different markets in the world. Different processes of international marketing and market entry methods are described intensely. The scope of international marketing is also mentioned properly. Brief about the MNC: Starbucks Corporation, once a small Coffee shop started by three friends in USA has become the biggest coffee shop chain in the world within four decades. In the recent time the Starbucks has become one of the most successful brands in the world. The wise international marketing strategy has shown the right path to this coffee shop giant. The long and successful journey of Starbucks started in the year of 1971 on 29th March. The first store was open in Seattle at Pike Place market and the store was located in the Harbor Heights Hotel (Burks. 2009. p. 1). The flagship store was opened by three friends and they were Gordon Bowker, Zev Siegl and jerry Baldwin. However, within few decades with the successful international marketing approaches the Starbucks became a cafe giant in the world. In the recent time it has existence in 47 countries with more than 16500 locations (Burks. 2009. p. 1). Within a short span of time it has become a global brand and in most of the overseas countries it is a very successful chain of coffee shops. In the present time Starbucks has become a part of daily routine for many individuals globally. SWOT analysis: Before the starting of any business activities in the new country or in a brand new market the SWOT (Strength, Weakness, Opportunity, and Threat) analysis is very important to understand the potentiality of the market. The SWOT analysis is having two factors, one is the internal factors and another one is the external factors. The internal factors are totally dependent on the company itself and the external factor comes from the market. Starbucks must do this analysis for the successful business globally. Different countries have different market factors. But, the market opportunity as well as threats is always there. For Starbucks the most important factor should be to nullify the threats and grabbing all the opportunities in the global market. Strength: The main strength of the Starbucks in the international market is the strong branding and positive image for which the customers in every country ready to pay high price for the premium quality coffee. Another strength is the vast expansion and acquisition strategy in the global market (Boone and Kurtz. 2009. p, 364). Weakness: The weakness is an inevitable fact for most of the organizations. For Starbucks one of the main weaknesses is opening up large number of stores which are not required in that specific area or market and also sometime not giving any attentions towards the better design of the stores (Boone and Kurtz. 2009. p, 364). Opportunity: opportunity is always there within every market or in every geographical location. However, the economic and environmental factors such as market growth, introduction of online marketing , presence of website in which Starbucks sells its products etc. the online marketing has given a great opportunity to capture the global market for the Starbucks. In the present time Starbucks sells coffee and other materials through its website. The global market identification is another opportunity. For example Starbucks outlets in Japan sell more coffees in than the outlets in USA (Boone and Kurtz. 2009. p, 364). The global upcoming market and developing economies are the main opportunity for the Starbucks Corporation. Threat: One of the main threats is the pricing. It could be very expensive in some countries as the local players charge less than the Starbucks. There is also another threat which is the introduction of the Gourmet Tea products in the global markets (Boone and Kurtz. 2009. p, 364). Service Marketing mix: The Starbucks Corporation falls under the restaurant and cafe category. Starbucks offers the product which is basically the combination of service and product. And that is the reason Starbucks must give importance to the extra 3 Ps of the service marketing-mix along with the traditional 4 Ps of marketing-mix and the extra 3 Ps are people, process and physical evidence. The new age marketing required some more specifications as far as the target market is concern. The traditional four Ps of marketing are important for the product marketing. However, according to Crane (1993) the additional three Ps are also very important for the products which are associated with services (Crane: 1993). Product: Coffee, breakfast and other beverages are the main products of the Starbucks. However, veg and non-veg options for the food sold and served in the stores would vary from country to country. The main characteristics of the Starbucks are the great aroma and best quality. Place: Choosing the new market opportunity in the new country is one of the major strategies of Starbucks. However, even after selecting the country they also selects best possible position or location for its stores. In most of the countries the Starbucks stores are located in the corners of the streets, beside the main roads, in the malls which are highly visible (Pham-Gia. 2009. p, 13). Price: Pricing is a great factor for the new markets. Starbucks coffees are highly prices but it suffices the customers as Starbucks never compromises with its quality. Promotion: Starbucks does many cross promotions with different food marts, offices and airlines etc. However, to capture the new market in the new country it must do more cross promotions with different chain of restaurant, malls etc to get more visibilities within the market. People: People are very important in case of a restaurant or cafe business. The people who are serving the customer they should be polite enough to make the customer happy. It would be better for Starbucks to hire people from the local area who know the culture, taste and preferences of the local customers. Process: Process is one most important factor which cannot be neglected. One of the main problems with the local coffee shops is the delivery time. No customer would like to wait for a cup of coffee. So the process timing should be fast. Physical evidence: Services are the non-tangible products. If the service is not recognized by the customer then it is of no use. The main USP (Unique Selling Proposition) of the Starbucks in the new countries should be the “Starbucks experience” within the store. Past performance: Present performance: Financial analysis: Influential factors: Analysis of PESTLE and Porter’s five force model: Porter’s five force model helps the organizations to understand the threats and opportunities in the specific market. However, in a broader prospective the five forces may not help and at that time the organization has to look beyond the stereotype influencing factors (Partridge and Sinclair-Hunt. 2008. P, 77). The PESTLE analysis helps the organization to identify the major forces in the macro-environments. In the larger prospective this helps the organization to setup the proper strategies. The main components of PESTLE analysis are the Political environment, Economic growth, Socio-cultural, Technological factors, Legislation and Ecological factors. The Starbucks must analyze these six factors and should follow the strategy accordingly for a smooth busyness in a new market. BCG matrix analysis: Boston Consultancy Group matrix analysis is also very important for the Starbucks if they would plan to enter a new market in a new country. This matrix is basically used by the organizations which are having multi-market existence (Stonehouse, Campbell ; et al. 2007. p 92). Starbucks can use this matrix to bring out the financial and marketing strategy. Four cells in the BCG matrix are names as stars, cash cow, question marks and dog and each of these symbols present the specific situation of the organization within the market (Kozami. 2002. p, 253). For a company like Starbucks is a cash rich company and in the new market the market share would be low at the beginning but the market growth rate would be high so in the new international market Starbucks should position itself in the box of star. Stars are those companies or business that have small share in the growing market (Griffin. 2010. P, 256). In this case Starbucks needs to invest wisely to enjoy the promising market share. . Future objectives and planning: Internationalization Process Theory (IPT): After the globalization the global expansion has become a primary strategy for most of the MNCs. However, internationalization of the firm is not an easy job. There are many factors are there which needs to be experienced. Vast knowledge about the market is very important. In the case of internationalization or to capture a new market in a new country requires three types of knowledge and they are market, internationalization process and product and knowledge about the available and upcoming technologies (Jones. 2009. p, 74). The Internationalization process theory (IPT) mainly depends and identifies the market and globalization knowledge. However, for the international new venture (INV) vast product knowledge and knowledge about the changing technology is very important (Jones. 2009. p, 74). Lack of knowledge about the overseas market could be a big disaster for the internationalization of the organization. According to the Uppsala model the greater business opportunity is the main force behind the internationalization (Jones. 2009. p, 74). Foreign business knowledge refers to the knowledge about the demographic profile, competitors, clients and partners etc. Starbucks must give importance to these points while they would be planning for the new entry in the new market. The process of international marketing: The process of international marketing is the planning and execution of the perfect combination of the marketing-mix (product, price, place, promotion) with respect to the selected country or market (Onkvisit, and. Shaw. 2009. p, 6). In the process of international marketing there are many limitations which vary country to country. The Starbucks has the existence in more than 47 countries and each country has different global marketing processes and limitations. For an example the marketing process of Starbucks is different Japan than that is in UK as the demographic profile, economy and environmental limitations are different in these two countries. Setting up new advertising campaign, new pricing, tailor-made product-line etc are the main co-factors of the international marketing process for the Starbucks. Planning for international marketing: Planning is the systematic path by which the organizations get better outcome. International marketing plan is a lengthy process. It is basically the organized way of gathering information from the target market (Ahlstrom and Burton. 2009. p, 105). The systematic planning helps the organizations to setup their vision and mission respect to the country. There are several steps in the planning process. However the main steps are; data gathering, mission generation, objective setting and strategy establishment (Ahlstrom and Burton. 2009. p, 105).. These factors are very important for the Starbucks to have successful entry in the new market. For an example, Starbucks gathered huge volume of data from the Japan before launching and with the proper analysis of these data they understood that it is great market and they also understood that new products like prepackaged coffee could be a new product in the Japanese market. (Ahlstrom and Burton. 2009. p, 105). Data gathering: This is the first step to understand the nature of the market and for that extensive data gathering is very important. These data are generally external environmental data and the internal factors related to the market. These data gathering help the organization to understand the new market. For an example before launching their chain in Japan Starbuks did extensive data gathering and that is the reason Japan has become the largest international marketing for Starbucks. Japan is having more than 500 stores of Starbucks (Ahlstrom and Burton. 2009. p, 105). Mission generation: With the proper gathering of data and analyzing those data the organizations set up the mission statement for the specific market. In this case environmental factors, economic factors play a great role. The mission is basically the long term goal setup by the organization. Objective setting: Once the final mission statement is generated the objectives are confirmed. These objectives must be measurable and performance oriented. In this case short term goals are very critical for the international firm as it helps to grow step by step (Ahlstrom and Burton. 2009. p, 105). For an example, if Starbucks open their chain India, then at the beginning they would prefer to open their stores only in the metros or major cities like Mumbai, Chennai, Delhi, Kolkata, Bangalore etc. and after the success in these cities they would prefer to enter B-grade cities. So at they beginning the short term objective of the Starbuck in India would be to check the response and profitability in these main cities. Strategy formulation: This is the last and the most vital step in the planning process. After accumulating all the important data from the market the mission and objectives are identified and with the specific mission and objectives the final strategy is formulated which would help the organization to accumulate growth and to meet the tangible targets of the firm. For a strong brand like Starbucks the five year strategic plan must be delivered which would role according year on year (Doole and Lowe. 2008. p, 24). The final strategy depends on many factors within the market and they are distributor and retailer, supplier, shareholder, home country government, individual politicians, host country government, customers, local competitors, pressure group, local organizations and the workers etc. International market entry methods: Due to the blessing of globalization more organizations are eyeing on the overseas markets. All levels of organizations are looking for a peace of the lucrative foreign markets. There are several market entry strategies which are follower by the organization. However, choosing the best entry strategy is very important job to be done (Tielmann. 2010. p, 1) . For an organization like Starbuck Corporation there are few methods which could be very effective. In the international market entry Foreign Direct Investment (FDI) plays a major role. However, Starbuck can enter the new market as the wholly owned subsidiary or by acquiring new companies in the specific country or by joint venture or by licensing. These are the main four methods to enter the new market for an organization like Starbucks. However, Starbucks prefers three major entry methods and they are wholly owned subsidiaries, join venture and licensing (Clarke and Chen. 2012. p, 183). Wholly owned subsidiary: According to the available data Starbucks accounted 85% of the total revenue from the wholly owned subsidiary in 2003. The company owned Starbucks stores are mainly located in USA, UK and Australia (Clarke and Chen. 2012. p, 183). Joint venture: The positive side of the joint venture is it requires less capital asset and the risk is low. However, the joint venture module of Starbucks is growing at a rate of 27% annually (Clarke and Chen. 2012. p, 183). For an example in the year of 1996 Starbucks opened its first store in Japan with a joint venture with Sazaby Inc. It was a joint venture because Starbuck did not want to take to much risk in the completely different market like Japan (Clarke and Chen. 2012. p, 183). Another Asian country which is in the mind of Starbucks is India. They are planning to enter the market with joint venture and with a unique strategy called carpet bombing strategy which means Starbucks would like to enter the market by gathering real estates and afterwards opening the numerous outlets (Verma. 2007. P, 265) Advertising and promotion: Each of the countries has different rules and regulation about the advertising and promotion. For an example most of the promotions and marketing activities are regulated by voluntary controls in UK. However, the voluntary controls are self regulated by the industry itself. According to Lewis and Trevitt (2000) all of these voluntary controls related to the advertising and the related laws with them are there to maintain a sustainable controlled situation in the UK market for the interactive marketing communication. The telemarketing or the promotion via phones must be avoided, according to Yadin (2002) the telephone preference service (TPS) is a very important service provided by the companies like British telecom to be taken very seriously in UK. Calling the TPS numbers are taken as a serious offence. In this era the combined promotional media is the best option for promoting and advertising. The development of the internet and the digitization of the television network have shown the paradigm to the media industry. Online promotion through an interactive website might be a very good option for Starbucks. Starbucks believes on the better quality service and product than spending huge in advertising campaign. Each and every Starbucks stores are not only a coffee shop rather it is an experience for each and every customers who walks in to the Starbuck stores. In the year of 1990 Starbucks spend about $ 10 million for its global advertising budgets, but instead of two dimensional advertising campaign the three dimensional stores gave more preference to the brand (Haig. 2011. p, 87). However, in the new international markets the above the line (ATL) advertising strategies are important to building the awareness about the brand Starbucks. For the brand like Starbucks the stores themselves are the promotional tool and the self-advertise the brand in a systematic manner (Haig. 2011. p, 88). Conclusion: From the above discussion it can be stated that the business plan is a vast process which requires many strategically wise steps. For a multi-national company like Starbucks the global business is the main phenomenon to expand its global arms. Different economic, cultural and environmental factors are closely related with the international marketing. However, a long term strategy is required to conquer the new lucrative but risky markets. References Ahlstrom. D and Burton G D. (2009). International Management:  Strategy and Culture in the Emerging World. Connecticut: Cengagebrain Boone and Kurtz. (2009). Contemporary Business 2010 Update. New Jersey: John Wiley & Sons. Brink A & Berndt A. (2009). Relationship Marketing and Customer Relationship Management. Claremont: Juta and Company Ltd,. Burk. B.M. (2009) Starbucks. California: ABC-CLIO,LLC. Clarke and Chen. (2012). International hospitality management. London: Routledge. Crane F G. (1993). Professional services marketing: strategy and tactics. London: Routledge. Doole and Lowe. (2008). International marketing Strategy. Connecticut: Cengagebrain Griffin R W (2010). Marketing. Connecticut: Cengage Learning. Haig. M.(2011). 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