Global Issues of Multi-National Corporation - Case Study Example

STARBUCKS GLOBAL OPERATIONS By Location Starbucks Global Operations Starbucks Corporation is a coffee companythat is based in the United States of America. Starbuck is considered to be the largest coffeehouse business organization globally. The corporation has About 21000 stores in over 60 countries in the world. Over 13000 of these stores are located in the United States of America. 1320 0f the remaining stores are in Canada, 990 in Japan, while 810 in the United Kingdom. Starbucks specialize in serving cold and hot beverages, including: ground instant coffee, whole bean coffee, and full leaf tea. Apart from the beverages they also serve products such as baked products, snacks, and sandwiches. Their evening locations also serve wines, beers, and appetizers as from 4 in the afternoon. They also have an entertainment division with the responsibility of marketing music, films, and books. This paper aims at discussing analysing of Starbucks’ strategy and approach to global issues. The paper will also view options that Starbucks may have for future growth in an increasingly competitive, global economy. Starbucks has managed to succeed in their global market endeavours through the acquisition of other companies. In the year 2003, Starbucks Corporation acquired a chain of cafes by the name Seattles Best Coffee. This might in a way helped them in eliminating the company competitively while at the same time increasing their global market capital by adding the customers that were previously loyal to the acquired companies to theirs. The kind of growth that is always associated with acquisition cannot be attained by the normal growth rate of a business organization (Hill & Jain 2007, p. 111). This is because the acquiring business organization inherits all the benefits from the existence of the acquired business. However, sometime acquisition might not lead to any growth, especially if the acquired business lacks market capital. Starbucks has over the years used Seattles Best Coffee strategically prevent fast food chain stores such as McDonalds from introducing their own coffee programs. Another method that was used by Starbucks in breaking into the global markets is simply expanding their operations into geographical areas that were previously known to be unsuitable for such businesses. As globalization continues in all the aspects of human life, people tend to adopt new culture and new ways of lives. As people move throughout the world, they meet different people, from different geographical areas with different cultures and beliefs. This kind of interaction leads to the exchange of culture and ways of living (Berry, Shankar, Parish, Cadwallader & Dotzel 2006, p. 67). Some parts of the world were previously believed to be unsuitable for coffee house business. In this industry, Starbucks was one of the first business organizations to take advantage of the changes in the way of life in such areas. Good examples of such places are Egypt and Morocco in Africa. At sometimes, selling business products only at the company’s outlets might not be enough for a business organization that plans to go global. Sometimes it can be convenient to come up with a strategy that will allow certain products to be sold in locations that are far from their points of production (Wheelen & Hunger 2012, p. 96). Starbucks has used this strategy for a number of its product. Starbucks has introduced new products that can be sold at joints such as groceries and convenience stores. This is something that they do with convenience stores and groceries all over the world. A good example of a product that has been sold through this means is Via instant coffee (Thompson & Arsel 2004, p. 633). This helps them in increasing their sales channels, thus making their products available to a bigger number of consumers all over the world. Operating in a foreign market is sometime hard, especially when there is no good knowledge of the market in question. This is particularly very true for the case of Starbucks Corporation. In order to avoid failure that might arise as a result of lack of proper knowledge of the foreign markets, they sometimes partner with local companies so that they can help in running the stores (Bussing-Burks 2009, p. 153). Their partners always run more than 50 % of the foreign stores owned by Starbucks. This might in a way be less productive as compared to direct management. However, the use of partner in the foreign market stores is safer than direct management. One of the main strategies that Starbucks uses in their operations is making sure that their products are of quality. Ever since the company was started in the 1980s, one of the most conspicuous thing about them was the quality of the coffee that they serve. This is as a result of the emphasis that the company has always put on the quality of coffee that they produce. As a result of this emphasis, they are able to be in a position in which their products are much more attractive to the public are compared to those produced by their competitors. This explains why even when their prices are slightly higher than those of their competitors, their products still remain tempting to the consumers (Mahrokian, Chan, Mangkornkanok & Hee Lee 2010, p. 10. The coffee produced at Starbucks is well known for their richness in taste and aroma. Given the high rate at which globalization in business organizations, the emphasis on quality have been very essential in making Starbucks the most popular coffee shop in the world. Right from the beginning of the corporation, they have always aimed at offering their customers a relaxing environment where they could have a relaxing atmosphere. People who have visited their stores claim that they have a chance of getting a place that has an atmosphere that is different from the one they have both at home and at their various working places. A research carried out on the things that attracted customers to the stores owned by the corporation, pointed out that the relaxing atmosphere was one of the most mentioned reasons. Starbucks provides their customer with extra relaxing part of their daily life. Customer satisfaction is a very important thing in business operation. At Starbucks Corporation, the satisfaction of their clients is always regarded with the utmost seriousness. As from the moment a customer’s entered the stores at the time they leave, their satisfaction with the services and products that are offered by the store is always taken as a necessity (Fitzroy, Hulbert & Ghobadian 2011, p. 72). This can explain the way in which the business organization has been able to offer satisfactory products to their customers 21000 stores in over 60 countries. Being able to serve their products just as their clients want, help them in enhancing customer loyalty. Partnership is a common phenomenon in modern businesses. However, partnerships can only be of the essence of a business organization if they are done in a strategic way (De Kluyver, 2010, p. 179). Starbucks Corporation is known for their ability to make smart partnerships. This has really helped in the growth of the corporation ever since it was started in the 80s. A good example of such partnerships is the one between Starbucks Corporation and Apple. This partnership was meant to enable their customers to use a wireless means to Brose, preview, search, purchase, and download music from the iTunes WI-Fi Starbucks into their enabled music devices. This partnership was highly effective in improving productivity of their entertainment branches. This is just but an example of the various strategic partnerships that the business organization has had during its period of existence. In the modern business environment, only the business organizations that have invested in innovation have an advantage over their competitors. This is innovation enables business organizations to bring into the market products and services that their competitors have not yet been able to produce. The Starbucks coffee company has over the years been known to exhibit a high level of creativity when it comes to the manner in which they produce (Verbeke 2013, 123). For instance, they have been able to add a number of flavours to their coffee. They have also been able to add more foods and beverages to their menus. The Starbucks coffee company was among the first business organizations in the industry in incorporating the internet into their operation. Through the internet, they were able to have better communication with their customers, enabling them to have better public relations as compared to the period before they started using the internet. The other strategy that they have commonly used is the buying out of leases of their competitors. Through such marketing, they aim at making themselves stronger in the market while at the same time reducing the influence of these competitors to the market. If such a marketing strategy is successful, it can be used as a tool for elimination of competition by the business organization. This kind of strategy can be very effective in an industry such as this one when a business organization is interested in going global (Gong 2013, p. 177). The use of such a marketing activity has contributed to the high number of criticisms of the methods that Starbuck uses to gain the market capital that they have. Critics claim that they use such activities to make sure that they make it hard for the small businesses in this industry to survive and grow. When it comes to innovation and management of the international stores, Starbucks has made sure that each of their foreign investments is managed independently. This independence is necessitated by that fact that these markets differ from that of the United States of America in many ways (Pahl 2008, p. 212). The markets are not only different from the US market, but also different from each other. This means that collective management would have led to failure in some of the places. A good example of a way in which their foreign store can benefit from having their own strategies and cultures is, “the tweet a coffee campaign” in Canada. Under these program customers could use their Starbuck accounts or twitter handle to send a $5 gift card to any person on the social network. The fact that it was successful in Canada does not imply that it would have been successful somewhere else. Starbucks has always settled on focusing on the upper scale of the industry’s market. This enables them to base their productions on comfort instead of convenience (Flamholtz & Randle 2011, p. 222). Such focus has enabled them to focus on maintaining the quality of their product. The quality of the coffee produced by Starbucks uses as its reference globally. These factors leave them with just two business organizations to deal with competitively. This factor makes it easy for Starbucks to be in a position in which they can spread their products in the global market (Pham-Gia 2009, p. 108). There are a number of things that can be done at Starbucks to make sure that they perfect their global market operations. For instance, looking at the main strategy, someone will easily notice that the strategy has so much focus on their competitors (Peng 2014, 97). If the business will reconsider this focus and instead put more focus on their brand, then they will definitely be safe even with the few competitors that they currently have. With the changes in global business environment, it is clearly evident that the market is gradually getting to a point where a business organization’s brand will be of more value to the productivity of the business (Ahlstrom & Bruton 2010, p. 201). Starbucks has proved beyond reasonable doubts that it is the most profitable coffee house company in the world. Given its humble beginning, it is clearly evident that there must have been intensive strategizing for it to get to the level it is in at the moment. Throughout the paper, it has been seen that there are a number of things that the company have strategically involved itself in to help in their global operation. The activities that they have involved in range, from killing competition to making their brand the most recognized globally. However, if the business organization would put more focus on their brand name instead of focusing on their competitor, they will definitely dominate the coffee industry for a long period. Bibliography Ahlstrom, D., & Bruton, GD 2010, International management: strategy and culture in the emerging world, South-Western Cengage Learning, Australia. Berry, LL, Shankar, V, Parish, JT, Cadwallader, S & Dotzel, T 2006, “Creating new markets through service innovation” Bussing-Burks, M 2009, Starbucks. Santa Barbara, Greenwood Press, Calif. De Kluyver, C. A 2010, Fundamentals of global strategy a business model approach, Business Expert Press, [New York, N.Y.] (222 East 46th Street, New York, NY 10017). http://site.ebrary.com/id/10409932. FitzRoy, P, Hulbert, J & Ghobadian, A 2011, “Strategic management: the challenge of creating value”, Routledge. Flamholtz, E., & Randle, Y 2011, Corporate Culture the Ultimate Strategic Asset, Stanford University Press, Palo Alto. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=692447. Gong, Y 2013, Global operations strategy fundamentals and practice, Springer, Berlin. http://dx.doi.org/10.1007/978-3-642-36708-3. Hill, CW & Jain, AK 2007, “International business: Competing in the global marketplace (Vol. 6)”, New York, NY: McGraw-Hill/Irwin. Mahrokian, S, Chan, P, Mangkornkanok, P & Hee Lee, B 2010, “CORPORATE CULTURE: A LASTING COMPETITIVE ADVANTAGE”, Review of Business Research, 10(1). Pahl, N 2008, The idea behind the Starbucks experience: the main elements of Starbucks strategic diamond, GRIN Verlag, Munchen. Peng, M. W 2014, Global strategy, South-Western, Mason, Ohio. Pham-Gia, K 2009, Marketing strategy of Starbucks Coffe, GRIN Verlag GmbH, München. http://nbn-resolving.de/urn:nbn:de:101:1-201009102339. Thompson, CJ & Arsel, Z 2004, “The Starbucks brandscape and consumers’(anticorporate) experiences of glocalization”, Journal of Consumer Research, 31(3), 631-642. Verbeke, A 2013, International business strategy: rethinking the foundations of global corporate success. Wheelen, T. L., & Hunger, J. D 2012, Strategic management and business policy: toward global sustainability, Pearson Prentice Hall, Upper Saddle River, N.J. Read More