Starbucks International Operations

In: Business and Management

Submitted By romohammadi
Words 3325
Pages 14
Starbucks’ International Operation
All's Not Well with Starbucks
For Howard Schultz, Chairman of Starbucks Corp., this list was special as Starbucks featured in the list. It was a dream come true for the Seattle-based entrepreneur.
Though the U.S. economy was reeling under recession and many major retailers were reporting losses and applying for bankruptcy, Starbucks announced a 31 % increase in its net earnings and a 23% increase in sales for the first quarter of 2003. Analysts felt that the success of Starbucks showed that a quality product speaks for itself. The fact that Starbucks spent less than 1 % of its sales on advertising and marketing strengthened this view. In addition to being a popular brand among customers, Starbucks was also considered the best place to work due to its employee-friendly policies.
However, analysts felt that the success of Starbucks was due to its profitable domestic operations. It was reported that most of Starbucks' international operations were running into losses. In May 2003, Starbucks' Japanese operations reported a loss of $3.9 million (Japan constituted the largest market for the company outside the United States), and the company also performed badly in Europe and the Middle East. Analysts pointed out that Starbucks' international operations were not as well planned as its U.S. operations. They also observed that the volatile international business environment made it difficult for the company to effectively manage its international operations.
Many analysts felt that it was important for the company to focus on its international operations. With the U.S. market getting saturated, Starbucks would be forced to look outside the United States for revenues and growth.
Background Note
The history of Starbucks dates to 1971, when Jerry Baldwin, Zev Siegl, and Gordon Bowker launched a coffee bean retailing store named…...

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