What Has Contributed to Starbucks Growth?

What has contributed to Starbucks growth?

From its creation in 1971 until when Howard Schultz became the sole owner of Starbucks, there wasn't a huge level of growth. Since 1985, when Howard Schultz took over, Starbucks has reached sales of $3.3 billion in 2002 thanks to proper strategic growth and marketing. Howard Schultz did an exceptional job and surrounding himself with skilled and diverse people to help make Starbucks grow to the international success that it is today. People like Orin Smith and Howard Behar have helped come up with strategies to retain staff and to brand its products.

The elimination of the middle man in the process of importing beans has resulted in having Starbucks have much more control over its product while reducing its costs. Location, Location, Location was the other key factor in Starbucks success in growth. The use of paying premiums over exiting rental prices to push up square footage rates also played a roll in giving Starbucks an advantage in many areas.

Is their foreign market entry mode sustainable?

The joint venture in Japan has also worked our very well. Sazaby, which currently has 250 stores (in 2002) and is expected to grown to over 500 stores by 2003. Following Japan they moved into China, where they were also successful. It appears as though Starbucks has come up with a well thought out plan, which seems to be unconventional. A westernized company that expands first to Pacific Rim markets prior to Europe is a rare occurrence, but it seems to be working well for them to date.

What does the future hold for Starbucks in Asia pacific, Europe and Latin America?

Expansion is still possible as not all markets have been penetrated. Although expansion into more industrialized markets such as Japan and Canada have worked well, it is unlikely that expansion can be as great in counties such as the Philippines, Thailand and Vietnam due to the cost of the products. Europe will most likely be successful, although it may be met with resistance as the Europeans can be quite 'snobby' when it comes to their coffee. Latin American could also be a successful market, but again the cost of the product could prove to limit the amount of expansion possible.

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