4. Existing Strategy

Over last time the Starbucks had a large expansion in a global scale and company is recognizable for their differentiation tactics. Each company in the world as a main objective has the growth purpose and in order to achieve these objectives the companies need to organize the steps of business operations for the accomplishment successfully the established growth objectives. The Starbucks in the recent times mostly use the growth strategy forced to a global expansion by offering the product portfolio of the company in a same manner. In a business environment the growth strategy with that kind of characteristics is named market development. The company through the different means of implementations as acquisitions, joint-ventures and mergers enter in new markets (The whole list of implementation methods is presented on table 1). The success of this strategy has been able through joint-ventures in other markets and alliances in the local market. The company successfully expanded their distribution channels through alliances with Barnes and Noble and Marriott Hotels. The main attraction the company gives to emerging countries and especially to BRIC countries. The succeed expansion to China influenced the company to enter to India through joint-venture with Tata Global Beverages ( Haoting, 2009 ! ). In the specialty coffee industry the company has the largest expansion map and store volume through the world (see chart 3.- the number of stores opened in 2012).

In the specialty coffee industry Starbucks is famous for its innovative ideas concerning beverages. By analyzing the generic strategies of Porter is defined that differentiation strategy mostly fit the company profile in the current industry. Starbucks offer unique products and values that are successfully met by customers in a global market. The differentiation of processes and products are able through the company's well established supply chain and relationship with farms in different regions producers of coffee and growers of coffee beans (Koehn, Besharov and Miller, 2008). Also, the company is involved highly in the control process of roasting the coffee beans and test practices of coffee are forced to meet the standards that differentiate company with their quality from the competitors.

Chart 3. Starbucks operations in China in 2012

The above reasons affect the company in the successful implementation of the differentiation strategy. According to Lynch (2006), the differentiation strategy has some disadvantages that can decrease the competitive advantage of the current generic competitive strategy. The first disadvantage is that the costs gained from the differentiation strategy will be recovered from customer by charging higher price. The downturn of the Global economy is increasing the limitations of the current strategy. Also, the differentiation strategies could be imitated by competitors and entrance in the market new companies like Dunkin Donuts and McDonalds. Moreover, the growth of commodity prices for coffee beans through Fair Trade agreement led to the price growth for a coffee beverages that could affect the company's sales margin in emerging markets through the lower income per capita in these countries comparing with traditional markets of Starbucks.

5. Alternatives strategic directions

Market Penetration

Usually the companies use this strategy due to the low financial capabilities to establish their business overseas. Starbucks in the beginning of their history mostly based on this strategy by expanding their business operations in US market. But, the company faced the overcrowding of the local market and some critics criticize the Starbucks for cannibalization of stores in the local market. The cannibalization of market sometimes carries on limitations such as dissatisfaction of customers as result of boredom, frustration and rebellion of customers with current brand. Also, the cannibalization of the market has to incur costs that needed to operate in the same place a lot of stores that revenues are equivalent to one. On other hand, from the SWOT analysis is identified that companies has the weakness as the dependence on US market and most of the company's revenues come from the local market that make this alternative strategic direction suitable for the company. Also, the US economy is the strongest economy and the market penetration strategy has a lot of capabilities for the growth.

Chart 4. - Net new stores opened worldwide in 2012.

From the above charts is identified that coffee industry in the US market follow to be highly attractive with steady growth between 3% -4% and Starbucks follow to pay attention to their local market development. American market still is the leading market for company operations and the criticism of store cannibalization in the local market does not stop the company in increasing capacity of stores in the U.S. When company started their business the generic strategy of the company was focused differentiation and company focuses on a narrow segment and attempt to reach the market with unique product. For example, the Starbucks started focusing on target group as the young students with higher income than average. After their expansion of business they recognized that have capabilities to expand their target group and they shift to target specific neighborhoods and social classes. In nowadays , Starbucks target every demographic group through their aggressive expansion techniques and generic strategy that mostly fit the aggressive expansion in the local market is broad differentiation (Smith, 2009).

Product development

The expansion of product line and the development of new products is an extremely important factor to maintain competitive advantage in a competitive market. The five forces model analysis identified that the specialty coffee industry is attractive that give the company possibility to increase their market share through the broaden product line (Bryce, 2007). The Starbucks products are often criticized for the premium price comparing with competitors especially the kiosk and office building stores that serve these locations (Gulli, 2007). The company also expanded their product line by entering in a breakfast market and company in their catalog included upscale breakfast sandwiches with their coffee. This renovation added for the company an estimation revenues per store more than 30.000$ per day ( Gulli, 2007). Also, the company need to take into consideration the health issues regarding the food offers, because customers more aware about health food (Menu Trends in Quickservice

Restaurants, 2004). This segment of food could be implemented as a success factor for the company's performance in competitive market and appeal health aware customers and could provide a source for growth. Moreover, the expansion of product line through healthy offerings would enhance brand image in front of health need customers. The product development in this segment open opportunities to the broaden product range and the introduction of salads, sandwiches and other lunch food could bring other customers to the store like business people in the metropolitan areas which could enter store not only to buy coffee but for a lunch or breakfast. Despite products, Starbucks often try to differentiate from the customer by implementing new services to their operations. The introduction of wireless internet offered better experience of service to the customers and increased the sales of company. The new service allows the customers to maintain customers for a longer time in stores and spend more money for the company's products (Miller, 2010). Wi-Fi internet as a new product development strategy is a strategic asset for Starbucks and in the expansion tactics of company will affect the potential new comers to the stores.

Diversification

The last period the company made a slight shift to the diversification strategy by introducing them as music record company. Comparing with the previous alternative strategic direction, diversification lead the company to a new market and with new completely product offerings. The diversification growth strategy is divided to two types as related and unrelated diversification also known as conglomerate. The difference between two, which first type of diversification is related to the existing industry where company operates and the second type of diversification is unrelated with existing industry and does not has relationship with company's existing products (Miller, 2006). Starbucks last period makes some attempts to diversify with existing growth strategy and enter to other industries. The diversification strategy and especially unrelated has high-risks as a growth strategy, but the company moved into unknown territories and established their business in the music industry. Starbucks established their new company Starbucks Entertainment and successfully until now worked with famous artists like Paul McCartney, Andrea Bocelli and Kenny G. Also, in order to compete with competitors like McDonalds the company from the specialty coffee industry enter the quick-service restaurants with broaden product variety with establishing sandwiches and other food offerings against McDonalds successful product Egg McMuffin. As it was mentioned above the company started their Hear music campaign in alliance with iTunes and XM Satellite radio to offer the Starbucks music products and from music industry company slowly enter in movie production industry with their new movie” Alleah and the Bee”. The Starbucks in the specialty coffee industry established as the premium coffee provider with premium upper-middle prices. For the new industries the company could implement the generic strategy as a best-cost provider that is the best strategy for new entrants in order to expand fast and find potential customers (Pehrson, 2006). In the specialty coffee industry Starbucks is not a pioneer of switching to a new industry. The German coffee company Tchibo changed the main industry and decided to sell coffee experience instead of coffee beans the core product of company. The company in nowadays offers products related with luxury and “feeling of well-being”. The company created its own lavel TCM and offer products such as sweatpants, lingerie, kitchenware, books and CD at a low price as it was recommended for Starbucks. The turnover of a new company passed by 75% the sales of coffee that influenced the company to leave the primary coffee business as the second after new successful segment (Schubert, 2006).

6. Recommendation and further actions

Above was developed an analysis of current strategy of Starbucks and alternative strategic directions for the Starbucks in alternative with existing one. In order to ensure that recommendation is a achievable and effective alternative effective solution for the company, different evaluation criteria must be considered in order to define the suitable recommendation for the future growth strategy. The evaluation criteria include:

1. Enable future growth in a global and US markets.

2. The improvement of customers' perceptions in US and international markets.

3. Enable expansion of product range for the US market and international.

4. Employees and shareholders satisfaction.

5. Starbucks capabilities and financial performance.

6. Organizational structure

In order to identify that strategy is more suitable and flexible for the future growth of the Starbucks, the company need to leverage its core competencies against various growth opportunities. Starbucks continue the growth by leveraging their strengths and opportunities, but sometimes the companies need to convince the shareholders by taking some decisions for the future that make the shareholders important factor in the strategy implementation. By evaluating all the strategic alternatives and the existing strategy the most suitable and achievable in terms of macro-economic environment and external environment the existing strategy is the most effective and financially beneficiary. The local and overseas brand recognition of company and the loyalty of customers make this strategy achievable in a global scale and the company through that strength could reach the forecasted success. The differentiation generic strategy helps the company to target the broaden market and through the product development company also could achieve the objectives of steady growth. Moreover, the cannibalized local market leads the company to other markets like Chinese as the strategic number one market for large expansion. On other hand, the financial growth boom of China forced and Starbucks competitors to this market. For that reason company need to use in appropriate way the company's capabilities and competitive advantage regarding this market. The market penetration strategy was achieved successfully through the range of acquisitions like Tazo Tea or Seattle water and company also operate in a local market with more than 40 alliances like Pepsi, Kraft, Hilton and Marriott hotels. These alliances could be used in the overseas markets and the globalization of the world led some of the companies from local market to overseas that make possible to continue strategic alliances overseas for Starbucks. Almost, it would be recommended to establish alliances with local companies that would bring their knowledge of the market to Starbucks and expand the target group of customers. The most appropriate company strategy is the market development that is currently recognized as exisiting and penetrates attractive international markets. As generic strategy the most appropriate strategy is a differentiation alternative, but the broader market segmentation lead the company to a broader product line and services.

Table 3. - Evaluation of each growth strategy for Starbucks

7. Conclusion

To sum up, before the CEO of Starbucks Howard Schultz return back the company has some years of decline that forced them to change the company's strategic directions and redesign the operations. The current strategic plan has been made to analyze the current market position of the company and future expansion of the company. In order to survive in the competitive market such as specialty coffee, the company has to understand their critical success factors and competitive capabilities in front of potential competitors. The analyze of external environment and especially competition analysis is developed to overview the possible competitors and existing ones in order to avoid the unexpected outcome from competition that could harm the company's performance. Also, from the external analysis and Porter's five forces was identified that the industry in a basic terms is attractive and have steady growth. The attractiveness of the industry leads to the growth of competition and from the competition analysis identified that some companies as McDonalds and Dunkin Donuts are very aggressive in their current strategies for growth and Starbucks need to take into consideration the outcomes from competition. From the SWOT analysis was identified the strengths and opportunities of the company for the future growth and especially the premium quality of products and services offered by Starbucks partners can enhance the brand image of Starbucks and led to a competitive advantage. The evaluation of the current strategy and alternative ones identified that company need to follow its market development strategy for a broaden expansion and the differentiation generic strategy could bring the company to leading positions in a global market.

Reference list

1. Adamy, J. (2008, January 31). Starbucks Slows Expansion, Seeks New Customer Segment. Retrieved February 4, 2008, from Wall Street Journal : http://online.wsj.com/article/SB120171787350829257.html

2. Annalyn Censky. (2012). Dunkin' Donuts to double U.S. locations. Available: http://money.cnn.com/2012/01/04/news/companies/dunkin_donuts_locations/index.htm. Last accessed 15 May 2013.

3. Anon. 2012. The telegraph. [ONLINE] Available at:http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9731618/Starbucks-branches-hit-by-tax-protests.html. [Accessed 15 May 13].

4. Anon b. (2013). McDonalds restaurants (most recent) by country.Available: http://www.nationmaster.com/graph/foo_mcd_res-food-mcdonalds-restaurants. Last accessed 15 May 2013.

5. Anon c. (2013). McDonald's History. Available: http://www.aboutmcdonalds.com/mcd/our_company/mcdonalds_history_timeline.html. Last accessed 15 May 2013.

6. Anon d. (2013). Our History. Available: www.cariboucoffee.com/page/1/home.jsp. Last accessed 15 May 2013.

7. Anon e. (2013). Find a Caribou. Available: http://www.cariboucoffee.com/page/1/our-locations.jsp. Last accessed 15 May 2013.

8. Anon f. (2013). Caribou Coffee Reports Third Quarter 2012 Results.Available: http://www.businesswire.com/news/home/20121108006762/en/Caribou-Coffee-Reports-Quarter-2012-Results. Last accessed 15 May 2013.

9. Anon g. (2013). Corporate Profile. Available: http://www.timhortons.com/us/en/about/profile.html. Last accessed 15 May 2013.

10. Anon h. (2013). Tim Hortons Inc. announces 2012 third quarter results.Available: http://www.newswire.ca/en/story/1067161/tim-hortons-inc-announces-2012-third-quarter-results-continued-system-expansion-and-same-store-sales-growth contributed-to-performance#. Last accessed 15 May 2013.

11. Anon j. (2013). Krispy Kreme Doughnuts Inc. Available: http://www.reuters.com/finance/stocks/companyProfile?symbol=KKD.N. Last accessed 15 May 2013.

12. Anon k. (2013). HISTORY. Available: http://www.krispykreme.com/about-us/history. Last accessed 15 May 2013.

13. Anon l. (2013). It All Began on Vine Street. Available: http://www.peets.com/about-us/our-history. Last accessed 15 May 2013.

14. Anon m. (2013). Peet's Coffee & Tea, Inc. Company Profile. Available: http://biz.yahoo.com/ic/53/53648.html. Last accessed 15 May 2013.

15. Anon n. (2013). Costa Coffee Shops. Available: http://www.costa-business.co.uk/. Last accessed 15 May 2013.

16. Anon o. (2012). Whitbread's Costa coffee boost delivers frothy results.Available: http://www.bbc.co.uk/news/business-178549. Last accessed 15 May 2013.

17. Anon p. (2012). Annual Report and Accounts 2011/12. Available: http://www.whitbread.co.uk/content/dam/whitbread/siteimages/investors/results-reports/annual-report-2011-12.pdf. Last accessed 15 May 2013.

18. Anon q. (2013). A drop of history in every cup. Available: http://www.costacoffee.ae/costa-coffee/the-costa-way/history/. Last accessed 15 May 2013.

19. Anon r. (2013) Whistle stop tour. Available: http://www.caffenero.com/story/History_01.aspx. Last accessed 15 May 2013.

20. Anon s. (2012). Financial Performance. Available: http://www.caffenero.com/story/performance.aspx#. Last accessed 15 May 2013.

21. Anon. (2013). Company Profile. Available: http://www.aboutmcdonalds.com/mcd/investors/company_profile.html. Last accessed 15 May 2013.

22. Bose, N. (2011, January 13). Starbucks signs pact to enter India. Business & Financial News, Breaking US & International News | Reuters.com. Retrieved January 30, 2011, from http://www.reuters.com/article/2011/01/13/india-starbucksidUSSGE70CB9T20110113

23. Chemonics International (2010) A Regional strategy for the specialty coffee value chain in Eastern Africa, USA: Anon.

24. Chris Reidy. (01/31/2013 ). Dunkin' Donuts same-store sales in the US rose by 3.2 percent in the fourth-quarter. Available: http://www.boston.com/businessupdates/2013/01/31/dunkin-donuts-same-store-sales-the-rose-percent-the-fourth-quarter/euXlpKwifvI09OByNHY1FL/story.html. Last accessed 15 May 2013.

25. Christina Rexrode (2011) Huffpost. [ONLINE] Available at: http://www.huffingtonpost.com/2011/08/04/dunkin-donuts-europe_n_917991.html. [Accessed 15 May 2013]

26. Datamonitor (2006) Starbucks Corporation SWOT Analysis. Retrieved August 13, 2007, from Business Source Premier database.

27. Davids, K. (2009, November). Quality and Fair Trade Certified Coffees. Coffee Review. Retrieved February 01, 2011, from http://www.coffeereview.com/article.cfm?ID=165

28. European Coffee Logistics Committee (2013) Coffee market Overview 2013, Netherlands: European Coffee Federation.

29. Georgi Gyton. (2012). Caffи Nero eyes 700 stores in UK. Available: http://www.bakeryinfo.co.uk/news/fullstory.php/aid/10941/Caff_E8_Nero_eyes_700_stores_in_UK.html. Last accessed 15 May 2013.

30. Graham Hiscott. (2013). Costa Coffee owner aims to double sales after selling more than 600 cups a minute. Available: http://www.mirror.co.uk/money/city-news/costa-coffee-owner-aims-double-1862449. Last accessed 15 May 2013.

31. Gulati, R. (2007). Silo Busting:How to Execute on the Promise of Customer Focus. Boston: Harvard Business School.

32. Gulati, R., Huffman, S., & Neilson, G. (2008, September 08). The Barista Principle --Starbucks and the Rise of Relational Capital. Retrieved from http://www.relationalcapitalgroup.com/downloads/TheBaristaPrinciple.pdf

33. Han, J. (2009, January 13). McDonald's Triggers Coffee War. The Korea Times. Retrieved December 01, 2010, from http://www.koreatimes.co.kr/www/news/biz/2010/04/123_37779.html

34. International Coffee Organization Prices. (2010, December). International Coffee Organization - News from the ICO. Retrieved January 29, 2011, from http://www.ico.org/prices/p2.htm

35. International Development. (2009). Retrieved November 24, 2009, from

36. John D. Cook, Tammy Halevy, and C. Brent Hastie, Alliances in Consumer Goods, The McKinsey Quarterly, 2003 No. 3.

37. Julie Jargon. 2012. The Wall Street Journal. [ONLINE] Available at:http://online.wsj.com/article/SB10001424127887323300404578203742378428644.html. [Accessed 15 May 2013].

38. Koehn, N.F., Besharov, M. and Miller, K. (2008). Starbucks Coffee Company in the 21st Century. Harvard business school. 45 p.

39. Mayhew, B. (2010). Core Competencies Working Definition. Retrieved August 21, 2010 from http://www.brucemayhewconsulting.com/index.cfm?pagepath=&id=18665

40. Mark King. 2011. The guardian. [ONLINE] Available at:http://www.guardian.co.uk/money/blog/poll/2011/sep/23/store-wars-caffe-nero-starbucks. [Accessed 15 May 2013].

41. McClary, Samantha. (2012) Caffи Nero Group PLC History. Available: http://www.fundinguniverse.com/company-histories/caff%C3%A8-nero-group-plc-history/. Last accessed 15 May 2013.

42. Miller, C. C. (2010, June 14). Aiming at Rivals, Starbucks will offer Free Wi-Fi. The New York Times. Retrieved January 30, 2011, from http://www.nytimes.com/2010/06/15/technology/15starbux.html

43. Nicola Groom, Exec says Starbucks Strategy Unchanged, Reuters, March 7, 2007.

44. Orehov, Dan, 2012. McDonald's: Overall results strongly outperform the EU economy. Frozen Food Europe, [Online]. 1, 6. Available at: http://www.frozenfoodeurope.com/article/reports/mcdonald%E2%80%99s-overall-results-strongly-outperform-eu-economy [Accessed 16 May 2013].

45. Porter, Michael E. "The Five Competitive Forces That Shape Strategy." Special Issue on HBS Centennial. Harvard Business Review 86, no. 1 (January 2008).

46. Smith, J. ( 2009). Starbucks Target Market and Management . Retrieved August 21, 2010 from

47. http://ezinearticles.com/?Starbucks-Target-Market-and-Management&id=2183347.

48. Stanley Holmes, Starbucks' Card Smarts, BusinessWeek, March 12, 2002.

Appendix 1. - SWOT Analysis

Strengths

One of the main strengths of the Starbucks Corporation is the expanding operating margin. The company due to the global extensive expansion achieved in 2012 an operating income of 2$ billion comparing with 2011 of 1, 7$ billion. The expansion of operating margin mostly was forced by growth of sales leverage and the absence of charges in fiscal of 2012 related to some of Starbucks store closures in Border's bookstores. Also, the company reported the growth of total net revenues to 13.3$ billion as result of growth of global sales. The sales growth helped the company to moderate the impact of higher commodity costs and especially coffee costs. As result, the company focused on improving the profitability of the company reflected by growth of operating margin due to the increase of consumer consumption.

Starbucks Corporation has the largest chain of coffee retail stores. The global retail footprint is the one of the strength parts of the company. Starbucks Corporation has operations in 60 countries with a total of 18,006 stores across the world. Only in 2012 the Starbucks Corporation opened 398 company-operated stores and 844 licensed stores. (GlobalData, 2013).

Also, the Starbucks brand is one of the most recognizable in the world and company brand reputation is a synonymous with premium coffee that helps to attract new customers in a worldwide scale (Owens, 2011). Other important key factor for the brand reputation is the ethical and environmental issues. The company use to find ways to keep the brand recognition as a green one. Starbucks in order to minimize their environmental wastes uses reusable cups and composting bags (Starbucks, 2011).

When it comes to the Starbucks products most of the customers mention the product quality. The Starbucks is recognized worldwide for their products quality and the highest quality beans are being produced. The success factor of achieving the high quality lies through the Starbucks differentiation strategy and operational processes using the value chain. The company achieves high quality of products also by securing the long-term supplies contracts with coffee farmers that gives the company the access to premium raw materials (beans) and guarantee the use of their patented production. In the service industry the human factor or employees play crucial role and employees could be seen as the core product in the service industry. For that reason the Starbucks pay attention to the training practices in order to increase product quality and service.

Strength that play crucial role of the Starbucks Company is the innovation. The company one of the first introduced automatic espresso machines and pre-paid cards that lead to the customer convenience and shorter transaction processes. Also, the innovation is the crucial factor in order to achieve steady new product development.

In the 90' the company was always criticized for the employees' satisfaction and workplace environment issues. In nowadays, the company made conclusions from the worst past experience concerning the employees issues and achieved last period of time good relationship with employees. As it was mentioned above the company also gives a crucial factor for the employees the training and development opportunity and to the relations with suppliers (Starbucks, 2011).

Starbucks is one of the leaders as a coffee specialty company with the biggest revenues and financial capabilities in the current sector. Starbucks has this strength against the other coffee specialty companies by achieving over past experience and operations the strong financial foundation that gives the company opportunities for growth and business expansion. The financial statements for the period of 2012 reported by the Starbucks Corporation illustrate the significant growth comparing with the previous years and reached total revenues 13.3$ billion (www.businessweek.com ).

The other strengths of the company is the in-store atmosphere like the Wi-Fi internet free access and the comfortable environment of the stores.

Weaknesses

Unless the global expansion and the sales growth generally from the international operations, Starbucks continue to have more revenues from the local market. Comparing the local revenues and international it is a large difference. For example only in 2012 the Starbucks had about 76.5% of total sales in US market and only 23.5 from worldwide operations. As result, it illustrates the high dependence of Starbucks on local market and the economic downturn in U.S.A could reduce the cash flow and generally the financial performance of the company.

Also, the high expansion level carries on the high costs of sales. The high cost of sales is contributed from the mixture of costs like distribution costs and fixed costs (stores rent costs).

The global presence on other hand weaken the company overall control due to the licensing and joint-venture agreements. It is crucial for the company to maintain the reputation of premium coffee provider. Licensing agreements get the risk of lack of control of operations that as result could decrease the products quality (EuroMonitor, 2008).

Despite the high cost of sales the company has higher prices comparing with the main competitors like McDonalds and Dunkin Donuts. On other hand, it does not affect loyal customers which follow in downturn times to purchase the company's products.

Starbucks more than ѕ sales comes from the beverages sales and the company brings specific attention regarding innovation toward beverages, but it could make the company more vulnerable to changes in consumer preferences and could be defined as a crucial weakness in the international markets (Datamonitor, 2006).

The global expansion not all the time has the easy road and especially the global brands in some markets faces protests and criticism. For example in the East-Middle Asia region the American companies faces high level of protests against American companies and this kind of protests could be defined and in the other regions especially from anti-globalists or anti-Americanization supporters. Despite of the anti-globalist the multi-national companies last period of time criticized for the tax payments. It could be defined from the latest protest in UK against Starbucks and its tax payment report (www.telegraph.co.uk ).

Opportunities

The last period of time the Starbucks follow the business strategy of acquisition the companies that operates in the inorganic products market. Starbucks follow inorganic growth opportunities by acquiring such companies in this area. For example, in 2012 Starbucks bought Teavana Holding which is one of the biggest retailers of tea-related merchandise. This acquisition makes Starbucks leader in the tea products market. Also, the company forces to acquire leading positions in the foodservice industry. The 100% interest purchase of Bay Bread and La Boulange bakery illustrate the company's strategy to acquire its position in the food service market and increase the customer loyalty by expanding product range. Despite of the foodservice some of the last acquisitions of company illustrate the company objectives to enter Health and Wellness sector. In 2011 the Starbucks Corporation acquired Evolution Fresh Inc. that gives to the company possibility to enter into the $1.6 billion super-premium juice segment. Such kind of business movements offers to Starbucks opportunities to extent its product line, to enter new categories of products and to expand distribution channels.

For every business the business expansion is identified as opportunity for growth and profitability (not necessary always). Starbucks is recognized as one of the leading companies regarding the business expansion. The last decade of years Starbucks constantly invest into expansion of its global retail store chain (See Table 1.-Starbucks worldwide presence). In the 2012 Starbucks opened its 700th store in China and it proves the strategic plan of company of large expansion in the Asia Pacific region. The high level of business expansion would enhance Starbucks global retail footprint and would generate earnings.

Also, the latest Starbucks global presence expansion toward India is identified as the opportunity for growth. The BRIC countries (Brazil, Russia, India and China) the last decade of years defined as the opportunistic countries for business expansion. In 2012 the Starbucks Corporation and Tata Global Beverages Limited signed an agreement in establishing joint-venture company- Tata Starbucks Limited.

Threats

The food and beverage industry is one of the most intensive. The Starbucks in the local and international market face intensive competition from quick-service restaurants and specialty coffee shops. The competition forces the company to innovate always and to extent product line as the decision choice to have competitive advantage or to reduction of prices. These two factors are the main in order to have a competitive advantage in front of competitors. Despite of the direct competitors as the coffee shops and quick-service restaurants, Starbucks also faces the indirect competition from the other stores that offers whole bean coffees.

Legal proceeding is a very frequently faced threat by companies. In 2011 the Starbucks had some legal proceedings with Kraft Foods Inc about distribution arrangements and the break of raw material delivery to Starbucks. Such kind of legal proceedings and misunderstandings regarding the arrangements and contracts could affect the company's operating performance.

The last decade of years the food prices increased significantly worldwide. The coffee prices are the not exception and Starbucks faced a crucial problem regarding the cost of product due to the high prices of coffee beans. According to the International Coffee organization, only in the period from 2010 and 2011 the coffee prices increased from 147.24 cents per pound to 210.39 cents per pound (Globaldata, 2013).

According to Goos (2007), Starbucks need to take into consideration the publications about the company and public opinion generally, that would lead to customer dissatisfaction and consumption in generic.

Each company growth ambitions could be declined by economic crisis. The economic crisis of 2008 has declined the ambitions of Starbucks to growth fast that resulted in the lower consumer spending for upscale products (Cateora and Graham, 2007).

Appendix 2- American Starbucks market Position

The graphic above is from the executive summary section of the IBIS World Industry Report Coffee & Snack Shops in the US published in April, 2011. It shows Starbucks as having 32.6% share and comparison analysis graph with other food and beverage segments.

The compare of the stocks of some of Starbucks competitors such as Dunkin Brands(NASDAQ: DNKN) , Peetґs Coffee (NASDAQ: PEET) and Caribou Coffee (NASDAQ: CBOU Starbucks has leading positions ( See Table below)

Appendix 3. - Main suppliers/exporting countries of coffee bean

Appendix 5.- Financial Report for Starbucks 2012

Размещено на Allbest.ru