Expansion of Starbucks in the Italian Market

EXPANSION OF STARBUCKS IN THE ITALIAN MARKET

TABLE OF CONTENTS

1. Executive Summary

2. Introduction

3. Internationalization

4. Foreign Market Screening, Segment & Targeting

5. Environmental Analysis

- Political

- Social

- Economic

- The market

- The Company

6. International Market Objectives

7. Foreign Market Entry Strategy

8. Marketing Mix

9. Recommendations

10. References

Executive Summary

This report has been written to discuss in detail the entry strategy of Starbucks into the Italian market and to analyse the feasibility and profitability of the same. We chose this topic for our group work as it is an interesting case and this business challenge is more difficult than everyone thinks at first due to Italian values and culture.

The study presents the culture of both the company and the market, its differences and future scope of success. It also suggests modes to improve the current perception about this expansion.

In the following topics, we will present a strategy - Starbucks must use a localized strategy through the adaptation of an aperitivo menu in order to have a possibility of being successful when entering the Italian market. This strategy can then be expanded and adapted into all Starbucks locations for use in the global market.

The success or failure of the strategy we try to present will demonstrate if Starbucks can find success in its most difficult market, Italy.

Introduction

Found in Seattle, Washington in 1971; Starbucks Corporation is one of the most popular coffee company and coffeehouse chain. It currently operates in 27,339 locations worldwide. Starbucks locations serve hot and cold drinks, whole-bean coffee, micro ground instant coffee known as VIA, espresso, café latte, full- and loose-leaf teas including Teavana tea products, Evolution Fresh juices, Frappuccino beverages, pastries, and snacks.

In 1983, Starbucks chairman and chief executive officer Howard Schultz travelled to Italy and was fascinated by Italian coffee bars. He wanted to bring the experience of the traditional Italian coffeehouse to the United States. With the goal of establishing the “third place” part from home and work for consumers to relax, socialize or listen to music, the company is focused on creating an experience like the Italian Coffee bars, just like what Schultz experienced in Italy. After the successful venture in the United States, Starbucks expanded their brand in other countries. Before choosing a new market to enter, Starbucks evaluates the country through “focus groups, quantitative market assessment, and detailed identification of appropriate business partner.”

The objective of this report outlines around the same. Through this report we research the untapped market of Italy by Starbucks, which has been a tough call for the company since the beginning. But the exposure of the organisation after its setup in China 1999 and Australia 2000, it has received a bucket full of exposure of entering into a less receptive market. Starbucks used a globalized strategy when entering the Australian market and transplanted coffee shops practically identical to United States Starbucks locations. In contrast, Starbucks used a localized approach when entering China and altered both their products and store to better fit Chinese consumers’ expectations and fulfil consumers’ desires.

Internationalization

A question that strikes in this report is “Why Starbucks has decided to embark Italy as one of its international platform?” Indeed, the core value of Starbucks that is “Creating a Culture of Belonging, Inclusion and Diversity.” (Starbucks, 2018) Depending on embrace different race, cultural backgrounds, life experiences, thoughts and ideas, Starbucks can understand diversity table taste of distinct person. This will be motivation of countless innovations and new ideas. Besides, this core value enhances Starbucks keep improving and makes business success. (Starbucks, 2018)

In 2014 Starbucks Global Responsibility Report, Starbucks want to make biggest impact in the world, therefore; Starbuck set four goals. First, support work chances to 1 million people, second, making coffee to a continue product to improve at least 1 million people’s life environment and communities. Third, making Starbucks to be largest green retail company in the world. Fourth, improve themselves by making impact in the world. (Starbucks, 2018) Although expending international programme is a long-term goal, Starbucks focus on globalization and Internationalization strategy and face difficulties for achieving their goals.

Foreign Market Screening, Segment & Targeting

Globalization and technology as the two core macro-environmental factors in the 21st-century business environment have strengthened and expanded the company’s international expansion strategy (Daft, 2010). In the current business environment, the success of international marketing strategy is not only an indicator of success, it is also a necessary condition for survival in a competitive market (Zahra et al，2000). Given the successful operation of Starbucks in North America, the European market is currently a potential platform.

Chen and Mujtaba (2007) stated that the factors that influence entry new markets are divided into three categories: firm-specific factors, country-specific factors, and market-specific factors.

Firm-specific factors refers to company-specific assets and skills that have ownership advantages. It mainly includes firm assets,