Starbucks Global Strategy Essay Example

Starbucks Global Strategy Paper Sales have also seen a tentative turnaround and the coffee chain plans to open 50-60 more stores in the country this year. The challenge in the Japanese market has been keeping consumers loyal to the Struck brand which can cost three times as much as its competitors. To counter this problem, Struck Japan launched promotions such as offering customers a second cup of coffee for 100 yen if they purchase a coffee beverage earlier the same day. This strategy was so successful that the company extended the deal. Struck has also worked over the years to customize its menu to cater to local tastes and bring costs down by procuring more ingredients locally. They have worked to revive recipes, focusing on items that would please the Japanese palate. The next challenge for Struck in Japan and In Asia, say analysts, Is fine-tuning racketing in a region populated by young people who are technically savvy. Mr.. Schultz said the company will continue to grow In the Japanese market, by adopting new store formats, such as drive-thorough, and Introducing new products, such as Its Via instant coffee. He states that We are still at the embryonic stages of what Salsa will be for the company. (Chants 2010). According to Struck. Com, Struck Coffee International Is built on great global partnerships. Struck Chief Executive Officer, Howard Schultz, summed It up nicely when he said, We main highly respectful of the culture and tradition of the countries In which we do business. In Struck search for new areas of growth following a deep retrenchment In ten . We will write a custom essay sample on Starbucks Global Strategy specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Starbucks Global Strategy specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Starbucks Global Strategy specifically for you FOR ONLY $16.38 $13.9/page Hire Writer In ten past year (Sancta, z teen nave turned t focus on increasing their presence in China. Although Japan currently has the most international Struck locations, Howard Schultz plans to open thousands of stores in China over time (Chants, 2010) and overtake Japan as its largest market outside of North America. Schultz understands the sensitivity associated with his plans to expand in China and has made the commitment to take the necessary time ND expend the necessary money to research, study and acclimate to the Chinese market. Struck goal to grow from 376 stores on the China mainland (Chants, 2010) to thousands of stores is a business risk that will be determined by their success at understanding and respecting Chinas political system, embracing the social norms of Chinese society and capturing the segment of the Chinese market that are or will become loyal Struck consumers. If Schultz and his team take the suggestions of industry analysts, they will use customized advertising to target the young, computer savvy Chinese professionals and students. This group could also be identified as the up and coming middle class market that needs a venue to display their upward rise. With a customized advertising strategy, Struck will also customize their deliverables. Products will be modified to suit the tastes of their target market and the Coffee Shops atmospheres will be designed to appeal to the aforementioned up and coming middle class. The issue of local differentiation will not only be handled through inducing atmospheres and product modification, but the local economy will be stimulated by Struck plan to purchase food items from local vendors. Local procurement will help defray the cost of product modification, provide more accessibility to specialized ingredients, and build upon Struck commitment to global partnerships. The key success factors to the strategy Schultz has outlined for China are knowledge of the political system, research, product modification and customized marketing and advertising. Schultz has already admitted that the complexity of the Chinese market will require significant discipline and thoughtfulness. (Chants 2010) Therefore, he is resigned to increasing the odds of long-term success by making strategic, carefully-designed decisions. Chinas constantly evolving political system does indeed present a challenge for Struck and may be one of the primary reasons they have not considered this level of expansion before, but Schultz and his Global Development Team are devoted to putting the right people in place to help the company stay abreast of and compliant with the political changes and political climate. After careful research, Struck RD Department will develop a locally accepted deviation of a Struck standardized menu. But, the primary key to the success of Schultz plan will be the success of his marketing and advertising department. If they are able to identify, reach, touch and persuade the up and coming Chinese professionals and students to buy Struck coffee and sit in [Struck] stores, (Chants 2010) Schultz plan will undoubtedly be classified a model for success. Due to the global economic crisis most Americans were cutting back on daily spending and luxury items which negatively affected the companys revenue and profit. Years of overextension had finally caught up with the coffee giant; a new strategy was needed to save the company. CEO, James L. Donald was let go and Howard Schultz was brought in to urn the sinking company around. Layoffs and store closings allowed the company to snare nearly expand in China stemmed from these significant cutbacks in the U. S. That left the coffee company in search for new growth opportunities. From an internal point of view, their misfortune proved to be an opportunity. This opportunity came at a time that allowed Struck to develop true growth using internal resources to expand profits domestically. The key was to see growth in sales without resorting to opening new stores in the U. S. This was done by focusing on customer service and developing ewe products such as TAG Tea, Via Ready Brew, and the Struck Reward Program. In January 2010, Struck reported its first quarter of same-store sales growth since the end of 2008 (Chants, 2010). With the worst behind them and U. S. Sales rebuilding, Struck is now in a place to move forward with expansion overseas. From an external point of view, China represents the most significant growth opportunity (Chants, 2010). China is one of the few economies that remained strong through the worst of the global financial crisis. This provides opportunity for Struck to establish a place in the China markets if integrated properly. Breaking into Chinas competitive market will be difficult and extensive planning needs to take place before any expansion happens. The foundation of Struck strategy should involve research of the Chinese culture so they can grasp an understanding of their taste and preference. Most Chinese do not have an appetite for coffee, as a whole China is known for its hot tea. They will not be impressed with caramel Franciscans and mocha lattes. To attract local followers, instead of foreign tourist, Struck needs to look into developing new tea and pastry recipes that use Chinese ingredients and products. Keep the Struck branding but develop a new line of products specific to China/Asia that can be added to China store menus. Moreover, Struck needs to continue to develop ways to compete with lowered priced rivals such as McDonalds and local mom and pop coffee shops. Struck currently offers $2 afternoon coffee when a customer purchases a full priced coffee prior to eleven a. M. In the same day (with receipt only). This is a great sales tactic that needs to be followed with weekly specials and promotions such as a flavor of the week for half price. Furthermore, Struck needs to reinforce the basics good customer service, quick production during peak hours, and the unique flavors that helped set them apart from competitors and make paying a little extra worthwhile. All businesses, regardless of the industry, must be prepared to adapt to their external environment in order to be successful in implementing global operating strategies. The external environment consists of competitors; the economic, political/ legal, and social systems; monetary systems; and the environmental systems of the host country. The strategic global plan of Inboard, a leading North American manufacturer of engineered wood products, is to become the supplier of choice while strengthening their role within the North American engineered wood product industry. Inboard products are currently sold to retailers, distributors, and finished goods manufacturers for the production of kitchen cabinetry, furniture, and floor covering. Inboards parent company, Pilferer Group, is a leading worldwide nutcracker AT engineered wood products, surface Talents products Ana laminate flooring. The company has approximately 6,000 employees and operates 22 plants in North America and Western and Eastern Europe. The company delivers its products to customers in over 80 countries. Comparable to Struck, Pilferer too strives to increase its international market position. The company focuses on a few primary objectives that include focusing on the engineered wood segment of the market, diversification of the companys portfolio by focusing on both products and the regions in which those products are made available, and cost reduction leadership. Similarly to Struck, Inboard has had to distinguish itself from its competitors. During the economic downturn in the housing and construction markets, it became ITIL for Inboard to provide a better value to their customers. At their newly acquired location in Monocle, NC, Inboard has established a mega-site which allows customers to purchase up to four different product lines from the same location. No other competitor in the industry has these same capabilities. This one stop shopping center provides Inboard customers with convenience and transportation cost reduction incentives that set it apart from other wood manufacturers. Over the past two years, the global economic recession has drastically slowed the growth in the engineered wood product industry. Many of Inboards competitors have been unable to withstand the instability and have idled facilities in an effort to control costs. Instead, Inboard has taken advantage of the slowed economy. By building a new medium density fiber board plant in the United States, Inboard has prepared for future market expansion. This new plant provides Inboard with the necessary capacity and increased product lines required to attract new customers as the economy begins to gain momentum and grow. In addition, the location of the new MAD plant in North Carolina provides Inboard with convenient access to revive the entire east coast and also allows them to take advantage of cheaper transportation and raw material costs. Struck, like Inboard, recognizes that carefully planned and calculated effort must be taken today to ensure future growth. Adjusting to the social system within the United States has been a relatively smooth transition when compared to some of the more complex social issues faced by Struck within the Chinese market place. However, one crucial issue facing Inboard is the language barrier between employees located in the United States and those employees who work at the corporate office in Lava, Canada. Lava, which is located in the Quebec/Montreal region, is a French speaking province. To further complicate issues, Pilferer, Inboards parent company, is located in Germany. Communication between the different parties can become strained as the meaning and understanding of issues can be lost during translation. The monetary system also presents real challenges for international companies. Both Inboard Canada and Inboard USA must deal with foreign exchange loss or gain on transactions that are generated between the two business units, as well as direct transactions with Pilferer GAG. In addition, Inboards SAP accounting system ad to be customized in order to be able to issue payments and receipts in multiple currencies Including ten u. S. Collar, Canaan dollar, Ana ten Euro. Political and legal issues have added an additional level of complexity for both Inboard and Struck. In an effort to further understand the political and legal issues within China, Struck has progressed cautiously. By expanding slowly and deliberately, Struck hopes to avoid making any costly mistakes that could ultimately lead to failure. One legal issue that was overlooked by Inboard when they purchased the site in Monocle, NC was sales and use tax application. Developing a knowledge base and understanding of sales and use tax law was a challenge for Inboards Canadian headquarters since this issue is unique to the United States and not applicable in Canada or Germany. Different tax rates are applied based upon the material being purchased and the role that the material has within the production process. Given that the SAP accounting system was not customized in order to process these taxes, a manual process had to be developed and implemented in order to stay within compliance of both state and federal laws. In recent years, increased environmental isolations have led to the development of new greener products that contain less formaldehyde and other chemical toxins. Customers have begun to demand more earth friendly products and government regulators have established guidelines and policies that must be adhered to in order to avoid fines and penalties. Struck has long been a leader in the environmental arena. By encouraging recycling and using only cups and packaging items that have been produced with recycled materials, Struck understands the importance of being environmentally friendly and has chosen to lead by example. The Struck initiative to branch into the Chinese arrest is one that is becoming more and more popular with countries both domestic and foreign. Countries continue to tap into this lucrative market for financial wealth and building capital. But what about companies that expanded in China long ago? Perhaps these companies have a solid establishment that they must evaluate their corporate strategy to maintain their Chinese presence? One such example of this scenario is Siemens. The company is based in Germany, with a global presence across the world. It has a sound corporate strategy that currently centers around innovation, sustainability and surviving the economic untrue. It operates in 3 different sectors: Industry, Energy and the focus of our international application, Healthcare. We will analyze Siemens reach across the globe in one of the biggest growing industries today. The strategic business unit of Siemens Medical Solutions prides its success on being a global leader in innovation. But this business unit must also consider its external business environment to maintain its successful brand. Earlier this year, the healthcare bill was a huge political factor in the healthcare industry. Hospitals across the country were reluctant to make equipment purchases based on whether he bill would pass or fail. As Siemens realized this political influence they began to look even close at its economic external environment. Siemens began to see the sale of its products decline, Just like competitors GE and Philips. So rather than persuade higher sales of new equipment, it focused on its current customers through impeccable service to keep them happy and satisfied amidst the uncertainty and economic downturn. The company incorporated internal campaigns directly around tons Idea tongue a O rests Like last call 1 u standards AT Excellence Ana a recently launched Think. Feel. Do. Campaign to encourage all employees to take a vested interest in servicing the end customer. Operating in the healthcare industry makes Siemens Medical an easy target from a legal perspective. The FDA must regulate and ensure each piece of medical imaging equipment and its operators meet standards suitable for patient use. Equipment malfunctions or misuse could lead to injury or even death. A recent example is the radiation overdose incidents that were reported last year. The overdoses went undetected for over a year. Although the argument can be made that the overdose is a result of operator error, the FDA is still investigating any many involvement and lawsuits continue to abound the equipment companies. The business world has evolved so much so that a global presence is necessary to expand for large companies such as Siemens. The functional strategy of the marketing and sales teams has to be well versed when it comes to interacting with different cultures from a social/cultural perspective. A common discrepancy we find in day-to-day business between US and German culture is the personal vacation time spent away from work. The typical length off German vacation is 4-6 weeks, whereas an American vacation if only 1 week. German maternity leave is roughly one year for others (with full benefits and pay the majority of the leave), where as American maternity leave is a maximum 8 weeks with only a percentage of pay. Siemens is a 160 year-plus powerhouse in Europe and has a major international presence. It has survived war, bad economies, and a host of other tumultuous events. It has learned to assess each business environment based on the cultural differences each possesses. Europe is officially branded as home to the Siemens trademark. Although the cost of living may be higher here than other industrialized nations, its healthcare is top notch due to the fact that Europeans do not pay out-of- octet to see a doctor or go to the emergency room. Including the costs in taxes ensures people take advantage of preventative care and keep costs low and will continue to keep its challenges minimal and its operational risks low. China is a vast changing environment that is trying to change how it disperses care to its vast population. Treating over 1 billion people is by far its greatest operational risk. China undertook a huge healthcare reform of its own to provide such adequate healthcare to its people. The challenge to shift governmental aid towards free market enterprise will also be addressed in this transition. A major component in making this move successful is expanding medical imaging access within the hospitals. Siemens has already established its brand in the country, but it must sharpen its global strategy to compete with local, yet much smaller competitors that may have a better chance at winning contracts because of their native ties. Siemens extensive reach within the United States surpasses any other country in the world. United States possesses over half of the companys healthcare market share. The brands innovation is perhaps its core competency and primary characteristic to compete with American powerhouse GE. Healthcare professionals cannot deny the companys product capability and performance. Amidst so many order winners, and its success in America, there are also challenges and risks the company cannot deny. The current state of the economy has shifted the way Americans think so much so, Tanat ten preference Is to Duty American, not Torrent. It Is up to Siemens to provoke our country with the trust and investment we desire to keep our status known. That means extending opportunities to American suppliers, American decision-making within the company, and expanding Jobs to keep the American economy thriving