Starbucks Harvard Case Solution & Analysis

Bargaining Power of Suppliers: Low

Suppliers for coffee industry are those supplying the retailer with the coffee beans and do not have much of the bargaining power. This is because coffee retailers like Starbucks are inclined to be very big bulk buyers for any of the supplier to lose their key clients. This places Starbucks in a dictating position to the supplier. Similarly, bargaining power of suppliers of other resources like that of paper products etc. will be low as there are many sources available as a substitute.

Bargaining Power of Buyers: Medium

Previously, buyers in India did not have bargaining power due to lack of food retail giants present in the country. However, with the arrival of multinational food retail giants in India, consumer has a lot of choices. Therefore, it will be difficult for Starbucks to impact the Indian buyers to pay premium for their products. In addition, the per capita income of Indian customers is low; however, the income of Indian youth is expanding rapidly but the prices need to be very competitive and should be done on zonal premise.

1.      Reasons and benefits for Starbucks to expand overseas

Starbucks International seeks international expansion with the sole purpose to recreate the Italian coffee culture considering these vital variables.

  • To tackle its rival at an early stage from picking up a head start in international markets.
  • To build and expand upon its growing desire for the Western brands
  • To profit from the higher coffee utilization rates in different countries.

Brand Expansion

The principal inspiration for Starbucks’ global expansion was the need to expand their brand. Schultz wanted to bring the “Starbucks experience” to the world and transform it into a global brand. There are significant markets that Starbucks has not entered yet, but it has the potential to succeed. These include strong, competitive European market and the Southeast-Asian market, where Starbucks could be the first-mover. Being the first to move in any international market will offer immense favorable circumstances. Japan had seen its market for coffee to develop as well as grow and the young generation has started to see the American society as new and hip.

Increase value for Investors

Another inspiration for Starbucks’ global push was their investors. Like most Wall Street movers, when an organization shows achievement, so they rely upon to keep on succeeding and grow. Starbucks was overwhelming the local coffee market and the most sensible spot for continued growth was in the international market. The world exhibited the chance to enter substantial markets that had not been arrived at by any organization like Starbucks and entering the international market permitted Starbucks the possibility to build its income.

Step above the competition

Staying above the competition is the main thing. There may be no end in the race of competition; therefore, they must be forced to submit. By expanding the business globally, Starbucks can do this and by attracting new customers before anyone else along with gathering talent and ability from different parts of the world; Starbucks can close down the competition, which will allow setting the tone for global affairs related to the coffee industry.

New Concepts

Doing business in another country can possibly revive the brand. It is not necessary to fundamentally change the core of it; but it will open up the company to new ideas, designs and innovations. By creating distinctive marketing methods to pull in new customers in another country, Starbucks can conceivably make an entirely new item that can be implemented across the board.

  • 2.      Starbucks’ core competencies and ability to transfer these core competencies to different international locations.

Starbucks does possess core competencies. They are the leader in dark roasted, high quality and Arabica coffee beans. They also offer a substantial mixture of flavors. Their far reaching product offering appeals to the diverse tastes of their heterogeneous customer. Starbucks has expanded to incorporate a lounge, making a "warm hearted" feeling, the atmosphere is extremely welcoming and inviting, drawing in the variant crowd and serve food items as well.................................

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