thisanStudies
HaagseHogeschool,DenHaag
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Executivesummary
In STARBUCKS
EnteringtheNetherlands
STARBUCKSENTERINGTHENETHERLANDS
Starbucks,
EnteringtheNetherlands
Student:BartVerhulst
Studentnumber:20024409
Supervisor:Mr.Kandou
Date:
TheHagueSchoolofEurope thesis, the luxury coffee company Starbucks has been well described, although many
aspectsofthecompanyhavebeenleftoutofconsiderationinordertokeepitrelevantandclear.
However,whileStarbuckshasnotenteredtheNetherlandsyet,thereismuchmorefortheDutch
tolearnaboutthecompany.ManyDutchpeopleareinterestedinthecauseofthecompanys
absenceintheircountry.EspeciallythefactthattheNetherlandsisacountrywithatremendous
coffeecultureandtheearlieropeningofaStarbuckscoffeeroastingplantinAmsterdamhas
broughtmorequestionmarkstoit.Thereseemstobeenoughfootholdforthecompanyatfirst
sight,giventhefactthatStarbucksalreadyhasmanysupportersintheNetherlands,provenby,for
example,theonlinepetitionsetupbyaStarbucksfantobringStarbuckstotheNetherlands,
whichthousandsofpeoplesigned.Obviously,thereisademandforStarbucksintheNetherlands,
whichistobeexpectedfromarich,internationallyfocusedandhighlydevelopedcountrylikethe
Netherlands.Nowthequestionrises:whyhasStarbucksnotyetenteredtheDutchmarket?All
thishasbeenaninspirationforthisthesisandeventuallybroughtforwardthefollowingresearch
question:IstheDutchcoffeemarketreadyforStarbucksstoresandwithwhichinstrumentscan
StarbucksgrowintheDutchmarket? Inordertoanswerthisquestion,thecompanyisshortly
introducedandanalysedwiththehelpoftheSWOTtheory.Thestrengths(likeitsworldfamous
brandanditseffectivemarketingstrategy)againsttheweaknesses(likeitsMcDonaldsimage
anditsrelativelyhighprices)giveinsightintheinternalenvironmentofStarbucks.Lookingatthe
companysexternalenvironment,onefindsopportunitieslikethehighleveloftheeconomyofthe
Netherlands and the international focus of the Dutch. Threats like successful and ambitious
competitors and Starbucks lack of experience in the Dutch market are important facts to
consider.ThesefactorsareofinfluencetoStarbuckspossiblestrategytoentertheDutchmarket.
Starbuckscurrententrystrategyofjustopeningstoreswheremanypeoplearewhile,inmany
cases,keepingthemcompanyownedwillnotbeenoughtobesuccessfulintheNetherlands.In
general,theDutch,withtheirrichcoffeehistory,arecriticsconcerningtheircoffeeandtheylike
drinking their quality coffee in a cosy environment. People who travel often or work in an
internationalenvironmentalreadynowStarbuckscoffeeandcanappreciateitsworldwideimage.
OthersareprobablynotwillingtopayforarelativelyexpensivecupofcoffeeinaMcDonalds
concept,differentfromtheauthenticcoffeeshoparoundthecorner.
ConcludingmyfindingsinthisthesisIwouldanswertheresearchquestionasfollows: TheDutch
coffeemarketisindeedreadyforStarbucksstoresandthecompanywillhaveagoodchanceof
successifitcanpartiallyadapttotheDutchcoffeeculture.Thecompanywillsurelyattractmany
customersatlarge(tourist)citycentreslikeAmsterdam,TheHague,Rotterdam,Utrechtand
transportation hubs like Schiphol Airport, Amsterdam Central Station and Utrecht Central
Station. These places have an international character and boasts of people who are open to
innovativeproductsinatrendyenvironmentandarewillingtopayextraforit.Thecompanys
lackofexperienceintheNetherlandsshouldbecompensatedbythecooperationwithestablished
organisations via joint ventureconstructions. Starbucks should not try, in any case, to
aggressivelycompetewiththecommonandtypicalDutchcoffeeshops,becausetheauthentic
Dutchcoffeeculturewillalwaysmaintainitspopularity.
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Preface
DuringanexchangeprograminBangkok,Thailand,organisedbyTheHagueSchoolofEuropean
Studies in 2005, Ivisited a Starbucks coffee store for the first time, althoughI was already
familiarwithitsbrandnameanditsconcept.BeingaDutchman,Iamusedtothehighstandards
ofcoffeeintheNetherlandsandmyfirstexperienceatStarbuckshonestlywasnotapositiveone.
Inmyopinion thecoffeewasofmediocrequalitydespiteitshighprice.AlthoughStarbucksdid
notmatchmyexpectations,Ilikedtheformatofthestoreandthevarietyofproducts.Itasted
many different blends of coffee and tried Starbucks Frapuccino, an iced coffee drink.
Moreover,ineveryStarbucksstoreyoucoulduseawirelessinternetconnectionwithyourlaptop.
WithaStarbuckscoffeestoreinnearlyeveryareaofBangkok,Igrewtolikeitmoreandvisited
stores more often. Back in The Netherlands I search for Starbucks stores and news about
StarbucksintheNetherlands,butthecompanydidnotshowtheintentionofopeningstoresinthis
country. The internet is an often used medium for Starbucks fans from the Netherlands to
complainabouttheabsenceofStarbucksintheircountry.Alsohavingaskedmanypeopleinmy
environment,itiscleartomethatIamnottheonlypersonwonderingwhyStarbuckshasnot
enteredtheNetherlandsyet,whileitseemsobviousthatthereisenoughreasonforthecompany
todoso.Thisissuehasbeentheinspirationforthechoiceofthissubjectformythesis,becauseit
is relevant to our current dynamic society. The Netherlands is a highly developed and
internationallyfocusedcountryinwhichpeoplearewillingtopayforinnovativeluxuryproducts.
Atthetimeofwriting,duringmytraineeshipinChina,IfoundoutthatStarbucksannouncedto
open a store at Schiphol Airport on June 25th. Although this coincidence might affect the
relevancyofthisthesisinthefuture,itisstillaninterestingquestionwhatstrategyStarbuckshas
followedtoentrytheDutchmarket.InthisthesisIhavetriedtoanalysethisbyreflectingittothe
companysenvironmentanditscurrentstrategies.
InthisprefaceIwouldliketotaketheopportunitytothankMr.Kandou,mythesismentor,and
Mrs.Arinsforherhelpgettingstarted. IwouldalsoliketothankMs.MandersofSchiphol
Airportfortakingthetimetogiveherassistance.
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Tableofcontents
Preface
.............................................................................................................................................. 4
1.Introduction
.................................................................................................................................. 7
1.1Objective
................................................................................................................................ 7
1.2ProblemStatement
................................................................................................................. 7
1.3ResearchMethods
.................................................................................................................. 8
2.Coffee
........................................................................................................................................... 9
3.Companydescription
.................................................................................................................. 10
3.1Missionstatement
................................................................................................................. 10
3.2Productportfolio
................................................................................................................... 11
3.3Market
.................................................................................................................................. 11
4.InternalAnalysis
......................................................................................................................... 12
4.1Organisationalstructure
....................................................................................................... 12
4.2Product
................................................................................................................................ 13
4.3FinancialSituation
............................................................................................................... 14
4.4Conclusioninternalanalysis
................................................................................................. 15
5.Starbuckscurrententrystrategy
................................................................................................ 17
5.1Intheory
............................................................................................................................... 17
5.2InPractice
............................................................................................................................. 18
5.3StarbucksabsenceintheNetherlands
................................................................................. 18
6.Externalanalysis
......................................................................................................................... 19
6.1Branchanalysis
..................................................................................................................... 19
6.2Competitoranalysis
.............................................................................................................. 23
6.3Consumeranalysis
................................................................................................................ 24
6.4Distributionanalysis
............................................................................................................. 26
6.5Starbuckscriticalenvironment
............................................................................................ 27
6.6Conclusion(OT)
................................................................................................................... 27
7.SWOTconfrontationmatrix
....................................................................................................... 29
8.Conclusion
................................................................................................................................. 31
8.1Recommendations
................................................................................................................ 31
8.2Locationsuggestions
............................................................................................................ 32
9.ReferenceList
............................................................................................................................. 33
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Siddiqui,F.(2006,November14)HealthyandstructuralgrowthofDutcheconomy.Retrieved
on May 17, 2007 from Holland trade Website:
http://www.hollandtrade.com/vko/zoeken/showbouwsteen.asp?bstnum=1423
.............................34
10.Appendices
............................................................................................................................... 35
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1.Introduction
1.1Objective
Starbucksisa well knownAmericancoffee companywhichhasitsname connectedto over
12,000storesin37countries( Starbucks,2007,companyfactsheet,p.1) andisstillgrowing,all
overtheworld.Starbuckshasdevelopedagoodimageincountrieswherecoffeewasnotevenan
establishedproductbefore.Obviously,thecompanyanswerstotheworldwidedemandforthe
Starbucksconcept.
Considering this, it is odd to conclude that Starbucks has not yet opened a store in the
Netherlands,historicallyacountrywithahighrateofcoffeeconsumption(seechapter2, Coffee
in the Netherlands); especially given the fact that Starbucks now has a roasting plant in
Amsterdam.ThedemandforstoreswithaStarbucksrelatedconceptisgrowingand,forexample,
Douwe Egberts, a respected Dutch coffee company has already opened several stores where
people can drink their personal favourite coffee in a nice environment. Moreover, a Dutch
Starbuckssupporter,JohanHuizinga,hasstartedanonlinepetitionforpeopletosignifthey
wantedaStarbucksstoreintheNetherlands.Thelistwithover4,000namesreceivedpublicity
andwaseventuallysenttoStarbucksHeadQuarters,withnoresultyet.
ConsideringthesuccessoftheconceptintheNetherlands,andthefactthatmanyDutchcoffee
consumersareawareoftheexistenceandimageofStarbucks,thefollowingresearchquestion
rises: IstheDutchcoffeemarketreadyforStarbucksstoresandwithwhichinstrumentscan
StarbucksgrowintheDutchmarket?
1.2ProblemStatement
Togiveananswertotheresearchquestionabove,itisnecessarytofirstexplaintheproblemin
thefollowingProblemStatement:
WhatstrategydoesStarbucksCoffeeCompanyusetoopenstoresinanewcountry,andtowhat
extendisthisstrategyapplicableintheNetherlands?
Tofurtherprovideinformation,Iwillanswerthefollowingsubquestions:
WhatisStarbucksCoffeeCompany?
Whatistheirtargetgroup?
Whatarethecurrentlocationdemandsofthecompany?
WhyhasStarbucksnotyetpenetratedtheDutchmarket?
WhatarepossiblecompetitorsattheDutchmarket?
WhatisthebeststrategyforStarbuckstoentertheDutchmarket?
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1.3ResearchMethods
Afterformulatingtheresearchquestionandtheproblemstatementswithitssubquestions,abroad
rangeofsourceswillbeconsultedandfiltered,inordertoselectthemostrelevantinformationto
useinthisreport.Thisrangeofsourcesconsistsofwebsites,literatureandarticlesfromrelevant
sources.TheacquiredinformationaboutStarbucksandtheDutchmarketwillbetestedandused
withthehelpofseveraltheorymodels.Also,Iwillvisitasmanycompetitivestoresaspossible,to
makearealisticcomparisonbetweenthevarioustranslationsoftheStarbucksconcept.This
willbedonethroughinterviewswithemployeesandmanagersandthroughobservationofthe
storesbyme.
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2.Coffee
Theproduct
Coffee, produced out of coffee beans, is a hot drink which is often consumed in social
environments,like whenvisitingpeople, whengoing out shoppingorjustto catch a private
momentduringabreak.Also,coffeeisusedasastimulatingfactorwhenoneneedstoperform
better.Thestimulatingandotherpositiveeffectofcoffeeareprovedbyseveralstudies(Positively
Coffee,2007,CoffeeandMentalPerformance,para.10).
History
Coffeehasbeenaluxurydrinkingproductsinceagesanditstillisnowadays. Itisanimportant
productfortheworldeconomy,anditisaveryvaluableproductinworldtrade.Coffeeoriginally
wasfoundinEthiopiaandfirstcultivatedinYemen.Intime,coffeeexchangeexpandedinAsia,
AmericaandEurope.AnicedetailisthatcoffeewasintroducedinEuropeatalargescalebythe
Dutchwhowerethemainsuppliersoftheproduct.Also,theDutchwerethefirsttostartthe
spread of the coffee plant in Asia and Central and South America (International Coffee
Organization[ICO]2007,TheStoryofCoffee).
Coffeethroughouttheworld
In2005/2006,theestimatedworldproductionwas111.5 millionbale(1bale=60KG).Coffeeis
producedinmanycountriesinAsia,theAmericasandAfrica.Themaincountriesofproduction
areBrazil,ColombiaandVietnam.Thedemandforcoffeeintheworldisgrowingeveryyear.
The supplying countries are participating to this trend. Considering favourable weather
conditions,in2007theexpectedamountofcoffeesupplyisabout120millionbale,whichcould
leadtoasurplus.In2006,thedemandwashigherthanthesupply,whichledtoagrowthofthe
priceofcoffee.Althoughthecoffeeindustryisdoingwell,theinternationalcoffeeassociations
striveforahealthybalanceofsupplyanddemandtopreventoverproductionandtokeepthe
pricestable.
CoffeethroughoutEurope
AlsoinEuropethedemandforcoffeeisgrowingsmoothly,thoughnotfastenoughconsideredby
coffeeorganisations.InWesternEurope,the ICO(internationalCoffeeOrganisation)stimulates
coffeeconsumptionbyintroducingseveralprogrammeslikethe PositivelyCoffeeProgrammeand
theHealthCareProfessionsCoffeeEducationProgramme,inwhichthepositiveeffectsofcoffee
arebeingpromotedtothepeople (VerenigingvanNederlandseKoffiebrandersenTheepakkers
[VNKT],2005,AnnualReport,p.8).
CoffeeintheNetherlands
CoffeeconsumingintheNetherlandsisbigbusiness.In 2005,theNetherlandsimportedalmost
150.000tons,stillgrowingeveryyearalthoughtheconsumptionratefluctuates. Theaverage
Dutchpersondrinks145liter(=7kg)onayearlybasis,whichequals3.2cupsofcoffeeper
person,perday. ThistakestheNetherlandstothe7thpositionontheworldlist.Onlypeoplein
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Scandinavia,Denmark,AustriaandSwitzerlanddrinkmorecoffee(VerenigingvanNederlandse
KoffiebrandersenTheepakkers[VNKT],2005,AnnualReport,p.11). Anticipatingonthese
facts,agrowingamountofcoffeestoresareopeningtheirdoors,therebystimulatingpeopleto
drinktheircoffeeoutdoors.
3.Companydescription
StarbucksCoffeeCompany,namedafterthefirstmateinHermanMelvillesMobyDick,was
foundedin1971byHowardSchultz,whoopenedhisfirststoreinSeattle'sPikePlaceMarketin
1982,afterprovidingcoffeeforseveralrestaurantsandbars. Throughtheyears,thecompanyhas
builtupitsamountofretailoutlets,alsobeyondthebordersoftheUnitedStates. Starbuckshas
nowbecometheworldsmostfamousbrandinthe specialtycoffeeretailermarket,providing
qualityproductsenservices.Worldwide,Starbuckshasover12,000outletsin37countries,of
whichover7000arecompanyoperated(therestisthroughlicensingandjointventures).Inthe
longterm,thecompanystrivesfor30,000sellingpointswhichwillbringStarbucksnearthelevel
ofMcDonalds.
Starbuckscorebusinessconsistsofcoffeeandteaproductsinallsortsandsizes,butitalso
providesspecialservicesforitscustomers,likewirelessinternet(incooperationwithTmobile).
Thecompanyhasaddedmuchmoretoitsrangeofproductstoservethecustomerevenmore;
people can now buy brewing equipment, merchandise, books, music and even films at their
nearestStarbucks.
AllthishashelpedcontributingtothefactthatStarbucksismorethanacoffeestore;itisa
lifestyle.VisitingStarbuckshasbecometrendy,allovertheworld.
YougetmorethanthefinestcoffeewhenyouvisitaStarbucksyougetgreatpeople,firstrate
music and a comfortable and upbeat meeting place, (Howard Schultz, Chairman Starbucks
CoffeeCompany)
3.1Missionstatement
ThemissionstatementofStarbucksis:
To establish Starbucks as the premier purveyor of the finest coffee in the world while
maintaining our uncompromising principles while we grow ( Starbucks, 2007, Mission
Statement).
The following six guiding principles will help us measure the appropriateness of Starbuck
decisions(Starbucks,2007,MissionStatement):
Provideagreatworkenvironmentandtreateachotherwithrespectanddignity.
Embracediversityasanessentialcomponentinthewaywedobusiness.
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Applythehigheststandardsofexcellencetothepurchasing,roastingandfresh
deliveryofourcoffee.
Developenthusiasticallysatisfiedcustomersallofthetime.
Contributepositivelytoourcommunitiesandourenvironment.
Recognizethatprofitabilityisessentialtoourfuturesuccess.
3.2Productportfolio
Starbucksofferscustomerswholebeancoffeesaswellasfresh,richbrewedcoffees,Italianstyle
espressos,coldblendedbeverages,abroadselectionofteas,sodas,juices,severalpastries,coffee
relatedaccessoriesandequipment,Starbucksmerchandise,andaselecti onofCDs,games,books
andevenDVDs.EachStarbucksstoreadjustsitsproductmixdependinguponthesizeofthestore
anditslocation.Largerstorescarryabroaderselectionthansmallstores.Duringfiscalyear2005,
theCompanysretailsalesmixbyproducttypewasapproximately77percentbeverages,15
percentfooditems,4percentwholebeancoffeesand4percentcoffeemakingequipmentand
accessories. In addition, Starbucks sells coffee and tea products through other channels of
distribution. These nonretail channels are known to Starbucks as Specialty Operations.
Starbucks Specialty Operations strive to develop the Starbucks brand outside the Company
operatedretailstoresthroughanumberofchannels.Forexample,thecompanyproducesandsells
bottled Frappuccino and Starbucks DoubleShot coffee drinks and a line of premium ice
creams,throughcertainofitsequityinvestees.(formoreinformationaboutStarbucksstrategies,
seechapterStarbuckscurrententrystrategy,page14)
3.3Market
Starbucksplaysasignificantroleinthecoffeetogoandthecoffeetostaymarket.Coffeetogo
meansthatpeoplecantaketheircoffeepurchasewiththeminapapercup.Coffeetostaymeans
thatpeoplecanenjoytheirdrinks,presentedinglassorchina,inthestore( Gordts,2006,p.60).
Althoughbothmarketsare(partly)covered,Starbucksaimsitsactivitiesespeciallyatthecoffee
tostay market. The consumer group of Starbucks is very diverse, because the products of
Starbucksareeasilyavailableandinterestingforalmostallkindsofpeople.Foryoungpeople,
withorwithoutalackoffinancialmeans,theimageoftheproductoftenweighsheavierthanthe
price.Elderlywithenoughmoneyandsparetimetendtointerruptadayofsightseeingwithanice
cupofcoffee.Higheducatedpeopleandstudentsareknownfortheirwilltospendmoneyonnew
productsandtheircriticalviewonthequalityofaproduct.Aswellaslocalswholiketofind
themselves drinking coffee at Starbucks during their shopping, travellers from abroad enjoy
takingabreakfromcitytouringatafamiliarcoffeestore.Basically,peoplefromeverylayerof
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societyarepossibleStarbuckscustomers.Though,specialtycoffeestaysaluxuryproduct,and
thereforeaimedatpeoplewithanaveragetohighincomelevel.
4.InternalAnalysis
Theinternalanalysisfocusesontheinternal factorsthatcharacterizetheorganisation;itspurpose
is to attain insight in the successincreasing factors and the valuedecreasing factors in this
specificorganisation.ThisisdonewiththehelpofaSWOTanalysis.ASWOTgivesinsightin
thestrategychoiceanddevelopment(Veldman,2004,p.291).Inthiscase,withStarbucksCoffee
Company,theSWOTanalysisfocusesontheexportpolicytowardstheNetherlands.
The first part of the SWOTanalysis (SW) determines the strengths and weaknesses of the
followingcompanyaspects:
Theorganizationalstructure
Theproduct
Thefinancialsituation
4.1Organisationalstructure
Theorganizationalstructuregivesanoverviewonthedifferentlevelsofanorganization;thisis
oftenshownwithanorganizationalchart.AtStarbucksthough,thisisdifferent;Starbuckshas
avoidedahierarchicalorganizationalstructureandhasnoformalorganizationalchart.Starbucks
believes thatits employees are one of the mostimportant assets and in Starbucks company
languageanemployeeiscalledapartner.
ThedifferentcorporatelevelsofStarbuckscanbedescribedasthefollowing:
The strategic planning is done by the board of directors which represents the top level of
Starbuckscorporategovernanceandisformedby12membersfromStarbuckscorporationand
othermajorcompanies.TheBoardisresponsiblefor overseeingtheexerciseofcorporatepowers
andensuringthattheCompanysbusinessandaffairsaremanagedtomeetitsstatedgoalsand
objectives.Strategicplanninginvolvesorganizationalobjectives,fundamentalstrategies,andlong
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termplanningandisalsodonebytheboardofseniorofficers.Thisboardisdividedindifferent
companycomponents like management, marketing, finance, new markets, Starbucks
Entertainment,storedevelopment,etc.
The tacticalplanning issupervisedbytheseniorofficersandmanagersofmiddlemanagement
levelatthestrategicbusinessunits(SBUs).
The operationalplanning isdonebythesupervisorymanagement,forexample,atStarbucks
stores.
Thecompanyhasarelativelyflatorganisationstructure,inwhichemployees(partners)havea
considerablyinvolvement.
Starbucksisapolycentricorganization.Thismeansthatthereismorethanoneheadofficeor
headquarters.ThehomeofStarbucksisconsideredtobetheUSheadquartersinSeattle.The
headquartersforEurope,MiddleEastandAsiaislocatedinAmsterdam,theNetherlands .
4.2Product
Image
TheimageoftheproductStarbucksisalreadyworldwiderecognizedeverywhereintheworld.
Becauseoftheevergrowingamountofoutletsthroughouttheworld,aswellastheevergrowing
and innovating product portfolio, the company stays ahead of their competitors and keeps
building its positive image. Also, with its emphasis onsocial responsibility, Starbucks has a
corporate social responsibility annual report with information about the companys policy
towardsfairtrade,communityinterestandtheenvironment.Allthisshouldcontributetothegood
image:itisacceptedandevenpopulartovisitStarbucks.
Quality
AlthoughthecurrenttrendatStarbucksistoshortenthewaitingtimeofacustomerinastore,the
quality is still an important issue for the company. To justify the reasonably high prices of
Starbucks products, the company simply must strive for high quality. This is also directly
connected with the Starbucks image. Quality comes from the ingredients (exclusively grown
coffeebeans),thewayofcraftingandcustomerservice.ThreeaspectsofwhatStarbucksvalues
highly.
Innovation
InnovationisanimportantfactorinthesuccessoftheStarb ucks brand.Notonlyisthecompany
continuously exploring new products, store concepts and facilities and services, it is also
innovatingintermsofsocialresponsibility.Thecompanywasthefirstinitsbusinesstoactively
leadandparticipateinseveralcommunityandenvironmentprograms.
Consumersmotives
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Consumers of Starbucks are attracted by the concept of Starbucks, with its broad range of
exclusiveproducts.Basically,aStarbuckscustomerwantstoenjoythecombinationoftheimage,
thequalityandtheinnovationoftheStarbucksbrand.
4.3FinancialSituation
Becauseofthecharacterofthisreportitseemsirrelevanttothoroughlydiscussthecomplete
financialhistoryofStarbucks.Though,itisimportanttomentionthatthecompanyhasgenerally
beenatafinancialupwardmovementsinceitsfoundationinthe70s.Forthemostrecentperiod
thefollowingimageshowsthefinancialhighlightsofthepast6years:
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Figure4:FinancialstatisticsStarbucks20002005(Starbucks,2006,Annualreportp.16)
Figure4clearlydescribestheongoinggrowthateveryfinancialaspectofthecompany,during
thelast6yearsbefore2006.
Attheendof2006,thecompanymentionedthefollowingfinancialhighlights (Starbucks,2006,
Annualreportp.58):
Arecordworldwidestoreopeningsof2,199in2006
Consolidatednetrevenuesof$7.8billionforthefullfiscalyear,anincreaseof22percent
comparedwith2005
2006netearningsof$564million,comparedto$494millioninfiscalyear2005
Starbuckshasapositivefinancialsituationandtheprospectsfornextyearsarepromisingaswell.
ItneedsnoquestioningthatStarbucksiscapableofenteringnewmarkets.
4.4Conclusioninternalanalysis
WiththeaboveinformationaboutStarbucksanditsrelevantaspects,itispossibletodefinethe
strengthsandweaknessesofthecompany.ThisrepresentstheSWpartoftheSWOTanalysis.
Strenghts
Outstandinglycompleteandattractivewebsite
Clearorganizationalstructure
Positive working environment due to the companys emphasis on the importance of
employees(partners)
Worldwiderecognitionandpositivereputation
Highlyinnovatingrangeofqualitativeproductsandservices
Strongandflourishingfinancialsituation
Weaknesses
Relativelyhighpricesofproducts
Duetotheextensionoftheproduct/serviceportfolio,thecompany getsfurtherawayfrom
itsinitialcoreconceptStarbucksissometimesdescribedastheMcDonaldsofcoffee
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5.Starbuckscurrententrystrategy
TheCompanysobjectiveisto establishStarbucksasaworldwiderespectedbrand.Toachieve
this goal, the Company plans to continue rapid expansion of its retail operations, grow its
SpecialtyOperationsandselectivelypursueotheropportunitiestoleveragetheStarbucksbrand
throughtheintroductionofnewproductsandthedevelopmentofnewdistributionchannels.How
doesthecompanyplantheseactivities?Inthischapter,Starbuckspolicytowardsentrystrategies
innewmarketsisdescribedintermsof choiceoflocation,criteria,growthstrategies,distribution
anditsentrystrategyinpractice.
5.1Intheory
Choiceoflocation
When considering a possible location, Starbucks basically looks out for places with many
people,wherepeoplework,travel,shopanddine;forexample:shoppingmalls,airports,train
stations,businessareas,etc.Therangeofproductsiseventuallycustomized,toadaptitselftothe
localtaste.
Criteria
Starbuckshasdevelopedcertaindemandstowhich potentialjointventurepartnersandlicensees
havetoanswer.ThestrengthofeachqualitybelowwillgiveStarbucksinsightinthe actual
potential.Thefollowingcriteriaareused(Starbucks,2007,StarbucksCoffeeInternational,para.
2):
Compatiblevalues,philosophy&groupculture
Storedesign&constructionexpertise
Accesstodesirablerealestate
Publicrelationsexperience&marketcontacts
Detailedknowledgeoflocalculture&consumer
Knowledgeoflocalbusinesspractices
Supplychainmanagementexpertise
Food&beverageexpertise
Keyfunctionalareasofexperience(tax,legal,storedesign,operations,etc.)
Commitmenttolearningatalllevelsoftheorganization
Financialresources
Information&communicationtechnology
Multiunit,brandedretailorFood&beverageexperience
Merchandisingsuccess
Establishedhumanresourcepolicies
Strategies
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Fromthepastuntiltoday,Starbuckshasimplementeddiversebusinessstrategiestostayaheadof
itscompetitorsandtokeepinnovatingtowardsconsumers.Thiscanbedescribedwiththe helpof
theAnsoffgrowthmodel(Alsem,2000,p.72).Starbuckshasthefollowinggrowthstrategies:
MarketPenetration:
Starbucksadaptsproductstolocaltaste
LinksStarbuckslogotocustomersatisfaction
Convenientaccess,openlatenight
MarketDevelopment:
InternationalExpansion
Suppliesspecialtycoffeetosupermarkets
ProductDevelopment:
Increaseinfoodsalesandnoncoffeesales
JointVentures
Diversification:
Launchnewproducts(Frappuccinoetc.)
Distribution
Theentrystrategyisoften translated inthedistributionpolicy,becauseitdescribeshow the
products are being spread and through which channel (Veldman, 2004, p. 231).
Asmentionedbefore,Starbuckshasmanycompanyoperatedstores.Inaddition,thecompanyhas
intimemadeseveralarrangementsfordistributionchannels,likebusinessAlliances,licensing
agreements,jointventuresandinteractiveoperations.
5.2InPractice
Becauseofthedominatingpositioninitsline ofbusiness,Starbucksisoftencriticizedforits
dubiouswaysofenteringanewmarket.Inpractise,Starbucksmarketentrystrategywould
meanthatitinvolvesfindingamarketsleadingindependentcoffeeshopatfirst,andthengoing
tothelandlordofthatcoffeeshopandbuyingtheleaseoutfromunderthem,replacingtheshop
witha Starbucks.IfStarbuckscannotbuythelease,Starbuckswillopenseveralestablishments
around the shop and heavily promote to draw the crowd. The entrystrategy is efficient and
effective,butalsoquestionablyintermsoffairbusiness;Starbuckshastheadvantageofitsnear
monopolisticstatus.
5.3StarbucksabsenceintheNetherlands
Although,atfirstsight,theNetherlandsfitsintheStarbucksentrystrategyasdescribedabove,the
company has still not opened one single public Starbucks store in the country. The internet
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STARBUCKSENTERINGTHENETHERLANDS
provides several concerning discussions Starbucks absence in the Netherlands. Because
spokesmenofStarbucksdonotofferanyexplanationsforit,differentspeculationsnowcirculate
theweb(NRCHandelsblad, 2006, p.12).Theone saysthat Starbucksdoesnotopenastore
becauseofagentlemensagreementwithSaraLee,thecompanythatownsDouweEgberts
Koffie.TheotherstatesthatStarbuckssimplycannotfindsuitableAlocationsintheNetherlands.
Also,manypeoplesharetheopinionthatStarbucksconceptjustcouldnotworkbecauseofthe
existingDutchcoffeecultureinwhichpeopleenjoyasimplecupofcoffeeinanauthenticand
cosycoffeeshop,otherthanthewellknownStarbucksstores.AccordingtoCarijnManders,
Manager Business Development Schiphol Airport, Starbucks did not enter the Dutch market
before,becauseoftheireffortstoenterotherEuropeancountries (Manders,2007).
6.Externalanalysis
Atthischaptertheexternalenvironment ofStarbucksisbeingdescribed.Forthisreportonlythe
externalanalysisoftheNetherlandsisrelevant,becausethisthesisisaboutStarbucksentryinthe
Dutchmarket.ExternalfactorswhichcanhaveaninfluenceonthesuccessofStarbucksentering
theNetherlandsarethebranch,thecompetitors,theconsumersandthedistributionpossibilities.
TheexplorationoftheDutchmarketismeanttogiveinformationaboutthemarketpotentialof
theNetherlands(Veldman,2004,p.175).
6.1Branchanalysis
Thebranchanalysisgivesinsightindifferentfactorsofthemarketwhich can bedivided in
macroenvironmentfactors(DESTEP)andPortersFiveForcesmodel.
Macroenvironment
WiththehelpofaDESTEPanalysisonecangetanoverviewoftheexternalenvironmentandits
developments. DESTEP stands for: demographically, economic, social/cultural, technological,
ecologicalandpolitical
Demographicalaspects
TheNetherlandsisarelativelysmallcountrywitharelativelyhighpopulation.Ithasthenin th
largestpopulationinEurope,withabout16.3millionpeople.Itisslightlygrowingeveryyear,
but,becauseofthehighemigrationrate,thepopulationgrowthwilldecreaseandtheagingof
populationwillincrease.Thegreatestpartofthepopulationlivesandworksinthewesternpartof
the Netherlands (over 7.6 million people) (Centraal bureau voor de Statistiek [CBS], 2006,
Inwoners Stedelijk en Landelijk Gebied). Although the growing aging of population is a
negativeeffectforStarbucks,thedensityofpopulationisthesecondhighestinEurope,which
couldbeanattractivestatforthecompany.
Economicaspects
TheNetherlandshasalwaysbeenlookeduponasbeingawealthycountrywithhighpotentialfor
foreigninvestors.ThestructureoftheDutcheconomyischaracterisedasopenandoutward
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STARBUCKSENTERINGTHENETHERLANDS
looking.Thiscanbeseenintheratesofexportandimportofgoodsandservices,whichtogether
accountforover60percentofGDP.Since mid2004,theDutcheconomyhashadbadtimesand
showedonlymodestgrowthinthefollowingyear2005.Economicgrowthisstillsubstantially
belowthepotential,butsince2006,theeconomyisgrowingaswellasconsumerandproducer
confidence (Siddiqui, 2006, Healthy and Structural Growth of Dutch Economy). In 2006,
Dutchhouseholdsspentconsiderablymorethanoneyearpreviously.Consumerspendinggrew
3.5percentandpeoplespentmoremoneyondurablegoods.Householdspendingonfood,drinks
andtobaccoincreaseddistinctly(3.6percent)comparedtothepreviousyear.Dutchhouseholds
alsospentmoreonrecreation,hotelsandrestaurants.Thistrendofgrowingconfidenceinthe
economyisexpectedtoproceed,whichisagoodsignforproducersofluxuryproducts( Centraal
bureauvoordeStatistiek[CBS],2006,Consumentenvertrouwen).
Social/culturalaspects
TheDutchareknownasenthusiasticcoffeedrinkers;coffeeisthesecondmostconsumeddrink
intheNetherlands,aftertapwater.Peopletaketheirtimetodrinkcoffee,becauseoftenitisa
socialactivity.ThisispartoftheDutchcultureandcanbeobservedinleisuretimeandduring
work.Drinkingcoffeeisanacceptedformofrelaxationandsocialconduct.Although,theDutch
oftenconsumecoffeeindoors(70percent),ratherthanoutdoors(30percent),theylikevisiting
restaurantsorcoffeebarstoenjoymoreluxury (VerenigingvanNederlandseKoffiebrandersen
Theepakkers[VNKT],2005,AnnualReport,p.10).
Technologicalaspects
To make a cup of coffee is not a matter of putting the kettle on anymore. Advanced
technologiesandinnovationshavenowenteredthecoffeelovershouseholdstoo.Peopleareable
tobuyluxury,easytohandleespressomachineswithawiderangeofaccessories.Starbuckshas
followedthistrendbysellingluxurycoffeeequipmentinitsstores.
Ecologicalaspects
TheclimateoftheNetherlandsisvariableandchangeablefromdaytoday.Thiscanhardlycause
anyproblemstothesuccessofcoffeestores.Moreover,ashortshowercouldonlyleadpeople
towardsthenearestStarbuckstofindcoverandatthesametimeenjoyabeverageorsnack.Allof
theecologicalconditionsneededtocultivatecoffeeareofinferiorimportancetotheNetherlands,
becausecoffeeisimportedfromelsewhereanyway.
Politicalaspects
TheNetherlandshasastablepoliticalandsocialsituation.WithitsEuropeanUnionmembership,
the country is part of a large world power. This has certain advantages, like the use of the
internationally strong Euro and the lack of trade barriers. Basically, import and export have
become less complicated (Starbucks would not have any problems concerning export at all,
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STARBUCKSENTERINGTHENETHERLANDS
becauseofitsroastingplantinAmsterdam).Also,theDutchwaysofsocialconductanddoing
businesscanwellbecomparedtothoseoftheUnitedStates,thehomeofStarbucks.
PortersFiveForcesmodel
TheFiveForcesmodelofMichaelPorterillustratesthecompetitiveforcesintheenvironmentof
the company. This model describes the force of competitors, substitute products, suppliers,
consumers,andpotentialnewentrantsinthemarket(Veldman,2004,p.212).
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STARBUCKSENTERINGTHENETHERLANDS
(Threatof)
potential
entrants
Suppliers
Competitive
Rivalry
Consumers
(Threatof)
substitutes
Figure6.1:PortersFiveForcesmodel
Competitors
Thethreatofcompetitorsistobetakenintoaccount.VariousplayersintheDutchcoffeetostay
market are locally acknowledged and some of them are ambitious to expand their business
throughtheNetherlands.Consideringcompetition,Starbuckshasanadvantagewithitsworldwide
image.Moreover,manycompetitorshavecopiedtheessentialStarbucksconcept.Theentryof
StarbucksintheDutchmarketthereforemeanstheentryoftherealthing;somethingmany
peoplecouldappreciate.
Potentialnewentrants
NotonlydotheexistingcompetitorsposeathreattoStarbucks.Thepotentialnewentrantsinthe
coffeetostay market could have a certain influence on the success of Starbucks as well.
CompanieslikeCoffeestar,PiacettoandEspressamenteareplanningtoexploretheDutch
marketafteropeningtheirfirst(few)stores( Gordts,2006,p.60).Withthenewentrantsandthe
currentplayersintheDutchmarket,thereisagoodchancethatcompetitionwillbestrongand
eventuallyleadtoasurvivalofthefittestscenario.
Substitutes
ThemostimportantsubstitutefortheconceptofStarbucksis theoldfashionedcoffeehouse,
whichcanbefoundthroughoutthecountry.Itmaynotofferthesamerangeofproductsandit
maynothavethesameworldfamousimage,butitisafamiliarplacetogoforacosycupof
coffee.AnothersubstituteforavisittoStarbucksistheespressomachine,withwhichpeoplecan
maketheirownfavouritecoffeeintheirownhome.Nowadays,various,easytohandlecoffee
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STARBUCKSENTERINGTHENETHERLANDS
machinesareavailableforeveryone,forexample,theSenseobyDouweEgbertsandPhilips.
Withthebroadvarietyofpossibilitiesandflavours,peopledonothavetoleavetheirhousesto
enjoyapeacefulmomentwiththeirpersonallycustomizedcoffee.
Suppliers
Thethreatofsuppliersisinsignificant,becauseStarbucksalreadyhasaroastingplantandsupport
centreinAmsterdam.Therefore,Starbucksusesonlyitsownsupplyofproductsandservices
neededtokeepstoresinbusiness.
Consumers
Thedemandforluxurycoffeeproducts isgrowingintheNetherlands.Newentrantsinthemarket
are testing their luck, and current players are doing business quite well. Suppose this trend
proceeds,thepowerofconsumerswillincreaseeveryyear,becausetherewillsimplybemore
optionstochoosefrom.Therefore,thepowerofconsumersissignificant.
6.2Competitoranalysis
Thecoffeetostayconcepthasbecome popularintheNetherlands,andifStarbuckswoulddecide
toentertheDutchmarket,itwillnotbetheonlyplayerinitsmarket.Variouscompanieshave
planned to attain their shares in this potentially successful market. To decide which players
Starbuckshastobeawareof,itisimportanttoanalyzethecompetition.
Whoarethecompetitors?
Therearemanydifferentcoffeehousesthroughoutthecountry,whichprovidepeoplewithhot
beverages,fooditemsandacosyortrendyatmosphere. However,noteverycoffeehouseoffers
theconceptwhichStarbucksconsumerswishfor. ThisdoesnotmeanthatatraditionalDutch
coffeehousecannotcauseapotentialthreatasacompetitor.CompaniesintheNetherlandswhich
followthecoffeetostayconcept,canallbeconsideredpotentialcompetitors.
Theseare(Gordts,2006,p.60):
Bagels&Beans,marketleaderwith26storesthroughoutthecountry
CafDE,SaraLeescoffeestores
Espressamente,aconceptofIlly(Italy),whichemphasizesonQualitycoffee
Piacetto,aconceptofthelargecompanyTchibo(Germany)
Coffee Company, originally a Dutch concept; now supported by Mexx founder
ThecommonDutch,nonfranchised,coffeehousesinthelargecities
Thesecompetitorsaretestedintheanalysismodelinfigure6.2.Inthismodel,eachcompetitor
will get a score for certain important aspects of business. These are:
Image(theimageofthecompany/brandintheNetherlands)
Products(thediversityandexclusivenessofrangeofproducts)
Quality(levelofproductquality)
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STARBUCKSENTERINGTHENETHERLANDS
Price(theattractivenessofthepriceleveloftheproducts)
Facilities (the diversity of store facilities (internet, merchandise, coffeetogo, etc.))
Size(theamountofstoresintheNetherlandsin2006)
Ambition(theplansandpossibilitiesforthecompanytoexpandintheNetherlands)
Thepercentagesstandfortheweightofeachaspectandthenumbersstandforthescoreper
aspect,percompany.Thecompaniesgetcreditsfrom1(bad)to4(good).
Theprovidedscoresinthetablebelowwereaffectedbymyownfindings,byvisitingthewebsites
ofeachCompanyand,wherepossible,visitingthecompanystoresaswell.Ofcourse,qualityof
coffeecanbeperceiveddifferently;thereforeIratedthequalityinproportiontoacompanys
emphasisoncoffeequality.Forexample,Espressamenteclaimstohavecoffeebrewedbymaster
brewersfromanItaliancoffeeuniversity,whereasBagels&Beansfocusesmoreonfoodand
storeatmosphere.
Image
Quality
Price
Products
Facilities
Size
Ambition
25%
20%
15%
15%
15%
10%
10%
Starbucks
4(100)
4(80)
2(30)
4(60)
4(60)
330
Bagels&Beans
3(75)
3(60)
3(45)
4(60)
3(45)
4(40)
3(30)
355
CafDE
2(50)
3(60)
3(45)
3(45)
2(30)
3(30)
3(30)
290
Espressamente
1(25)
4(80)
1(15)
2(30)
2(30)
1(10)
2(20)
210
Piacetto
1(25)
4(80)
1(15)
2(30)
2(30)
1(10)
2(20)
210
CoffeeCompany
3(75)
3(60)
2(30)
3(45)
2(30)
2(20)
4(40)
300
3(60)
4(60)
2(30)
1(15)
4(40)
3(30)
335
Common Dutch
4(100)
coffeehouses
Totals
Figure6.2:Competitorscoretable
Conclusioncompetitoranalysis
Inreferencetotheabovetable(whichofcoursecannotpreciselycoverallcriteria),themain
potentialcompetitorsare:Bagels&Beans,CoffeeCompanyandthecommonDutchcoffeehouses
throughoutthecountry.Thesestoreshaveawellestablishedimageand provideagoodvaluefor
money,somethingwhichisimportantinDutchcultureinordertoattractasmanypeopleas
possible. The three potential competitors all have completely different concepts, but these
conceptscouldjustaswellbetheprofitablequalitiesthatcouldformapotentialthreattothe
entranceofStarbucksintheDutchmarket.
6.3Consumeranalysis
ToestimateStarbuckssuccessintheNetherlands,itisimportanttofindoutwhichDutchpeople
arepotentialStarbucksconsumers.Therefore,aprofileofthetypicalDutchStarbuckscustomer
hastobeformed.
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Marketsegmentation
Thiscanbedonewiththehelpofmarketsegmentation,inwhichthetotalmarketisdividedinto
differentsegmentstodecidewhatcharacteristicsthistypicalStarbuckscustomerhas.Withthis
information,thecompanyeventuallyknowswhichpeopletofind,wheretofindthemandhowto
attract them to Starbucks. In this thesis, segmentation will be based on a combination of
demographical,psychographical,behaviouralandgeographicalcriteria(Verhage,2004,p.199).
Demographicalcriteria
IntheNetherlands,outdoorcoffeeconsumptionispopular,butmoreexpensivethanindoors.
Generally, people of middle and upper level income can afford luxury outdoor coffee. Also
studentswithalowincome,butexpectedbrightfuturearewillingtopayahigherprice.From
teenagertosenior,fromworkingclasstoCEO,maleorfemale,almosteverypersonwithasuited
income is a potential consumer of Starbucks. However, in the following criteria, this broad,
diversegroupwillbereducedtocloserspecifications.
Psychographicalcriteria
AStarbuckscustomerstandsinthemiddleoftheeverchangingsocietywithselfconscienceand
selfconfidence.Thispersonconsidershimorherselfadynamicpersonwithaneyefortrends
andtasteandiswillingtopayextraforsomethingwhichfitsthisimage.IntheNetherlands,these
peoplecanbefoundunderstudents,(young)urbanprofessionals,touristsandmodernthinking
(retired)seniors;allhighereducated.Whenimplementing benefitsegmentation,peoplecanbe
dividedingroupsinwhichpeoplesharecertainproductadvantages.ForStarbucks,theseare:
convenience, variety, exclusiveness, quality and social status. Dutch people who are more
interestedindrinkingtheirgoodoldcupofcoffeeinanoldfashioned,lowprofilecoffeehouse
withafamiliarmenu,willnotbeattractedbyStarbucks.Peoplewholiketotrynewtastes,who
liketobegivenawiderangeofpossibilitiesandwholiketobeseeninadynamic,international
environment,willnotchoosethecoffeehouseatthecorner;theywillchooseStarbucks.
Behaviouralcriteria
BecauseStarbucksdoesnotyethaveapublicstoreintheNetherlands,itisdifficulttomention
brandloyalty.OnlypeoplewhohavevisitedaStarbucksstoreabroadareabletojudgeStarbucks
fromownexperience.Therefore,peoplewhohavegoneabroadandbecameStarbucksloverswill
nothesitatetolettheirbrandloyaltyleadthemtoStarbucksintheNetherlands.Thisalsocounts
for people from abroad, like expats (expatriots) or tourists. Starbucks is a worldwide
acknowledgedcompanyofwhichmanyDutchpeoplewillhaveheardof.Nevertheless,thereare
stillmanypeopleintheNetherlandswhoareunfamiliarwiththeStarbucksbrand.Considering
people with no Starbucksexperience, it is important to question their will to purchase a
Starbucksproduct.IntheNetherlands,peoplewillingtotrynewthingswithoutarguingtheprice
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STARBUCKSENTERINGTHENETHERLANDS
are,again,welleducatedpeoplewithrelativehighincomes.Animportantfactorforpeopleinthis
groupisthetimeandwilltovisittheirnearestStarbucksstore.
Geographicalcriteria
Asmentionedbefore,theNetherlandsisacountrywithalonghistoryofcoffeeconsumption.
Coffeeisbeingconsumedatahighratethroughoutthecountry.However,potentialconsumersof
Starbucks(asdescribedintheothercriteria)aretobefoundinthelargecitiesoftheNetherlands,
becauselargecitiesarecrowded,easytoreachandpackedwithshoppingandbusinessfacilities.
The following cities are in this case relevant: Amsterdam, Rotterdam, Haarlem, The Hague,
Utrecht,Eindhoven,Groningen,ArnhemandNijmegen.Thesearetheplaceswithahighrateof
urbanization,wherelargeamountsofpeopleworkandstudy.Thesearealsotheplacesthatare
mostvisitedbytourists.However,theidealplaceforStarbuckstofindtheirpotentialcustomers
wouldbeSchiphol,themainairportoftheNetherlandsandalargetransportationhub,centrally
locatedinthecountry.
Conclusionconsumeranalysis
Consideringthedifferentcriteriadescribedabove,theconsumersatwhomStarbuckshastofocus
oncarrythefollowingprofile:
Higheducatedpeoplewithabovetheaverageincomes,studying,visiting,livingorworkingin
largecities.
Thisprofilecoversthefollowingconsumergroups:
(young)urbanprofessionals
trendyretiredpeoplewithmoneyandsparetime
students
tourists
expatsintheNetherlands
6.4Distributionanalysis
Today,Starbuckshasalargeamountofstoresthroughouttheworld.The policiesofthecompany
towardstheusageofitsbrandarequiteclear;thecompanydoesnotworkwithfranchisesbut,in
manycases,itfinancesitsdevelopmentwithitsownmoney.Fortheirinternationaloperations,
Starbuckscurrentlyusesthreebusinessstrategies:jointventures,licenses,andcompanyowned
operations(Starbucks,2007,InvestorsFAQ,para.1).
Licenses:
Starbuckshasdebatedforawhilenow,whethertoentertheDutchmarket.Becausethereasonof
itsabsenceisstillinquestion,onecanpresumethatStarbuck smanagementhastheopinionthat
thefootholdinTheNetherlandsisstillnotstrongenough.WhenStarbuckswouldtakethenext
step in the Netherlands, it will for certainly not give the responsibility out of hands to any
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STARBUCKSENTERINGTHENETHERLANDS
company.Onlyincooperation witha company thatalreadyworkedtogetherwithStarbucks,
licensingwouldbeanoption.
JointVentures:
BecauseofthepopularityofcoffeeintheNetherlands,therearemanylargechainorganisations
likehotelsanddepartmentstores orlargeHoReCamanagementcompaniesthatknowhowto
handlethemarketingofacoffeecompany.Theirknowhowofmarketsegmentation,locations,
peoplesinterestsandlikingsmakethesecompaniessuitablebusinesspartiesforacompanywith
littleexperienceintheNetherlands,likeStarbucks.AJointVenturewithoneofthesebigchain
companiesisthereforealikelyscenarioforStarbucks.
Companyownedoperations:
WhileStarbucksCompanyhardlyhasthesuitableexperienceintheNetherlands,itwillbeasafer
andmorelogicalchoicenottoopenstoresunderitsownmanagement,butratherwiththehelpof
largecorporationswiththenecessaryknowhowoftheDutchcoffeemarket(seeJointVentures
above).
Physicaldistribution
ThephysicaldistributionofStarbucksproductstothepotentialstorelocations canberelatively
easy,withtheStarbuckscoffeeroastingplantbeinglocatedinAmsterdam.Everyspotinthe
Netherlandsiswellaccessiblefromthisplantbyanefficientroadandtrainnetwork.
6.5Starbuckscriticalenvironment
Being a major worldwide corporation Starbucks is subject to many critical opinions from
differentcornersofsociety.TherehavebeenmanycomplaintsaboutStarbucksleavingsmall
coffeestoreownersnochoicebuttogiveintoStarbucksandclosetheirshops.Also,Starbucksis
being accused of even cannibalising its own stores, just to be sure to own a certain area.
Therefore,Starbucksisseenmanytimes asacompanythatplaysamonopolisticroleinthe
market(Everything2,2004,Starbucks,para.3).AnotherissuechasingStarbucksisthequestion
if thecompanyissociallyresponsible enough.Hundredsofstrugglingcoffeefarmscouldbe
helpedbycooperatingwiththegiantcoffeeprovider,butithasbeenoftenquestionedwhether
Starbucksistodemandingaboutitscoffee.Thecompanysetsstandardstoitscoffeewhichmost
farmerscannotliveupto.
Starbucksisboycottedbypeoplecriticizingthecompanybecauseoftheseissuesandtherefore
thecompanyneedstokeepfocusingonitscompanyethicsanditssocialresponsibility.
6.6Conclusion(OT)
Considering the external analysis for Starbucks, being the potential Dutch market, one can
mention several aspects which can either cause threats or develop into possibilities for the
company.Theseaspectsareimportanttofocuson,becauseitshowshowStarbucksmightbe
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STARBUCKSENTERINGTHENETHERLANDS
influencedbyitsenvironmentwhenopeningupshopintheNetherlands. Inthischapterthe
conclusionoftheOpportunitiesandThreatsisgiven;itrepresentstheOTpartoftheSWOT
analysis.
Opportunities:
Manyhigheducated/internationallymindedpeople
HigheconomiclevelintheNetherlands
TremendouscoffeemarketintheNetherlands
Convenientandefficientdistributionpossibilities
Threats:
AuthenticcoffeecultureintheNetherlands
Developmentofambitiouscompetitorsinthemarket
StarbuckslackofknowledgeoftheDutchmarket
CriticismagainsttheevilcorporatecharacterofStarbucks
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STARBUCKSENTERINGTHENETHERLANDS
7.SWOTconfrontationmatrix
Strengths
Weaknesses
S1Positiveworkingenvironment
duetothecompanysemphasison
theimportanceofemployees
S2Worldwiderecognitionand
positivereputation
S3Highlyinnovatingrangeof
productsandservices
S4Strongandflourishingfinancial
situation
S5Effectivemarketingstrategy
W1Relativelyhighpricesof
products
W2Blurringofcompanyscore
conceptbyexpansionofthe
assortmentofproductsand
services
W3Companyoftendescribedas
theMcDonaldsofcoffee
Opportunities
SO1Companysimagematchesthe
potentialconsumermarketinthe
O1Manyhigheducated/
internationallymindedpeoplein Netherlands
SO2TheDutchareexperienced
theNetherlands
coffeedrinkersandwelcome
O2Higheconomiclevelinthe
innovativequalityproducts
Netherlands
O3Tremendouscoffeemarketin SO3Itspositivefinancialstatus
enablesreducestheriskofentering
theNetherlands
theDutchmarket
O4Convenientandefficient
SO4Starbucksshouldbringits
distributionpossibilitiesinthe
internationalimagetothe
Netherlands
internationallyminded:
transportationhubsandbigcities
Threats
ST1Starbucksneedstouseits
strongmarketingtechniquesand
T1Authenticcoffeeculturein
experiencetointroducetheDutchto
theNetherlands,differentof
itsinnovativeproducts
Starbucksconcept
ST2Starbucksworldwide
T2Developmentofambitious
acknowledgedbrandhasthe
competitorsinthemarket
T3Starbuckslackofknowledge advantageoverlessknown
competitors
oftheDutchmarket
ST3Starbucksneedstomaintainits
T4Criticismagainsttheevil
effortstobesociallyresponsible.Its
corporatecharacterofStarbucks
praisedworkingenvironmentand
positivereputationarevaluable.
WO1TheDutcharewillingtopay
extrafornew,qualityproducts
WO2Thecompanysdiverse
activitiesshouldbepromotedto
answertheDutchdemandfor
convenienceandservice,which
goeshandinhandwiththe
countrysdynamiceconomy
WO3TheMcDonaldsesque
characterofStarbucksappealsto
internationallymindedconsumers
WT1Withtheexpansionofthe
companysproductsandservices,
Starbucksshouldpromoteits
advantageovercompetitors
WT2Highpricesshouldbean
instrumenttoemphasizeonthe
companyexclusiveness
WT3Itsinternationalcharacteris
akeyforsuccessinthe
negotiationswithpotential
businesspartners
WT4Starbucksshouldfurther
developitssocialresponsibility
anditsreputation
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STARBUCKSENTERINGTHENETHERLANDS
Figure7:SwotAnalysis,confrontationmatrix
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STARBUCKSENTERINGTHENETHERLANDS
8.Conclusion
Theresearchdoneinthisthesishasbeennavigatedtowardsaconclusioninwhichthefollowing
researchquestioncanbeanswered: IstheDutchcoffeemarketreadyforStarbucksstoresand
withwhichinstrumentscanStarbucksgrowintheDutchmarket?
DebatingallrelevantinandexternalaspectsrelatedtoStarbucksandtheDutchcoffeemarket,it
isclearthatStarbucksandtheNetherlandsmakeagoodmatch.Inotherwords:theDutchcoffee
marketisreadyforStarbucks. TheStarbucksconceptwillnotfindanymacroenvironmental
obstacles in this country and the current high level economy of the Netherlands enables the
companytoattractconsumerstobuyitsrelativelyexpensivebutinnovatingandtrendyproducts.
StarbuckstargetgroupiswellrepresentedintheNetherlandsandtherehaveevenbeenclear
signals of peoples demand for Starbucks stores in their country. Finally, Starbuckslike
competitorsdoquitewellintheNetherlandswhichensuresStarbucksthatthisconceptcarriedout
bytherealthingwillgoodaswell,ifnotevenbetter.
8.1Recommendations
AlthoughStarbuckshasagoodchanceforsuccessintheDutchcoffeemarket,thecompanyhas
tokeepinmindsomepotentialthreatswhenconsideringitsentrystrategyintheNetherlands.
Thereforethefollowingistoberecommended:
TheDutchcoffeecultureisrichandgoesbackalongwayinhistory;theDutchare
criticalaboutthequalityofthecoffeeandtheoutdoorvenueshouldbecosyandpeaceful.
Starbucksistotallydifferentandthereforeithastoaimatpeoplewhoarefamiliarwith
theconcept.Thecompanyshoulduseitsfamousandtrendybrandtoreachforitstarget
groupofconsumers.
The Dutch are used to drink plain cups of coffee instead of the wide variety which
Starbucksoffers,thereforethecompanyshouldimplementawellconsideredmarketing
strategytopromotetheircoffeevarietyandcoffeerelatedproducts.
Starbucksshouldbringtheirinternationalimagetotheinternationallymindedwhoareto
befoundintouristcitycentresandmajortransportationhubs.Themostlogicalchoicefor
thefirststorewouldbeSchipholAirport.Withmanyinternationaltravellersandthelarge
shareofcoffeestoresatSchipholofaround40%(Manders,2007),Starbucksshouldbe
representedhere.
Asanywhereintheworld,thereareantiglobalistsprotestingagainstthedevelopmentof
majorcorporationslikeStarbucks,becauseofvariousreasons. Starbucksshouldmaintain
itssocialresponsibilityandrespectthesmaller,authenticcoffeehousesintheNetherlands
by,forexample,notaggressivelyexpandingitsbusinessatthecostofthesesmallscale
competitors(seechapter5.2)
Starbucksshouldoutdotheircompetitorsbyemphasizingontheiruniqueproductsand
diverseactivities.
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STARBUCKSENTERINGTHENETHERLANDS
BecauseofStarbuckslackofexperienceandknowhowintheNetherlands,thecompany
shouldworktogetherwithwellestablishedorganisations onajointventureorlicensing
basis. Thelatter would onlybe acceptable if it concerns a company that hasalready
cooperated with Starbucks. With this cooperation, Starbucks is being assisted in the
managementofthelocalstore.Potentialcandidatesforcooperationsare:HMSHosting
(SchipholAirport), Vroom&Dreesmann(MaxedaRetailgroup)andBeijenkorf(both
warehouse
chainsinlargecitycentres.
8.2Locationsuggestions
Asalreadymentionedintherecommendations,accordingtomyresearchStarbucksshouldopen
itsnewstoresatvenuesthatattractaninternationalandinternationallymindedaudience;people
whotendtoknowandliketheStarbucksconceptandproducts.IntheNetherlands,thesevenues
canbefoundatthecentreoflargecitiesandmajortransportationhubs. Figure8showssome
suggestedlocations.
CityCentres
Location
Why?
Amsterdam
TheHague
DeDam,LeidsePlein
HetPlein
Rotterdam
Koopgoot
Manytourists,easilyaccessible
Famoussquare,easytofind
Manytouristandshopping
facilities
Utrecht
Neude
Manytourists,centrallocation
Transportationhubs
Location
Why?
AmsterdamCentralstation
Arrivalhall
UtrechtCentralStation
HoogCatharijne
SchipholAirport
SchipholPlaza
Manytourists,closetoSchiphol
Airport
Shoppingcentreandmajortrain
connectionpoint
Accessibleforbothtravellersand
visitors
Figure8:LocationsuggestionsintheNetherlands
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9.ReferenceList
About Us. (n.d.) Investors FAQ. Retrieved on May 23, 2007 from Starbucks Website:
http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irolfaq#26956
AboutUs.(n.d.)StarbucksCoffeeInternational.RetrievedonMay8,2007fromStarbucks
Website:
http://www.starbucks.com/aboutus/international.asp
AboutUs.(n.d.)Annualreport2006.RetrievedonMay9,2007fromStarbucksWebsite:
http://www.shareholder.com/visitors/dynamicdoc/document.cfm?
CompanyID=SBUX&DocumentID=1382&PIN=&Page=18&Zoom=1x&Section=33416#
33416
AboutUs.(n.d.)MissionStatement.RetrievedonMay8,2007fromStarbucksWebsite:
http://www.starbucks.com/aboutus/environment.asp
Alsem,K.J.(2000). StrategischeMarketingplanning;Theorie,TechniekenenToepassingen (2e
druk).EducatievePartnersNederlandB.V.
CBS. (n.d.) Bevolking. Retrieved on May 21, 2007 from CBS Website:
http://statline.cbs.nl/StatWeb/Table.asp?
LYR=G2:9&LA=nl&DM=SLNL&PA=60039fvw&D1=26&D2=0
16&HDR=T&STB=G1
CBS. (n.d.) Consumentenvertrouwen. Retrieved on May 21, 2007 from CBS Website:
http://statline.cbs.nl/StatWeb/Chart.asp?
DM=SLNL&PA=71328ned&LA=nl&D1=0&D2=0&D3=a,!4,!9,!14,!19,!
24&HDR=T&STB=G1,G2&HEIGHT=768&WIDTH=1024
CompanyFactsheet.(n.d.)RetrievedonMay17,2007,fromStarbucksWebsite:
http://www.starbucks.com/aboutus/Company_Factsheet.pdf
Everything2.(n.d.)Starbucks,monoculture,andAmericanImperialism. RetrievedonMay28,
2007fromEverything2Website:http://www.everything2.com/index.pl?node_id=1535254
Gordts,E.(2006,November4).Horeca:GeenGewoonBakkieTroost.Elsevier,Issue44 2006,
p.60
ICO.(n.d.)TheStoryofCoffee.RetrievedonMay6,2007fromInternationalCoffeeOrganization
Website:
http://www.ico.org/coffee_story.asp
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Manders, C. (2007, June 6) Interview with former Manager Business Development Schiphol
Airport,Guangzhou,China
Mathijssen,G.(2006,January24)StarbucksTimmertaandeWeg.NRCHandelsblad,p.12
PositivelyCoffee.(n.d.)CoffeeandMentalPerformance.RetrievedonJune8,2007from
PositivelyCoffeeWebsite:http://www.positivelycoffee.org/topic_mental_revision.aspx
Siddiqui,F.(2006,November14)HealthyandstructuralgrowthofDutcheconomy.Retrievedon
May17,2007fromHollandtradeWebsite:
http://www.hollandtrade.com/vko/zoeken/showbouwsteen.asp?bstnum=1423
Veldman,H.(2004)ExportManagement(5eDruk).StenfertKroese
Verhage,B.J.(2004)GrondslagenvandeMarketing(6eDruk)StenfertKroese
VNKT. (n.d.) Jaarverslag 2005. Retrieved on May 30, 2007 from VNKT Website:
http://www.vnkt.nl/content/documents/VNKT_JAARVERSLAG_2005.pdf
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10.Appendices
10.1InterviewCarijnManders
10.2PressreleaseStarbucksintheNetherlands
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10.1InterviewCarijnManders
ManagerBusinessdevelopmentSchipholAirport
Date:29062007
WaaromzitStarbucksnognietopSchiphol?
Inmiddelsheeftdewerkelijkheiddevraagingehaald;op25junijl.heeftdeeersteStarbucks
vestiginghaardeurengeopendopSchiphol,Lounge1.Erzijnvoorhetkomendejaarnog3a4
gepland.
BentuooitbenaderddoorStarbucks?
Inhetverledenzijnergesprekkengeweest,maarwasStarbucksnietaggressiefomvestigingen
in Nederland en/of Schiphol te openen. Sterker nog, in die tijd (rond 2004) wilden ze zelfs
helemaalgeenvestigingenopeneninNederland,omdatzedrukbezigwarenmetexpansiein
Duitsland,Spanjee.d.enditverliepnietergvlekkeloos.
HoegoedpastStarbucksbinnenSchiphol?
Prima,maarwelopdejuistelocatie,eeninternationalebrand,herkenbaarengoedvankwaliteit,
alhoewelhetprijsniveaut.o.v.degebodenkwaliteitvorNederlanderseenredenkanzijnhetniet
tekopen.
HoegrootishetaandeelkoffiebarsopSchiphol?
40%vanhettotaleaanbod.
WatzietualsgrootsteafnemersgroepvooreeneventueleStarbucksopschiphol?
Deinternationalepassagierdiebekendis,ineigenland,metStarbucks.
HoeschatudekansvanslagenvoorStarbucksopSchipholin?
Groot vanwege haar internationale karakter; 40% van de passagiers is niet Nederlands.
WaarzoueeneventueleStarbuckskomen?(vertrekhal,achter/voordouaneetc.)
Inmiddels is de eerste store geopend achter de douane Lounge 1; er zijn plannen voor een
vestiginginlounge2en3,ookbeideachterdedouane,eneenvestigingopSchipholPlaza,het
winkelcentrumvoordedouane.
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10.2PressreleaseStarbucksintheNetherlands
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