Competing in a Global Market
Starbucks Corporation is a Seattle, Washington-based coffee company.
It buys, roasts, and sells whole bean
specialty coffees and coffee drinks through an international chain of retail outlets.
From its beginnings as a seller of
packaged, premium specialty coffees, Starbucks has evolved into a firm known for its coffeehouses, where people
can purchase beverages and food items as well as packaged whole bean and ground coffee. Starbucks is credited
with changing the way Americans--and people around the world--view and consume coffee, and its success has
attracted global attention.
Starbucks has consistently been one of the fastest growing companies in the United States.
Over a 10-year period
starting in 1992, the company’s net revenues increased at a compounded annual growth rate of 20%, to $3.3 billion
in fiscal 2002. Net earnings have grown at an annual compounded growth rate of 30% to $218 million in fiscal
2002, which is the highest reported net earnings figure in the company's history (See
On Wall Street, Starbucks is the last great growth story. Its stock, including four splits, has soared more than
2,200% over the past decade, surpassing Wal-Mart, General Electric, PepsiCo, Coca-Cola, Microsoft, and IBM
in total return. Now at $21 [September 2002], it is hovering near its all-time high of $23 in July , before
the overall market drop.
To continue this rapid pace of growth, the firm’s senior executives are looking to expand internationally.
Specifically, they are interested in further expansion in Europe (including the Middle East), Asia Pacific (including
Australia and New Zealand) and Latin America. Expanding in these three continents represents both a challenge
and an opportunity to Starbucks.
While the opportunity of increased revenues from further expansion is readily
apparent to the company’s top management, what is not clear is how to deal with growing “anti-globalization”
sentiment around the world.
This case looks at issues that are arising as Starbucks seeks to dominate specialty coffee markets around
the world and explores what changes in strategy might be required.
This case was written by Professors Suresh Kotha and Debra Glassman, both from the University of Washington, Business School, as the basis
for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
Some of the facts provided in
the case have been disguised to protect confidentiality.
Copyright © Kotha & Glassman 2003.
All rights reserved.
, Business Week
, September 9, 2002, p. 100-110.