Starbucks Expansion Strategy in Asia

Report On: Starbucks Expansion Strategy [Yea in Asia r] Report On: Starbucks Expansion Strategy in Asia Course: International Marketing (MKT 427) Submitted To: Mr. K. M. Raziuddin Taufique Course Instructor, MH School Of Business Presidency University Submitted By: Name Md. Sabbir Hossain Rabia Akter Humyra Nuzhat ID No. 052012025 062060025 083007025 Date of Submission: Date Of Submission: 07.11.2009 07.11.2009 Starbucks Coffee Expansion Strategy in Asia Table of Content Sl no 1. Topic Introduction Case Summary Company Overview 2 Marketing Stategy Of Starbucks Target segmentation Evaluation Of Segmentation Positioning Differentiation SWOT Matrix Confrontation Matrix Marketing Tools Brand Equity 3. Prioratization of Market Japan Singapore China Indonesia Prioritization Chart 4. 5. 6. 7. Expantion Strategy Roasting Strategy Appendix Reference 3-8 3 3-4 4 4 5 6 7 8 9-17 9-10 11-12 13-14 15-16 17 18-23 24 25 26 Page No. 2 Page 2 of 29 Starbucks Coffee Expansion Strategy in Asia 1. Introduction Case Summary: Starbucks is a USA based coffee roster & retailer operating worldwide. Their sales growth is rapid but the rate of growth is slowing. Therefore Starbucks want to expand their market in Asia as Asia is offering more potentiality in in market growth. They have to expansion strategy & the management has to face several issues such as: fierce competition, language barriers, and political instability. With the information in hand the management has to suggest the best strategy to select market & expand into it. To do this we have provided some informational background, SWOT analysis to enlighten the main issues. Finally we have pointed out the implementation our best strategy to expand the market. Company Overview: Starbucks was founded in 1971 by tree coffee lovers: Zev Siegl, Jerry Baldwin & Gordon Bowker. Its main office is in Seattle Pike Place Public Market. It has more than 10000 shops around the world at present. They are the market leader in North America. They mainly export coffee from Indonesia, Guatemala, Ethiopia & Kenya. They buy the finest Arabica beans from the world coffee market, regardless of price. They have a mission statement containing: working environment, highest standard of coffee purchasing, profitability, ethical issues & diversification. They contribute in charity & improvement of living standard of coffee producing countries. But the current situation is that they have quick sales growth but the growth rate is falling. Page 3 of 29 Starbucks Coffee Expansion Strategy in Asia 2. Marketing Strategy of Starbucks Target segmentation: Approach Base Geographical segmentation Aggregate Demographical segmentation Category Income Two stage International Segmentation Sub Category Asia Pacific High incomers Moderate incomers Upper class Disaggregate Behavioral Upper middle class Working class User Rate Regular drinker Benefits Quality Social Class Evaluation of Segment: These segments are measurable, large enough to provide profitability & accessible. They are on the basis of two-stage international segmentation. Therefore, according to the target segment & market attractiveness we would suggest for selective specialization. • Different line of product can be provided to different segments according to their preference. o Japan: Both high & moderate incoming groups are present in Japan & coffee can be provided according to their price preference. Most of the customers in this region are in working class therefore they prefer coffee most. They are concerned about the quality to this will be beneficial. They are regular drinker & world’s 3rd highest coffee consumers. o Singapore: High & moderate incoming groups are residing here & most belongs to upper class & upper middle class is present in Singapore. But as the competitors providing lower price should be of two types in this region to grab the market. They are indulged with luxury so variety of products should be provided with good atmosphere. Page 4 of 29 Starbucks Coffee Expansion Strategy in Asia o China: most people prefer tea so better quality should be ensured that Starbucks already has but the price should be also lower in this region. o Indonesia: It’s a major coffee producer & exported of the world. They are regular drinker of coffee so quality & user status based segmentation is most suitable. But the price should be moderate in this area. Positioning: Global Consumer Culture Positioning (GCCP) & Foreign Consumer Culture Positioning (FCCP) should be followed because these Japan & Singapore is very keen to adopt the image of the country of origin (USA) & global customer. Indonesia has a very good political relation with USA & they are also having a reputation for producing world class coffee. Differentiation: • • The products should be affordable for the customers. Ordering process will be easy: can be ordered via internet & telephone. • Higher courteous employees should be hired to ensure good relationship with customers Page 5 of 29 Starbucks Coffee Expansion Strategy in Asia SWOT- Matrix: Strengths Internal factors (S & W) products Weakness cannibalization S1. Starbucks provides high quality W1. Starbucks has been facing S2. Starbucks has many joint venture W2. Starbucks has partners merchandizing effort S3. Starbucks has high brand equity poor External factors (O & T) S4. Starbucks has a very good relation with the community W3. Starbucks does not have any roasting plant in Asia W4. Starbucks does not promote extensively S5. Staffs are courteous and customer service is excellent S6. Starbucks has a strong distribution W5. Product pricing (expensive) channel Opportunities O1. There is very good potentiality in Asia to expand market O2. New coffee markets are emerging in Asia SO 1. Grow vertically to include other low cost countries using good brand. 2. Using good relationship with community, Starbucks could create more joint-venture with local companies. WO 1. Using brand extension and technological advances to overcome promotional and poor merchandising weaknesses. 2. Reduce costs to reduce price in low investment markets and get benefits from the growing markets. O3. Increasing disposable income in 3. Strong distribution channels could Asia be used to create horizontal line O4. Technological advances extension (beverages, CD’s etc.) O5. Brand extension. Threats T1. The growth rate of sales is ST 1. Differentiate using the high brand and strong distribution channel to prevent sales decline. WT declining for current recession. T2. Fragile state of worldwide production of specialty coffees T3. Cultural and political issues in foreign countries 1. Reduce costs to reduce price in order to survive in the current financial crisis (transportation cost, labor 2. Make backward vertical integration cost etc.). using good community relations and joint-venture to avoid volatility of coffee and dairy 2. Establishing plant in Asia or investment to overcome roasting & cost problems. Page 6 of 29 Starbucks Coffee Expansion Strategy in Asia Confrontation Matrix: O&T S&W S1 S2 S3 S4 S5 S6 W1 W2 W3 W4 W5 values for O & T O ++ + ++ ++ ++ + 0 0 -+6 T 0 0 + 0 0 0 0 ---5 values for S & W +1 +1 +2 +3 +2 +1 0 0 -4 -3 -2 +10 -9 O +6 • Starbucks S W -9 -5 +10 T Page 7 of 29 Starbucks Coffee Expansion Strategy in Asia Marketing Tools: Product Changes can be done in Price packaging Two pricing strategy can be followed: o High price for Japan & Singapore o component. Such as: o Different sizes can be offered o Different prices can be offered to the customers. Changes can be done in support service components: o Ordering process can be made easier & faster o Great outing environment can be created. Place • • Stores can be opened in offices Can be provided to hospitals specially emergency units • • Can be provided in railway stations Bus stops can be a good option Moderate price for Singapore, China & Indonesia Promotion • As most of these countries have languages, religions & diversified cultures the advertisement should be done according to these • Advertisement televisions • Radio is a good option for advertising should be done in Page 8 of 29 Starbucks Coffee Expansion Strategy in Asia Brand Equity: Starbucks is a well-known organization. As Starbucks is provides quality & social status & follows some ethics almost everyone has a positive attitude toward its brand. They are also very successful around the world. They are providing quality service & products. Starbucks can create brand equity by following ways: • Local influential people & Hollywood actors can be asked to be the brand ambassador as there are diverse group of people & they like USA image. • They can create a very comfortable & friendly atmosphere as it is grabbed by the Singaporean customers. Even in Japan people works like machine if this environment it provided it will be success. • Starbucks can provide Wi-Fi zone in the café so that people can work & enjoy at the same time. People in Japan, Singapore & China are very active & lead a very busy life therefore this can create a good image in these markets. • These segments have high living expectancy so Starbucks can offer discounts to senior citizens. The same thing can be done for the students. • Membership can be offered to the regular drinkers. This will be helpful to do business in Japan & Singapore. • These countries arranges sports events like: badminton tournament, basketball tournament, racing events, hand ball tournament, snooker championships, table tennis tournaments therefore Starbuck can grab the opportunity to create brand equity by sponsoring them. • They can start providing full meals as it is preferred by the Singaporean & Japanese customers. • Indonesian coffee is world famous therefore this can be added to brands equity. 3. Prioratization of Market Page 9 of 29 Starbucks Coffee Expansion Strategy in Asia In the priority market section we analyzed different markets through SWOT and confrontation matrix individually. These analyses has led us to the priority market for Starbucks in Asia Pacific. JAPAN Japan has a high per capita income. Its per capita income is the highest is Asia. They are the 3rd largest coffee consumer in the world. Starbucks is offering the same menus that they offer in USA. Japanese customers are very much keen to drink quality coffee. The Japanese people love to think themselves as westernized. The operation cost in japan is very high. SWOT- Matrix Strengths 1. Strong alliance with local people. 2. Specialty blends experience of local people. 3. High quality of product. 4. Huge customer based market for coffee. 5. Bottled beverage is producing Opportunities 1. The largest economy in Asia Pacific. 2. High demand for coffee. 3. Openness towards USA products and Western lifestyle. 4. Fastest growing segment for coffee. 5. Bottled beverage appreciation of customers. Threats 1. Operational costs(labor, rent, retail space) are high. 2. Falling economic growth. Weaknesses 1. Supply doesn’t meet high demand for Coffee. 2. No roasting facility available. Confrontation Matrix Page 10 of 29 Starbucks Coffee Expansion Strategy in Asia O&T S&W S1 S2 S3 S4 S5 W1 W2 values for O & T O ++ ++ ++ + + -+5 T 0 0 0 --5 values for S & W +2 +2 +1 0 +1 -2 -4 -6 +6 O +5 • Starbucks W -6 -5 +6 S T Page 11 of 29 Starbucks Coffee Expansion Strategy in Asia SINGAPORE Singapore is known as the lion state, it has a high growing rate of market 11%.it has one of the best living condition is Asia. There is many diversified group of people living in Singapore. They are very much indulged with food & coffee. There are many competitors present in this region for specialty coffee. But the market is becoming crowded with coffee shops. SWOT – Matrix Strengths 1. Products are trendy and American. 2. Starbucks coffee has consistent high quality. 3. Staffs are courteous and customer service is excellent. Opportunities 1. High per capital 2. Preference for western life-style and products 3. High Standard of living. 4. High coffee consuming market. Threats 1. Aggressive competitors. 2. Over crowded market with competitors and still growing. 3. Divers population. 4. Declining economic growth. 5. Declining growth in retail industry. 6. Ambiguity about coffee market leader. Weaknesses 1. Less diversifiable products. 2. Less opportunity for service differentiation 3. Comparatively high price. Page 12 of 29 Starbucks Coffee Expansion Strategy in Asia Confrontation Matrix O&T S&W S1 S2 S3 W1 W2 W3 values for O & T O ++ ++ + 0 +3 T 0 0 --5 Values for S & W +2 +2 0 -3 -2 -1 -6 +4 O +3 W -6 -5 +4 • Starbucks S T Page 13 of 29 Starbucks Coffee Expansion Strategy in Asia CHINA China has a large number of potential customers. They are an emerging economy but have low demand for coffee. They are basically tea consuming country & one of the smallest coffee markets in the world. SWOT -Matrix Strengths Starbucks provides quality coffee. 2. 3. Weaknesses Starbucks has high cost for products 2. 3. Starbucks have many varieties of Starbucks has strong distribution They have a niche segment They have very poor coffee including snacks. channel. Opportunities 1. 2. There is a lots of potential customers China has huge population in this market promotion Threats 1. 2. 3. High preference for in China subsidiary goods Low demand for coffee The market is very small Page 14 of 29 Starbucks Coffee Expansion Strategy in Asia Confrontation Matrix O&T S&W S1 S2 S3 W1 W2 W3 Values for O & T O ++ ++ 0 -0 +1 T 0 + 0 -0 -2 Values for S & W +2 +3 0 -4 0 -2 -6 +5 O +1 -6 • Starbucks -2 +5 S W Page 15 of 29 Starbucks Coffee Expansion Strategy in Asia T Page 16 of 29 Starbucks Coffee Expansion Strategy in Asia INDONESIA Indonesia has very good per capita income in Asia & they have a high living standard. They are the 4th largest producer & 3rd largest exporter of coffee in the world. Starbucks import a large part of coffee for Asia from Indonesia. They are one of best producer of finest Arabica coffee beans & provide a great roasting facility. Starbucks got a positive response when they launched their first outlet in Indonesia. SWOT- matrix Strengths 1. 2. 3. Starbucks imports most of its coffee beans Starbucks has a very good relation with Starbucks has a positive response of Weaknesses 1. Starbucks did not expanded its business in this potential market 2. Starbucks did not made a clear market survey of Indonesia 3. Starbucks does not promote much for Asia from Indonesia Indonesian coffee farmers as well as community customers 4. Starbucks has excellent staffs speaking diversified languages Opportunities 1. Threats 1. There are lots of different speaking is people terrorism in in language Indonesia 2. Indonesia is the 4th largest coffee producer There is less competitors in this market Indonesia has a high per capita income Positive relation between SCAI & SCAA Indonesia provides roasting facility Availability of efficient & cheap labor 2. 3. 4. 5. 6. There Indonesia Page 17 of 29 Starbucks Coffee Expansion Strategy in Asia Confrontation Matrix O&T S&W S1 S2 S3 S4 W1 W2 W3 values for O & T O ++ ++ + ++ 0 +5 T 0 0 0 0 0 -2 values for S & W +2 +2 +1 +1 0 -1 -2 -3 +6 O +5 -3 • Starbucks +6 -2 S Page 18 of 29 Starbucks Coffee Expansion Strategy in Asia W T Page 19 of 29 Starbucks Coffee Expansion Strategy in Asia Prioritization Chart: Prioritization of the Market 1. Market • • • • • • Reasons and Explanations Japanese people consume too much coffee They have a high per capita income They are less affected by price They are mainly concerned about the quality of taste These segment has less competitors The opportunity these segment provides is much more profitable that the weaknesses & threats can be over looked Cheap production cost Positive response of customers Positive image on the country The threats & the weaknesses can easily be overcame by utilizing the opportunities Diversified lifestyle Very much competition is present Price sensitive customers are also present The profit is less in this segment as the main barrier is the competitors & many diversifications are needed here. The market has low demand for coffee The market is very small The customers are very concerned about price There are some political contradiction with USA This market does not provide any potentiality about the coffee market there for it is not much attractive Japan 2. Indonesia • • • • 3. Singapore • • • • 4. China • • • • •  With these analyses in mind we would recommend to expand the Japanese and Indonesian markets; and our so, expansion strategies would emphasize on these two Asian markets for Starbucks coffee. 4. Expansion Strategies Page 20 of 29 Starbucks Coffee Expansion Strategy in Asia In evaluation of different segments we considered Japan and Indonesia as potential & priority of expanding markets for Starbucks. We choose these markets because of its promising attractiveness, mass coffee consumers, economic stability and coffee producing and roasting ability. After entering and becoming stabilized into those markets we considered some expansion policies and strategies to maintain growth in those segments. These strategies are discussed below according to the markets. Japanese Market and Expansion Strategies:The Store Expansion Strategy: As Japanese market is showing significant growth and potential for Starbucks, store expansion is inevitable to reach all the targeted customers in Japan. Starbucks had notable success in identifying top retailing sites for its stores. The company has the best real estate team in the coffee-bar industry and a sophisticated system that enabled it to identify not only the most attractive individual city blocks but also the exact store location that was best. Even though real state is expensive and difficult to get but slow expansion of stores would be profitable for foreseeable future. The company could also introduced two mini-store formats using the same styles and finishes. Such as store-within-a-store for supermarkets or office-building lobbies, and a self-contained small space that could be moved from spot to spot. Real Estate, Store Design, Store Planning, and Construction: Starbucks would create zone vice presidents to direct the development of each region and to implant the Starbucks culture in the newly opened stores. Through them Starbucks would create a "stores of the future" and a third place for people to congregate beyond work or the home, a place that welcomed people and rewarded them for coming, and a layout that could accommodate both fast service and quiet moments. The Starbucks team researched the art and literature of coffee throughout the ages, studied coffee-growing and coffee-making techniques, and looked at how Starbucks stores had already evolved in terms of design, logos, colors, and mood. The team would come up with four store designs—one for each of the four stages of coffee making: growing, roasting, brewing, and aroma—each with its own color combinations, lighting scheme, and component materials that would signify not only The Starbucks atmosphere but also the Japanese drinking culture and heritage. Page 21 of 29 Starbucks Coffee Expansion Strategy in Asia Product Line: Starbucks stores would offer a choice of regular or decaffeinated coffee beverages, Italian-style espresso drinks, fresh-roasted whole-bean coffees, a selection of fresh pastries and other food items, sodas, juices, teas, and coffee-related hardware and equipment, Frappuccino blended beverage, Chai Tea Latté (a combination of black tea, exotic spices, honey, and milk.) etc. to Japanese market. Larger stores would carry a greater variety of whole coffee beans, gourmet food items, teas, coffee mugs, coffee grinders, coffee-making equipment, filters, storage containers, and other accessories. Smaller stores and kiosks typically would sell a full line of coffee beverages, a limited selection of whole-bean coffees, and a few hardware items. Also the Starbucks CDs, created from the Capitol Records library, would prove a significant addition to the company's product line. Store Ambience: Starbucks management has looked upon each store in northern America and Europe as a billboard for the company and as a contributor to building the company's brand and image. There each detail was scrutinized to enhance the mood and ambience of the store, to make sure everything signaled "best of class" and that it reflected the personality of the community and the neighborhood. The thesis was "Everything matters." The company went to great lengths to make sure the store fixtures, the merchandise displays, the colors, the artwork, the banners, the music, and the aromas all blended to create a consistent, inviting, stimulating environment that evoked the romance of coffee, that signaled the company's passion for coffee, and that rewarded customers with ceremony, stories, and surprise. To try to keep the coffee aromas in the stores pure, Starbucks banned smoking and asked employees to refrain from wearing perfumes or colognes. Prepared foods were kept covered so customers would smell coffee only. Colorful banners and posters were used to keep the look of Starbucks stores fresh and in keeping with seasons and holidays. Company designers have come up with artwork for mugs and T-shirts in different cities that was in keeping with each city's personality. These differentiations would be helpful for expansion in Japanese market. Building a Top Management Team: Hiring people with extensive experience in managing and expanding retail chains would contribute largely to defining and shaping the company's values, principles, and culture. As the company will grow, additional executives would be added in marketing, store supervision, specialty sales, human resources, finance, and information systems. Page 22 of 29 Starbucks Coffee Expansion Strategy in Asia Bonding with Customers: Starbucks has a huge loyal customer base in northern America and Europe. Starbucks Baristas became familiar with these regular customers, learning their names and their favorite drinks. In Japan this service differentiations could be significant to expand the market and increase loyalty and brand affection towards Starbucks. Mail Order Sales: In Japan, Starbucks could publish a mail-order catalog offering coffee, candies and pastries, and select coffee-making equipment and accessories. A special business gift-giving catalog could be mailed to potential customers during holiday seasons. The company could also have an electronic store on the Internet. This direct-response marketing effort could help the retail expansion and reinforce brand recognition in new Japanese market. Joint Ventures: In Japan, where there is an $8 billion market for ready-to-drink coffeebased beverages, could face low reception for Starbucks beverages. So, joint venture with local companies could have a feasible success. Starbucks already have joint venture with beverage, ice cream, music, beer and various other companies in northern America and in other countries. Licensed Stores and Specialty Sales: Starbucks could start entering into a limited number of licensing agreements for store locations in areas where it do not have ability to locate its own outlets. Starbucks could receive a license fee and a royalty on sales at these locations and supply the coffee for resale in the licensed locations. All licensed stores have to follow Starbucks' detailed operating procedures and all managers and employees who worked in these stores would receive the same training given to Starbucks managers and store employees. Starbucks could also have a specialty sales group that would provide its coffee products to restaurants, airlines, hotels, universities, hospitals, business offices, country clubs, and select retailers. Corporate Responsibility: Starbucks is one of the largest corporate contributors in North America to CARE, a worldwide relief and development organization that sponsored health, education, and humanitarian aid programs in most of the Third World countries where Starbucks purchased its coffee supplies. Starbucks have alliance with Appropriate Page 23 of 29 Starbucks Coffee Expansion Strategy in Asia Technology International to help poor, small-scale coffee growers in Guatemala increase their income by improving the quality of their crops and their market access. Starbucks have an Environmental Committee that looked for ways to reduce, reuse, and recycle waste, as well as contribute to local community environmental efforts. There is also a Green Team, consisting of store managers from all regions. As Japan still have massive casualties from nuclear attack of WW2, Starbucks could have peace and charity projects for them. Also there are many other community development and social charitable projects with which Starbucks is involved and could bring these corporate responsibilities in Japanese market. Indonesian Market and Expansion Strategies:The Store Expansion Strategy: Indonesian coffee market has a distinctive advantage as a coffee producer and roaster of coffee beans and so, this market has already been introduced with coffee. But specialty blends affection and coffee culture like America has not been developed in this region. So store expansion is needed but with proper alliance and venture with local companies (like strong and well-known real-estate company). Also Starbucks could introduce two mini-store formats using the same styles and finishes. Such as store-within-a-store for supermarkets or office-building lobbies, and a self-contained small space that could be moved from spot to spot. As investment could be lower than other market because of low labor cost. Product Supply: Although most coffee was purchased in the commodity market—coffee was the world's second largest traded commodity—coffee of the quality sought by Starbucks was usually purchased on a negotiated basis at a substantial premium above commodity coffees. Later, Starbucks entered into fixed-price purchase commitments in order to secure an adequate supply of quality green coffee beans and to limit its exposure to fluctuating coffee prices in upcoming periods. When satisfactory fixed-price commitments were not available, the company purchased coffee futures contracts to provide price protection. Nonetheless, there had been occasions in pasts when unexpected Page 24 of 29 Starbucks Coffee Expansion Strategy in Asia jumps in coffee prices used to hamper the company's margins and necessitated an increase in the prices of its beverages and beans sold at retail. But creating a market in the Indonesia could introduce opportunities to reduce those unexpected threats of coffee beans supply for Starbucks. It will also create an opportunity for Indonesia to become leading coffee producer (Brazil leading with 2,249,010 tons and Indonesia at 3rd with 697,377 tons) and Starbucks would be provided with necessary quality coffee beans for roasting. Product Line: In Indonesia, Starbucks would offer almost all the products like, regular or decaffeinated coffee beverages, Italian-style espresso drinks, fresh-roasted whole-bean coffees, a selection of fresh pastries and other food items, sodas, juices, teas, and coffeerelated hardware and equipment, Frappuccino blended beverage, Chai Tea Latté (a combination of black tea, exotic spices, honey, and milk.) etc. but within moderate price to expand the market. Joint Ventures: Join venture with local companies could be a winning decision for expansion. As Indonesia is coffee producer and roaster, Starbucks could have immense advantage to collect and supply coffee in Indonesia as well as in whole Asia without adding extra cost for roasting and transporting from America. Licensed Stores and Specialty Sales: Starbucks could have some licensed partners in Indonesia to distribute and sell their coffee and related products under their supervision. All licensed stores have to follow Starbucks' detailed operating procedures and all managers and employees who worked in these stores would receive the same training given to Starbucks managers and store employees. Corporate Responsibility: As Starbucks is involved in many corporate responsibilities, and as they have good relationship with local farmers and coffee producers, it could give them a competitive advantage over local retailers and resellers. Starbucks could introduce peace and development projects like primary education for farmers and their children, coffee related education, health and safety etc. to increase their image in Indonesia. Bonding with Customers: As Indonesian coffee market is growing, bonding with local customers is crucial to have a long term loyalty towards Starbucks, and as Starbucks Page 25 of 29 Starbucks Coffee Expansion Strategy in Asia already has distinctiveness for service quality and relation with customers in retail stores of other region, they could bring the differentiation in to Indonesian market. Building a Top Management Team: Hiring, building and developing top managers from foreign as well as local market could be a long term benefit as the company will grow in that market, so will be the competency of locally developed managers. 5. The Sourcing Strategy Indonesia is 4th largest producer of coffee in the world & the 3rd largest exporter of coffee beans. Even a large share of coffee beans of Asia is imported from Indonesia by Starbucks. Indonesia mainly exports to USA, Japan, China & Singapore. Indonesia also has a very good facility for roasting coffee. The islands of Indonesia are very favorable for roasting. Especially Bali, Sumatra is two of the best places for roasting coffee beans. Starbucks also helps to improve the living standard of the coffee farmers, therefore they Page 26 of 29 Starbucks Coffee Expansion Strategy in Asia have a cost effective advantage here. They have an association SCAI that is very supportive & maintains a good relation with the USA association SCAA. In Asia Indonesia is the largest roaster of coffee. If Starbucks start sourcing in Indonesia they will be able to get cheaper price, efficient labor at lower cost & political support from the government. As Indonesia already have good production and roasting facilities available, Starbucks does not need to make a large investment there. They could only invest in TQM (total quality management) facility for local production and roasting facilities; and also an inventory and packaging facility for distributing all over Asia Pacific region. It could cut their cost for full coffee plant investment and will maintain good relationship with local coffee producers for a long time. Therefore on the basis of presented facts Starbucks should consider Indonesia as a potential coffee sourcing facility. Page 27 of 29 Starbucks Coffee Expansion Strategy in Asia 6. Appendix Legend for confrontation Matrix -0 ++ + The two opposites have a high negative interactive effect The two opposites have a low negative interactive effect The two opposites have neither positive nor negative interactive effect The two opposites have a high positive interactive effect The two opposites have a low positive interactive effect Page 28 of 29 Starbucks Coffee Expansion Strategy in Asia 7. Reference Book: 1. International Marketing, 13th edition Philip R.Cateora, John L.Graham McGraw-Hill International Edition 2. Principles of Marketing, 12th Edition Philip Kotler & Gary Armstrong Prentice-Hall 3. Marketing Management, 11th edition Philip Kotler Pearson education Case: Starbucks Market Expansion Strategy in Asia Instructor: Mr. K. M. Raziuddin Taufique Instructor, MH School Of Business Presidency University Course Materials: 1. Global Segmentation, Chapter-7 2. Product & Service for Consumers, Chapter-12 Internet:http://www.starbucks.co.jp/en/beverage/brewed_coffee.html http://www.starbucks.co.jp/en/coffees/asia_pacific/index.html http://en.wikipedia.org/wiki/Indonesian_coffee http://en.wikipedia.org/wiki/Specialty_Coffee_Association_of_Indonesia http://en.wikipedia.org/wiki/Indonesia http://en.wikipedia.org/wiki/Indonesian_cuisine#Beverages Page 29 of 29