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 ID No.

Md. Sabbir Hossain 052012025
Rabia Akter 062060025
Humyra Nuzhat 083007025

Date of Submission:
Date Of Submission: 07.11.2009
07.11.2009
 Starbucks Coffee Expansion Strategy in Asia

Table of Content

Sl no Topic Page No.

1. Introduction 2

Case Summary

Company Overview

2 Marketing Stategy Of Starbucks 3-8

Target segmentation 3

Evaluation Of Segmentation 3-4

Positioning 4

Differentiation 4

SWOT Matrix 5

Confrontation Matrix 6

Marketing Tools 7

Brand Equity 8

3. Prioratization of Market 9-17

Japan 9-10
Singapore 11-12
China 13-14
Indonesia 15-16
Prioritization Chart 17
4. Expantion Strategy 18-23

5. Roasting Strategy 24

6. Appendix 25

7. Reference 26

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 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.

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 Starbucks Coffee Expansion Strategy in Asia

2. Marketing Strategy of Starbucks

Target segmentation:

Approach Base Category Sub Category

Geographical segmentation Asia Pacific
Income High incomers
Moderate incomers
Aggregate Demographical Upper class
Two stage
International segmentation Social Upper middle class
Segmentation Class
Working class
User Rate Regular drinker
Disaggregate Behavioral Benefits Quality

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
& worlds 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.

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 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: Its 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

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 Starbucks Coffee Expansion Strategy in Asia

SWOT- Matrix:
Strengths Weakness
Internal factors S1. Starbucks provides high quality W1. Starbucks has been facing
products cannibalization
(S & W)
S2. Starbucks has many joint venture W2. Starbucks has poor
partners merchandizing effort
S3. Starbucks has high brand equity W3. Starbucks does not have any
roasting plant in Asia
S4. Starbucks has a very good relation
External factors with the community
W4. Starbucks does not promote
S5. Staffs are courteous and customer extensively
(O & T)
service is excellent

S6. Starbucks has a strong distribution W5. Product pricing (expensive)

Opportunities
O1. There is very good potentiality
in Asia to expand market
O2. New coffee markets are
emerging in Asia
O3. Increasing disposable income in
3. Strong distribution channels could
Asia
O4. Technological advances
O5. Brand extension.
channel
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.
be used to create horizontal line
extension (beverages, CDs etc.)
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.

Threats
T1. The growth rate of sales is
declining for current
recession.
T2. Fragile state of worldwide
production of specialty
coffees
T3. Cultural and political issues
in foreign countries
ST
1. Differentiate using the high
brand and strong distribution
channel to prevent sales decline.
2. Make backward vertical integration
using good community relations
and joint-venture to avoid volatility
of coffee and dairy
WT
1. Reduce costs to reduce price
in order to survive in the
current financial crisis
(transportation cost, labor
cost etc.).
2. Establishing plant in Asia or
investment to overcome
roasting & cost problems.

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 Starbucks Coffee Expansion Strategy in Asia

Confrontation Matrix:

O&T
O T values for S & W
S&W
S1 ++ - +1
S2 + 0 +1
S3 ++ 0 +2
+10
S4 ++ + +3
S5 ++ 0 +2
S6 + 0 +1
W1 0 0 0
W2 0 0 0
W3 -- -- -4 -9
W4 - -- -3
W5 - - -2
values for O & T +6 -5

+6
Starbucks

W S
-9 +10

-5

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 Starbucks Coffee Expansion Strategy in Asia

Marketing Tools:

Product Price

Changes can be done in packaging Two pricing strategy can be followed:

component. Such as:
o High price for Japan & Singapore
o Different sizes can be offered
o Moderate price for Singapore, China
o Different prices can be offered & Indonesia
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 Promotion

Stores can be opened in offices As most of these countries have

diversified languages, religions &
Can be provided to hospitals specially
cultures the advertisement should be
emergency units
done according to these
Can be provided in railway stations
Advertisement should be done in

Bus stops can be a good option televisions

Radio is a good option for advertising

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 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 caf 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
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 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 Weaknesses

1. Strong alliance with local people. 1. Supply doesnt meet high demand for

2. Specialty blends experience of local people. Coffee.

3. High quality of product. 2. No roasting facility available.

4. Huge customer based market for coffee.

5. Bottled beverage is producing

Opportunities Threats

1. The largest economy in Asia Pacific. 1. Operational costs(labor, rent, retail space)

2. High demand for coffee. are high.

3. Openness towards USA products and Western 2. Falling economic growth.

lifestyle.
4. Fastest growing segment for coffee.

5. Bottled beverage appreciation of customers.

Confrontation Matrix
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 Starbucks Coffee Expansion Strategy in Asia

O&T
O T values for S & W
S&W

S1 ++ 0 +2

S2 ++ 0 +2

S3 ++ - +1 +6

S4 + - 0

S5 + 0 +1

W1 - - -2
-6
W2 -- -- -4

values for O & T +5 -5

+5 Starbucks

W S
-6 +6

-5

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 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 Weaknesses

1. Products are trendy and American. 1. Less diversifiable products.

2. Starbucks coffee has consistent high quality. 2. Less opportunity for service differentiation

3. Staffs are courteous and customer service is 3. Comparatively high price.

excellent.

Opportunities Threats

1. High per capital 1. Aggressive competitors.

2. Preference for western life-style and products 2. Over crowded market with competitors
and still growing.
3. High Standard of living.
3. Divers population.
4. High coffee consuming market.
4. Declining economic growth.

5. Declining growth in retail industry.

6. Ambiguity about coffee market leader.

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 Starbucks Coffee Expansion Strategy in Asia

Confrontation Matrix

O&T
O T Values for S & W
S&W

S1 ++ 0 +2

S2 ++ 0 +2 +4

S3 + - 0

W1 - -- -3

W2 - - -2 -6

W3 0 - -1

values for O & T +3 -5

+3

W S
-6 +4

-5 Starbucks

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 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 Weaknesses

Starbucks provides quality coffee. Starbucks has high cost for products
2. Starbucks have many varieties of 2. They have a niche segment
coffee including snacks. in this market
3. Starbucks has strong distribution 3. They have very poor
channel. promotion
Opportunities Threats

1. There is a lots of potential customers 1. High preference for

in China subsidiary goods
2. China has huge population 2. Low demand for coffee
3. The market is very small

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 Starbucks Coffee Expansion Strategy in Asia

Confrontation Matrix

O&T
O T Values for S & W
S&W

S1 ++ 0 +2

S2 ++ + +3 +5

S3 0 0 0

W1 -- -- -4

W2 0 0 0 -6

W3 - - -2

Values for O & T +1 -2

+1 +5
S
-6
Starbucks -2

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Starbucks Coffee Expansion Strategy in Asia

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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 Weaknesses

1. Starbucks imports most of its coffee beans 1. Starbucks did not expanded its
for Asia from Indonesia business in this potential market
2. Starbucks has a very good relation with 2. Starbucks did not made a clear
Indonesian coffee farmers as well as community market survey of Indonesia
3. Starbucks has a positive response of 3. Starbucks does not promote much
customers
4. Starbucks has excellent staffs speaking
diversified languages
Opportunities Threats
1. Indonesia is the 4th largest coffee producer 1. There are lots of different
language speaking people in
2. There is less competitors in this market
Indonesia
3. Indonesia has a high per capita income
2. There is terrorism in
4. Positive relation between SCAI & SCAA Indonesia

5. Indonesia provides roasting facility

6. Availability of efficient & cheap labor

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Confrontation Matrix

O&T
O T values for S & W
S&W

S1 ++ 0 +2

S2 ++ 0 +2
+6
S3 + 0 +1

S4 ++ - +1

W1 0 0 0

W2 - 0 -1 -3

W3 - - -2

values for O & T +5 -2

+5 Starbucks

-3
S
+6
-2

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Prioritization Chart:

Prioritization
Market Reasons and Explanations
of the Market
1.
Japanese people consume too much coffee
They have a high per capita income
They are less affected by price
Japan 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
2. Cheap production cost
Indonesia Positive response of customers
Positive image on the country
The threats & the weaknesses can easily be overcame by
utilizing the opportunities
3. Diversified lifestyle
Singapore 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.
4. The market has low demand for coffee
The market is very small
China 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

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

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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 designsone for each of the four stages
of coffee making: growing, roasting, brewing, and aromaeach 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.
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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 Latt (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.

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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 coffee-
based 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

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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 marketcoffee
was the world's second largest traded commoditycoffee 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
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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 coffee-
related hardware and equipment, Frappuccino blended beverage, Chai Tea Latt (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

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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
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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.

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6. Appendix

Legend for confrontation Matrix

-- The two opposites have a high negative interactive effect

- The two opposites have a low negative interactive effect

0 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

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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

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