John Fredemont G.

Manangan
Starbucks Coffee Company


INTRO:
Starbucks got its start in 1971 when the three academics,English teacher Jerry Baldwin, history teacher Zev Siegl, andwriter Gordon Bowker opened Starbucks
Coffee, Tea, andSpice in Seattle. Initially, Starbucks ordered coffeebean supplies from a specialty coffee retailer, buttoward the end of the first year, they
purchased a usedroaster, set up roasting operations, and came up withtheir own blends and flavors.In 1981, Howard Schultz decided to pay Starbucks a visit.
Schultz was immediately takenby the powerful and pleasing aroma of the coffee. After taking three sips of the brew, Schultzwas hooked. He began asking
questions about the company andits ways of roasting coffee. On his return trip to New York, Schultzcould not stop thinking about Starbucks and what it would
be liketo be a part of the enterprise. But it took a year, numerousmeetings for Schultz to have his job in Starbucks.In 1984, the original owners of Starbucks, led
by Jerry Baldwin, took the opportunity topurchase Peet's. During the 1980s total sales of coffee in the USA were falling, but sales of specialty coffee increased,
forming 10% of the market in 1989, compared to 3% in 1983. By1986 the company had 6 stores in Seattle and had only just begun to sell espresso coffee.In
August 1987, - who left Starbucks inlate 1985 and formed his own company, IlGiornale Coffee Company, bought Starbucksand combine with his own Company.
Thename of the combined company is StarbucksCorporation, and Howard Schultz became Starbucks president and CEO at the age of 34 By 1989 there were 46
stores across the Northwest and Midwest in 1989 and Starbucks wasroasting over 2,000,000 pounds of coffee a year. At the time of its initial public offering on
thestock market in June 1992, Starbucks had grown to 140 outlets and had a revenue of $73.5m,up from $1.3m in 1987. Its market value was $271m. The 12%
portion of the company soldraised the company around $25m which would help it double the number of stores over thenext two years. By September 1992, the
share price had risen 70% to over 100 times theearnings
per share of the previous year. From the IPO, Starbucks stock price continuously increase overtime, even after 2-for-1 stock split,its stock price isoften higher
thanor at least equal tohalf of theprevious price. Forinstance, the pricechange from$48.25 to $27.50after a 2-for-1 split in Sep 30, 1993. In June 28, 2013, its
stock price reached $65.51.In 1996, Starbucks opened its first location outside North America in Tokyo, Japan.Starbucks entered the U.K. market in 1998 with
the $83 million acquisition of the then 65-outlet, UK-based Seattle Coffee Company, re-branding all the stores as Starbucks. From there,Starbucks started to
expand its business all over the world.In 2012, Starbucks has more than 18,000 stores worldwide and 13.3 billion U.S. dollars intotal revenues (about 11% higher
than its total revenue in 2011). Today, at least one in ahundred cups of coffee served every day is Starbucks and it's estimated to have 32.6% shares inthe
market.


1.) PESTLE ANALYSIS: PESTLE analysis is a tool that can aid organizations making strategies by helping them understand the external environment in
which they operate now and will operate in the future. It is a method of examining the many different external factors affecting an organization - the
outside influences on success or failure

The PESTLE analysis will be used to identify and understand the important factors Starbucks must consider in all areas of the business.

Political:
* Taxation policy - high taxation imposed on farmers in those countries producing the coffee bean will usually mean Starbucks pay a higher price for the coffee
they purchase. Any fluctuations in taxation levels in the industry are almost certainly ultimately passed on to the consumer. Tax was lowered for these 'small
holder' farmers and this saving will have been passed on to purchasers of coffee like Starbucks.
* Deregulation - A decade ago, the USA pulled out of the ICA (international Coffee Agreement) that set export quotas for producing nations and kept the price of
coffee fairly stable. Coffee quotas and price controls ended. Since the deregulation farmers have suffered and their earnings have dropped. Many have struggled
to make a living so have given up.
* International trade regulations/tariffs - Trade issues will affect Starbucks predominantly when exporting and importing goods. When another country's
government imposes a tariff it not only results in an efficiency loss for Starbucks but large income transfers can become inconsistent with equity. This extra
charge can turn a bargain into a rip-off. Also, since 9/11, trade relations have been adversely affected between the USA and some other countries.
* Government stability
The forthcoming American elections may have an effect on Starbucks as new legislation or new or existing government may bring in taxes. Also, those countries
in political turmoil or civil war (e.g. Zimbabwe at present) should be approached with great caution when considering new ventures.
* International stability -The aftermath of 9/11 was an example of an economic downturn that affected the world market. If the world market is in a slump it is
not usually the ideal time for a business to look at grand expansion.
* Employment law - A reduction in licensing and permit costs in those countries producing the coffee bean for Starbucks would lower production costs for
farmers.
This saving would in turn be passed on to the purchaser.

Economic:
* Interest rates - A rise in interest rates means investment and expansion plans are put off resulting in falling sales for Starbucks and their suppliers. Also
mortgage repayments rise so consumers have less disposable income to spend on luxury products such as coffee. Low interest rates should have the opposite
effect.
* Economic Growth - If growth is low in the nation of location of Starbucks then sales may also fall. Consumer incomes tend to fall in periods of negative growth
leaving less disposable income. Consumer confidence in products can also fall if the economic 'mood' is low
* Inflation rates - Inflation is a condition of increasing prices. It is measured using the
Retail Price Index (RPI) in the UK. Business costs will rise for Starbucks through inflation, as will shoe-leather costs as they shop around for new 'best prices' of
materials, menu costs will rise as Starbucks have to create new price lists. Also, uncertainty is created when making decisions not least because inflation
redistributes money from lenders to borrowers. A firm that borrows L1000 during an inflation period will pay back less in 'real terms' as the value of this money
will decline over the period.
* Competitors pricing - Competitive pricing from competitors can start a price war for
Starbucks that can drive down profits and profit margins as they attempt to increase, or at least maintain, their share of the market.
* Globalization - Globalization of the coffee market has meant farmers of the bean now earn less money than they used to. This can result in a decrease of
people willing to do it for a living, which will mean a decrease in coffee produced, resulting in a drop in Starbucks supply levels and probably profits.
* Exchange rates - Starbucks are affected by exchange rates when dealing with international trade. If the value of the currency falls in the country of a coffee
supplier this enables Starbucks to get more for their $ or L when importing the goods to their country. This saving can be passed along to the customer.
Exchange rates are forever changing throughout the world in today's market


Social:
* Population demographics - Population demographics are a very important factor for Starbucks as they identify what parts of the population they need to aim
their products at or which parts of the population they need to encourage to visit their stores more than they presently do. Looking at the table in the case study
demonstrating the percentage of the age groups that drink coffee or speciality coffee it can be seen that
the age groups that Starbucks should be aiming their marketing at are the people between 35 and 54. They should consider targeting the 18-24 age group as
they drink the least amount comparatively and by encouraging this segment to choose Starbucks coffee now, there is a chance they may continue to drink it long
into the future.
* Income distribution - Where income is distributed is another factor that Starbucks should look at as this also demonstrates the ideal place to aim their
marketing or to locate their stores. Coffee is more of a luxury product so it is those people/places with the most amount of disposable income to spend that
should be targeted the most intensely.
* Attitude to work - Starbucks would not want to locate to an area where the local population have a poor attitude to work. Recruitment would be difficult,
training arduous, and staff turnover would be high. Attitudes to work are important in other ways. A large number of workers in large cities now go out for their
lunch rather than use an internal canteen. Starbucks can use this to their advantage and promote the shop as a place where people can meet up and so it will
mean that they will get a larger amount of people in their stores at this time of the day.
* Standard of education/skills - When Starbucks are deciding upon new premises they must look at the standards of education and skills locally. They must be
sure there are people who live there with sufficient skills to ensure successful operation of the business, or at least the potential to learn that comes with a good
education.
* Working conditions/safety - Those people with the most disposable income, e.g. young single professionals etc, will be accustomed to high standards.
Starbucks must ensure it's shops are clean and comfortable, service is of the highest order and health and safety issues are fully addressed
* Location - Transport needs to the premises must be considered for both staff and customers. Easy access is vital to ensure there is no excuse for staff to arrive
late or for customers not to visit.
* Age distribution - Research shows the average age of the population is getting older and birth rates are stagnating. Starbucks is presently aiming it's product at
young people but maybe these views will change in the long-term as the market proportion for young people diminishes. The most profitable way forward may
be to widen their target market despite the risk of alienating present customers.
* Health consciousness - Good health and foodstuffs associated with healthy living are important I today's market place, as this is a trend that is occurring at the
moment in western societies. Starbucks can use this information when deciding the additional products to sell, as well as coffee, as a large number of their
customers are looking for healthy alternatives to cakes and biscuits, which have been associated with coffee in the past.

Technological:

* IT development - Starbucks is always looking to develop and improve its Internet facilities. Starbucks launched its first-generation e-commerce Web site in
1998. In late 1999, Starbucks decided the site needed a major upgrade to enable new functionality and prepare for long-term growth. To achieve these goals,
Starbucks upgraded to Microsoft Commerce Server 2000, one of the key Microsoft .NET Enterprise Servers. As a result, scalability and performance have
improved, and the company now has the tools it needs to profile and target customers, analyse site data, and deliver new features to the market in the shortest
time possible.
* New materials and processes - Developments in the technology of coffee making machines and the computers that Starbucks use to run their cash registers
will enable their staff to work more quickly and efficiently. This will result in customers being served quicker and create the potential to serve more customers in
a day. This will prevent customers from having to wait around for long periods thus improving
customer relations along with increasing the customer base.
* Software upgrades - In the short-term, Starbucks must identify the most efficient software upgrades to use to keep up with the competition. This applies to the
improving the accessibility of their website (www.starbucks.com) and also improving the speed and quality of the service provided on the shop floor.
* Research and Development activity - As a multi-national business empire, Starbucks has the budget and the resources to have a cutting-edge R+D department.
The website is very accessible, the facilities are state of the art but more importantly new ideas are consistently being tried in terms of a constantly updating
menu.
* Rate of technological change - The rate of technological change in the current world market is high, much higher than, say, thirty years ago. Much of this is
down to the Internet and the speed with which information can be communicated around the globe. Starbucks will need to invest heavily just to stand still in
their ever expanding and developing market, and even more so to try to stay ahead of competitors.

Legal:
* Trade and product restrictions - Starbucks need to be aware of the trade laws in the various countries they occupy and do business with. They need to ensure
they are not in violation of e.g., religious laws. Also, certain countries impose a tariff that has to be paid when goods are imported/exported so this must be
taken into account.
* Employment law - Each country has varying employment laws. Some may have a Sabbath day, some may have a limit on the number of hours an employee
may work per week, all will have varying levels of minimum wage. Starbucks should consider these factors when deciding on relocation.
* Health and Safety regulations - Starbucks may find these regulations are not as stringent or well enforced in certain countries. It would be wise though to
enforce a universally high standard of health and safety throughout all it's shops to maintain a good global image and ensure all laws are abided by. Also, by not
maintaining high standards they will be liable for a large amount of civil cases as it is a legal requirement for them to enable that their staff and customers are
safe when they are in their stores.
* Monopolies commission - If Starbucks consider expanding their operations further to control an even larger percentage of the market than they already have
they will have to consider the possibility of breaking monopolies legislation as they may have a share of the market that is too large. This would mean that they
would have unfair advantage over other companies in the same market. This would mean that they could benefit from economies of scale and would also be
able to charge prices that were not competitive in the market and get away with it due to the lack of competition. The Competition Commission are in place to
try and prevent these situations occurring [e.g. CC (back then the MMC) block BskyB attempted takeover of Manchester United in 1999].
* Land use - Starbucks may have to abide by local planning regulations when building shops or altering purchased sites, as certain areas of land may be
protected or unsuitable. All matters would be addressed by the local government.

Environmental:

* Pollution problems - Starbucks customers create a lot of waste as they often leave the shop with their cup of coffee and then dispose of it in the street. The
packaging for this cup must be carefully considered to make it as biologically degradable as possible. Certain other materials can be very harmful to the natural
environment.
* Planning permissions - Planning permission may not be granted if Starbucks wish to
build in an area that could be harmful to the environment. The land may be protected. * Work disposal - Starbucks need to carefully consider the methods in
which they dispose of their waste as there are strict laws in most countries to ensure a firm trading in their country disposes of the waste that is created in their
business in a specific and efficient way. If they do not follow these laws they may find themselves being sanctioned, which not only affects them financially but
also tarnishes the reputation of the brand name, as most of the waste created will bear the logo of Starbucks.
* Environmental pressure groups - Starbucks should be aware of the physical and influential power of groups such as Greenpeace and Friends of the Earth. Any
violation of animal or environmental rights by a company is usually followed by a swift and attention-drawing protest from one of the groups. Brand image and
customer bases are often irreconcilably tarnished due to the actions of these groups.

2.) WORLD TRADE ORGANIZATION

As Starbucks establishes a global presence, its growing ubiquity has not gone unnoticed by anti-globalization activists. A clear manifestation of this came in
November 1999, as tens of thousands of protesters took to the streets of downtown Seattle when the World Trade Organization (WTO) held its 3rd Ministerial
conference there. Although non-governmental organizations (NGOs) and activists had gathered to oppose the WTO, some activists deliberately targeted
multinationals like Starbucks, Nike and McDonalds.25 A small, but vocal, percentage of these protestors garnered international press coverage by committing
acts of vandalism against carefully chosen targets.

Starbucks faces anti-globalization movement.
-Dropped sales from $10.4 billion in 2008 to $9.8 billion in 2009. Dropped profits from $673 billion in 2007 to $582 billion and $494 billion in 2008, 2009
respectively.
-The firm closed 475 stores in the US in 2009 to reduce costs.
-Saturated market with over 10,000 stores scattered across the US.
-Self-cannibalization (opening stores in the same area)
-Reduced companys share of the profits to only 20 50 %.
-Starbuck faced cultural challenges. The company faced a hostile reception from its future consumers, the 20 or 30 something of generation x (born from 1960
1980) cultural changes

Starbucks also has political implications, since its serves as a symbol of globalization for many. Many websites are maintained for the purpose of criticizing
Starbucks as a monopoly. During the 1996 World Trade Organization (WTO) talks, several Starbucks shops located in Seattle were vandalized with the anarchist
symbol A. In response to such criticism, Starbucks has become the largest buyer of Certified Fair Trade coffee beans in the world and is a Certified Fair Trade
retailer of coffee in over 23 countries. The Certified Fair Trade coffee label assures the consumer that coffee bean farmers were not exploited, since certification
requires meeting rigorous international criteria.

3.) The World Banks latest Ease of Doing Business study ranks the U.S. No. 4 overall and No. 1 among the 25 largest economies. In the words of the
World Bank, A high ranking on the ease of doing business index means the regulatory environment is more conducive to the starting and operation
of a local firm. Unlike so many business trade associations and lobbyists, the World Bank recognizes that the regulatory environment includes many
rules that enhance and protect business activity, and the U.S. ranks especially high in protecting investors, enforcing contracts, and getting credit.


----The rank of the United States on the World Banks Ease of doing business has vastly affected Starbucks in terms of the categories given by the World Bank.
Starbucks has been proved to have started the business very well, given that From Starbucks' founding in 1971 as a Seattle coffee bean roaster and retailer, the
company has expanded rapidly. Since 1987, Starbucks has opened on average two new stores every day. This could not have happened if the company had not
started in the US territory, that, according to WB, has met every single one of the categories very precisely. The company has been branched out all over the
world, trading across borders, enforcing contracts and resolving insolvency. It has recovered from the WTO protesters mentioned above; the US had obviously
protected the company, which is one of the most important keys of the given topic.

4.) MNC
In order to succeed internationally, Starbucks has needed to adapt to unique marketswhile preserving a commitment to its core competencies, namely high
quality, efficiency, and good customer service. As an example, In 1994, Starbucks entered into a joint venture with Pepsi-Co to help with its distribution
chains.Pepsi-Co already had extensive international distribution chains throughout the world. With Pepsi-Co, Starbucks entered into the cold coffeemarket.
Japan at the time had an $8 million dollar a year market for ready-to-drink coffee based beverages.

This market provided crucial information that Starbucks used when deciding to enter the Asian market. The fact that Japan did not have a dominant market
leader meant that timing was also crucial.Starbucks success abroad has enabled the company to become one of the largest in the world within the decade after
its first journey outside of North America. In 2006, 10 years after having entered the Japanese market, Starbucks revenues had reached around $8 billion,
triplingin the three years prior. In 2006 alone, international revenues jumped over 30% and Starbucksrevenues from international operations expanded from 9%
to around 20% between 1997 and 2006, respectively which helped the company gain their name and be able to compete with other coffee shops internationally

5.) CULTURAL DIFFERENCES
Making the decision to enter China can present both tremendous opportunities as well as daunting challenges for brands that are unfamiliar with Chinese
consumers. When mainstream coffee brand Starbucks entered China in 1999, they faced a nation rooted historically and culturally in drinking tea. Yet,
today, Starbucks boasts over 800 stores throughout China and continues to grow. An outstanding example of understanding consumers, Starbucks can
credit its success to a keen understanding of the Chinese market and their approach towards constant innovation and much of how Starbucks
communicate with the customers as a way to have a personalized one on one conversation.. Mr. Wu, the managing director of Maxims Caterers, Starbucks
joint venture partner in China said, "The Chinese especially, they mostly cannot drink coffee alone, it must go with food," said Wu, explaining the
generalized Chinese notions of coffee that Starbucks is hoping to transform. Thus making sales per customer higher than in the United States they buy
coffee with food. Despite the cultural differences, Starbucks business is going extremely well.

6.) DEMOCRACY
Starbucks has entered a democratic brand by making a public website called, My Starbucks Idea. Started in 2008, My Starbucks Idea is an online
ideation platform. At the core of this online community is the philosophy that consumers who benet from the Starbucks experience need to be
involved in creating and advancing it. Members can submit ideas on what new products, new locations or changes to existing products and locations
they want to see. Starbucks has democratized its own brand by empowering customers to create, vote and discuss ideas for improving the brand
experience. The conversation is monitored and guided by Starbucks employees. Ideas that become popular are nally take up for action. Customer
and brand relationships are moving from being transactional to becoming partnerships. This relates to the concept of brand democracy; the theory
that you dont own your brand the people do. Its about creating an opportunity to make a product their own and democratize the brand. It is
beneficial to consider the new consumer as creative partners. My Starbucks Idea has helped Starbucks stay relevant in the face of a bearish retail
sector and competition from lower margin operators like McDonald's.


7.) The MAIN ETHICAL ISSUE Starbucks is faced with, is their strategy of expanding their company. Known as clustering, Starbucks attempts to open as
many locations around the globe as possible, often leading to many locations on one street. This method has many ethical issues, the main one
concerning smaller coffee shops. Locally owned coffee shops tend to go out of business and bankrupt because of the many Starbucks locations in the
vicinity. Starbucks has been criticized on issues such as fair-trade coffee, as well as genetically modified milk, and the accusations of running small
coffee shops out of business in the U.K. It covers everything from serving up genetically engineered growth hormone in milk and a relentless union-
busting campaign, to attempting to block Ethiopias attempts to improve the livelihoods of coffee growers.

8.) High INTEREST RATES may affect Starbucks in its investments in capital goods and other interest-rate-sensitive spending. In addition, high interest
rates might lower Starbucks asset prices when using the concept of present value. Fiscal policies may differ from one country to another and, even
though they may not affect Starbucks operating results, they may have an influence on the net results. In addition, taxation affects investment and
potential output.




WORLD TRADE ORGANIZATION:

WTO is an organization that intends to supervise and liberalize international trade.

The organization deals with regulation of trade between participating countries by providing a framework for negotiating and formalizing trade agreements and
a dispute resolution process aimed at enforcing participant's adherence to WTO agreements, which are signed by representatives of member governments
[6]:fol.9
10
and ratified by their parliaments.
[


The WTO provides a forum for negotiating agreements aimed at reducing obstacles to international trade and ensuring a level playing field for all, thus
contributing to economic growth and development. The WTO also provides a legal and institutional framework for the implementation and monitoring of these
agreements, as well as for settling disputes arising from their interpretation and application. The current body of trade agreements comprising the WTO consists
of 16 different multilateral agreements (to which all WTO members are parties) and two different plurilateral agreements (to which only some WTO members
are parties).

Main activities:
negotiating the reduction or elimination of obstacles to trade (import tariffs, other barriers to trade) and agreeing on rules governing the conduct of
international trade (e.g. antidumping, subsidies, product standards, etc.)
administering and monitoring the application of the WTO's agreed rules for trade in goods, trade in services, and trade-related intellectual property rights
monitoring and reviewing the trade policies of our members, as well as ensuring transparency of regional and bilateral trade agreements
settling disputes among our members regarding the interpretation and application of the agreements
building capacity of developing country government officials in international trade matters
assisting the process of accession of some 30 countries who are not yet members of the organization
conducting economic research and collecting and disseminating trade data in support of the WTO's other main activities
explaining to and educating the public about the WTO, its mission and its activities.

**The opening of national markets to international trade, with justifiable exceptions or with adequate flexibilities, will encourage and contribute to sustainable
development, raise people's welfare, reduce poverty, and foster peace and stability. At the same time, such market opening must be accompanied by sound
domestic and international policies that contribute to economic growth and development according to each member's needs and aspirations.

Principles of the trading system
The WTO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is concerned with setting the rules of the trade policy
games.[45] Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO:

--Non-discrimination. It has two major components: the most favoured nation (MFN) rule, and the national treatment policy. Both are embedded in the main
WTO rules on goods, services, and intellectual property, but their precise scope and nature differ across these areas. The MFN rule requires that a WTO member
must apply the same conditions on all trade with other WTO members, i.e. a WTO member has to grant the most favourable conditions under which it allows
trade in a certain product type to all other WTO members. "Grant someone a special favour and you have to do the same for all other WTO members."[29]
National treatment means that imported goods should be treated no less favourably than domestically produced goods (at least after the foreign goods have
entered the market) and was introduced to tackle non-tariff barriers to trade (e.g. technical standards, security standards et al. discriminating against imported
goods).

--Reciprocity. It reflects both a desire to limit the scope of free-riding that may arise because of the MFN rule, and a desire to obtain better access to foreign
markets. A related point is that for a nation to negotiate, it is necessary that the gain from doing so be greater than the gain available from unilateral
liberalization; reciprocal concessions intend to ensure that such gains will materialise.

--Binding and enforceable commitments. The tariff commitments made by WTO members in a multilateral trade negotiation and on accession are enumerated
in a schedule (list) of concessions. These schedules establish "ceiling bindings": a country can change its bindings, but only after negotiating with its trading
partners, which could mean compensating them for loss of trade. If satisfaction is not obtained, the complaining country may invoke the WTO dispute
settlement procedures.

--Transparency. The WTO members are required to publish their trade regulations, to maintain institutions allowing for the review of administrative decisions
affecting trade, to respond to requests for information by other members, and to notify changes in trade policies to the WTO. These internal transparency
requirements are supplemented and facilitated by periodic country-specific reports (trade policy reviews) through the Trade Policy Review Mechanism (TPRM).
The WTO system tries also to improve predictability and stability, discouraging the use of quotas and other measures used to set limits on quantities of imports.

--Safety valves. In specific circumstances, governments are able to restrict trade. The WTO's agreements permit members to take measures to protect not only
the environment but also public health, animal health and plant health.



EASE OF DOING BUSINESS:

The ease of doing business index is an index created by the World Bank. Higher rankings indicate better, usually simpler, regulations for businesses and stronger
protections of property rights. Empirical research funded by the World Bank to justify their work show that the effect of improving these regulations on
economic growth is strong. The ease of doing business index is meant to measure regulations directly affecting businesses and does not directly measure more
general conditions such as a nation's proximity to large markets, quality of infrastructure, inflation, or crime.

CATEGORIES OF EASE OF DOING BUSINESS
Starting a business Procedures, time, cost and minimum capital to open a new business
Dealing with construction permits Procedures, time and cost to build a warehouse
Getting electricity procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse
Registering property Procedures, time and cost to register commercial real estate
Getting credit Strength of legal rights index, depth of credit information index
Protecting investors Indices on the extent of disclosure, extent of director liability and ease of shareholder suits
Paying taxes Number of taxes paid, hours per year spent preparing tax returns and total tax payable as share of gross profit
Trading across borders Number of documents, cost and time necessary to export and import
Enforcing contracts Procedures, time and cost to enforce a debt contract
Resolving insolvency The time, cost and recovery rate (%) under bankruptcy proceeding

MULTINATIONAL CORPORATIONS:

A multinational corporation (MNC) or multinational enterprise (MNE) are organizations that own or control production or services facilities in one or more
countries other than the home country. For example, when a corporation is registered in more than one country or has operations in more than one country, it
may be attributed as MNC. Usually, it is a large corporation which both produces and sells goods or services in various countries. It can also be referred to as an
international corporation or "transnational corporation".

They play an important role in globalization. Arguably, the first multinational business organization was the Knights Templar, founded in 1120. After that came
the British East India Company in 1600 and then the Dutch East India Company, founded March 20, 1602, which would become the largest company in the world
for nearly 200 years.

PORTERS FIVE FORCES

Porter five forces analysis is a framework for industry analysis and business strategy development. It draws upon industrial organization (IO) economics to derive
five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry
profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry
would be one approaching "pure competition", in which available profits for all firms are driven to normal profit. This analysis is associated with its principal
innovator Michael E. Porter of Harvard University (as of 2014).

They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a
business unit to re-assess the marketplace given the overall change in industry information. The overall industry attractiveness does not imply that every firm in
the industry will return the same profitability. Firms are able to apply their core competencies, business model or network to achieve a profit above the industry
average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models, have
been able to make a return in excess of the industry average.

(STARBUCKS):


4.1 Michael Porters five forces
Michael Porter defines five forces impacting a firm's competitivenessthreat of substitutes, threat of new entrants in the industry, bargainingpower of
suppliers, bargaining power of customers, and theintensityof competition within the industry. A firm's strategic decisions torespond to these five forces are a
source of risk also.

Rivalry among existing competitors is high within the industry Starbucks operates in with major competitors like Costa, McDonalds, Caribou Coffee, and Dunkin
Donuts and thousands of small local coffee shops and cafes.

Starbucks customers possess large amount of bargaining power because there is no and minimal switching cost for customers, and there is an abundance of
offers available for them.

The threat of substitute products and services for Starbucks is substantial. Specifically, substitutes for Starbucks Coffee include tea, juices, soft drinks, water and
energy drinks, whereas pubs and bars can be highlighted as substitute places for customers to meet someone and spend their times outside of home and work
environments.

Starbucks suppliers have high bargaining power due to the fact that the demand for coffee is high in global level and coffee beans can be produced only in
certain geographical areas. Moreover, the issues associated with African coffee producers being treated unfairly by multinational companies are being resolved
with the efforts of various non-government organisations, and this is contributing to the increasing bargaining power of suppliers.

However, the threat of new entrants to the industry to compete with Starbucks is low, because the market is highly saturated and substantial amount of
financial resources associated with buildings and properties are required in order to enter into the industry.

The company is facing a real threat of substitution from many othercompanies that producing the same product that is satisfying the sameneed. This is in its
domestic market and even in the internationalmarket specially Europe and Middle East.Also Starbucks is facing a real problem of rival competition due to
itsuncompetitive price all over the world and even in its domestic market.Also the taste of Coffee had been judged by customers as an artificialtaste especially in
Japan.Suppliers bargaining power is really represent a threat for Starbucks.That they decided to deal with a 51% women or minority ownedsuppliers. Also they
are not dealing with suppliers who dont follow thesame environmental ethics that are for Starbucks. This may lead themto lose a good opportunity or deal with
a supplier that they will notdeal with him. Also dealing with small suppliers instead of dealing withlimited number of big power full suppliers is not giving them
real gooddeals for facilities and prices


SWOT Analysis:
SWOT analysis (strengths, weaknesses, opportunities, and threats analysis) is a framework for identifying and analyzing the internal and external factors that can
have an impact on the viability of a project, product, place or person.
As its name states, a SWOT analysis examines four elements:
Strengths - internal attributes and resources that support a successful outcome.
Weaknesses - internal attributes resources that work against a successful outcome.
Opportunities - external factors the project can capitalize on or use to its advantage.
Threats - external factors that could jeopardize the project.
Strengths:
Sound financial records. Starbucks profitability has been rising for the past few years and is now 14%. The company also outmatches its nearest
competitors with 24.54% return on investment and 29.16% return on equity.
No. 1 brand in coffeehouse segment, valued at $4 billion. Starbucks has a strong brand reputation associated with quality coffee and excellent
customer service. Its brand is the most valuable brand in coffeehouse segment and is valued at $4 billion.
Starbucks experience. One of the strongest advantages Starbucks has is the experience it delivers to its customers with perfectly blended coffee,
premium music, friendly staff and warm atmosphere, which results in incomparable customer service.
Largest coffeehouse chain in the world. The company operates around 20,000 coffeehouses in 60 countries, making it the largest coffeehouse chain
in the world.
Employee management. The company offers its employees extensive range of benefits and a pay rate higher than offered by competitors.
Weaknesses:
Coffee beans price is the major influence over firms profits. Starbucks profitability and its coffee price are largely dependent on prices of coffee
beans, which is a commodity and cannot be controlled by Starbucks. Due to hedge funds, weather conditions and many other factors, Starbucks
cannot estimate the price of tis coffee and companys profitability.
Product pricing. Starbucks offers great coffee and customer experience but that results in high price of its products. In comparison, some premium
coffee was price lower than Starbucks coffee and was better evaluated.
Negative publicity. The corporate continuously receives negative publicity over its poor efforts of becoming greener company, tax evasions and poor
treatment of some suppliers.

Opportunities:
To extend supplier network. Starbucks doesnt grow its own coffee beans but has to buy them from various suppliers, which are mainly clustered in
South America, Arabia or Africa. For Starbucks to ensure critical supplies for its operations in Asia, reduce the dependence of good or bad harvests in
Africa and South America and to save on shipping costs, Starbucks has to extend its supplier network.
Expansion to emerging economies. There are great opportunities for coffeehouses in China and India, in which Starbucks has comparably only
modest number of restaurants.
Increase product offerings. The business could expand the number of coffeehouses that offer wine and beer, plus adding some new products and
reaching broader customer group.
Expansion of retail operations. Starbucks does not only manage coffeehouses and franchises but sells some of its products through other retailers.
The firm should form more of such partnerships and offer to sell its coffee, for example, in supermarkets.
Threats:
Rising prices of coffee beans and dairy products. The chain strongly depends on the coffee beans and dairy products prices, which Starbucks cannot
control or can hardly estimate.
Trademark infringements. The company is often involved in cases over illegal use of its trademark, which is costly and detrimental for Starbucks.
Increased competition from local cafes and specialization of other coffeehouse chains. Local cafes can offer much lower price and more suited
menu for its customer. Big coffeehouse chains specialize so they wouldnt need to compete head-to-head with Starbucks. In both situations,
Starbucks experiences intense competition and loses market share.
Saturated markets in the developed economies. Coffee markets in the developed economies are already saturated and with intensifying
competition, Starbucks will find it hard to grow in these markets.
Supply disruptions. Due to political, economic and weather conditions Starbucks may experience supply disruptions, adding significant cost to the
firm.
CORPORATE SOCIAL RESPONSIBILITY:

A form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors
and ensures its active compliance with the spirit of the law, ethical standards, and international norms. In some models, a firm's implementation of CSR goes
beyond compliance and engages in "actions that appear to further some social good, beyond the interests of the firm and that which is required by law." CSR is a
process with the aim to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers,
employees, communities, stakeholders and all other members of the public sphere who may also be considered stakeholders.

Starbucks Corporate Social Responsibility (CSR):

Starbucks takes an active role in addressing environmental concerns that little things in theircoffee shops, like tissues, are made recyclable. One of Starbucks'
main focuses is thesustainable production of green coffee. With this in mind, it created C.A.F.E. Practices, a set of guidelines to achieve product quality,
economic accountability, social responsibility andenvironmental leadership. In fact, Starbucks takes their environmental responsibilities so
seriously that its stated on their

Starbucks mission statement and theyve even made the latestStarbucks Corporate Social Responsibility Annual Report available for public view on theirwebsite.

CSR and the Starbucks Corporate Social Responsibility Annual Report

The Starbucks Coffee Company is one of those corporations who consider the welfare of thepeople by being responsible for the impact of their activities on all
groups of people involvedand affected by their business, e.g. their employees, customers, stakeholders. The StarbucksCorporate Social Responsibility Annual
Report is basically a document where the companywrites about their global responsibility commitments and the way they approach business.

Mission statement representing CSR
The environmentally conscious Starbucks Corporate Social Responsibility statement speaks to anew dimension of businesses that care about their carbon
footprint. Today, Starbucks Coffee ompany has outlined two mission statements; one for the company and one that defines theircommitment to the
environment:


CHANGING COMPETITIVE ENVIRONMENT (RESPONSE)

Starbucks

Starbucks has made strategies in relation to their changing competitive environment:

A low-cost provider strategy: striving to achieve lower overall costs than rivalscomparable.- A broad differentiation strategy: seeking to differentiate
the companys product offering
from rivals with superior attributes that will appeal to a broad spectrum of buyers.

A focused low cost strategy
: concentrating on a narrow buyer segment andoutcompeting rivals on costs, thus being able to
serve niche member at a lower price.

A focused differentiation strategy
: concentrating on a narrow buyer segment andoutcompeting rivals with a product offering that meets the
specific taste and requirements of niche members better than the product offerings or rivals.


A best cost provider strategy
: giving customers more value for their money by satisfying
buyers expectation. This option is a hybrid strategy that blends elements of differentiation and low cost strategies; the aim is to have the lower costs and prices
among sellers offering products with comparable differentiating attributes.

As they provide a high quality coffee and unique experience in the convenience of a largevolume of locations, which separates them from their competition, it is
clear that Starbucks gets their success by A BROAD DIFFERENTIATION STRATEGY.

FINANCIAL INTEGRATION

Financial integration is a phenomenon in which financial markets in neighbouring, regional and/or global economies are closely linked together. Various forms of
actual financial integration include: Information sharing among financial institutions; sharing of best practices among financial institutions; sharing of cutting
edge technologies (through licensing) among financial institutions; firms borrow and raise funds directly in the international capital markets; investors directly
invest in the international capital markets; newly engineered financial products are domestically innovated and originated then sold and bought in the
international capital markets; rapid adaption/copycat of newly engineered financial products among financial institutions in different economies; cross-border
capital flows; and foreign participation in the domestic financial markets.