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Unit 15: Global Strategic Management and Business Ethics

volunteer in orphanages and other worthy causes. In the midst of the disastrously low notes
prices coffee growers are getting for their green beans, Star-bucks gave a one-time shot in
the arm of $1 million to the Calvert Social Investment Foundations to help coffee farmers.
At the same time, the company announced that it would expand its fair trade programme,
promising to buy at least a million pounds over the next year and a half.
And the bright-eyed coffee evangelists who serve up Starbucks blends throughout the world
are all trained in the Starbucks Experience that some have likened to a cult. ‘Starbucks is a
brand built on passion,’ Maslen says, ‘and you can easily feel the passion of our partners in
any of our international stores.’ To instil this attitude in its first Swiss employees, Starbucks
flies its new foreign managers to Seattle for thirteen weeks of rigorous education and
indoctrination.

Will Starbucks approach a saturation point in places like the United States and, eventually,
elsewhere in the world? Will it face increasingly stiff competition as imitators spring up
to feed on its success? Amazingly, there is no real Pepsi to Starbucks’ Coke, anywhere
in the world. Tully’s and Seattle’s Best Coffee (SBC, now owned by AFC Inc.) also have
international profiles, but they are so far behind Starbucks that they pose no real threat.

And saturation? That’s not likely to be an issue for the next few years. Look at all those coffee
bars in Italy. What if Starbucks could convince the Chinese to drink coffee like Italians?
Also recall lessons from history: in London, back in 1700, there were 2,000 coffeehouses.
Even in the US and Canada, there still appears to be room for growth. In the province
of Quebec, for instance, Starbucks teamed up in 2001 with a Quebec pizza franchiser to
open some seventy-five retail outlets. And in [the] state of Vermont, Starbucks has recently
opened one lonely outlet in Burlington, the hip college town. There is obviously room for
growth. They don’t seem to be feeling the success wind down; Starbucks has just opened
its third US roasting plant in Nevada, a 300,000-square-foot facility scheduled to begin
operations in 2003.
And what happens if an emergency arose and leader Howard Schultz had to leave the
company tomorrow? Analyst Glass isn’t worried. ‘Schultz is important, one of the great
entrepreneurs of our time, but he has already taken on more of an ambassador role with a
concentration on international development. He leaves the day-to-day operations to CEO
Orin Smith and CFO Michael Casey. Starbucks has a wonderful, deep management team.
It is not dependent on one person.’ On the other hand, he notes that Schultz ‘embodies the
passion, the human side’ of the company, and as a symbolic leader of the loyal troops he
is unparalleled.

Questions
1. Discuss the forces for and against the globalization of the coffee shop industry.
2. Discuss the advantages and drawbacks of Starbucks’ global strategy.
3. If you were Starbucks’ global manager, what would you do differently? And what
would you stop doing?

Source: Mark Pendergrast (Feb. and Mar. 2002), ‘The Starbuck experience: going global, tea and coffee’, www.teaand-coffee.
net/0202/coffee2.htm, 176(2).
15.7 summary

This unit attempts to give an overview of the functions in as simple manner as possible.
l z A firm’s strategy can be defined as the actions that mangers take to attain the goals of
the firm. For most firms, the pre-eminent goal is to maximize long-term profitability.
Maximizing profitability requires firms to focus on value creation.

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