Starbucks Internationalization

Starbucks Internationalization

1. How did the pace, rhythm and scope of Starbuck’s internalization in the coffee industry affect its performance?
In order to answer this question, we would haveto take a three-point perspective approach: A) Regarding the pace of the internationalization, we could say there was a negative correlation between pace and performance. Thus, the pace of theinternationalization was negative to its performance.
B) Regarding the rhythm of Starbuck’s internationalization, during the 1994-2001 period, there was high volatility contrary to the periods of2002-2009, in which performance was the highest. This trend is identifiable in the high ROA that appears in the latter period due to the stable growth and low volatility. Thus, Starbucks was able toconsolidate and improve its performance.
C) Last, the scope of the internationalization, measured by the relative growth of the number of countries to which it expanded, shows a negative slope impliesthere scope and returns are opposite to each other.

2. Was Starbucks too aggressive in its internationalization?
I would identify the profitability of Starbucks during the period of theinternationalization and after it expanded, since a firm’s goal is to deliver shareholders’ value through a sustainable growth and profitability in the long term. During the 1994-2001 period, ROA was low becauseof the volatility and aggressive expansion while the following 2002-2009 period, characterized by low pace of internationalization and stable growth marked a high profitability period in terms ofROA. Thus, Starbucks’ internationalization may have been aggressive but the long term profitability prospects makes it highly affordable and worth it to internationalize.

3. Resuminginternationalization: how should Starbucks approach internationalization going forward?
In my humble opinion, Starbucks should keep its stable growth approach through local partnership, joint ventures or...