ANALYSIS OF INTERNATIONAL COMPANY OPERATIONS.

Analysis of International Company Operations

Analysis of International Company Operations

Introduction

“Starbucks purchases and roasts high-quality whole bean coffees and sells them along with fresh, rich-brewed, Italian style espresso beverages, a variety of pastries and confections, and coffee-related accessories and equipment -- primarily through its company-operated retail stores.  In addition to sales through their company-operated retail stores, Starbucks sells whole bean coffees through a specialty sales group and supermarkets.  The company's objective is to establish Starbucks as the most recognized and respected brand in the world.  To achieve this goal, Starbucks plans to continue to rapidly expand its retail operations, grow its specialty sales and other operations, and selectively pursue opportunities to leverage the Starbucks brand through the introduction of new products and the development of new distribution channels” (The Company).  Starbucks is considering expanding into the Israeli restaurant industry to see if there are opportunities for growth.  Currently, Israel is a technologically advanced market economy with substantial government participation.  The proceeding subsections will further analyze certain risk and economic factors that will affect Starbucks if they choose to expand into the Israeli restaurant industry.

 

Product/country motivation

The company our group has chosen is Starbucks.  “Starbucks has become a popular premier restaurant business in the United States and has expanded into the international market with more than 1,500 coffeehouses in 31 markets outside North America” (Starbucks Coffee International).  Starbucks should expand into countries, such as Israel, to increase the recognition of their brand and grow its sales to accomplish its objective to establish them as the most recognized and respected brand in the world.   Since there are already many established American restaurants operating in the Israeli restaurant industry, consumers in Israel should be more enticed to buy Starbucks' products.  Furthermore, the Israeli economy has been in a recession due to factors such as the Israeli-Palestinian conflict, increasing declines in the high-technology and tourism industries, and strict fiscal measures in the face of growing inflation.  According to Don Montuori, Acquisitions Editor for Packaged Facts, “In a slow economy, people are reluctant to or unwilling to purchase big-ticket items.”  In addition he stated, “But what's driving - and in fact saving - the gourmet beverage market is the attitude among consumers that spending a dollar or two more on an upscale drink is a luxury they can afford, and if that drink is also positioned as a having a health benefit, all the better” (Consumer Spending on Upscale Ready-to-Drink Items Driving Growth in the $14.7

Billion Premium Beverage and Confectionery Market).  In order to have ultimate control over the management of all operations, Starbucks should set up operations in Israel rather than forming joint ventures or exporting Starbucks' products from the United States to Israel.  “Most of the world's coffee is grown between the Tropic of Cancer and the Tropic of Capricorn on plantations in Africa, Southeast Asia, and the Americas” (The Company).   So, many of the inputs in developing coffee comes from abroad for Starbucks.  The Starbucks in Israel will receive all of ...