Resuming Internationalization at

Starbucks
International Marketing | Professor Berk Talay
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1. How did the pace, rhythem, and scope of Starbucks

internationalization in the coffee industry affect its performance?

Pace of Starbucks Internationalization:

The most obvious movement in the pace of internationalization
in the coffee industry that affected Starbucks performance was the
downward slope. By examining the downward slope you can see that it
shows a negative connection between pace and performance. The rate
of opening too many stores overseas in such a short period of time had
a negative affect on the performance of Starbucks coffee. While on the
other hand, if you were too look at their best performing years, 2004-
2007, you can see that the pace rate was also lower as well. (Alkema,
Koster, & Williams, 2010).
Rhythem of Starbucks Internationalization:
The two sets of years 1994-1997 and 1998-2001 according to the
article represented high volatility in the internationalization of
Starbucks, which as a result of this, caused lower performaces in these
date ranges. The rhythem of Starbucks internationalization is
measured through the kurtosis of the number of foreign stores over
each four-year time period (Alkema, Koster, & Williams, 2010). Within
a four-year period they use the calculation of kurtosis and figure out
how irregular or regular the rhythem of Starbucks is. The higher the
number the more irregular, and a lower kurtosis number suggested a
more regular rhythem. In years 1994-1997 shows that opening stores
domestically was at a normal rate, but was compensated by the
opening of foreign locations. Specifically what caused this was the fact
that the majority of the countries that Starbucks did open up new
locations in, were countries that faced very different culteral
differences. In years 2002-2005 and 2006-2009, there was much less
volatility, which as a result of this caused much higher and better
overall performance. When it came to those years, Starbucks has
slowed down their rapid growth development and started to really
focus on their performance on the company and what they could do to
improve overall. (Alkema, Koster, & Williams, 2010).
Scope of Starbucks Internationalization:

The number of countries in which Starbucks expands into over a

given period of time determines the scope of Starbucks. By 1993-1995,
Starbucks was only located in the United States and Canada, they
hadnt fully internationalized much further than that. However, in
1996, was when Starbucks expanded outside of North America. As a
result of this expansion, it clearly showed that the more countries
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Starbucks opened up locations in, Return on Assets and their

performance was in decline. (Alkema, Koster, & Williams, 2010).

In conclusion, Starbucks uncompromisingly attempted

internationalization, but their performance was effected greatly as a
result. Due to their inability to control this strategy, Starbucks failed to
achieve the highest performance and growth.

2. Was Starbucks too aggressive in its internationalization?

Simply put, yes. Starbucks was tremendously aggressive in its

internationalization. Sometimes too much too quickly can affect a
business, and in Starbucks case, it most certaintly did. Starbucks
wasnt able to re-asses their market position, which consequently had
a affect on their well-known performance, product quality, and
company image. In response to Starbucks receiving negative crisitsm
for moving too fast, in their 2009 annual report they stated:

Starbucks actions to rationalize its global store portfolio have

included the planned closure of nearly 1,000 Company-operated stores
globally. At the end of fiscal 2009, nealry all of the approximately 800
US Company-operated stores, 61 stores in Australia and 41 Company-
operated stores in other international markets had been closed. The
remaining International store closures are expected to be completed by
the end of fiscal 2010.

This statement shows that Starbucks will now better successfully enter
the international market not too aggreively, but in fact learn about the
different markets in which their stores will be opening in.
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References

Alkema, R., Koster, M., & Williams, C. (2010). Resuming

internationalization at Starbucks' (1st ed., pp. 1-16). London, Ontario:
Richard Ivey School of Business.

Starbucks Corp. (2009). Starbucks Corp. Annual Report. Seattle, WA