Starbucks' Case
- Submitted by: h215737809
- Views: 475
- Category: Other
- Date Submitted: 04/22/2013 11:33 AM
- Pages: 2
- Report this Essay
Question: Should Starbucks resume its international expansion and once again intensify its commitments in overseas markets? If so, what approach should the company take?
In my opinion, Starbucks should slow down resume its international expansion and intensify its commitments in overseas markets. Because of the global recession, intensifying competition and supply chain pressures, Starbuck's revenue versus relative store growth has been facing a downward sloping trend. Starbucks' revenues growth of foreign stores had dropped from 60 percent to lower than 20 percent between 2001 and 2009.
If Starbucks resume its international expansion and intensify its commitment in oversea markets, there three approach that the company should take. First of all, slow down its pace. According to the article, the downward slope indicates a negative association between pace and performance, which means the faster pace the lower ROA. The best performing years were the characterized by a slower pace of internationalization. Therefore, slower pace means higher ROA.
Secondly, regular rhythm will result in a better performance. According to the article, the rhythm of Starbucks' internationalization is measured through the kurtosis of the number of foreign stores over each four-year time period. A high kurtosis implies a more irregular rhythm, and a lower kurtosis implies a more regular rhythm. With a irregular rhythm, the lower performance the company showed. However, Starbucks received a higher ROA when the rhythm of international expansion became more regular and less volatile. Therefore, with a stable growth, the company has a better performance.
Thirdly, a lower scope of Starbucks' internationalization will result in a better performance. A downward slope implies a negative association between scope and returns. Once Starbucks embrace international expansion in 1996 and thereafter, higher returns were generally gained in the years in which the scope of...
In my opinion, Starbucks should slow down resume its international expansion and intensify its commitments in overseas markets. Because of the global recession, intensifying competition and supply chain pressures, Starbuck's revenue versus relative store growth has been facing a downward sloping trend. Starbucks' revenues growth of foreign stores had dropped from 60 percent to lower than 20 percent between 2001 and 2009.
If Starbucks resume its international expansion and intensify its commitment in oversea markets, there three approach that the company should take. First of all, slow down its pace. According to the article, the downward slope indicates a negative association between pace and performance, which means the faster pace the lower ROA. The best performing years were the characterized by a slower pace of internationalization. Therefore, slower pace means higher ROA.
Secondly, regular rhythm will result in a better performance. According to the article, the rhythm of Starbucks' internationalization is measured through the kurtosis of the number of foreign stores over each four-year time period. A high kurtosis implies a more irregular rhythm, and a lower kurtosis implies a more regular rhythm. With a irregular rhythm, the lower performance the company showed. However, Starbucks received a higher ROA when the rhythm of international expansion became more regular and less volatile. Therefore, with a stable growth, the company has a better performance.
Thirdly, a lower scope of Starbucks' internationalization will result in a better performance. A downward slope implies a negative association between scope and returns. Once Starbucks embrace international expansion in 1996 and thereafter, higher returns were generally gained in the years in which the scope of...