Environmental Factors Starbucks Is a

Environmental Factors Starbucks is a dominant coffee chain in the United States and has taken their concept to 49 more countries. Canada is the largest base of foreign operations, with over 1000 stores, but Starbucks has a much higher market share in many of its Asian countries. Global economic interdependence impacts Starbucks in many ways. The company's inputs involve a wide range of commodities, including coffee, sugar and paper, that trade on global markets. Starbucks offers a premium product, so when the U.S.

economy collapsed recently taking many other markets with it, Starbucks was unable to reap the benefits of geographic diversification. Trade practices and agreements have a significant impact on Starbucks' operations. In particular, regulations concerning trade in agricultural commodities have a significant impact on the company's structure of input costs and availability. Furthermore, rules and agreements regarding foreign direct investment impact Starbucks' market entry strategies. For example, Starbucks only runs its own stores in 10 markets outside of the U.S. Physical infrastructure is critical to Starbucks' success.

The company must be able to get its proprietary supplies to its outlets to maintain inventory levels. This requires the ability to ship these inputs from anywhere in the world to the destination market, but also to them move them to the branch locations. One of the key elements of the marketing mix is place, which highlights the importance of physical location to Starbucks. The company built much of its success on its real estate portfolio.

The company has built a strong brand, but success is dependent on being in front of the consumer at the point in time when the consumer wants a coffee. Demographics are important to Starbucks because, outside of Canada, the company has not achieved saturation. This means that Starbucks is positioning itself in these nations as a premium provider. Traditionally, Starbucks' premium positioning targets middle class and wealthy white collar workers between the ages of 25-44.

Thus, Starbucks' key target markets are upwardly mobile nations with healthy populations in that core demographic. The influence of cultural differences has been critical to Starbucks' overseas success. When the company moved into Asia, it was entering into nations with no coffee drinking tradition. To adjust for this, Starbucks emphasized tea drinks, flavored coffees and the role of the shop as a "third place," an essential drawing card in Asia's overcrowded cities (JETRO, 2009). In entering Arab countries, Starbucks needed to build separate rooms for families and the male-only crowd.

Social responsibility has always been a hallmark of Starbucks, in particular with respect to the treatment of its employees. The company has been consistent in its dealings with foreign partners that the business needs to adhere to Starbucks' standards, not foreign standards. The company has extended its social responsibility to the lives of the coffee farmers, for example by providing a strong, ready market for coffee grown in China's Yunnan province (Lu, 2009).

Starbucks' code of ethics applies to its entire operations, including its partners, irrespective of local laws, which of course are also adhered to. Political systems have had some impact on Starbucks, compelling them to joint ventures and partnerships rather than greenfield investments. International relations are critical to Starbucks, since it needs strong trade agreements and positive relations not only to operate in its multiple foreign markets but also for sourcing its coffee. Positive international relations allow Starbucks to exploit the market opportunities with which it is presented.

As with all American companies, Starbucks is bound by the Foreign Corrupt Practices Act. This law covers American firms working overseas. Starbucks' strong commitment to ethical behavior compels the company and its employees to adhere to the foreign corrupt practices act. The company also adheres to, and usually exceeds the parameters of, international legislation. Starbucks pays its workers above local minimum wage and treats them as they would domestic workers. Technology has impacted Starbucks' operations, particularly on the product side.

The company has utilized technology such as automatic espresso machines to improve the pace of product delivery, allowing the company to reduce staff costs. It purchased the high-end Clover system (Starbucks, 2008) and has recently introduced an instant coffee system (Berfield, 2009), both in an attempt to diversify its coffee offerings. Beyond product, Starbucks relied on sophisticated inventory management and sales forecasting systems. These systems are especially crucial for international operations, which may have lead times of weeks for products originating in the United States.

The company also relies on information systems to analyze sales data that can help with scheduling and bottleneck management at peak times. Starbucks has very quickly built one of the.