Global Operations One of the largest sources of competitive advantage for a global corporation is the ability to optimize operations on a world-wide scale by minimizing costs and maximizing revenues. This is accomplished by leveraging technology, manufacturing efficiencies, brand names, and/or capital across countries. The major thrust of Starbuck Corporation's global strategy has been to build a global brand to target customers in all major markets throughout the world. However, even with instant name recognition, the company has faced enormous challenges in applying its domestic business model to work in many foreign markets.

Starbucks was founded in 1971 as a gourmet coffee bean roaster and distributor and began to dominate the North American market over the following two decades. To continue its rapid growth and to combat the threat of future market saturation in its own domestic market, Starbucks turned its eye to international expansion in 1996 (Starbucks outlines international growth strategy; focus on retail expansion and profitability, 2004). By the end of that year, Starbucks had opened 127 international stores. At the end of 2000 the company had reached 792 stores in sixteen countries outside the United States and has just ended fiscal year 2004 with 2,437 stores in 33 countries outside of the United States.

Despite its rapid expansion, Starbucks is going full force ahead with plans announced in 2004 to open an additional 15,000 locations beyond the United States (Starbucks outlines international growth strategy; focus on retail expansion and profitability, 2004) . In Latin America, Starbucks...

In Europe, the Middle East and Africa, the Company has 670 stores, and sees a future opportunity for approximately 6,000 stores. In Asia Pacific, Starbucks now has 1,234 stores and plans to have 6,500 stores in that region. In Canada, the company currently has 438 stores and sees a potential for adding 562 new ones. Additionally, Starbucks is exploring several new countries for future locations, including Brazil, India, and Russia and is keeping its eye on China for future growth.
Results to date for Starbuck's international operations are poor. For the first time since the company began its international expansion it posted a profit in its 2004 fiscal year, citing an operation profit of 8.8% (Wolverton, 2004). Even for this year, critics charged that the numbers were artificially inflated by the decline of the dollar vs. other major currencies and the inclusion of Canadian, Hawaiian and Puerto Rican stores in its international operations. A variety of factors explain Starbuck's less than stellar results in international markets.

To reduce risks, Starbuck's international entry has been based on join ventures and licenses, unlike its domestic strategy where the stores are largely owned by the company. Starbucks has relied on experienced partners abroad to help identify locations, sift through local tax and legal issues and to give Starbuck stores more community appeal (Coffee in a time of conflict: Starbucks' growth risks backlash, 2003). While Starbucks has received revenues and profits as well as licensing fees for supplying…