Business Studies
Starbucks and the Potential Expansion into Sri Lanka
The expansion of any company will require careful consideration. The expansion plan will need to facilitate a number of factors, including allowances for the country into which expansion is taking place, as well as the needs of the company in terms of acquisition of resources and training of staff. The plan will need to build on the strengths of the organization, take advantage of opportunities, and minimize the potential dangers that exist as a result of weaknesses and threats. In order to assess the way in which Starbucks may expand into Sri Lanka, it is necessary to look at the company itself before looking at the way in which it may expand.
Company Background
Starbucks is a global brand of gourmet coffee shops. Starting from 1 shop located at Pike placed in Seattle in 1971, it the company has now grown to operations in 50 countries with more than 17,000 outlets growing through both organic growth and use of the franchise model Starbucks, 2014). Approximately 50% of stores are owned by franchisees (Starbucks, 2014).
The growth has been rapid, driven by Howard Schultz, who took over the firm from its original owners. Schultz joined Starbucks in 1982 in a position of director of retail operations (Starbucks, 2012). At the time Schultz joined Starbucks the company had already been successful for more than a decade with a focus on the roasting and selling of coffee beans (Schultz, 1998). Schultz realized was a graded a potential for expansion, and after a business trip to Italy in 1983 he believed the espresso bars he had seen would be a good model for expansion (Schultz, 1998).
In 1985 Schultz persuaded the owners of Starbucks to try his idea, and set up a coffee bar (Starbucks, 2014). However, the owners were not keen to pursue this strategy, so Schultz started up his own coffee house concept which he called Il Giornale (Schultz, 1998). Schultz's new venture was successful, and by 1987 he was able to gain support from some local investors. Following this investment Schultz acquired Starbucks, following the acquisition he changed the name of the Il Giornale to Starbucks started to build his empire. By the end of 1987 the company had a total of 17 coffee shops, this grew to 55 by the end of 1989, and hundred 16 by the end of 1991 (Starbucks, 2014). In 1992 shares were offered on the New York Stock Exchange, with the investment marking the acceleration of growth.
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