Starbucks\' Entry Mode into Sweden

Starbucks Coffee Entering Sweden

Alan Diamond 1632135

“Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our

uncompromising principles while we grow.”- 2008

"To inspire and nurture the human spirit - One person, One cup, and One Neighborhood at a time.“

- 2012

Starbucks’ Mission Statement

Introduction

Research was conducted into Starbucks to find out if a new

store in Sweden would be feasible.

There were three main objectives:

1) The external environment will be explored

2) The internal environment will be investigated

3) Based on the findings in objectives (1) & (2),

recommendations were made.

Countries that have Starbucks stores are shown above in green.

Methodology

The Focus Group FindingsAttendees Drink Coffee in a Café Already has Espresso House

Swedish Culture to drink in Café Pre-made and packaged goods no “home made” products

See Starbucks as “fast” & “quick” Change menu to suit Swedish coffee culture

Disagree with mission statement – not a “third place”

Would purchase Starbucks from Ireland

Believe that they will be successful American – Very pop culture

Target Students/Tourists Fair Trade – No impact in Sweden

56% Female, 44% Male Little Loyalty to a Coffee Brand

All participants were Swedish Swedish People Will Buy from Starbucks

Majority Aged between 16-24 Gevelia is considered the most popular brand of coffee

Most drink at least one cup of Coffee a day

Majority think Starbucks entering Sweden is a good idea.

Most Drink Their Beverage At Home

Participants believe Starbucks will be most successful in Stockholm

The Survey Findings

The PESTEL Analysis

Political Factors

1. Increase of business participation

2. Strong Existing Relationships

3. Subject to EU Regulations

Economic Factors

1. Swedish Banks are extremely stable

2. Unemployment rate of 7.6% in Jan 2012

3. Sweden is an export-dependant country

Social Factors1. High Average life

expectancy

2. English is widely spoken

3. Aging population, declining birthrate

PESTEL Analysis

Technology Factors1. Leading position in

R& D

2. High level of innovators

3. New developments in technologies

Environmental Factors1. Strong

international environmental image

2. Taxes on waste management

3. Anti-litter laws, & other EU legislation

Legal Factors

1. Foreign investments are strongly encouraged

2. No stated minimum wage

3. Trade unions are extremely strong in Sweden

PESTEL Analysis

Buyer Power:

Buyer power within the Swedish hot drinks market is moderate

Supplier Power:

Supplier power is moderate, however depends on the size of the company

New Entrance:

The Threat of new entrants is moderate

Substitutes:

Threat of substitutes is very low in Sweden

Rivalry:

The overall rivalry due to the cultural aspect in Sweden is strong

PORTER’S FIVE FORCES

The Marketing Mix

Product

Offers a variety of beverages – not just coffee!

Known for its coffee variety, includes more than 30 blends of coffee.

Offers seasonal & holiday beverages e.g. “Pumpkin Spice Latte”

Offers food like pastries, sandwiches & salads.

Price

Raised prices by about 1% due to the increasing price of coffee beans, dairy

produce and other raw material.

Wishes to maintain or lower the price of some of its most popular beverages.

Unlike the coffee, tea prices aren’t based on the size, instead it’s based on the number

of tea bags, since water is pretty cheap in non-bottle form.

Place

Seen as a gathering place in the neighbourhood.

Distributed directly to the customer in the Starbucks Cafes as well as over 3rd parties such as supermarkets.

Starbucks cafes are found (as well as in the city centre locations) in major industrial parks with a large labour

appearance.

Promotion

Starbucks started a community website, My Starbucks Idea, designed to collect suggestions and feedback from customers.

Starbucks stresses quality above price and other features it could emphasize.

Has gone to great lengths to create a “community atmosphere” among premium coffee lovers.

The Starbucks Card.

People Starbucks customers are service orientated.

Starbucks is committed to the principle of equal employment opportunity

The staff at Starbucks are friendly, helpful and polite.

All employment decisions at Starbucks are based on business needs, job requirements and individual qualifications.

Process

Starbucks offers an experience like no other coffee house.

The process is: entering the store, queuing to pay, and then waiting for your order at another counter. The

customers can choose to drink in or take out.

The process that Starbucks have in place is not always the best.

The Starbucks Process

(1) Queue To Order Your Drink (2) Order & Pay For Your Drink

(3) Wait For Drink To Be Made (4) Enjoy Your Starbucks

Physical Evidence

Starbucks staff wear black trousers, a black polo shirt and a green Starbucks apron.

Coffee-master = black apron.

The Merchandise all have the Starbucks logo.

Loyalty Card.

SWOT Analysis

Strengths Weaknesses

Organisational culture is very strong.

Excellent value network.

Strong recognised global branding.

Good corporate social responsibility.

Incentives to progress through company.

Good reputation around the world.

World’s Most Ethical Company in 2012

Increased number of competitors.

Refuses to guarantee that products are free of genetically modified ingredients.

Increases in pricing are not in line with global economic crises.

Management structure is hierarchical and decision making is very slow.

No cultural differences considered.

Opportunities Threats

Advertising environmentally friendly policies.

Advertising local charity drives.

Close working relationships with trade unions.

Job Creation.

Niche Market – “Coffee-on-the-go”

Global Economic Crisis.

Increased waste produced.

Small businesses being pushed out of the market

Huge resistance in international countries.

People are becoming more health conscious.

Huge coffee culture exists - a great number of competitors.

Entry Modes

Entry Mode Options

Licensing

Location

Wholly Owned Subsidiary

Strategic Partnership

Joint Venture

Recommendations

Conclusion

To conclude, the Swedish market has shown to be extremely welcoming for Starbucks to enter and would experience

considerable growth if they were to proceed with this venture.

Thank You For Listening

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