Starbucks and Globalization

Few companies have impacted the basic way that individuals across the globe live their daily lives as much as Starbucks has. The powerful marketing and expansion strategy favored by Starbucks is as much the result of its deliberate policy of globalization as it is the actions of individual actors. Starbucks stands as a global corporation that has succeeded beyond its wildest expectations due to its capacity to offer a global brand that “carries meanings that stand in sharp contrast to local alternatives” and provides customers “distinctively themed servicescapes” that facilitate a unique sense of personal experience (Arsel and Thompson, 2004). Lastly, the corporate image that Starbucks cultivated, namely the idea that it was simply a Seattle-based coffee company that happened make it big, allowed it to penetrate markets and eventually acquire the entire business supply chain from the growing of the coffee beans to the actual brewing of the beverages.

Starbucks, as a global brand, succeeded greatly in its ability to market itself as a having unique meaning or corporate identity that placed it apart from local competitors while, at the same time, offering the security and professionalism of a large network. Arsel and Thompson (2005) argue that Starbuck’s “staggering success is due in large part to its skill at creating, standardizing, and implementing an upscale third-place ambiance on a global scale” (p. 633). This “third-place” mentioned by Arsel and Thompson refers to a niche in the consumer market with regards to the overall types and locations of personal and business interactions. Daily life is usually divided between a sense of workplace and the home, the former of which offers a forum for the professional aspect of life and serious, work-related conversations. The home, by contrast, is inherently less formal and more open to a positive emotional context. The “third-place” is, in essence, a hybrid of the two—a place, while not at home, that individuals and families can interact in a relaxed atmosphere and enjoy themselves. Starbucks, then, succeeded as a result of its sheer market domination of places where “patrons imbibe a comforting sense of community, camaraderie, and social engagement” (p. 634). Unlike its competitors, Starbucks shattered the idea that large corporate chain stores could successfully take over this market niche and developed a corporate identity synonymous with comfort, accessibility, professionalism, and quality.

Another way that Starbucks achieved global success was through the aesthetic appeal of its stores. Coffee shops can be viewed, as Arsel and Thompson point out, in the sense that they must cultivate a very particular sense of belonging and visual appeal. The coffee shop must include “prominent displays of visual art”, it must have music that can be called “sophisticated, hip, or in some way countercultural”, and it must have an exaggerated menu of “oversized gourmet muffins” and associated treats (p. 634). The modern coffee shop, almost by definition, must promote a sense of culture and warmth and subtle artistic flair. It must also cultivate a sense of “intellectual engagement and cultural enrichment” (p. 634) that guarantees its ability to create a warm and opening environment for the customer. Without this atmosphere, a coffee shop fails to provide the experience required to place it in the “third-place”, forever relegating it to the status of a mere provider of a particular good, and not a complete environment in which one can be submerged. 

Starbucks, then, achieved this cultural placement with staggering success. The corporation “portrayed itself as a sort of an everyday embodiment” of a Seattle-based company that “went everywhere, selling Italian-inspired” products and embracing a global business model that still retained a distinctive sense of cultural belonging (Simon, 2001).  The use of its very distinctive aesthetically-pleasing store layouts combined with the ability of the company to aggressively expand meant that Starbucks would soon become a cultural icon, something that consumers simply expected to see in every reasonably-sized market center or consumer area. As Starbucks grew, its unique cultural image became expected on the national scene, and it became bizarre to not see a Starbucks present. Starbucks saw a growth of retail sales in the U.S. from “$60 million in 1981 to $3.3 billion in 2001”, caused largely by the “proliferation of specialty coffee retail outlets from around 250 in 1980 to over 12,000 in 2001” (Lyons, 2005). The growth the corporation showed in the domestic market alone is immense, and is largely due to the sheer expansion efforts pushed for by the Starbucks upper management, as well as its acquisition of the “third-place” market niche. 

In addition, Starbucks’ globalization strategy involves the promotion of its Seattle-based identity and an implicit, while not rejection, perhaps distancing from a quintessentially American identity.  At no point has Starbucks ever truly embraced a distinctly American perspective in its stores; instead, it has centered on its “consistently clean, upscale design and an ambience that distinguishes Starbucks outlets from independent coffeehouses” (Lyons, 2005). The corporation embraced a subtle, culturally suave sense of appeal that was not dominated by a sense of the company as an American global corporation; instead, Starbucks maintained and continues to maintain a cultural appeal that focuses on the sense that Starbucks just happens to be a small, Seattle-based coffeeshop that made it big, yet never lost the integral domestic comfort associated with small enterprises. 

The most visibly global aspect of Starbuck’s strategy internationally is the acquisition of the entire supply chain of the coffee industry, starting with the actual source of coffee beans. MacDonald (2007) argues that Starbuck’s powerful globalization strategy enables it to “implement changes to a range of social and environmental practices” on the ground in the states where Starbucks acquires its specialty coffee beans. In effect, Starbucks controls the supply chain from start to finish, enabling it to remove the costs associated with dealing with third parties and guaranteeing the quality of their own product. However, Starbuck’s globalization strategy, while effective, is not without its own costs, as workers often live on “farm property and provisions for food, health care, and other forms of social infrastructure are determined at the discretion” of local owners (MacDonald, 2007). Indeed, temporary workers are often housed in mere shacks and the lack of social infrastructure designed to facilitate a positive work environment in these countries is most assuredly lacking. Globalization, then, comes at a cost and adds to the employee retention efforts in the United States.

Moreover, Starbucks achieved success due to its break with the existing coffee shop supply chain model. Before the rise of the corporation to international prominence, “buyers are separated from producers via the often lengthy, intermediate trading chains through which producers sell to exporters” (MacDonald, 2007). These complex and complicated chains are fundamental in understanding how and why Starbucks maintains such a positive bottom line on its balance sheets—by removing the intermediary dealers, Starbucks is able to substantially increase its own operating margins. Indeed, it is through the process of “capturing increasing shares of the income generated across the supply chain” that has accounted for much of Starbucks’ capacity to continue financing new stores and aggressive marketing efforts overseas. 

Starbucks has successfully infiltrated the global marketplace through its ability to offer a corporate brand that is fundamentally based on the principles of a small coffee shop gone global, and the underlying guarantee that Starbucks will continue to fulfill the “third-place” niche in cultural interactions by providing a warm and enticing environment in which individuals can embrace social interaction. By controlling its supply chain from start to finish, Starbucks guarantees the quality of its product and improved profits, given that the corporation does not need to deal with middlemen and can instead manipulate the industry from the source itself. Overall, Starbucks is a great example of a corporation that combines a nearly universal cultural appeal with an effective global business strategy focused on aggressive marketing and expansion. 

References

Lyons, J. (2005). 'Think Seattle, act globally'. Cultural Studies, 19(1), 14-34.

Macdonald, K. (2007). Globalizing justice within coffee supply chains? Fair trade, Starbucks and the transformation of supply chain governance. Third World Quarterly, 28(4), 793-

812

Simon, B. (0001). The not-so-flat world: Exploring the meaning of buying at the intersection of the global and the local at a Starbucks in Singapore (English). Comparative American

 Studies (Print), 7(4), 319-337.

Thompson, C. J., & Arsel, Z. (2004). The Starbucks brandscape and consumers' (anticorporate) experiences of glocalization. Journal of Consumer Research, 31(3), 631-642.