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Starbucks: Rapid Growth Strategy

  • Date Submitted: 06/08/2012 10:28 AM
  • Flesch-Kincaid Score: 52.8 
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Starbucks: Rapid growth strategy

Internal growth usually means expansion of a business by opening new branches, shops or factories. This is also known as organic growth. Starbucks confirmed growth plans in which they have said they are considering opening over 10,000 new cafes over the next four years. This is a great example of internal growth as they are opening cafes in countries such as Brazil and Russia. Therefore, Starbucks is going to entering new market which they do not have any knowledge or experience of, they can therefore naturally learn about the culture and attitudes of the new demographics which may be seen as a risk to some.

Adopting a rapid expansion strategy would mean Starbucks can build a customer loyalty base and attract a lot of customers as quickly as possible. This can lead to faster sales inevitably higher profits. Starbucks is less likely to fail as it would run much more efficiently since they are not forcing expansion.

China has a large population which means there are more people inevitably higher sales. If Starbucks focuses on the Chinese market they can make plenty of profit.   The fact that they have a fast growth economy means that the country produces and consumes a lot which can therefore; increase Starbucks’ changes of success. This also justifies Starbucks rapid expansion strategy. The lack of strong local competition means that Starbucks can enjoy a high profit margin. Consequently, Starbuck having little or no competition consequently allows them to not have to compete in price wars, which could have had a negative effect on their customers and their sales as their prices are considerably high. Therefore, they can become the market leader and gain a higher market share.

Starbucks is planning to reduce its reliance on selling coffee even though they are known for their coffee. They are focusing on increasing sales of non-coffee products such as cold drinks and cakes. Furthermore they want to expand their sales of...

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