Introduction

Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world
which based in Seattle, Washington, USA which now operating in 72 countries with
approximate 24,000 stores worldwide. (Starbucks, 2016)
On 31 March 1971, the first Starbucks opened in Seattle, by three partners; Jerry
Baldwin an English teacher, Zev Siegl a history teacher, and a writer named Gordon Bowker
who all had a passion for fresh coffee. Their mission was to sell high quality coffee beans to
the public and they began selling fresh-roasted whole beans in a specialty store (Starbuck,
n.d.). In 1982, Howard Schultz joins Starbucks as director of retail operations and marketing.
Starbucks begins providing coffee to fine restaurants and espresso bars. Schultz brings up the
idea of coffeehouse culture to Seattle after he travels to Italy in 1983 (Starbuck, n.d.). By
1986 the company operated six stores in Seattle and had only just begun to
sell espresso coffee, and the next following years the original owners sold the Starbucks
chain to Howard Schultz, who rebranded his Il Giornale coffee outlets as Starbucks
Corporation and quickly began to expand its store in Chicago and Vancouver, Canada.
(Starbuck, 2016)
By 1995, Starbucks had 667 stores opened and continuing to expand its store by
choosing Tokyo, Japan as the first location outside North America in 1996 followed by
Singapore and the Philippines. Starbucks operates in two types of stores : company-operated
and licensed. In the early 2000s, Starbucks expanded into other important key markets,
covering most Asian countries and also moving into the European, Australian, and LatinAmerican market. Today, Starbucks is the leading roaster and retailer of specialty coffee in
North America with more than 24,000 retail stores in 72 international markets. Starbucks also

ensuring the extraordinary potential of coffee is discovered, revealed and delivered- helping
to bring great pleasure to millions of people each day.
Starbucks Mission Statement
To inspire and nurture the human spirit one person, one cup and one
neighborhood at a time. Starbuck (2016)
Starbucks mission statement has nothing to do with coffee because this mission statement
reflects what Starbucks does to keep its business running and the chain continues to expand
and thrive and create uniquely branded Starbucks customer experiences all over the world. To
accomplish that mission, Starbucks has several Principles that are really "corporate values"
which guide its employees in their decision making every day and they are:

Creating a culture of warmth and belonging, where everyone is welcome.

Acting with courage, challenging the status quo and finding new ways to grow our

company and each other.

Being present, connecting with transparency, dignity and respect.
Delivering our very best in all we do, holding ourselves accountable for results.

The Evolution of Starbucks Logo

Figure 1: The locations of Starbucks Coffee stores (in green colour) around the world.

Source : https://knoema.com/kchdsge/number-of-starbucks-stores-globally-1992-2016

Figure 2 : The total number of Starbucks location worldwide and the distribution of the stores
by segments.

Figure 1 shows the location of Starbucks Coffee stores worldwide which indicate that
Starbucks is one of the leading coffee marketer in the world. The total number of stores as
present is approximately 25000 stores and located in three main markets: the Americas,
which includes Canada, Latin America, and the US; China and Asia Pacific (CAP); and
Middle East and Africa (EMEA).

STARBUCKS MALAYSIA
Starbucks continue expends its international markets and entered Malaysia in 1998 which
choose Kuala Lumpur as the first store location. Starbucks in Malaysia is jointly owned by
Berjaya Corporation and Starbucks Coffee International. Berjaya Starbucks Coffee Company
Sdn Bhd (BStarbucks) now has 215 stores in Malaysia. In Berjaya corporations most recent
2016 Annual Report, it was stated that there was a revenue growth of 16.85% from the
previous financial year due to its rapid retail store expansion where the number of stores
increased from 193 stores to 215 stores. Besides that, the introduction of new beverages and

various marketing promotions on different platforms were put in place to continue capturing
public interest towards Starbucks products.

PESTEL Analysis for Starbucks Malaysia.

1) POLITICAL ANALYSIS
Malaysia is a multi-party democracy country which gives the fact that Malaysia has a
high degree of stability. This is important factor for businesses investing in other
country.
2) ECONOMIC ANALYSIS
Malaysias main attraction as a location for business is its vibrant economy.
With the increasing rate of growth has lead to a large increase in consumer incomes
and therefore demand for high quality coffee also increase.
3) SOCIAL ANALYSIS
Malaysia is a multicultural and a multi-religious country which seen as an example of

racial harmony as the different populations have existed peacefully together for years.
The mixture of religions in the country gives rise to a large number of religious

celebrations - Malaysia has more public holidays than any other country.
The cultural differences mean that businesses entering the country will have to adapt

their products and business practices to suit the needs of the population.
4) TECHNOLOGICAL ANALYSIS
Starbucks invest in machines and high technology research to provide attractive
dressing of coffee.
Provide wifi to customer for browsing while enjoy the coffee.
5) ENVIROMENTAL ANALYSIS
Starbucks cares about environmental control by recycling in Stores using reusable and
greener cups.
6) LEGAL ANALYSIS
Legal issues such as Monopoly and national protectionist laws will affect Starbucks

because of its size and its plan of expansion.

Malaysian legal system is based on Common law, and Islamic law is applied to the
Muslim. Halal certificated need for joining food industry in Malaysia.

Porters Five Forces Analysis for Starbucks Malaysia

Bargain power of supplier : An overcrowded
markets, rising prices of coffee beans, choose
suppliers based on quality, economic and
environmental issues.

Bargain power of
customers: more
option due to
competitors, large
variety of products

Rivalry :
competitors selling
similar products,
specialty coffee and
high quality food

Threat from
substitutes :
Tea, smoothies,
juices, soft drinks

Threat of new entrance : Controlled

1) Intensity of Competitive
Rivalry
: High
access
to distribution
channel, product
The industry has a monopolistic
competition,
with Starbucks having the largest
differentiation and innovation
markets share and its closest competitors also having a significant market share,
creating significant pressure on Starbucks. For example, Old Town White Coffee also
a popular specialty coffee in Malaysia which provide a much cheaper coffee than
Starbucks. Consumers do have any cost of switching to other competitors.
2) Bargaining Power of Suppliers : Low
The main inputs into the value chain of Starbucks is coffee beans and premium
Arabica coffee grown in select regions which are standard inputs, which makes the

cost of switching between substitute suppliers, moderately low.

Starbucks also forms a highly important part of the suppliers business, due its size and
scope, which make the power of the suppliers lower. Given these factors, suppliers

pose a moderately low bargaining power.

3) Bargaining Power of Customers : Low
Consumers have a moderate sensitivity in premium coffee retailing as they pay a
premium for higher quality products.
4) Threat of new entrants : High
As Starbucks produce a high quality of coffee, the new entrant might have difficulty

to compete with Starbucks.

But if there are new company that can produce a high quality product with a lower

cost than Starbucks, then the threat became high.

5) Threat from substitutes : High

There are many reasonable substitute beverages to coffee, which are mainly tea, fruit

juices, water, sodas, energy drinks and others.

Consumers could make their own home produced coffee with household premium
coffee makers at a fraction of the cost for buying from premium coffee retailers like

Starbucks.
There are no switching costs for the consumers for switching to substitutes, which
makes the threat high.

Strategy marketing for Starbucks Malaysia consists of 4 Ps which are price, place, products
and promotion.

1) Product
Malaysia is one of the Muslim country, Starbucks get the certified Halal by Jabatan
Kemajuan Islam Malaysia (JAKIM) to expand Muslim markets and all beverages and
food served in Malaysia are safe for Muslim consumption (Starbucks Malaysia Website
2016). Frappuccino are new flavor beverage products from Starbucks Malaysia to variety
the products that fit the taste of customers. In 2011, Starbucks also come out another new
product, called VIA Ready Brew, an instant coffee from Starbucks. Besides that, the
merchandise such as drinkwares, machines and accessories products are all designed to
symbolic Malaysia.
2) Price
Price of Starbucks are slightly higher than competitor due to the 'premium price' concepts.
Customers are willing to spend the budget for their service and products, because
Starbucks provide the high quality products, comfortable environment, unique tastes and
conveniences for customer to take a break from their busy life. Starbucks are using
penetration pricing strategic, in order to capture market share price for a new product
(such as new flavour Frappuccino) are set below average cost on special time. A part from
that, instant coffee product in Malaysia market is not truly with "premium style" compare
to Nescafe's Gold. Therefore, Starbucks used a skimming pricing strategy by offering 3

sachets is RM8 and 12 sachets is RM28 and on average price for Starbucks VIA is around
RM 2.33 till RM 2.66.
3) Place
Starbucks are provided a good environment for customers to enjoy their reading, listening
to music, free WIFI and meeting. Starbucks store can be obviously found in any
surrounding crowd in high-traffic and highly visible locations such as airport, mall and in
the city. In its efforts to adapt as the world rapidly evolves, Starbucks Malaysia
introduced the new drive-thru concept stores with consistency in mind which gives
customers the option to enjoy their favourite coffee on the go, or at the store should they
prefer to stretch their legs and relax. Starbucks drive-thru concept stores are located in
Johor Bahru, Shah Alam, Cyberjaya, Petronas Kajang along the highway and also Penang
(Starbuck Malaysia, 2016)
4) Promotion
Starbucks usually have seasonal promotion during festival, school holiday and so on. For
example, during major festive seasons such as the Chinese New Year and Hari Raya
Aidilfitri, Starbucks celebrate with their customers by offering promotions, merchandises
and Starbucks Card that appeal to the local market. Starbucks Cards is one of the
promotions used in Starbucks. Starbucks Cards had presented the customer brand loyalty
and a lot of promotion. In 2011, Starbucks Malaysia introduced Starbucks Card in
Malaysia where customers are now able to enjoy their cup of coffee with just a swipe at
anytime and anywhere. The Starbucks Card Mobile Application was introduced in 2014,
making it the fastest and most convenient way to pay at Starbucks which provides greater
convenience to our customers.
REFERENCES
1) Starbucks Corporation (2016) Starbucks Company Profile. Retrieved from
https://www.starbucks.com/about-us/company-information/starbucks-companyprofile

2) Starbuck Corporation (2016). Starbucks Company Timeline. Retrieved from

https://www.starbucks.com/about-us/company-information/starbucks-companytimeline
3) Knoema (2016). Number of Starbucks Store Globally,1992-2016. Retrieved from
https://knoema.com/kchdsge/number-of-starbucks-stores-globally-1992-2016
Starbucks Malaysia (2016). Welcome to Starbucks Malaysia. Retrieved from
http://www.starbucks.com.my
4) Starbuck (2016). Financial Release. Retrieved from
http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irolnewsArticle&ID=2223143
5) Starbuck (n.d). In Wikipedia. Retrieved from
https://en.wikipedia.org/wiki/Starbucks