Compare Starbucks và Mc.
cafe:
Franchising Vs. Licensing: What’s The Difference? ([Link])
[Link]
[Link]
Entrepreneur-options-Franchising-vs-Licensing-McDonalds-vs-
[Link] ([Link])
*The Barista Principle — Starbucks and the Rise of Relational
Capital ([Link])
Glocalization: How Starbucks Adapt and Enhance the Regional
Offerings of Japan ([Link])
Starbucks: Transnational Strategy
- Licensed store + Owned store
- Korea: 1334 licensed store
- Use license store to reach customer through points that SB
cannot access (high cost to acces - real estate cost): airports,
hospitals, campuses,…
Tight control over license:
Choose based on reputation and commitment to quality
Train employees of licensee
Sell some input
Fees based on sales
- Glocalization = localization + globalization
+ Localization: special menu + company owned store (local
pressure)
+ Globalization: License store + standard menu drink (cost
pressure)
Adapation more on store ambience (services)
Tỉ lệ company owned là trên 50%
Mc. Café:
McDonald's vs Starbucks - dissimilar business models yet successful in
their own ways ([Link])
Sci-Hub | Investment incentives for single and multiple unit franchisees.
Qualitative Market Research: An International Journal, 9(3), 225–242 |
10.1108/13522750610671662
EM-MBRJ200035 43..69 ([Link])
- Franchise:
+ Own territory => for rent to franchisee
The McDonald’s strategy is all about managing supplier
relationships and keeping costs down. I felt this was its key
competency. It’s all about volume sales ..
+ revenue from royalty fees
- Few local products, more standardized products
- Company owned: to operate all others franchisees
Adaptation more on products
- Tỷ lệ company owned 10%
In korea market:
Starbucks: Broad differentiation
- Status display
Mccafe: Best cost
1. Corporate level strategy of Starbucks and McCafe:
Starbucks and McDonald’s
1.1. STARBUCKS:
After becoming dominant in the US market, Starbucks began concentrating
in expanding international markets. F&B industry, especially in coffee drink
sector, it has a high local responsiveness pressure since customers are very
sensitive to the products, and also the high cost pressure for such MNC like
Starbucks requires standardization. With these isssues, Starbucks has
implemented transnational strategy since 1995.
To response with the adaptation pressures, Starbucks tries to bring local
experience through company-owned stores. These stores have Starbucks
signature design with local features. For instance, in Japan market,
Starbucks has many company - operated store to adjust with Japanese
culture. The corporate sees Japan as a highly-regionalized country with 47
perfectures and a lot of diversity in agriculture from the northernmost part of
Hokkaido to the southernmost part of Okinawa. “Limited edition” store in
Kawagoe mimics a traditional merchant’s store made of cedarwood and fine
tile roofs. This little local touch blends in with surrounding buildings of
Kawagoe town, while still keeps Starbuck’s signature color template of
green, white, black and the logos. Starbucks Japan is also home to the
largest Starbucks Reserve Roastery outside of the United States. Located
by the Meguro River, the 4-storey building was designed by world-renowned
Japanese architecture, Kengo Kuma. The first floor features the souvenirs
section, coffee, as well as an Italian bakery. The second floor is dedicated to
tea lovers, featuring Starbucks’ signature Teavana. Alcohol is served on the
third floor of this Roastery, whilst the fourth floor is a wide lounge for
customers to dine in and enjoy. Additionally, customization in products is
offered in specific areas where customer’s taste and culture is very
distinctive. In Europe and the US, Starbucks specifies in coffee products
such as toffee, chai latte, pumkin latte… However, with tea – based markets
in Asia countries, it offers various seasonal, herbal tea including Sakura
Blossom latte, Peach Cloud with Jelly,… The adapatation to local
responsiveness is also be proved through dairy milk and non dairy milk
option to adapt with vegetarians and healthy life styles.
On the other hand, cost pressure is also well executed by Starbucks to
reach the transnational strategy. Since coffee market is a very elastic
industry with high competition, the necessary for cost reduction is viable.
The problems of market pressure is solved through the strategy that
Starbucks executes licensed stores in many areas such as hospitals,
casinos, college campuses,… domestically and internationally. These
places have a very standardized desgin, and bring signature Starbucks
ambience. Standardization in these drive the costs of operating, design
down, while they are operated in dense - populated points. In order to gain
such standardization in the quality, training is given for licensed stores, input
supply is controlled strictly. Therefore, brand recognition is increasing but
still remains high – end quality. Besides, Starbucks reaches globalization of
products by providing standard, well received cafein drinks including matcha
latte, expresso, caramel machiatto,… in every markets. The corporation has
merged the taste of distinctive markets to a huge market where some
products can adapt well.
Dissimilarity between Starbucks and McCafe by McDonald’s
transnational strategy
Transnational strategy from Starbucks have higher adaptation to local
responsiveness, as oppose to McDonald’s, it pursues more for global
integrations.
Net revenues Percent
Company operated store 24,607 84.7%
Licensed store 2,683.6 9.2%
Others 1,770 6.1%
Total Revenue 29,060.6 100%
Starbucks revenue structure
McDonald’s revenue structure
Net revenues Percent
Company operated store 2,736 7.37%
Franchise store 37,295 92.63%
Total Revenues from store 40,031 100%
From the tables, Starbucks earns more from Company owned stores which
shows that local adaptation from these stores get a good responses from
customers. In company owned stores, the value of Starbucks brings better
at these places, attracting customers with local ambience and coffee
products. In the mean time, McDonald’s revenues structure comes most
from franchise, proving that McDonald’s has to focus more for
standardization in franchise stores. Company – operated stores play a role
as a master franchisor, which provide trainings, and control other
franchisees. Adaptation for local responsiveness is less in both stores,
however, globalization of service and products contributes better to the
revenues. These key contrast also result from competitive strategy of these
2 corporations. McCafe by McDonald’s pursuit Best cost strategy, and
Starbucks emphises on broad differentiation strategy.
Differences in corporate – strategy between Starbucks and McCafe by
McDonald’s
In international market, both MNC are going for transnational strategy,
however, there are some features which highlight the comparative
advantage of Starbucks:
Difference in entry modes: License vs Franchise
Service, food chain firms tend to use franchise with an aim to search for
globalization. McDonald’s is one of the most succesful corporation
implementing this strategy. Compare to Starbucks, Licensing is the core
entry mode when it comes to international entry.
Starbucks License vs McDonald’s Franchise:
Starbucks implements license strategy for its entry modes with an aim to
have more control over the international business units. While traditional
franchising, Mcdonald’s franchisees can own the business and adjust their
restaurants based on the core value of McDonald’s. However, the questions
about quality control will always be raised when McDonald’s applying this
model. For licensing, licensees just have access to the brand features,
including logos, trademarks, products, but they do not own the business. In
this case, Starbucks has permission to control tighter over the operations of
licensees and deliver to customers the core value. Core value of Starbucks
stresses on the ambience, the high – end products, which Starbucks must
stricly control this when reaching globalization to avoild any detrimental
variations. We can see that even though licensor can provide just the use
for trademarks, Starbucks goes in detail more over operations for licensees.
The corporation provides a master of arming its partners with the training
and knowledge, which they need to not only prepare any drink order a
customer can dream up (there are more than 87,000 possible drink
combinations) but also how to respond positively in difficult situations,
Starbucks invests heavily in training its front-line employees to create
exceptional experiences that embody the corporate culture, even going as
far to close all of its stores to train employees. L&D leaders at Starbucks
have created a new hire training program that utilizes the 70/20/10
approach. This means that 70 percent of partner training happens through
on-the-job experience, 20 percent of training is acquired from feedback and
mentorship from coaches, and 10 percent is learned through online e-
learning modules. New employees get their initial training from their store
manager, as well as dedicated trainers responsible for teaching
the Starbucks Experience classes which cover the company history, its
legacy of social responsibility, and its culture. The Starbucks Experience is
typically taught to groups of new hires at regional training centers, or in-
store in more remote markets. Each store also has a learning coach —
another partner who has shown a passion for training and teaching — who
guides new hires through the Barista Basics hands-on training program.
Plus, licensed store is obligated to use Starbucks inputs for resell.
Another contrast when discussing about Starbucks License and McDonald’s
franchise is store’s territory. Licensed stores by Starbucks are placed at
densed populated points which have a high territory costs such as hospitals,
campuses, airports, grocery… These locations gain brand reputation as a
high value chains for Starbucks in the mind of customers. Meanwhile,
franchise by McDonald’s was contructed based on real estate that the
corporation owns. Thus, with capacity of having many lands, the number of
stores is populated and everywhere.
Fee on franchising is paid based on the rents (McDonald’s owns territory)
plus the sales. McDonald’s will just mentor franchisees to sell more, but not
for lower the costs. However, Starbucks licensing agreement states that
licensees will pay royalty based on the revenue. Therefore, operation
activities in these licensed stores has to be very close to company –
operated versions. And Starbucks will help licensees to increase sales and
decrease operation costs in order to gain higher profits.
With a corporation has a distinctive competitive advantage and
core competency based off of: quality, service, ambience,
culture; license is suitable for Starbucks to transfer these in
worldwide business. Therefore, broad differentiation strategy is
supported by the license. Meanwhile, standardization is
guaranteed with McDonald’s franchise.
Korea Market
Broad Differentiation strategy of starbucks (sb latte tall 3.14 euro
Business – level of Starbucks overall can be described as a broad
differentiation strategy. Starbucks highlights its value proposition
regarding high – end quality and distinctive products. The focus is on the
store ambience, which bring unique experiences and also, augmented
coffee products. Implication for this differentiation strategy from Starbucks
can be accessed through value drivers from Starbucks value chain.
Firstly, products features and performaces are well received by customers
in every markets. Even though coffee industry contains high local
responsiveness, Starbucks take advantages of the pressures to tranform
products into distinctive features that increase value in consumers’
perception. Especially, in Korea market, store designs have highlighted the
outstanding apperances of Starbucks to other competitiors. Starbucks THE
Bukhansan offers a unique experience for busy modern urbanites in Seoul
to enjoy a cup of coffee and commune with nature while appreciating the
magnificent view of Bukhansan mountain. Spanning about 300 square
meters across the first and second floors and rooftop, the branch boasts 253
seats to provide a comfortable space for customers to enjoy their coffee.
Starbucks Kyungdong 1960 is located in Kyungdong Market, Dongdaemun.
This particular location is the fifth community store and is meant to bridge
the gap between generations by incorporating retro decorations along with
the theme of a theatre from the 60s. This Starbucks was restored from the
Kyungdong Theatre, which was originally built in 1960 and has been closed
since 1994, as you can see from the architecture, design, and structure of
the cafe! Starbucks Seoul Wave Art Center is floating right on the Han River
and is especially beautiful at night with all the lights. The combined effect of
the building looking like an oiler ship, and the long walkway makes you feel
like you are boarding a boat for a nautical adventure. Additionally, Starbucks
has a wide range of customized products for its Korean customers. There
are 9 exclusive Korean drinks: New Mungyeong Omija Fizzio, Jeju Honey
Peanut Latte, Jeju Hoji Tea Cream Frappuccino, Jeju Tangerine Green Tea,
Iced Oatmeal Latte, Orange and Dark Mocha, Lavender Café Breve, Green
Grape Black Tea Blended, and Green Tea Banana blended. Besides, local
products from international market are also well received by consumers
such as Chai latte, Cappuchino, Americano.
Secondly, Starbucks offers exceptional customer services to distinguish
with others competitors. Starbucks Korea executed special services called
"My DT Pass" where customers can order a drink for a drive-thru pickup.
The payment will be made online and license plate number recognition
technology will help to identify customers who have registered their vehicle's
information in the app."We adopted new technology that allows customers
to order using their voice. Because it is not safe to use a mobile phone while
driving, our application will can recognize a voice command and send an
order to a designated drive-thru coffee shop," the official said.
Thirdly, sales and marketing is being invested wisely by the corporation.
Customization marketing strategy for each market has signal the value of
Starbucks for its customers. It is resulted in the perception of being a
premium brand, trendy products, a middle class social status customers
when they think about Starbucks.
Best cost strategy of McCafe by McDonald’s
As a main competitors of Starbucks, McDonald’s has its own strategy to
compete with. In Korea market, McDonald’s pursues best cost strategy for
McCafe, to form competitive advantage.
The capability to upscale McCafe product offerings comes from the
standardization in franchised stores of McDonald’s. McCafe is embbed on
McDonald’s food chain, which make the fixed costs for McCafe products is
low. Mass integration in store desgin provide McCafe customers with
standard services, sustainable experience. Additionally, the menu of
McCafe in Korea has few global products such as americano, cappuchino,
iced caffe latte,… The benefits from franchise structure plus the global
products give McCafe a benefit to lower the cost. And the decrease reflects
partly on the price comparing to other coffee brand in Korea.
Although customers can benefit from McCafe prices, the variety in products
offerings have distinguished McCafe with most of the competitors in Korea.
McCafe offers for its customers unique drinks such as Plum Peach Chiller,
Jeju Hallabong Chiller. Compare to local coffe stores in Korea, McCafe
gives customers more products with high quality, but with affordable prices.
Since US – based corporation is viewed as an expensive, high class status,
McCafe delivers well this superior value while the price is better than
Starbucks