Growth Through Geographical Expansion
Updated: Feb 27
Being a CEO of a company isn’t easy. Regardless of any industry or size, the goal is to grow the company. That might look like people development, product innovation, sales - but it ultimately has to come down to more profit and revenue over the long run.
There are 7 proven strategies to business growth. In this seven series blog post, we’ll share anecdotes and assets needed to execute. Here, we are kicking it off sharing the geography strategy.
Howard Schultz, the founder of the well-known coffee shop: Starbucks. He was born on July 19, 1953 in Brooklyn, NY. Schultz didn’t always grow up in a luxurious life as he is living now. He had a “defining moment” in his life which changed his way of looking at the “American Dream” forever: "I saw the fracturing of the American Dream and I saw my parents go through hopelessness and despair ... And those scars, that shame, that is with me even today” (Inc.).
Business Growth Strategy
What the geography strategy means for Starbucks is that no matter which Starbucks one goes to get coffee or tea, it will be the same coffee or tea in a different region. Because Starbucks creates the same experience across multiple geographies, it makes Starbucks dependable and consistent. The following are ways how they give the same experience each time:
1. Fixed Menu
Having a fixed menu online and in-store, this gives consumers the reassurance and relief that they are prepared on what they want coming in or know that the shops in Philadelphia get the same drinks as the ones in New York City.
2. Proven Store Concept
A store concept will enhance the appeal that seeks for a particular lifestyle (Unibox). The idea of paying $4 for a cup of coffee, most people would more so be unlikely to spend it. However, once it is associated with the brand Starbucks, people are ready to throw their cash at them. Not only do people come to Starbucks for coffee, but they even stay for the experience and the ambiance that the space offers. So, typically one will see that those that do stick around the cafe are using laptops, reading books, and doing work. Which then leads to - no matter which Starbucks we go to, we know what the inside looks like every time. The store concept will be the same (or all very similar) atmosphere that people expect when walking in.
3. World Class Training Program
Since Starbucks is part of the food industry, they are providing a service. In order to have consistent service, employees receive training so that they understand how to behave and treat customers. For example, people typically describe a size by: small, medium, and large. Not at Starbucks. They are strictly trained to voice the sizes as:
Short (8 ounces)
Tall (12 ounces)
Grande (16 ounces)
Venti (24 ounces)
Trenta (31 ounces)
This goes into the way of how Starbucks set themselves apart from other shops. It gives off the appeal that they are more superior by adding some fancy terms, even if it is as simple as talking about sizes.
4. Clear Target Customer
By understanding who the target customer of Starbucks, they then can curate the right kind of training to employees that's geared towards handling students and young urban professionals (aka yuppies). They can also then produce more advertising and drinks that the target may have interest in trying and continuously order. With having the target audience in mind, they created a concept/mission statement that would spark with them on a personal level.
Here's a video with further explanation on not only the geography strategy, but the other six, in order to expand the growth of a business.
Does Growth Through Geographical Expansion Work?
According to CNN, after Schultz announced that he was stepping down as executive chairman, "Starbucks announced it would shutter 150 under-performing US stores this year -- triple the usual amount of annual closures". After the transition and turmoil, Kevin Johnson as current CEO, decided that Starbucks isn't done growing in America or China. Today, Starbucks is booming more than ever. With Starbucks continuing expanding internationally, it means that "Starbucks can thrive even as its competitors are also doing well" (CNN).