Course Name: Business Communication

Course Code: BUS251

Section: 05

Submitted to: Ms. Shabnin Rahman Shorna

Senior Lecturer,
Department of Management,
School of Business and Economics,
North South University.

TERM PAPER: STARBUCKS EXPANSION INTO LITHUANIA

Submitted by: Group 5

Group Member Names Group Member ID

Asaduzzaman Nur 2111018630

Mohammad Fahim Washi 2112346630

Tanjim Bin Noor 2131787630

Afima Tun Noor 2132016630

Tahia Alam Diana 2122388630

 LETTER OF TRANSMITTAL

1st November, 2023

Shabnin Rahman Shorna,

Senior lecturer,
Department of Management,
School of Business & Economics,
North South University.

Subject: Submission of term paper on Starbucks’ expansion into Lithuania.

Dear Ma’am,
With due respect, we, the members of group 5, would like to present to you the term paper on
Starbucks’ expansion in Lithuania.
Thank you for approving our proposal and allowing us to work on this organization and country.
It was a pleasant experience learning from you and we are grateful to you.

Sincerely,
Asaduzzaman Nur

Mohammed Fahim Washi

Tahia Alam Diana

Tanjim Bin Noor

Afima Tun Noor.

2
 ACKNOWLEDGEMENT
Firstly, we would like to thank our instructor, Ms. Shabnin Rahman Shorna, for teaching and
guiding us till now, and also for this report. Every member of the group contributed equally in the
process of completion of the term paper and we appreciate each other’s efforts.

3
 TABLE OF CONTENTS

EXECUTIVE SUMMARY............................................................................................................. 5

INTRODUCTION TO STARBUCKS ............................................................................................ 6

STARBUCKS’ PRESENCE IN EUROPE ...................................................................................... 6

HOST COUNTRIES OF STARBUCKS ......................................................................................... 7

STARBUCKS’ FAILURES AND STRUGGLES IN SOME COUNTRIES...................................... 8

WHY STARBUCKS SHOULD EXPAND INTO LITHUANIA ...................................................... 9

INTRODUCTION TO LITHUANIA ..................................................................................... 9

LITHUANIAN COFFEE CULTURE .................................................................................... 9

SOURCING OF COFFEE ................................................................................................... 10

COFFEE CONSUMPTION OF LITHUANIA ..................................................................... 10

EASE OF DOING BUSINESS ............................................................................................. 11

COUNTRY/CULTURE COMMUNICATION ............................................................................. 12

BUSINESS, LEGAL, POLITICAL, DEMOGRAPHIC AND GEOGRAPHIC ENVIRONMENT OF

LITHUANIA ............................................................................................................................... 13

BUSINESS ENVIRONMENT .............................................................................................. 13

LEGAL ENIVRONMENT................................................................................................... 14

POLITICAL ENVIRONMENT ........................................................................................... 16

GEOGRAPHIC AND DEMOGRAPHIC ENVIRONMENT ................................................ 16

BUSINESS OVERVIEW, CHALLENGES AND MITIGATION STRATEGIES .......................... 18

PROSPECTS OF EXPANDING INTO LITHUANIA .................................................................. 21

CONCLUSION ............................................................................................................................ 24

REFERENCES ............................................................................................................................ 25

APPENDIX ................................................................................................................................. 26

PROCEDURAL MEMO...................................................................................................... 26

4
 EXECUTIVE SUMMARY
This report, "Starbucks Expansion into Lithuania," presents a comprehensive analysis of the
feasibility and strategic implications of Starbucks' entry into the Lithuanian market. The research
explores the rich historical and geographical aspects of Lithuania, revealing its potential as a bridge
between Western and Eastern Europe. A detailed examination of Lithuania's population, customs,
and economic landscape highlights the opportunity for Starbucks to cater to a growing demand for
quality coffee experiences. The report also addresses the competitive coffee industry in Lithuania,
emphasizing the need for Starbucks to adapt to local market conditions. In conclusion, this report
equips Starbucks with essential insights and recommendations to make informed decisions for its
expansion into Lithuania, ensuring a successful entry into this vibrant Eastern European market.

5
 INTRODUCTION TO STARBUCKS
Starbucks is an American multinational coffeehouse and coffee roastery chain. It is the largest
coffeehouse company in the world, with over 30,000 locations in 83 countries. (Starbucks, 2023)
Starbucks was founded in 1971 in Seattle, Washington by Jerry Baldwin, Zev Siegl, and Gordon
Bowker.
Starbucks is known for its coffee drinks, pastries, and snacks. The company also sells a variety of
coffee beans, coffee makers, and coffee-related accessories. Starbucks coffee is roasted in-house
at the company's headquarters in Seattle.

As we journey through this research, we will discuss Starbucks’ presence in Europe and which
countries it struggled in, followed by a description of Lithuania and its coffee culture, and then we
will unveil Lithuania's potential as a favorable choice for Starbucks' expansion, analyzing the
business, legal, political and geographic environments that make it an enticing opportunity.

STARBUCKS’ PRESENCE IN EUROPE

The European market has unique nuances, and each country offers its advantages and challenges
for Starbucks. Europe, as a whole, contributes significantly to Starbucks’ global operations, with
a turnover of $5.2 billion in 2022 (Starbucks' worldwide turnover in 2022 was $29.2 billion).

6
HOST COUNTRIES OF STARBUCKS (and number of stores):
Africa Europe North America
• Egypt: 66 • United Kingdom: 1,214 • Canada: 2,359
• South Africa: 54 • Germany: 161 • Mexico: 531
• Morocco: 9 • France: 121 • Trinidad & Tobago: 15
• Tunisia: 1 • Spain: 107 • The Bahamas: 12
• Poland: 72 • Costa Rica: 12
Asia • Ireland: 67 • Jamaica: 12
• China: 6,000 • Switzerland: 63 • El Salvador: 11
• Japan: 1,415 • Netherlands: 59 • Guatemala: 7
• South Korea: 1,080 • Romania: 54 • Panama: 5
• Turkey: 663 • Greece: 31 • DominicanRepublic: 5
• Taiwan: 550 • Czech Republic: 26 • Aruba: 3
• Indonesia: 500 • Denmark: 21 • Barbados: 3
• Thailand: 410 • Austria: 20 • Curaçao: 3
• Philippines: 401 • Belgium: 19 • Cayman Islands: 1
• Saudi Arabia: 351 • Italy: 18
• Malaysia: 327 • Norway: 17 Oceania
• India: 270 • Sweden: 17 • Australia: 59
• Hong Kong: 147 • Hungary: 16 • New Zealand: 22
• UAE: 138 • Bulgaria: 15
• Singapore: 125 • Portugal: 11 South America
• Kuwait: 89 • Finland: 9 • Brazil: 122
• Vietnam: 87 • Slovakia: 8 • Argentina: 100
• Lebanon: 41 • Serbia: 7 • Chile: 91
• Kazakhstan: 30 • Luxembourg: 4 • Peru: 81
• Cambodia: 21 • Malta: 4 • Colombia: 24
• Bahrain: 19 • Andorra: 1 • Uruguay: 12
• Qatar: 18 • Monaco: 1 • Bolivia: 4
• Jordan: 14 • Guyana: 1
• Cyprus: 11 • Paraguay: 1
• Oman: 11
• Azerbaijan: 4
• Brunei: 4
• Laos: 2

7
 STARBUCKS’ FAILURES AND STRUGGLES IN SOME COUNTRIES
Australia
Starbucks' failure in Australia can be attributed to several key factors. Firstly, the Australian coffee
market is highly competitive and deeply ingrained with a strong café culture that favors local,
independent coffee shops. Starbucks' standardized offerings and Americanized approach clashed
with the preferences of Australian consumers who value unique, artisanal coffee experiences.
Secondly, Starbucks struggled with pricing, positioning itself as a premium brand in a market
where consumers had access to high-quality, affordable coffee alternatives. This led to a perception
that Starbucks is overpriced, deterring cost-conscious Australians.
And lastly, the rapid expansion of Starbucks stores without adapting to local tastes and preferences
diluted the brand's authenticity and appeal. This forced Starbucks to close down 61 of the 84 stores
it had in Australia.
Russia
In March 2022, Starbucks announced that it would be suspending all operations in Russia in
response to the Russian invasion of Ukraine. Starbucks had 130 stores in Russia at the time.
Starbucks has not yet announced when or if it will resume operations in Russia.
Starbucks is still operating in Switzerland and Austria, but they have struggled in some of
these countries:
Switzerland
Starbucks first entered the Swiss market in 2001, but the company struggled to gain traction. Swiss
people strongly prefer local coffee houses over international chains, and Starbucks is considered
too American and expensive. Switzerland also has several well-established local coffee chains that
offer high-quality coffee and food at competitive prices. Starbucks stores in Switzerland were often
located in tourist areas, which meant that they were not accessible to residents daily. Additionally,
Starbucks is known for its high prices, which are even higher in Switzerland due to the strong
Swiss franc.
Austria
Austrians have a strong preference for local coffee houses over international chains. A 2019
Austrian Chamber of Commerce study found that only 20% of Austrians had ever been to a
Starbucks, and only 5% were regular customers.
Austria has several well-established local coffee chains, such as Julius Meinl and Aida. These
chains offer high-quality coffee and food at competitive prices. In 2019, Starbucks had only 1%
of the Austrian coffee market, compared to 25% for Julius Meinl and 15% for Aida.

8
 WHY STARBUCKS SHOULD EXPAND INTO LITHUANIA

INTRODUCTION TO LITHUANIA
Lithuania, situated in the northeastern part of Europe, shares its borders with Latvia to the north,
Belarus to the east and south, Poland to the southwest, and Russia's Kaliningrad Oblast to the west.
It is the largest of the three Baltic states in terms of both land area and population. Lithuania boasts
a thriving economy with a GDP per capita of approximately $24,000, making it an attractive
market for premium brands like Starbucks. (World Bank, 2023)

In early 2017, there were around 104,000 businesses in Lithuania. The Lithuanian government
works hard every year to enhance the business climate of the nation; as a result, Lithuania
frequently rises in international rankings. The World Bank's most recent Doing Business Report
places Lithuania 21st out of 190 nations. (World Bank Group, 2020)
LITHUANIAN COFFEE CULTURE
Lithuanian coffee culture is a fascinating blend of tradition and modernity. Coffee holds a special
place in the hearts of Lithuanians, and it is often associated with socializing and relaxation. The
café scene in major Lithuanian cities is vibrant, with a growing demand for high-quality coffee.
Independent coffee shops have flourished, indicating a discerning customer base that values a
premium coffee experience.

9
Starbucks can leverage this burgeoning coffee culture by offering its iconic coffee beverages and
creating a unique ambiance that resonates with the Lithuanian clientele. With a strong emphasis
on the art of coffee preparation and a variety of offerings, Starbucks can cater to the preferences
of both coffee connoisseurs and those looking for a cozy place to socialize.
SOURCING OF COFFEE
Starbucks sources its coffee from over 30 countries within the Coffee Belt, (Starbucks, 2023) a
region encircling the globe between the Tropics of Cancer and Capricorn. Divided into Latin
America, Africa, and Asia/Pacific, these three main growing regions contribute distinct flavors to
Starbucks coffees.
Leveraging Established Supply Chains: Starbucks already engages with over 30 coffee-
producing countries worldwide, including those within the EU. This existing network and supply
chain management within Europe can be extended to Lithuania, ensuring a reliable source of high-
quality coffee beans for Lithuanian coffee enthusiasts.
COFFEE CONSUMPTION OF LITHUANIA
Lithuania recorded a per capita coffee consumption of 17.0 kg, marking a notable 11.5% increase
from the previous year, as reported by Faostat. Among the 161 countries monitored, Lithuania
holds the 4th position in terms of per capita coffee consumption.

10
 Figure: Coffee consumption per capita in Lithuania. (Helgi Library, 2022)

EASE OF DOING BUSINESS

Lithuania, ranked 21st in the 2017 World Bank's Doing Business Report, offers a favorable
environment for starting a new venture. (World Bank, 2017) Its European Union membership
grants access to a vast market and cost-effective sourcing options for raw materials. With a growing
economy, there's an increasing number of businesses and rising household incomes. This suggests
that people might shift their spending towards premium choices as their GDP per capita increases.
Given Europeans' strong affinity for coffee, opening Starbucks operations in Lithuania seems like
a promising opportunity. Starbucks' established reputation and goodwill can attract consumers,
ensuring consistent earnings in a market with a growing appetite for coffee.

11
 COUNTRY/CULTURE COMMUNICATION
When thinking about company development in Lithuania, it is important to consider several
cultural communication issues.
1. Verbal Communication:
Lithuanians are multilingual and frequently speak second languages like Russian, English, French,
and German. Approximately 50% of Lithuanians are bilingual, and 90% of the population can
communicate in at least one foreign language. English is widely spoken among Lithuanians,
especially in metropolitan areas, however knowing some Lithuanians or using interpreters is
necessary for good communication. Lithuanian is the official language of the country. A company
like Starbucks must consider promoting their products in all the languages that the Lithuanians
speak or understand.
2. Business Etiquette in Lithuania: Embracing Hierarchy, Respect, and
Formality
Numerous Lithuanian businesses use a hierarchical structure. (Business Culture, 2023)Senior
business people only converse with others in the same position in such circumstances. The culture
of Lithuania is hierarchical and values respect for age and authority. Respect elders and refer to
people by their titles. Meetings for business purposes often follow a set format and have a
designated leader or decision-maker.
3.
Cultural Awareness:
Recognizing Lithuanians' pride in their background can go a long way toward improving relations.
Successful commercial connections and operations of Starbucks in the nation will be facilitated by
developing trust and a grasp of the local culture.
4. Attitude towards Materialism:
Lithuania combines historic traditions with contemporary materialism. People are growing more
accepting of high-end goods, but they nevertheless respect modesty and thrift. Starbucks has to be
both careful and creative when promoting their products and services and make sure the pricing
and positioning is well enough.

12
 BUSINESS, LEGAL, POLITICAL, DEMOGRAPHIC AND GEOGRAPHIC
ENVIRONMENT OF LITHUANIA

BUSINESS ENVIRONMENT
Lithuania has been a part of the European Union since 2004 and has been well-integrated in foreign
trade since then. It has an open economy and its foreign trade represents 156% of its GDP. (Llyods
Bank, 2023) The major trading partner of Lithuania is the European Union as it is considered as a
whole. In terms of exports, the destination countries are mostly Russia, Latvia, Germany, and
Poland. While it imports from mainly Germany, Poland, Latvia, and the Netherlands. The country’s
merchandise balance (a component of current account) has been in deficit due to energy imports
mainly gas from Russia.
Lithuania's business and legal environment is conducive to foreign investment. The country has
witnessed steady GDP growth, with a recent rate of 4.8%, indicating a robust economy.

Figure: GDP growth rate of Lithuania. (Trading Economics, 2023)

The corporate tax rate in Lithuania is competitive at 15%, which is attractive for international
companies. Moreover, the country has a low corruption rate, enhancing the transparency and
reliability of business operations. Lithuania's commitment to promoting entrepreneurship and
innovation is evident in its policies, including support for startups and research and development
initiatives.
The ease of doing business is relatively high in Lithuania, making it easier for Starbucks to
navigate regulatory processes and establish a strong presence. Collaboration with local suppliers
and businesses can further streamline operations, ensuring a seamless entry into the Lithuanian
market.

13
The Gross National Income (GNI) per capita in Lithuania is another important indicator of its
economic health. As of the latest figures, the GNI per capita is approximately $16,500, reflecting
a rising standard of living among the Lithuanian population. This rising income level is indicative
of a growing middle class with disposable income, which is a key market segment for Starbucks.

Currency: Lithuania adopted the Euro as its official currency when it joined the European Union
in 2004. This move has both advantages and disadvantages for businesses like Starbucks:

The adoption of the Euro in Lithuania offers several advantages for Starbucks. Firstly, it simplifies
transactions for customers, as they no longer need to exchange currency when visiting Starbucks,
making the overall experience more convenient. Additionally, Starbucks can enjoy stable
payments when importing coffee ingredients, as the Euro's consistency avoids the currency
fluctuations that might occur when dealing with multiple countries. These benefits enhance the
ease and predictability of doing business in Lithuania for Starbucks, contributing to a favorable
operating environment.

However, there are also notable disadvantages to Lithuania's adoption of the Euro. One major
drawback is the loss of monetary control. Lithuania no longer has the ability to independently
adjust its monetary policy, which can be problematic during economic crises. If such crises arise,
it may impact consumer purchasing power, potentially leading to a decline in demand for premium
services like Starbucks.

For Starbucks, the Euro's value compared to the US Dollar is crucial, as a stronger Euro can boost
earnings when translating profits back into US Dollars. This currency factor should be considered
when investing in Lithuania.

LEGAL ENIVRONMENT
Lithuanian law provides workers with the right to safe working conditions and it is highly enforced
as the local law aligns with the EU law. The Constitution of Lithuania considers all citizens to be
equal, therefore Starbucks has to be open-minded and inclusive while recruiting and working with
employees of different races, origins, languages, nationalities, religions, etc. As Lithuania has a
strong anti-discrimination policy, not abiding by the rules will come with legal issues and a
negative brand image for Starbucks. Also, it is against the law to recruit workers without proper
work authorization as Lithuania deals with cases of illegal immigrants due to its geographic
location. Therefore, to avoid large fines and severe penalties Starbucks must verify all the legal
documents of its workers.
Apart from morally and physically safeguarding the workers, Starbucks has to provide a few
mandatory benefits such as vacation pay, sick leave, healthcare insurance, etc. Also, companies
operating in Lithuania have to be transparent with their pay system. Therefore, Starbucks must be
transparent and would need to make changes if found with a pay gap of above 5 percent among

14
the genders. Cases of workplace gender discrimination and sexual harassment have severe
punishments.
Taxation and Trade
One of the notable advantages for businesses in Lithuania is the corporate tax rate, which is
currently at a competitive 15%. (Trading Economics, 2023) This low tax rate incentivizes foreign
investment and encourages companies like Starbucks to establish a presence in the country.
Additionally, Lithuania has a network of double taxation treaties, further facilitating international
trade and investment.
Lithuania's membership in the European Union also grants it access to the EU's extensive trade
agreements and benefits, making it an ideal hub for Starbucks to source coffee beans and other
products.
Business Policies and Ease of Doing Business
Lithuania has implemented a range of business-friendly policies to attract foreign investors. The
government has streamlined administrative processes, reduced bureaucracy, and made efforts to
simplify business registration and licensing procedures.

Figure: FDI (USD mn) showing the flow of foreign funds into Lithuania. (CEIC Data, 2023)
Furthermore, Lithuania encourages collaboration between businesses and research institutions.
This fosters innovation and can benefit Starbucks by providing opportunities for product
development and improving customer experiences through technological advancements.

15
POLITICAL ENVIRONMENT

Lithuania is characterized by political stability and a democratic government, which provides a

favorable environment for businesses, including Starbucks. The country's political leadership
actively supports economic growth and development.

The government offers benefits to businesses through various policies. These include tax cuts and
business-friendly regulations that encourage growth. Companies meeting specific conditions can
even enjoy a reduced corporate income tax rate, which can potentially go down to 0 percent.

In terms of its political relations with other countries, Lithuania has occasionally faced political
conflicts, such as with China and Russia. For instance, it recognized human rights violations in
China and engaged in trade disputes with China and Russia over various issues. However, these
political disputes have not significantly impacted the overall business environment, and the
government remains committed to fostering a business-friendly atmosphere.

Furthermore, the Lithuanian government's commitment to education and workforce development

has led to a well-educated and skilled labor force. Starbucks can benefit from this pool of talent by
recruiting and training local employees to ensure high service quality standards are met.

In conclusion, Lithuania enjoys political stability with a democratic government, and it actively
supports business growth through various incentives and a business-friendly approach. The
combination of a low corporate tax rate, a growing economy, and a well-educated workforce makes
Lithuania an attractive market for Starbucks to expand its operations.
GEOGRAPHIC AND DEMOGRAPHIC ENVIRONMENT
Geographic Profile
History: Lithuania's proximity to other European countries provides an efficient gateway for
Starbucks to import coffee beans and related supplies. This location can streamline the supply
chain and reduce transportation costs, facilitating a steady and cost-effective flow of goods to
support Starbucks outlets in Lithuania and potentially neighboring markets.

Geography: Lithuania's access to the Baltic Sea, which is connected to major European ports,
enhances the distribution capabilities of Starbucks. The country's ports, such as Klaipeda, provide
convenient access to maritime routes, enabling efficient importation and distribution of coffee
beans and other essential products. This strategic location can reduce lead times and contribute to
more.

People: Lithuania is home to a warm and resilient population known for its strong sense of national
identity. Lithuanians are proud of their rich cultural history, which includes customs, folklore, and
a strong love of the arts and music. They are also known for their warmth and for appreciating the
16
value of communal values and familial ties. Lithuanians have a strong work ethic, which is
frequently reflected in their history of overcoming obstacles and pursuing advancement. Both
foreign tourists and expatriates will find Lithuania to be a nice and hospitable country.
Demographic Profile

Lithuania's demographics are vital for Starbucks to understand its potential market. With a
population of around 2.8 million, Lithuania offers a manageable market size. (Worldometers,
2023) The population is diverse in terms of age, allowing Starbucks to cater to various customer
preferences, from young professionals seeking social hubs to older generations valuing traditional
coffee. The country emphasizes education, which aligns with Starbucks' appeal to discerning
customers.

Lithuania's moderate population density, particularly in urban areas like Vilnius, presents an
opportunity for Starbucks. The urban cafe culture is growing, indicating a rising demand for high-
quality coffee and room for Starbucks to establish itself as a premium coffee destination.

The climate is typical for continental Europe with distinct seasons. Climate change effects, such
as lower rainfall, have impacted crop yields and could contribute to inflation. However, Lithuania
is committed to addressing climate change by reducing greenhouse emissions, signaling a long-
term focus on sustainability.

17
 BUSINESS OVERVIEW, CHALLENGES AND MITIGATION STRATEGIES

Competition

• Local Coffee Chains: Starbucks may face fierce competition from Lithuania's well-
established coffee chains, which are well-embedded in the community.
• Independent Cafes: Independent cafes and coffee shops are common in Lithuania. They
frequently serve a variety of customer preferences by providing distinctive, locally
produced goods.
• International Competitors: Other foreign coffee businesses that operate in Lithuania may
pose a threat to Starbucks, escalating the rivalry.
• Local Consumer Preferences: Success depends on knowing and meeting Lithuanian
customers' unique tastes and preferences, which may deviate from Starbucks' regular menu.
• Location Strategy and Marketing: For Starbucks to succeed in a crowded market, it will
be crucial to select wise shop locations and put strong branding and marketing plans into
place.

Advertising

To successfully advertise Starbucks in Lithuania, it is crucial to have a deep understanding of the

country's demographics, opinions, lifestyles, and preferences. By analyzing these factors,
Starbucks can create effective advertising strategies that will resonate with the Lithuanian people.

1. On average, Lithuanians spend approximately three hours a day in front of a television

screen, making TV commercials a highly effective method for advertising as they can
potentially reach a large audience.

2. Showcasing Starbucks at ideal locations for reading and quality time in the advertisements
will attract consumers who are into reading.

3. Incorporating local actors, celebrities, or foreign movie actors could result in hype for
Starbucks products.

4. Women in Lithuania have a strong interest in fashion. Therefore, featuring fashion

statements in advertisements and utilizing magazines will attract female consumers,
allowing Starbucks to better reach this segment.

5. Lithuania has the highest number of social media users among the Baltic countries.
Advertising Starbucks on social media can improve brand awareness.

Therefore, creating advertisements according to the taste of the Lithuanian people will result in
customer interest and attention.

18
Staffing

Advantages of Lithuania's Workforce:

1. Abundant Service Workers: Lithuania offers a standard 8-hour workday and has seen an
increasing demand for service sector workers, ensuring a large pool of potential employees for
Starbucks.

2. Multilingual Workforce: Lithuania's high level of tourism from various European countries
results in a multilingual workforce. Approximately, 78% of Lithuanians know at least one foreign
language, which can enhance customer service and flexibility for tourists. (Statistics Lithuania,
2013)

3. Strong Work Culture: Lithuanians are known for their strong work culture, both individually
and in groups. They are well-educated, hardworking, and open to constructive criticism, fostering
a productive and respectful work environment.

4. Adaptation to Technology: Lithuania has embraced technology in recent years, and its
workforce is proficient in using technology for efficient communication and real-time task
management, which can benefit Starbucks' operations.

Disadvantages of Lithuania's Workforce:

1. Limited Financial Expertise: The Lithuanian labor force may lack analytical, problem-solving,
and financial skills. Starbucks may need to source specialized financial managers from other
countries, potentially incurring higher costs.

2. Cost and Training: Hiring financial experts from other sources may require higher wages,
additional training, and time-consuming recruitment processes, posing challenges for Starbucks in
terms of budgeting and financial management.

Solutions to Workforce Challenges in Lithuania:

1. Addressing Gender Disparity:

- Starbucks can actively promote gender diversity and inclusion in its workforce by
implementing equal opportunity hiring practices.
- Develop targeted recruitment and retention strategies to attract more male employees, ensuring
a balanced workforce.

2. Enhancing Financial Expertise:

19
 - Offer specialized training programs to improve the financial and analytical skills of the local
workforce, reducing the need to hire expensive external financial experts.
- Consider partnerships with local educational institutions to create customized training
programs for Starbucks employees.

3. Recruitment Strategies:
- Collaborate with recruitment agencies and use online platforms to access a broader talent pool
within and outside Lithuania.
- Provide competitive compensation packages and benefits to attract skilled workers, while also
offering opportunities for career growth and development.

4. Employee Retention:
- Create a supportive work environment with opportunities for skill development and career
advancement to retain talented employees.
- Encourage a culture of continuous learning and personal development to enhance employees'
skills and capabilities.

By addressing these challenges and implementing these solutions, Starbucks can better navigate
Lithuania's workforce conditions and build a strong and well-rounded team to support its
operations in the country.

20
 PROSPECTS OF EXPANDING INTO LITHUANIA

Starbucks' strategic expansion into Lithuania presents a plethora of promising prospects, aligning
perfectly with the global growth strategy of this iconic coffee brand. It can open up café stores,
sell its ready-to-drink products and also its high-quality coffee grounds that have such high
demand. This move offers substantial advantages and potential opportunities for Starbucks. Let's
delve into these prospects to understand the richness of the opportunity that Lithuania holds.

Market Growth and Profitability

Lithuania's steadily growing economy, with a GDP per capita of approximately $22,700, indicates
the presence of a rising middle class with an increasing disposable income. This favorable
economic landscape sets the stage for Starbucks to tap into a burgeoning consumer base. As local
consumer preferences evolve and mature, Starbucks can anticipate sustainable growth and
profitability.

Coffee Culture Integration

Lithuania boasts a thriving coffee culture that artfully blends tradition with modernity. Coffee
holds a special place in the hearts of Lithuanians, and independent coffee shops have thrived,
signifying a discerning customer base that truly appreciates a premium coffee experience.
Starbucks can seamlessly integrate itself into this culture by offering its iconic coffee beverages
and creating a unique ambiance that deeply resonates with Lithuanian clientele. By emphasizing
the art of coffee preparation and providing a diverse range of offerings, Starbucks can cater to both
coffee connoisseurs and those seeking a cozy place to socialize.

Supply Chain Optimization

Lithuania's strategic location within Europe offers remarkable logistical advantages for Starbucks.
Its proximity to neighboring European countries simplifies the importation of coffee beans and
related supplies, streamlining the supply chain and reducing transportation costs. Additionally,
Lithuania's access to the Baltic Sea and major European ports enhances distribution capabilities,
ensuring a responsive and cost-effective supply chain. Starbucks can leverage these geographical
advantages to ensure a consistent and efficient flow of goods to support its outlets in Lithuania and
possibly reach neighboring markets.

Collaborative Opportunities

To thrive in the Lithuanian market, Starbucks can explore partnerships or collaborations with local
businesses. Partnering with local suppliers for coffee beans and pastries, for instance, can help
ensure a seamless supply chain and infuse local flavors into Starbucks' offerings. By actively

21
supporting the local economy and incorporating regional tastes, Starbucks can enhance its appeal
to Lithuanian consumers and further establish itself as an integral part of the local fabric.

Consumer Market Expansion

The Lithuanian middle class is growing and enjoying increased disposable income. This
demographic shift makes Lithuania an ideal market for Starbucks, which caters to consumers
seeking premium coffee experiences. Starbucks can introduce innovative products and concepts
tailored to the local market, effectively engaging a broader audience. Starbucks' presence can play
a pivotal role in expanding the coffee culture and stimulating demand for high-quality coffee
offerings.

Ready-to-Drink Products Opportunity

Starbucks can seize the opportunity to introduce its ready-to-drink products to the Lithuanian
market. (Starbucks UK, 2022) With an on-the-go culture and a demand for convenient premium
coffee, these products can cater to a wide range of consumers. Offering bottled or canned Starbucks
beverages through local retailers and cafes can further enhance the brand's accessibility and
presence in Lithuania.

Figure: Some of Starbucks ready-to-drink products.

Retail Coffee Sales

Starbucks can introduce its premium coffee grounds in Lithuanian grocery stores and
supermarkets. By making its coffee products available for purchase, Starbucks can cater to
consumers who prefer to brew their coffee at home. This strategy allows Starbucks to reach a
broader audience, including those who may not visit Starbucks stores regularly but still enjoy its
coffee.

22
Online Sales

With the growing trend of e-commerce, Starbucks can set up an online store for Lithuanian
customers to purchase its coffee powder products directly from the company's website. This not
only provides convenience but also allows Starbucks to gather customer data and tailor its
marketing efforts.

Local Partnerships

Starbucks can collaborate with local coffee retailers, cafes, and businesses to supply its coffee
grounds. These partners can then incorporate Starbucks' coffee products into their offerings,
expanding Starbucks' reach in Lithuania.

23
 CONCLUSION

In conclusion, Starbucks' expansion into Lithuania holds considerable promise and aligns with the
brand's mission to provide exceptional coffee experiences to customers worldwide. By leveraging
Lithuania's economic stability, geographic advantages, and thriving coffee culture, Starbucks can
establish a strong foothold in the country and potentially serve as a gateway to neighboring
markets. Collaborative efforts with local businesses and investments in workforce development
can further enhance Starbucks' integration into the Lithuanian market. As Starbucks continues to
chart its course in the ever-expanding world of coffee culture, Lithuania represents a compelling
chapter in its global journey, offering both growth potential and opportunities for meaningful
cultural engagement.

In recent news, Starbucks announced plans to expand and elevate its brand around the world in
partnership with Alsea, a leading restaurant operator in Latin America and Europe. While this
partnership may not directly pertain to Lithuania, it underscores Starbucks' commitment to global
expansion and innovation. This expansion strategy is well-aligned with the prospects discussed
earlier, emphasizing Starbucks' dedication to bringing its premium coffee experiences to new
markets.

Starbucks' international presence continues to evolve, with a focus on creating unique, culturally
relevant experiences for customers while maintaining its commitment to high-quality coffee. As
the brand explores new territories and partnerships, its expansion into Lithuania serves as a prime
example of its global growth strategy in action. The prospects outlined in this research provide a
glimpse into the potential success and impact that Starbucks can achieve in Lithuania and beyond,
as it continues to be a beacon in the global coffee industry.

24
 REFERENCES
Business Culture. (2023). From https://businessculture.org/eastern-europe/lithuania/meeting-
etiquette/#:~:text=Importance%20of%20Business%20Meetings,and%20polite%2C%20li
stening%20very%20diligently.
CEIC Data. (2023). From https://www.ceicdata.com/en/indicator/lithuania/foreign-direct-
investment
Helgi Library. (2022). From https://www.helgilibrary.com/indicators/coffee-consumption-per-
capita/lithuania/
Llyods Bank. (2023). From https://www.lloydsbanktrade.com/en/market-
potential/lithuania/trade-
profile#:~:text=Lithuania%20is%20a%20very%20open,Bank%2C%20latest%20data%20
available
Starbucks. (2023). From https://en.wikipedia.org/wiki/Starbucks
Starbucks. (2023). From https://www.starbucksathome.com/gb/story/where-does-coffee-come
Starbucks UK. (2022). From https://www.starbuckschilled.com/uk/
Statistics Lithuania. (2013). From https://in.mfa.lt/in/en/news/statistics-lithuania-785-of-
lithuanians-speak-at-least-one-foreign-language
Trading Economics. (2023). From https://tradingeconomics.com/lithuania/full-year-gdp-growth
Trading Economics. (2023). From https://tradingeconomics.com/lithuania/corporate-tax-rate
World Bank. (2017). From https://www.pwc.de/de/internationale-maerkte/assets/doing-business-
in-lithuania-2017.pdf
World Bank. (2023). From
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=LT
World Bank Group. (2020). From
https://archive.doingbusiness.org/content/dam/doingBusiness/country/l/lithuania/LTU.pdf
Worldometers. (2023). From https://www.worldometers.info/world-population/lithuania-
population/

25
 APPENDIX
PROCEDURAL MEMO
Date: October 4, 2023

To: Mohammed Fahim Washi

Tahia Alam Diana
Tanjim Bin Noor
Afima Tun Noor

Cc: Ms. Shabnin Rahman Shorna

Senior Lecturer
Department of Management
School of Business and Economics
North South University.

From: Asaduzzaman Nur

Subject: Completing the term paper of BUS251 course by 1st November, 2023.

Dear groupmates,

As you are aware, there is a term paper that we need to complete and submit by 4th November, 2023, and we had our
proposal checked and got the green signal to work on Starbucks expansion into Lithuania. The instructions of the term
paper have been uploaded and now this memo is to plan our next steps so that we can complete the project within the
deadline.

I am dividing the project among five group members:

• Mohammed Fahim Washi: Introduction to Starbucks and current business operations.

• Tahia Alam Diana: Struggles of Starbucks, introduction to Lithuania and its coffee culture, and
cultural/country communication.
• Myself (Asaduzzaman Nur): Reasons why Lithuania should consider expanding into Lithuania, analyze its
business and legal environment.
• Afima Tun Noor: Geographic and demographic environment, and analyze other products of Starbucks.
• Tanjim Bin Noor: Business overview, challenges Starbucks might face and how to tackle them, and prospects
of expanding into Lithuania.

We will conduct an online meeting through Google Meet on 6th October, 2023, at 8:00 pm to discuss further in details
regarding the term paper. We will stay in touch through our messenger group and update each other daily about the
progress of the report.

To make sure we are on track, I am setting a deadline of submitting our individual parts on 20th October, 2023, so that
I can compile all the parts and add the necessary things (such as cover page, letter of transmittal, table of contents,
executive summary, conclusion, and references), then revise, correct, and complete the whole project by 4th November,
2023.

Best of luck, everyone. Please reach me through our messenger group or email (asaduzzaman.nur1@northsouth.edu)
if you have any query.

Regards,

Asaduzzaman Nur.

26
Plagiarism Checker: Grammarly
Plagiarism Score: 2%

27