This case study is in regards to Starbucks' international expansion strategy. It describes the advantages and risks which may be caused by expansion to Europe

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Starbucks Coffee Overvalued Stock Despite Strong Growth Prospects Business Analysis and Security Valuation Prepared by Erik Eselius, Jon D. Taylor, Olivier te Boekhorst, and Peter Winters For Professor Charles Lee Johnson Graduate School of Management, Cornell University April 29, 1997 TABLE OF CONTENTS TABLE OF C 2 EXECUTIVE SUMMARY........................................................................................................................ 3 OVERVIEW OF STARBUCKS............................................................................................................... 4 Business Ove 4 Recent Stock Performance.............................................................................................................. 4 COMPETITIVE ANALYSIS .................................................................................................................... 5 Rivalry Among Existing Firms.......................................................................................................... 5 Threat of New Entrants .................................................................................................................... 6 Threat of Substitute Products........................................................................................................... 6 Bargaining Power of Buyers............................................................................................................. 7 Bargaining Power of …

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…not reach the current $27.50 stockprice. In fact, the prices from these models ranged from a low of $7.12 to a high of $23.09, as shown below. Model Conservative Aggressive Best/Average Estimates Estimates Estimates Price - Price/Value Price - Price/Value Price - Price/Value Edward Bell Olson $7.54 - 365% $16.89 - 163% $8.75 - 314% Discounted Cash Flow $7.12 - 386% $23.09 - 119% $8.52 - 323% Market Multiples $12.73 - 216% $14.70 - 187% $13.72 - 200% In light of the above analyses, we are placing Starbucks on our short list.