Starbucks – Going Global Fast
Starbucks – Going Global Fast
1) Promotion. I think that spending only 1% of revenue on advertisement is a bit too little and Starbucks should definitely spend more.
2) Product. In Italy for instance food is popular in cafes. To open shops and be successful in Italy Starbucks should have more differentiated products.
3) Price. Again in Italy price for coffee is a bit less than Starbucks proposes. The only way is to make the price less.
1) Starbucks tries to control competition for instance paying for rent twice as much, so competitors cannot get a place or renting empty space. Even though it seems to be controllable, customers can be unsatisfied because of that and also businesses can practice same strategy. It also can lead to bad reputation (it is not nice to do so)
2) Starbucks wants to enter French market. The main problem is strict regulations and labor benefits. Considering some problems with working hours and salary that Starbucks had it would be hard to work in France.
3) Italians know which coffee to drink. Considering this Italian coffee culture and the amount of competitors in Italy it will be very difficult for Starbucks to be famous there.
4) Cultural challenge is the main problem for Starbucks to be global. Every country needs to be treated differently. If in US people got used to very sweet coffee, in Japan they did not.
1) In my opinion potential risk is connected with dissatisfaction of employees. If Starbucks will not change its policies, salaries, working hours it will have problems with personnel. Potential solution could be identifying gaps connected with employees and try to make everyone happy. Increase the salary if needed, make the environment for employees friendlier, so they will stay and enjoy their work.
2) Another risk is attracting next generation customers. Younger customers feel uncomfortable already, because almost all stuff is same age as they are. Some do not like the terminology. Starbucks can for instance change the terminology once in a while. Make it in different language every time. It also can hire more diverse workforce, young and not so young, different nationalities, so people will feel more comfortable.
3) Because of complains of employees Starbucks can loose its reputation, which can decrease sales. Its good that Starbucks wants to increase its market share and income, but it would be bad if it will loose its reputation because of that. So it is better to focus on both things together.
4) In international environment Starbucks faces a lot of risks. Cultural risks are the most important ones. For instance language differences, tastes and others. Managers of Starbucks should examine foreign cultures better to understand them and provide them with products they want.
5) Competition is a big risk also. To be more competitive Starbucks should not loose its image and make the products more differentiated. As it says in the case study in Japan Starbucks lost 70% of its profits because of competitors. It’s a huge loss and Starbucks should think and fight with competitors.
Reading the case I noticed that Starbucks uses unethical strategy. Paying for empty space so competitors cannot make business there is unethical I think and it can damage the image of Starbucks. A lot of customers of Starbucks think of ethical part of the business and this strategy will probably make them think to go to Starbucks or other place. Another issue is that Starbucks experiences decrease in sales and tries to improve this aspect. But all efforts (Starbucks express, cards etc.) do not give the desired outcome. There must be something wrong with their strategy. Low salary to employees is an issue too.
Starbucks still does not have stores in 8 states in US. It is controllable. Starbucks can open its stores and make them successful there.
Starbucks can improve the taste of coffee and make it like Japanese people want. Examine culture better and understand what people want and need. Starbucks also can improve service or make better atmosphere. It also can renovate coffee houses. Develop new menu that will fit tastes of Japanese customers. Also Starbucks should always work and improve to keep customers interested and fight with competition. Japanese people are busy, so maybe it would be convenient for them to buy coffee online.
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 22 November 2016
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