STARBUCKS – CASE STUDY
1. Identify the controllable & uncontrollable elements that Starbucks has encountered in entering global markets.
¬ Challenge to maintain growth
¬ Dependency on overseas growth to maintain annual revenue growth ¬ Innovations to surmount toughest challenges in the home market ¬ Employee’s feelings of a far less special place to work
¬ Paying twice the market-rate rates to keep competitors out of location ¬ Rivals offering similar fare & growing competition (Japan) ¬ Depressed Japanese Economy
¬ Local partners operating its overseas stores
¬ Imitators stealing market share (England)
¬ Arcane regulations & labor benefits (France)
¬ Cultural challenges & price war (Italy)
¬ Greater competition with local coffee houses (Italy)
¬ Coffee bars serving both food & coffee (Italy)
¬ Lookalike Products (Japan)
2. What are the major sources of risk facing the company and discuss potential solutions.
¬ Its domestic expansion plans in the United States may be slowing down due to heavy market saturation (Reliance of US Market) ¬ Global recession leading consumers to shift to less costly brands ¬ Internationally Starbucks is not able to maintain complete control as the ownership of a unit abroad is jointly owned by Starbucks Corporation as well as a local partner. ¬ Competition from rival coffee chains in International Markets. ¬ Hostile reception from the future generation of consumers turned off by the high pricing of their product, generation x, those aged in their twenties and thirties. ¬ Low employee morale and employee burnout. (a psychological problem) ¬ Fewer options available for the customer
¬ Cultural differences has been a major problem (changing lifestyles)
Solutions for the above problems:
¬ Starbucks should allocate more budget for advertising spending & campaigns which can help improve its image to the public ¬ To tackle domestic market saturation, Starbucks should concentrate on...
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