are the major sources of risk facing the company? Discuss potential solutions Risks:
Due to its global dominance it has created a powerful brand image around the world it has evoked strong emotions in people’s mind so much that it leads to street protests. Starbucks has a store at every corner in some parts of U.S •
Global recession led to shift consumers to less costly brands e.g. (McDonald’s McCafe). The future generation and people within their 20’s & 30’s are not ready to pay High prices. •
Employees have a low morale at starbucks leading to “Employee burnout” i.e. a psychological problem. •
Low wages is another issue employees and managers deal with. •
Lawsuits have been another reason for Employers and Managers leaving frustrated. Costed the company around 18 Million dollars to cover it leaving them with decreasing in their profit share. •
Stabucks market is saturated in U.S.
Rising prices of Commodities e.g. (Coffee beans and Milk) have triggered consumer to spend. •
Expansion and Cannibalization risk. Expanding aggressively growth in stores around the world. Culture difference has been a major problem for E.g. ( Italy felt a threat from changing their lifestyles of drinking coffee).
Investing more capital in Advertising campaigns to improve their public image. •
Concentrate on International Expansion for e.g.( India, China and Russia). •
Product differentiation. For e.g. (Adaption of starbucks products to Chinese standards and culture by producing its own Moon cakes). •
Instead of Targeting the Higher-Income crowd they should re-position their products and focus on Middle class. •
To avoid Cultural issues the company should create Global Strategies depending on locations to achieve success through researching the country’s culture and belief’s and introduce products according to their likings. •
Focus on improving Quality of coffee and services by keeping their employees happy.
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