What Are the Major Sources of Risk Facing the Company? Discuss Potential Solutions

Topics: Coffee, Brand, Employment Pages: 1 (308 words) Published: October 11, 2010
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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