Coffee and Starbucks Case Study
STARBUCKS – CASE STUDY
1. Identify the controllable & uncontrollable elements that Starbucks has encountered in entering global markets.
Controllable
¬ 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
Uncontrollable
¬ 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
1. Identify the controllable & uncontrollable elements that Starbucks has encountered in entering global markets.
Controllable
¬ 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
Uncontrollable
¬ 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