Starbucks: Failure Abroad

Topics: Starbucks, Coffee, Coffeehouse Pages: 18 (6380 words) Published: November 4, 2008

Starbucks: Failure Abroad

Introduction
When one thinks of a global corporation, one thinks of a company who has got it together. They must right? How else could a corporation overcome transnational barriers and socio-cultural issues and still make a profit? Turns out not all global companies have this ability. Some do for the most part but are still vulnerable to mistakes. Such is the case with Starbuck’s failure in Australia. We will introduce you to the company, overview their history and expansion efforts, and explain in short why they failed miserably at something they have done literally thousands of times before. General Information

Starbucks Coffee International, Inc. purchases, roasts, and sells whole bean coffees, brewed coffees, Italian-style espresso beverages, and cold blended beverages. The company markets its products through more than 15,000 stores in North America, Europe, the Middle East, and Asia and the Pacific Rim among other regions. The company was founded and is based in Seattle, Washington. As of 2008 Starbucks operates in 44 countries. (Starbucks.com). Starbucks Coffee International operates as a subsidiary of Starbucks Coffee Company. Starbucks diversified its business. Starbucks now offfers compact discs, books and other life style products. In addition they have created several strategic alliances with food manufactures both domestic and Abroad. (www.starbucks.com) Company History

In 1971 the first Starbucks store was opened in Seattle’s Pica Place Market by Jerry Baldwin, an English teacher, Zev Siegel, a history teacher and the writer Gordon Bowker (www.mhhe.com). In 1982 Howard Schultz joined the company as a director of retail operations and marketing. He saw potential in Starbucks and started to build up a coffee house culture in Seattle. In 1984 Starbucks enlarged its product mix, adding coffee specialities like different kinds of Café Lattes and espresso beverages. In 1985 Howard Schultz left the company and set up his own Coffee Bar Il Giornale (www.starbucks.com). Shortly after, Starbucks began losing money on its expansion efforts. Howard Schultz purchased the struggling company in 1984. He then combined Starbucks with Il Giornale and changed the firm’s name to Starbucks Corporation. New and experienced managers were hired and successfully turned around the business. By 1991 Starbucks was doing well enough to offer stock options to all of their employees (premium.hoovers.com).

Expansion
In 1992 Starbucks once again began expansion efforts. This time Starbucks set up coffee shops in department stores and bookstores and provided coffee to Sheraton Hotels. By the end of 1993 Starbucks had opened a new roasting plant and the number of stores locations neared 275 (www.starbucks.com).

Starbucks began operating internationally in 1996. Their first international venture was opening a Starbucks in Tokyo (www.findarticles.com). In the same year, Starbucks began operating an online coffee shop called Caffe Starbucks. This venture in particular was ahead of its time and not necessarily as successful as other ventures Starbucks was involved in. However, Starbucks kept on expanding in domestic areas like Florida, Michigan and Wisconsin and further internationally even opening a store in the Philippines in 1997. In the next year Starbucks opened several stores in Thailand, Taiwan, New Zealand, Malaysia and in the UK. Starbucks entrance into the United Kingdom was markedly different. There they acquired an existing firm, “Seattle Coffee Company”, and used the existing stores to transition into the market. In the same year, Starbucks expanded its brand name into several different grocery market chains and convenient stores. Domestically, they focused on entering new states like Louisiana, Oregon, Kansas, and Missouri (www.starbucks.com).

With business booming, the company continued expansion internationally and domestically. Between 1999 and 2002 Starbucks began operations in over 15...

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