Starbucks risk factors

Topics: Coffeehouse, Starbucks, Coffee Pages: 2 (1174 words) Published: May 9, 2014
2- Major risks in Starbucks at domestic region and its potential solution: Starbucks faces 3 major risks and challenges which leads to the declining profit rate. According to Starbucks researches there is a mismatch of their policies with customers’ expectations. They thought that they can increase their profit by increasing their stores day by day but they fail to provide customers satisfaction. Their prices are still high than of the competitors and they failed to satisfy the newer generation. The organization has a strong presence in the United States of America, one of the challenges that Starbucks faced in USA is market saturation which can be overcome in focusing on international or global marketing. But Global expansion poses huge risks for Starbucks. For one thing, it makes less money on each overseas store because most of them are operated with local partners. While that makes it easier to start up on foreign turf, it reduces the company’s share of the profits to only 20 percent to 50 percent. Japan, which was the largest overseas market for Starbucks followed by United Kingdom, started facing decline in their profit rates. In the mid-2000s, the chain was doing great, opening a store a day, branching into new territories like South America. The design team had opening new shops down to a science or at least a kit of parts that made it easy to launch a cafe with as little risk and time as possible. In 2007, the economy went south, and so did some of Starbuck’s business. In 2008, the company closed around 600 shops, prompting a change in senior leadership, and ultimately a change in design thinking. As Starbucks growing abroad and expanding its business, they will face two main obstacles with the local partners which are SRC and their competitors using their own cultural values, experiences, and knowledge as a basis for decisions. The solution in my opinion is the new strategy that Starbucks starts using for designing more local-seeming...
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