CASE 1-1 STARBUCKS
GOING GLOBAL FAST
RAROQUE, Stephanie B. INT MKT Prof. Rad SaringanMM09401 June 25, 2012
Identify the controllable and uncontrollable elements that Starbucks hasencountered in entering global markets.
For the controllable elements or aspects that Starbucks has encountered in entering globalmarkets were promotion price, product, channels of distribution and research. For the priceand promotion, Starbucks Vienna is usually known for its low marketing costs. They had agala opening for the first store all over Austria. A big marketing campaign is not whatStarbucks stands for. It got popular mainly by word-of-mouth recommendations, but in Austria it was decided to adapt the promotion and introduce Starbucks with a gala, becauseover there Starbucks had to defend a very modern reputation. In North- America, theyalready regarded as an ordinary Starbucks outlet that still attracts a lot of people in Europe,especially on the younger generation. Adapting the price level is a possible step to simplifythe expansion into another country. In general, the coffee in Italy is much cheaper thanStarbucks´ coffee. An espresso in northern Italy is offered for approximately 67 cents; in thesouth just 55 cents. By that reason Starbucks would have to lower the prices, entering theItalian market. Italian coffee experts also consider Starbucks coffee of a low quality.Therefore an adaption of the taste needs to be made by changing the coffee makingprocess or using different beans. We also considered that one of the controllable elementsof Starbucks is through their channels of distribution.For the uncontrollable elements or aspects that Starbucks has encountered in enteringglobal market are the political/legal forces wherein in France, they face not only political butlegal constraints; with many regulations. Another aspect would be the Cultural forceswherein in Vienna, they have cultural issues where they embrace what is new in that theywill always seek new trends. In Japan they have suffered two uncontrollable aspects. One isthe economic forces wherein they experienced an economic depression due to the rivalrybetween coffee shops and other convenience stores in there. And on the other hand is thecompetitive forces wherein they have some instances that some of the products sold their have lookalikes, not just in coffee taste, packaging but also in its logo. They werestrategically and economically challenged with this kind of situation in Japan.
What are the major sources of risk facing the company? Discuss potentialsolutions.
• Risks that Starbucks faced were: losing customers, age group, and being in an
engrossed market environment in the U.S.
• Ways that
they could alleviate these problems could be:i. Bringing more variety and an overall better product to its consumers, this shouldconsecutively increase customers business.ii. Repositioning, re-pricing and re-market products so as to cater to all ages.