Case 1-1 Starbucks- Going Global Fast | Starbucks | Coffee


RAROQUE, Stephanie B. MM09401


Prof. Rad Saringan June 25, 2012


Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets.

For the controllable elements or aspects that Starbucks has encountered in entering global markets were promotion price, product, channels of distribution and research. For the price and promotion, Starbucks Vienna is usually known for its low marketing costs. They had a gala opening for the first store all over Austria. A big marketing campaign is not what Starbucks 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, because over there Starbucks had to defend a very modern reputation. In North- America, they already 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 simplify the expansion into another country. In general, the coffee in Italy is much cheaper than Starbucks´ coffee. An espresso in northern Italy is offered for approximately 67 cents; in the south just 55 cents. By that reason Starbucks would have to lower the prices, entering the Italian 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 making process or using different beans. We also considered that one of the controllable elements of Starbucks is through their channels of distribution. For the uncontrollable elements or aspects that Starbucks has encountered in entering global market are the political/legal forces wherein in France, they face not only political but legal constraints; with many regulations. Another aspect would be the Cultural forces wherein in Vienna, they have cultural issues where they embrace what is new in that they will always seek new trends. In Japan they have suffered two uncontrollable aspects. One is the economic forces wherein they experienced an economic depression due to the rivalry between coffee shops and other convenience stores in there. And on the other hand is the competitive 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 were strategically and economically challenged with this kind of situation in Japan.

What are the major sources of risk facing the company? Discuss potential solutions. • 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 should consecutively increase customers business. ii. Repositioning, re-pricing and re-market products so as to cater to all ages.

CASE 1-1 STARBUCKS – GOING GLOBAL FAST iii. In an engrossed market they may branch out seeking more international business. iv. They could also increase quality of service and incentives so as to have a better customer-employee relationship that could in-turn bring repeated business.

Critique Starbucks overall corporate strategy. • With Starbucks overall corporate strategy has them at somewhat of a loss in a few ways. In trying to become a global force they have not been spending what is required for them to be extremely successful. With proper advertising strategies they could find themselves ahead of the rest. In certain cities they have as much as 129 while in other are as many as two or even none. Rather than fully compacting one city and believing that many outlets mean great business, they should satisfy customer needs and How might Starbucks improve profitability in Japan? The Japanese people are very much less conscious when it comes to the price. Now a days, the younger generation in Japan are inclined towards spending their time in a more constructive manner. According to some source from the internet, it says that they have very less time for their leisure. Aside from sipping a cup of coffee in a coffee shop that they go to, they also love or they are interested in learning the language of English. And, they don’t hesitate to spend thousands of yen in an internet café just to sleep. In other words, to improve the profitability in Japan, they should reposition their products and services. Here are the following strategies that they should do:  The Starbucks and its competitors in Japan are providing the same fare. As a result, competitors can easily eat up at Starbucks’ share. In short, they should either reduce the price or increase the benefits in Japan. They can also introduce the style in the US online system in Japan. This would let the Japanese to order their products through the internet. Lastly, they can introduce various cultural entertainment or campaign in Japan. This would make the youths will be attracted to enter the coffee shop. This kind of extra activities are very helpful especially during the economic recession that can boost up their sales.


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