1.

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

Ans. I think the controllable factors that Starbucks has encountered entering the globalmarket are
similar to those in their domestic market. These factors include product, price,place and promotion.
The Starbuck's name and image connect with millions of consumersaround the globe. Internally,
Starbuck's is able to make adjustments to fit a county's culturaltastes and expectations regarding
their product, it's price, where it is available and how it ismarketed. Starbuck's is also able to take
part in market research to be sure their product hasthe right fit for each of its international
locations.

According to the company's website, they maintain a high level of successinternationally by choosing
international partners who share their values and commitment tobringing the Starbuck's experience
to customers worldwide. The controllable elements can bealtered in the long run and, usually, in the
short run to adjust to changing market conditions,consumer tastes, and corporate objectives.

Some elements that are almost impossible to control by Starbucks managementinclude:

•Sovereign risks - governments of foreign countries may change their fiscal andmonetary policies
affecting the operations of Starbucks.

•The Prices of coffee in world commodity markets - prices may be affected forexample by natural
disasters like droughts.

•Changes in customers' disposable income - for example due to economic downturns.

•Fluctuations in world currency rates.

2. What are the major sources of risk facing the company and discuss potentialsolutions.

Ans.I think Starbucks considers that the upper limit of coffee shop saturation. Another riskis losing
customers, because fewer options are available for the customer. And third risk isless but not the
least the young generation feels comfortable. Global expansion poses hugerisks for Starbucks. For
one thing, it makes less money on each overseas because most ofthem are operated with local
partners.

Potential solutions: Basing on the risks faced by Starbucks, we can suggest the followingsolutions.

• One of the risks that they faced in USA-the risks of market saturation can be overcome infocusing
on international or global marketing. They may focus on the fact of reducingemployee disruption to
increase the quality of service and coffee for which they are wellknown.

• As they were facing ominously hostile reception from its future consumer, they shouldreposition
their product according to customers need. They can also change their pricingstrategy.

• As coffee is the core product of them to serve they should give more focus on improving thequality
of coffee. They may make arrangement for some other items beside coffee as well.
• As Starbucks is going abroad to expand it business with local partners of that region thererisk of
SRC and ethnocentrism. It can be over come through proper adjustment keeping SRCand
ethnocentrism away in decision making.

3. Critique Starbucks’ overall corporate strategy.

Ans.I think Starbucks are incurring losses for mismatch between their corporate strategies and the
customer’s expectations. Those are described below:

• When Starbucks is blanketing some specific cities for dominance, still eight states in theUnited
States are with no Starbucks stores. Starbucks free cities are - Butte, Mont., and N.D.

• Starbucks’s target customers are the Baby boomers or older generation, it has no
differentialpricing.

• Though Starbucks fully control its business in the USA, but it has franchisee outside theUSA.
Depending on the franchisees’ undermines the strength of Starbucks outside the USA.

• Starbucks is about to become a global company. But its spending does not match with itsstatus.
Starbucks only spends 1% of its revenue as advertisement; whereas most companiesits size spend at
least 10% revenue. Low spending on advertisement hampers Starbucks’sbrand building outside the
USA.

• By aggressive marketing strategy they have created entry barrier for the competitorsthrough
“predatory real-estate strategy”.

• They have focused on the product concept which myopic attitude in making corporatestrategy.

• Starbucks pay does not come close to match the work load of their employees that created

4. How might Starbucks improve profitability in Japan?

Ans.To improve the profitability in Japan they should reposition their product and service.The
Japanese are less conscious about the price. According to the present cultural trend inJapan,
younger generation is inclined towards spending their time in a constructive manner.The source
from internet says that the Japanese youth have very less time for their leisure.Besides sipping a cup
of coffee in a coffee shop they love to learn English Language.

• Starbuck should either reduce the price or increase benefits in Japan.

• Starbucks can introduce US style online system in Japan, so that busy Japanese can providetheir
order in the internet.

• Starbucks can introduce various cultural campaign or entertainment campaign in Japan, sothat
Japanese youth feel attraction to come Starbucks. In times of economic recession extraactivities are
necessary to boost up sales.So, for attracting the Japanese market in addition to coffee,
arrangement of internetfacility and other amenities should also be provided