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Saint Louis College

City of San Fernando, 2500 La Union
GRADUATE SCHOOL

COURSE NUMBER: PHM 305

COURSE TITLE: MULTINATIONAL MARKETING MANAGEMENT
NAME: YVONNE JOYCE G. TULIAO
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INTRODUCTORY CASE: STARBUCKS

1. Identify the controllable and uncontrollable elements that Starbucks

has encountered in entering global markets.

The business environment is so vast that it includes both controllable and

uncontrollable factors to define the operation of the business and its success
as a whole. The controllable factors are those that can be controlled by the
business within the firm and called marketing mix which includes the product,
price, place and promotion. The uncontrollable factors which is otherwise
known as the environmental factors are such that are not within the means of
the business like the political stability, legal forces, demography and many
more.

The controllable elements that Starbucks can monitor in entering global

markets are as follows:

PRODUCT: Starbucks which is known for quality coffee may expand its
product line to provide additional products which will be suitable to a
particular country and culture and be more inclusive with the needs of the
other generations.

PRICE: Starbucks may adjust the prices of its coffee and the other product
lines to compete with its local competitors in foreign countries without
sacrificing the premium quality it offers to all of its products.

PROMOTION: Starbucks may decide to increase their budget in providing

better and more creative promotional efforts and advertisements in various
markets considering their differentiated culture

PLACE/ CHANNEL OF DISTRIBUTION: Starbucks has dominated the US

Market and is going international so fast, thus the product is readily available
to its customers in majority of the cities of these foreign countries and may
decide to consider other avenues to sell its products like convenience stores
and grocery stores where they can still reach other customers who are far from
visiting stores of Starbucks.
PHYSICAL EVIDENCE: Starbucks branding of excellence and premium
quality can also be observed simply in its packaging or how they should be
displayed based on the agreement or contract agreed upon with other sellers.

PEOPLE: Starbucks can strengthen its culture of excellence not only

through its products but also to the services that are rendered by its
employees, thus sending them to trainings and seminars which will add value
to them and in return to the company can be a good opportunity to further
success.

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PROCESSES: Starbucks should invest its resources wisely to continuously

improve its systems in delivering the products and service and these can be
accounted from the Research and Development of the company.

The Uncontrollable Factors that affect Starbucks towards its international

penetration are as follows:

CULTURE: Cultural differences is now more evident because Starbucks is

exposed with different countries and it is critical to consider all concerns of a
particular country since their acceptance of the product determines their
profitability and viability overtime.

COMPETITION: Starbucks will definitely be competing with highly established

local companies and brands where people are normally used to visiting and
buying their products, without substantial difference and evident competitive
advantage, it will be hard for Starbucks to win the locals.

ECONOMIC CONDITIONS: The economic conditions are not the same in all
countries, thus Starbucks shall make its strategies according to each country’s
economic conditions and know whether these locals have the ability to
purchase their products.

LEGAL FACTORS: Government Policies particularly Business or Corporate

Laws are not the same with countries, and so Starbucks need to adjust with
whatever laws that are implemented in such country.

2. What are the major sources of risk facing the company? Discuss
potential solutions.

Major sources of risk

Starbucks has saturated the US Market and low margin for growth in the home
country.

Starbucks due to its expensive prices in general is not appealing and

considered an option for other generations or other segment of the market and
thus losing its stand to its competiors
 
Starbucks is exposed with various cultural differences and there is a need to
adjust and avoid conflicts otherwise their products may not be accepted and
their profits may be guaranteed.

Starbucks has limited product lines and may not favor inclusivity within the
market.

Starbucks no longer provide competitive compensation and benefits package

which may increase employee turnover.

Potential solutions

There is no other way to grow further than to explore other markets in the
foreign countries, thus Starbucks shall continue its efforts in establishing
stores overseas.

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Starbucks shall review its prices and reconsider lowering its prices to compete
with the locals and include more options on the beverage or eliminate products
that are not suitable to the taste of the locals in that country as well as
expanding product lines.

Starbucks should invest more on researches to fully understand the needs and
wants of the locals in that foreign country. They need to have a balance of
Standardization and Adaptation.

Starbucks should try offering more varieties of coffees or beverages based on

the results of their comprehensive research.

Starbucks need to review its compensation and benefits package to its

employees and match the workload with their salaries and make sure that they
consider not only mandatory benefits but rather provide premium benefits to
keep them loyal and in return add value to the company in longer terms.

 
3. Critique Starbucks’ overall corporate strategy.

Starbucks has been so aggressive in penetrating the international market and

some of its strategies are no longer aligned with the company’s vision and
branding. It’s store expansion has been criticized in the US because its
proliferation tends to cannibalization and sustained offsetting of sales.

The aggressive growth is leading to some material losses due to expenses on

unnecessary activities without considering the real needs, wants and
preferences of the local customers across different counties.
Starbucks had considered unfair strategy of trying to monopolize the market by
driving smaller companies who could not afford to pay rents that have gone up
due to their initiation on premium prices for the estate which in turn upsets
the customers for not having enough choices in the area.
 
Starbucks should be more sensitive and respectful to the cultural preferences
of its customers to avoid conflicts in those countries.

Starbucks does not provide a competitive compensation and benefits package

to its employees and in return may affect their productivity and the services
rendered to the customers.

Starbuck’s target customers are the Baby boomers or older generation; it has
no differential pricing for the Generation X or younger generation.

Starbucks has a low spending on advertisement and promotional activities

affects the efforts in improving the awareness of more people about the brand
outside the US.

4. What advice would you have for Starbucks in Africa? In China?

The brand which is known for its premium quality coffee coupled
with an expensive price does not match the preferences of the customers
considering the affordability factor. Some of the stores of Starbucks
through its local partners have closed down before it has expanded due
to high operating costs and tight customer budgets. Africa’s middle class
have been under pressure for slow economic growth brought by a lot of
factors including this pandemic. The strategy of Starbucks should adjust

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with the phase and growth of the continent for it to become a significant
market for Starbucks. The company should rather focus more on a more
significantly contributing market than stick with a struggling market for
the mean time. On the other way around, the company should
reconsider updating their product options and offer lower-priced coffees
that suits both the budget and taste of the locals.

The China is anticipated to beat the US economy in few years due

to its consistent GDP growth and other economic indicators of growth
and power. Since the company has now been accepted by the Chinese
community, it pays to invest more time and effort in Research and
Development on how to consistently satisfy the need and wants of the
locals to further its growth across the different regions as the booming
economy can drive more sales for Starbucks. The expansion in Asia
particularly in China could be a revolutionary growth for Starbucks and
company should continue establishing its brand by fostering a healthy
relationship with its local partners and the government.

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