Bachelor of

Business Administration (Hons)

Assignment
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Course Title: Bachelor of Business Administration (Hons)

Unit Title Learning Outcomes

International Marketing LOC 1, 2, 3

Student Information:

Student Name / Student ID Number: Sithsara arundhathi perera / ECC-F-20-21-163

Assignment Title Assignment – Individual Assignment

Assessor Name Mr. Kasun Deemantha Caldera

Date Issued Deadline Submitted On

01/04/2022 30/04/2022 30.04.2022

Assessor Feedback

Action Plan

Student Feedback

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Final Grade Awarded

Internal Verification

Signature Date
IV Name

Signature Date
Assessor Name

I understand the feedback given to me and agree to carry out the actions in future
Student Verification works as required and indicated.

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ASSESSMENT DECLARATION FORM

Sithsara arundhathi perera

Student Name

Student Reg No. ECC-F-20-21-163

PLEASE TICK TO INDICATE THAT YOU HAVE SATISFIED THESE REQUIREMENTS

This assignment is my own work, I have not participated in collusion, nor have I previously
submitted this or a version of it for assessment in any other Unit of Study.

I have taken proper and reasonable care to prevent this work from being copied by another
student.

I confirm that I have indicated, by in text and end Referencing, where I have used someone
else’s graphics or data, concepts, words, irrespective of whether I have quoted or I have
paraphrased in my own words.

I have carefully read the assessment criteria that will be used to evaluate my work as given
below.

ASSESSMENT CRITERIA
The goal of this assignment is to identify the controllable and uncontrollable elements that Starbucks has
encountered when entering the global market, the major resources of risk facing the company as well as
a good discussion of the potential solutions and how Starbucks improves profitability in Japan.

I certify that the statements I have attested to above have been made in good faith and are true and
correct. I also certify that this is my work and that I have not plagiarized the work of others and not
participated in collusion.

Sithsara 30.04.2022
Student Signature Date

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Plagiarism

Plagiarism is a particular form of cheating. Plagiarism must be avoided at all costs and students who
break the rules, however innocently, may be penalized. It is your responsibility to ensure that you
understand correct referencing practices. As a university level student, you are expected to use
appropriate references throughout and keep carefully detailed notes of all your sources of materials for
material you have used in your work, including any material downloaded from the Internet. Please consult
the relevant unit lecturer or your course tutor if you need any further advice.

Student Declaration

Student Declaration

I certify that the assignment submission is entirely my own work and I fully understand the
consequences of plagiarism. I understand that making a false declaration is a form of malpractice.

Student signature: sithsara Date:30.04.2022

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European city campus and City University Malaysia

Bachelor of Business Administration (Hons)

Assignment

International Marketing

Starbucks

Case study

Total words

4063

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Table of Contents
Table of figures ............................................................................................................................................. 6
ASSIGNMENT BRIEF ................................................................................................................................ 7
DECLARATION BY THE CANDIDATE................................................................................................... 7
ACKNOWLEDGEMENT ............................................................................................................................ 7
What is Starbucks?........................................................................................................................................ 8
Name and logo of the company ................................................................................................................ 8
Mission, vision, and social responsibility. ................................................................................................ 9
Mission.................................................................................................................................................. 9
Vision .................................................................................................................................................... 9
Social responsibility. ............................................................................................................................. 9
Starbucks cooperation: products ............................................................................................................. 10
1. Identify the controllable and uncontrollable elements that Starbucks has encountered in entering
global markets. ............................................................................................................................................ 10
2. What are the major sources of risk facing the company? Discuss with potential solutions................ 17
3. how might Starbucks improve profitability in japan? ......................................................................... 19

Table of figures
Figure 1 Starbucks logo ................................................................................................................................ 8
Figure 2 classification of the business environment. .................................................................................. 10

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ASSIGNMENT BRIEF
The goal of this assignment is to identify the controllable and uncontrollable elements that
Starbucks has encountered when entering the global market, the major resources of risk facing
the company as well as a good discussion of the potential solutions and how Starbucks improves
profitability in Japan.

DECLARATION BY THE CANDIDATE

I hereby declare that the work present in this assignment was submitted by me to the European
city campus in fulfillment of the Bachelor of honors in business administration and the project
work carried out by me with the guidance of the lecturer Mr. Kasun Deemantha Caldera. I
further declared that the work reported in this project has not been submitted, either in part or in
full for the award of any other degree or diploma in this institute or any other institute.

ACKNOWLEDGEMENT
First of all, I would like to thank the European city campus and city university Malaysia for
allowing me to be a part of the bachelor of business administration. In preparation for my
assignment, I had to take the help and guidance of some respected persons, who deserve my
deepest gratitude. As the completion of this assignment gave me much pleasure,

I would like to show my, Course Instructor, Mr. Kasun Deemantha Caldera, on the European city
campus for giving me a good guideline for assignments throughout numerous consultations. I
would also like to expand my gratitude to all those who have directly and indirectly guided me in
writing this assignment.

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What is Starbucks?
Starbucks is a coffeehouse franchise based in the United States that first opened its doors on
March 31, 1971. Since then, they've grown to more than 24000 locations throughout the world.
Starbucks has a robust CSR program. They are dedicated to sourcing tea, coffee, and
manufactured goods ethically and sustainably. By 2020, they aspire to have 100% ethically
sourced chocolate, 65 percent ethically sourced tea, and manufactured items.

Starbucks is now the market's largest builder of environmentally friendly locations. Because they
are reevaluating existing outlets and introducing new, eco-friendly procedures, they are well on
their way to attaining their target of 10,000 Greener Stores by 2025. Starbucks is the first
company to provide a discount to consumers who bring their cups. Starbucks intends to increase
the recycled content in its cups to 20% by 2022. Starbucks recognizes the importance of
sustainability and has taken proactive steps to improve the general health of the ecosystem to
assure future fruitfulness. (starbucks wikipedia 2022, n.d.)

Name and logo of the company

Terry Heckler was the designer that came up with the original Starbucks emblem. He got his idea
from antique sea texts and a 16th-century Norse woodcut for the two-tailed siren motif. This siren
was mistaken for a mermaid for many years, but it was subsequently determined that the symbol
was a siren.

However, both Starbucks' in-house design team and Lippincott, a worldwide brand consultant
agency, collaborated to produce the 2011 makeover (aka the current Starbucks logo).

Throughout all of the modifications, the core notion of Starbucks' logo design has maintained the
maritime motif. Here are all of the pieces that make up the renowned Starbucks logo, broken
down into easier-to-understand chunks.

Figure 1 Starbucks logo

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Mission, vision, and social responsibility.

Mission
“to inspire and nurture the human spirit-one person, one cup one neighborhood at a time.”
(fourweekMBA, n.d.)
Vision
Starbucks coffee does not make its vision statement easily available, but a careful examination of
the company's website discloses it.

“to establish Starbucks as the premier purveyor of the finest coffee in the world while
maintaining our uncompromising principles while we grow.” (slideshare , n.d.)

Social responsibility.
Starbucks is ethically, environmentally, economically, and philanthropically responsible.

• Ethically/legal
▪ Competitive employee compensation
▪ Don’t pay farmers enough
▪ Protects culture and reputation by providing resources that help partners make
ethical decisions at work.
▪ diversity
• Environmentally
▪ Water waste
▪ No recycling
▪ Energy conservation
▪ Deducing waste.
• Economically
▪ Goal was to expand all around the world.
▪ Increasement of net revenue to 24.61 billion US dollars in 2021 when compared
to the past years. (net revenue of starbucks , 2003-2021)
▪ According to the data as of October 2019, 31.7 % of users use the mobile app to
order in Starbucks. (mobile app users of starbucks, 2019)

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• Philanthropically
▪ Upfront costs.
▪ Tuition reimbursement.

Starbucks cooperation: products

1. Coffee- more than 30 blends and single-origin coffees.

2. Handcrafted beverages-coffee and non-coffee blended beverages, espresso and classic,
cold blew (hot, cold, and fresh)
3. Merchandise- Home espresso machines, coffee brewers, and grinders, as well as a range
of quality chocolate, coffee cups, and coffee accessories, and a selection of gift products
are all available.
4. Fresh foods- buns, pastries, etc...

1. Identify the controllable and uncontrollable elements that

Starbucks has encountered in entering global markets.
The environment that contains the various factors that are subject to influence in the process of
the implementation of business activities is called the business environment. the business
environment can be presented in terms of the internal environment (controllable factors) and the
external environment (uncontrollable factors).

business
environment

internal external
environment environment
Figure 2 classification of the business environment.
Internal environment: various parties and forces acting inside the business directly affected the
business activities.

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It should be noted that while entering global markets, the firm has dealt with key controllable
variables. Maintaining the company's growth has been a major issue. It has no debt and has been
able to fund its expansion plans without difficulty.
In addition, the corporation has had to retain a tight hold on its image. To address this problem,
the corporation has made sure that the majority of its outlets are owned by the company. This
means there will be no franchisees to slow down the company's operations from several angles.
There are four controllable factors in the internal business environment as well as they are
known as 4p’s they are:
1) Product
2) Price
3) Place
4) Promotion
Product
The term "product" encompasses both tangible and intangible goods as well as services. Here are
a few examples of product choices to consider:
• Name
• Brand
• Physical features
– Functionality
– Appearance
• Range of products
• Product service
• Psychological product
Price
The process of determining what to charge for the product or service, as well as taking into
consideration what your consumers are willing to pay for. Look at variables such as production
costs/expenses, competition, etc. Some examples of pricing decisions to be made include:

• Cost to the business

• Willingness to pay
• Competitor pricing
• Pricing strategies

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- Mark-up/cost plus

- Price skimming

- Penetration pricing

- Competitor pricing
Place
The term "distribution" refers to the process of distributing things to customers, as well as the
locations where they will be sold or made available. Consumers must be able to find products
quickly; will your product be available all year or only during certain seasons? The following are
some instances of distribution decisions:
• Level of distribution
• Physical presence or online
• Channel intermediaries and marketing channels
Promotion
Promotion encompasses all parts of marketing communication, i.e., promoting your product to
raise customer awareness of information such as what it is and where to get it. Choosing a
message to send to customers and advertising to elicit a favorable response. Among the choices
in marketing communication are:

Traditional approaches:
• Brochures and leaflets
• Direct mailing/personal selling
• Banners
• Business cards
• Merchandise
• Stationery
• Newsletters
• Press releases
• Media advertisements

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Digital approaches
• Social media
- Facebook
- Twitter
- Snapchat
- Periscope
- Google+
- Electronic newsletters
- Blogs
- Instagram
The corporation has also had to deal with price as a controllable factor. Italian pubs, for example,
have thrived by providing clients with a variety of quinines. Starbucks has kept control of its
advertising and so saved a lot of money on marketing.
It only spends 1% of its income on advertising, which is extremely effective and efficient. The
majority of money is spent on new product releases and flavor beverages. When compared to
comparable corporations that spend over $300 million on advertising, the company spends only
$30 million.
In expanding to new markets, management growth strategies have been retained within the
company's resources.
As a result, the firm was able to design and build a new store in under 16 weeks. Furthermore, it
was able to recover its investments in less than three years. Another controllable variable that the
corporation has consistently leveraged to its advantage is innovation.
In this scenario, the corporation has been quite inventive in terms of its beverages. This may be
explained by the fact that it has installed automated espresso machines in over 800 sites to
improve service delivery in new areas. The firm also started issuing prepaid cards a few years
ago. As a result, its activities in new foreign markets have improved.
In the company's worldwide expansion plan, technology has been embraced at the corporate
level. Web technology has been used in its systems in this example to improve service delivery.
Customers may order and pay for pastries and drinks ahead of time.
Alternative answer:
Product - Starbucks has a wide range of high-quality items to offer. Coffee, tea, pastries,
Frappuccino drinks, and smoothies are among the company's offerings.
Price - In the United States, an espresso costs $1.5; in northern Italy, it costs 67 cents, and in the
south, it costs just 55 cents.

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Place - As the world's largest coffeehouse company, Starbucks has a robust distribution system,
with 20,891 locations in 62 countries, including 13,279 in the United States, 1,324 in Canada,
and 989 in Japan, 851 in China, and 806 in the United Kingdom.
Promotion - Starbucks saves a lot of money on marketing by relying on mystique and word of
mouth to sell their coffee. Starbucks spends about 1% of its revenue on advertising, or $30
million each year.

External environment: various parties and forces acting outside the business and indirectly
affecting the business.

The external environment includes factors that are beyond the business’s control.

The factors included in the external environment or uncontrollable factors:

• Customers- parties who purchased products

• Suppliers- parties who supply products or raw materials.
• Competitors-business in the same environment.
• Economic environment-this consist of economic factors that affect businesses. the
government of the country is mainly responsible for setting economic policies.
Examples
- interest rates
- Inflation
- Income distribution
- Level of employment
- Foreign exchange rate
- International relations.
• Political environment-various government policies are affected.
E.g.
- Infrastructural policies
- Fiscal policy
- Privatization

• Technological environment-the environment comprising the technological implements

that influence the implementation of business activities like modern technological tools,
machinery, new inventions, etc.

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• Global environment-removal of restrictions and obstacles that exist between the various
countries of the world and functioning as a single village.
• Legal environment-the legal environment consists of laws and regulations, enforced to
protect consumers, protect domestic manufacturers and the business community, and
protect the environment.

The organization has had to deal with the unpredictability of being labeled as mature. This
has been observed in the United States, but it has now expanded to other international
markets. In this situation, the corporation will be met with a negative response from a variety
of potential customers.

The corporation does not influence the number of young people in various markets. This
requires it to re-invent itself regularly to maintain its long-term viability. It has been heavily
involved in market research to understand the demands of various market sectors.

As the corporation grows, it has run across a variety of cultural issues in various areas. It is
important to note that each country has a unique cultural heritage. Consumers' likes and
preferences are shaped by their cultural background.

As a result, to grow its presence, the organization has had to learn about many cultural
factors. It's self-evident that a certain item would struggle in new worldwide marketplaces.
Starbucks has consistently improved its product range to meet changing consumer demands
and preferences in this scenario.

There is no way for a corporation to limit the rate of technical progress. With time,
technology has continued to expand at a breakneck pace. The firm should stay up with
numerous innovations to optimize its operations.

Starbucks has always embraced technology and implemented it into its operations in
response to the demands of a particular new market to stay relevant. In the development of
prepaid cards for clients, such developments have been noticed.

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In certain areas, such as Japan, competition has been rising. Customers' thirst for fresh
experiences has heightened the competition. As a result, the corporation must deal with the
competition since it cannot manage it. To stay competitive in Japan, for example, it has
continuously produced a broad new menu. As a result, it has increased its shop count to 700.

To stay ahead of the competition, it has created seasonal items that cater to the demands of
the market at that time. Starbucks has also had to deal with several political and legal
restrictions. The convoluted rules and labor benefits in France are an example.

Alternative answers

Economic: In Japan, they are unable to regulate both the number of competitors and the
economy. Starbucks' Japan profits were down 14 percent due to the country's economic
downturn.

All countries' economic situations are not the same. As a result, Starbucks tailors its approach
to the economic realities of each nation.

Political and legal: Arcane restrictions and rich labor perks abound in France.

Global environment: Because coffee shops in Vienna are elderly, Starbucks can conquer the
market by appealing to younger people. It's only a speculative possibility. Some people may
prefer the older ones as well.

Starbucks is having trouble due to cultural differences. For example, Schultz once provoked
a ruckus among pro-Palestine activists.

Competition: Starbucks was up against competitors in Italy, France, Japan, and a variety of
other places.

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

A saturated market is one of the biggest risks that the organization has encountered. Though this
has been seen in home markets such as the United States and Canada, it has also had an impact
on new and worldwide markets. Despite having over 17,800 locations in 49 countries, the firm
considers this to be the maximum limit of coffee shop saturation.

In Japan, for example, the effect of new stores has gradually worn off, resulting in saturation. To
counteract this danger, the firm has continued to modernize its locations and improve its services
in order to remain competitive.

Losing consumers is yet another source of danger. This is due to the fact that the corporation
only provides a limited number of alternatives to various customers. Indeed, it has been
expanding into new areas with its signature items. Regardless of how closely markets are linked,
the corporation must produce items that cater to a variety of interests and inclinations. This will
keep clients who desire fresh experiences from leaving.

Starbucks locations are unpopular with Generation X, and this poses a significant danger to
multinational businesses. In this instance, the firm may receive a harsh response from potential
consumers.

They will be turned off by the company's well-known brand's strength and image. To address
this issue, the corporation should continue to reinvent its brand in order to appeal to a younger
audience.

The company's worldwide markets are in danger as a result of its global expansion. This is due to
the fact that its abroad endeavors generate less revenue. Such international projects are run in
collaboration with local firms. In this instance, the corporation should concentrate on forming a
strong strategic relationship that would boost its profits.

For example, instead of partnerships, it can accept coalitions in the acquisition of assets. SRC
and Ethnocentrism with local partners will face significant challenges.

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To address this, the corporation can exclude SRC and Ethnocentrism from its decision-making
process. Another possibility is that employees will be disrupted. There is a sense that the
majority of the company's employees are unsatisfied with their compensation in this scenario. As
a result, Starbucks should concentrate on new strategies to reduce staff disturbance in order to
improve service performance in its shops.

Starbucks, located in Seattle, Washington, is a multinational American corporation. It is the

world's largest coffee chain. However, Starbucks faces significant hazards, but we can provide
some possible answers. Here's what they are:

Market saturation in the United States is one of the company's biggest threats.

Another risk is losing clients since the customer has limited alternatives and the price of their
coffee is greater than that of their rivals. Entering a larger market or expanding globally is a
substantial risk, and cultural differences may be a serious difficulty in some countries. Another
key concern for the Starbucks corporation is the low pay and salaries of its employees and
management. Starbucks' failure to focus on the quality of their primary product coffee, as well as
their lack of other products than coffee, poses a significant risk to the corporation.

Focusing on worldwide or global marketing might help to overcome market saturation. Because
their key client is the younger generation, who do not want to drink coffee at exorbitant costs, the
danger of losing customers can be mitigated by lowering the coffee price. They face a significant
risk of global expression, but they may mitigate this risk by researching other cultures and
understanding client demands.

Focusing on a global or global marketing strategy might help you avoid market saturation.
Because their main consumer base is the younger generation, who do not want to pay outrageous
prices for coffee, the risk of losing customers can be reduced by cutting the coffee price. They
confront a huge risk of globalization, but they may reduce this risk by learning about various
cultures and understanding customer needs.

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Alternative answer

Starbucks is exposed to several primary sources of risk which are:

• The housing market is becoming increasingly crowded.

• Future customers are likely to be hostile.
• For its employees, Starbucks is becoming a considerably less unique environment.

Solutions

• Starbucks faces tough competition; therefore, it must outperform them. They may do this
by lowering pricing, providing better products and services, bringing innovation to their
operations, or incasing their product range.
• Comprehensive study is required, as well as the development of a new approach for
various generations.
• To ensure employee happiness, they must modify their employees' work schedules, raise
their salaries, and provide additional perks.

3. how might Starbucks improve profitability in japan?

Every firm wants to make a profit; in this situation, Starbucks seeks to increase profitability in
Japan.

• Developing new product lines

Starbucks may increase profitability by establishing a new product line. They can poll customers
to determine what they want and how to boost profitability.

• Reducing the price

If Starbucks lowers the price of its products, it will attract more consumers and increase profits.

• Online services

create an online system similar to that used in the United States in Japan, so that busy Japanese
may place their orders online.

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• Studying about the competitors

Starbucks would have to study the pricing of their coffee products in Japan due to rival
shop competition so that the price of a cup of coffee and the environment is reasonable,
and customers feel valued rather than feeling expansive and switching to any other
Starbucks competitors in the Japanese market.
• Renovation
They can stay successful by refurbishing establishments that are in need of it and
constantly enhancing customer service and staff happiness.
• Increasement in benefits
Developing new consumer advantages such as bonus programs, member cards (birthday
gifts, special discounts, and lower prices), and coffee-related accessories.
• Locational changes
Being at the correct location is crucial to a company's success. If a business chooses an
improper site, it may not have appropriate access to customers, employees,
transportation, supplies, and other resources. As a result, the location of a company's
earnings and overall performance is frequently influenced by its location.
• Comfortable environment
Starbucks needed to develop locations where consumers could spend the majority of their
time in the same spot in comfort, as well as provide a WIFI system so that everyone
could go online for enjoyment, education, or even business meetings. These are likely to
create a welcoming environment, allowing the target market to expand.

Japan's market is both competitive and rewarding. To increase their profitability in Japan,
businesses must position their products and services in accordance with Japanese culture. They
might use Japanese symbols or motifs to decorate their stores.

It may also devise a successful entertainment or cultural campaign to appeal to a wide range of
Japanese youngsters. This is expected to draw young people into the company's outlets.
Additional activities can be added to the company's existing product line to cater to diverse
consumer preferences. The corporation will be able to boost its profitability in Japan in this
instance.

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