Starbucks International Marketing
Some of the uncontrollable elements that Starbucks has encountered are: -Control Forces. When they tried to sell Starbucks on Asia, they found out that the way they drink coffee is different from other countries. People want their drink less sweet and they are more interesting in buying teas instead of a cup of coffee. -Economy Forces. On Italy, Italian coffee is cheaper than US so they need to lower the price to be able to sell and make customers more interest in the product. -Competition.
Some companies like Coca-Cola became with new product can caffeine that makes Starbucks to be aware on their products and try to provide something new to the market. 2. What are the major sources of risk facing the company and discuss potential solutions. One of the major sources of risk is the way they open so many stores to fast without giving the opportunity the other stores to increase their profit; it is because of this Starbucks at this time is facing a lot of difficulties and they plan to close 600 stores.
Global expansion poses huge risks for Starbucks; it makes less money on each overseas store because most of them are operated with local partners. Although that makes it easier to start up on a foreign territory, it reduces the company’s share of the profits to only 20 percent to 50 percent. Other risk that company face is the price of the product some people think the price is too high just for a cup of coffee but it doesn’t happen in all countries that is why they need to do a researches in each country and see what is the price that people are willing to pay or afford.
For example on Italy is one of the major problem that Starbucks has in the growing process they had to lower the price so they can be one of the top company and be able to open more stores. Starbucks also faces slumping morale and employee burnout among its store managers. A lot of dissatisfaction from customers and employees over odd hours and low pay is affecting the quality if the normally excellent service and even the coffee itself. Frustrated store managers among the company’s roughly 470 California stores sued Starbucks in 2001 for allegedly refusing to pay legally mandated overtime.
They need to be more focus on customer service and increase manager’s wages so they can provide better service and be more motivate at work. To have employee happy create more productive and friendly work environment and a better treat to the customers. 3. Critique Starbucks’ overall corporate strategy The crowding of so many stores so close together and too fast sometimes can be a good way to grow a business and a bad way to let other business to grow.
Starbucks admits while its practice of blanketing an area with stores helps achieve market dominance; it can cut sales at existing outlets. Paying more than market-rate rents to keep competitors out of location is not the way to grow a business. This company strategy could rebound causing the neighborhood activists and local business increasingly resent the tactics, but customers could also grow angry over having fewer choices. 4. How might Starbucks improve profitability in Japan? Trying to show to the Japanese why is better Starbucks from the other competitors and convince people that the quality and tasting of Starbucks is unique. -They can offer more amenities -They need to stop opening more stores and be more focus on the stores they already opened. -Another idea is to do more researches on what Japanese really like or provide different flavors to give the opportunity to Japanese to decide which ones are the flavors they like to consume.