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Starbucks Case Study.

In: Business and Management

Submitted By pbear2226
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1. Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets.
In Japan Starbucks had to deal with uncontrollable elements such as competition among the rival shops, as well as an economic depression. Controllable element in Italy: Price (Italian coffee bars prosper by serving food as well as coffee, an area where starbucks still struggles. Also Italian coffee is cheaper than US coffee. Americans pay about 1.5 for an espresso, on the other hand northern Italy the price is 67 cents, in the south just 55 cents. [ (Starbucks Going Global Fast Case 1.1, 2013) ]
2. What are the major sources of risk facing the company? Discuss potential solutions.
Starbucks grew from 17 coffee shops in Seattle 15 years ago to over 19,000 outlets in 58 countries. In Seattle there is outlet for every 9,400 people. And the company considers that the upper limit of coffee shop saturation. The company faces an ominously hostile reception from its future consumers, the twenty- or thirty-somethings. They don’t feel wanted in a place that sells designer coffee at $3 a cup.
Potential Solutions:
The Market saturation can be overcome by focusing on international or global marketing.
Figure out a new strategy to market to the newer generations.
Possibly focusing on the product that they are selling by improving the quality of the coffee so that the price of 3 dollars or more fits what they are serving.

3. Critique Starbucks’ overall corporate strategy.
Starbucks believes that they more the outlet the more the sale. Basing on this strategy they are increasing their outlets day by day in their domestic region as well as abroad. But where are the needs of the customers met, mentioned in the selection. Without those needs being met and by increasing the numbers they are not going to succeed in their own mission.
With Starbucks about to become global their spending doesn’t match their status. Starbucks only spends 1 percent of its revenue as advertisement, whereas most companies its size spend around 10 percent. Their employee pay doesn’t come close to match the work load that their employees are doing, thus creating dissatisfaction among them.
4. How might Starbucks improve profitability in Japan?
Starbucks needs to reposition their product and their service. It was stated that they didn’t care about the price just as long as it was sweet. Starbucks in order to compete with the local competition needs to either reduce their price or increase the benefits in Japan. Bring what they are doing with the WIFI to Japan, this would appease many of the people over there making the business soar.

References:
Starbucks Going Global Fast Case 1.1. (2013, June 1). Retrieved from Starbucks Going Global Fast Case 1.1: http://highered.mcgraw-hill.com/sites/dl/free/0073529974/971354/case_1_1_Starbucks_Going_Global_Fast.pdf

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