Starbucks-Going

Global Fast
By Rahimullah Amin Section A

Answer No 1: Followings are the Controllable and Uncontrollable elements that Starbucks has

encountered in entering global markets.

The controllable and uncontrivable factors have impacts on every business they are also called

internal and external factors. Starbucks has the following Internal and external factors.

A) The controllable Elements/Factors:

The Management: The management of the Starbucks which was failed to satisfy their

own employees as they were demotivated and demoralized. They could be more

effective if they had better management practice.

The Product: Starbucks provides different types of quality products such as Coffee, Tea,

and Pastries etc.

Price: Starbucks has different strategies for different locations such as 1.5 $ in USA, 67

cents in northern Italy and just 55 cents in in south and it also charges premium prices

too.

Promotion and Promotion Channel: Promotion- the Starbucks has controlled its

promotional strategy and has saved a lot of marketing cost by mainly relying on worth

of mouth and the company has good brand name in national market as well as in

overseas markets. Starbucks has large company compared to other companies in

number of coffee houses in different markets for example in Starbucks has 20,891

stores in 62 countries, including 13,279 in the United States, 1,324 in Canada, 989 in

Japan, 851 in China and 806 in the United Kingdom.

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 Starbucks-Going Global Fast
By Rahimullah Amin Section A

R/D Research and Development: As the marketing share of Starbucks was large they

faced competition and it could improve more competitive strategies to overcome their

competitors this would have paved the way for innovation by research and

developments.

B) Uncontrollable Elements or Factors:

Culture elements: Culture elements are always so tricky the culture includes the beliefs,

values, rituals, symbols and thoughts these cultural elements can cause huge problems

for Starbuck and many others if not dealt with care. In order to overcome the challenges

of culture, taste and habits the Starbucks could research on the coffee habits in locals.

Competitive Factors: Starbucks faced both domestic (local) and international

competitors. There were competitors in Japan, Italy, and France and in many other

countries. Many competitors used to imitate their products for example Coffee.

Political and Legal Elements: Different countries have different laws and different

political systems which Starbucks couldnt control them for example the law regarding

the problem of overloading and underpaid of employees in countries.

Economic Elements: As economic systems and level of income differ from country to

country Starbucks charged different prices for different location but still Starbucks

couldnt control the tax and other related elements.

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 Starbucks-Going Global Fast
By Rahimullah Amin Section A

Answer No 2: The major sources of risk facing the company and their potential solutions.

a) The major sources of risk that Starbucks faced:

The saturation of United States Market: The home market (US Market) was saturated

as there were eight cities in the United States without Starbucks stores. It prevented

self-cannibalism and the stores must be strategically located.

Employees dissatisfaction: The Starbucks is faced another risk it was because of the

dissatisfaction of employees because of overwork and unpaying. Dissatisfaction of odd

hours and low-pay.-Positive reinforcement which leads to higher feelings of job

satisfaction- Improve the employee satisfaction. So, the quality of service as well coffee

increases.

Demographic problems: The demographic element of age was the problem for

Starbucks. The Consumers 35 years and older tend to consumer coffee more often than

the18 - 25 age group. The Starbucks Market research should be carried out to study

consumptions habits for younger consumers. Starbucks should offer innovations such as

wireless networks to its customers to overcome challenge in order to attract the next

generation of customers.

b) The potential solutions can be:

Starbucks has competition in the market. It has to improve the quality of products,

lower the prices and improve technology and innovate new product in order to be

different.

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 Starbucks-Going Global Fast
By Rahimullah Amin Section A

Because of X Generation they need to have deep research about demographic

factors and ages.

The Starbucks has to train its employees to improve the quality of product and

services.

Starbuck has to rethink about working hours and the payments to the workers.

Answer No 3: Critique Starbucks overall corporate strategy

The critique Starbucks overall corporate strategy is follows:

Eight cities in U.S. remained untapped, Starbucks relied on word of mouth, Starbucks

spends just1% of revenues on advertising.

Low payment to employees predatory real estate strategypaying more than market-rate

rents to keep competitors out of a location not only it is claimed as an unfair attempt to

drive out small, independent competitors who could not afford to pay inflated prices for

premium real estate, this also leads to monopoly and then leaves customers annoyed with

fewer choices.

Stores Expansion in the U.S.-Growing continuously rapidly, Starbucks has done clustering

several locations in a small geographical area. Doing so eventually will inevitably act to

cannibalize existing locations same store sales. Stores Expansion Globally-Stores expansion

in other countries too rapid to concern the real preferences and habits of local consumers

and competitors.

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 Starbucks-Going Global Fast
By Rahimullah Amin Section A

Labor Disputes & Involvement in Lawsuit.-Because of Starbucks payment and policies

toward its part-time and full-time employees do not compatible with working hours and

duties.- 470 Frustrated store managers sued Starbucks in 2001 for allegedly refusing to pay

legally mandated overtime.

Answer No 4: How might Starbucks improve profitability in Japan?

To improve their profitability in Japan, they need to position on time with decreased Price and

increase the benefit and they have to target mid-income levels were frequent buyers and grew

substantially. Starbucks offers new beverages according to the Asian or Japanese culture and

provide wider range of different tea or soft drinksTea drinks will increase popularity because their

perceived value of health benefits. Starbucks should provide special, Japanese food in Starbucks

stores, Japanese candies, cakes or sweets or even snacks Starbucks may become more Japanese.

Starbucks has to improve the technology like for good services.