CASE 1 – 1: Starbucks—Going Global Fast

1. It is evident after looking at the case that Starbucks faced elements, which were both controllable and uncontrollable. The controllable elements, which were faced by Starbucks in the global market, were very much similar to the domestic market. These controllable elements were promotion, place, price and product. The brand name for the company has great connection with customers all around the world, so it was easy for them to market the products with promotion strategy. Moreover, they can develop products, which are very much similar to the local taste and culture so that customers can be satisfied. They also can come up with prices, which are affordable in a given international market. They also invested in market research to know more about each and every market. These controllable elements were managed by the company through making partnerships with partners around the world. They can alter the strategy for these controllable elements.

But fact of the matter is that they also faced uncontrollable elements as well. These elements cannot be controlled by Starbucks as they are beyond their control and strategy. For instance, first element in this regard is risk for foreign governments. The foreign country may change their monetary policy and may come up with new strict rules for international companies, which can make life difficult for Starbucks. The currency rates do fluctuate in different countries. Moreover, competition from local brands is also uncontrollable element as local brands have more convenience in doing business. So, these have been few controllable and uncontrollable elements for Starbucks (CHINWENDU, 2014)

2. The company is facing several major risks and one of the significant one is market saturation. The biggest example in the case is Japan. When company entered in Japan in 1996 with new stores at different locations, they got much attraction for their new stores from customers. But soon, the market became saturated for them and it was hard for Starbucks to keep the level of profits high as they did initially. To deal with the risk of market saturation, they need to focus on other market places as well as changing the strategy, where they can have various opportunities to expand the business.

The other major risk faced by Starbucks is the competition from local as well as international coffee brands. For instance, if an international chain is already there in the market, then it is difficult and risky task for Starbucks to enter in such market. To deal with this competition, they need to develop different products with better quality as well as affordable prices so that they can remain ahead of the competition. If they deal with these risks, they can be more successful (Stringfellow, 2017)

3. The corporate strategy of Starbucks is little confusing in terms of covering different markets with so many stores, whereas leaving other markets open. For instance, it is shocking to know that there are eight states in United States, which has no stores of Starbucks. This fact is shocking because company is based in United States and has enjoyed so much success, then how they have missed eight states. Moreover, they have very much saturated their U.S market and need to change their overall strategy in this regard.

They have strategy for global expansion with quality of products, and this overall strategy is a god one for their future success. But they lack the competition in terms of advertising. The case has revealed that they only spent 1% of their total revenue on advertising, whereas companies with the size and revenue like Starbucks do spend around 10% of their revenue. This is huge difference and Starbucks have to improve their spending in this regard if they want to get more attraction and recognition in the global coffee market (Morrison, 2011)

4. In a market like Japan, Starbucks has to do a lot of things differently so that they can move in right direction to have more growth and profits with the passage of time. In Japanese market, the culture is one of the most significant elements to be looked at. Starbucks cannot succeed in Japan by going with an American or Global culture style; rather they have to be more adaptive to the Japanese culture as people so much value their culture in Japan. The company has to come up with products and business strategies, which are more suitable for Japanese culture and taste (MURAI, 2017)

The price may not be an important factor in Japan, but quality is. Therefore, Starbucks have to come up with quality products enhancing the real taste of coffee for Japanese consumers. Moreover, the company should enhance the experience of store visits by innovative services, which engage people in other activities, other than just sipping a cup of coffee. For instance, they can arrange cultural and entertainment activities for Japanese youth to get more attraction from them. If Starbucks culture and services will complement the Japanese culture, then success is the most likely outcome for them.

References of Starbucks—Going Global Fast

CHINWENDU, I. (2014). Controllable and Uncontrollable Variables In Marketing Environment. Retrieved March 2, 2019, from https://www.projectwriters.ng/controllable-uncontrollable-variables-marketing-environment-2/

Morrison, M. (2011). STARBUCKS HITS NO. 3 DESPITE LIMITED AD SPENDING. Retrieved March 2, 2019, from https://adage.com/article/news/starbucks-hits-3-limited-ad-spending/227316/

MURAI, S. (2017). For foreign companies in Japan, adapting to local culture seen as key to success. Retrieved March 2, 2019, from https://www.japantimes.co.jp/news/2017/08/23/business/foreign-companies-japan-adapting-local-culture-seen-key-success/#.XHrkV8AzY1k

Stringfellow, A. (2017). How To Succeed In An Over-Saturated Market. Retrieved March 2, 2019, from https://www.americanexpress.com/en-us/business/trends-and-insights/articles/how-to-succeed-in-an-over-saturated-market/