STARBUCKS

Case Study: Starbucks

Case Study: Starbucks

Introduction

Starbucks is one of the most successful coffee houses across the globe because of their aggressive expansion strategies, which helps them to push its competition and remain competitive. By means of its expansion strategy, Starbucks Corporation has emphasised on a wide network of coffee chains across the world. Starbucks has arguably been the leaders in the retail coffee market and sell its coffee for a premium prices and boost their profitability.

In July 2000, Starbucks entered in Australian market and now it has around 22 coffee outlets in several cities of Australia, including Melbourne, the Sunshine Coast, the Gold Coast, Brisbane and Sydney (Starbucks.com. 2013). Starbucks offers its customers the finest coffee along with an excellent and comfortable ambiance. Thus, this paper examines the issues and challenges faced by Starbucks in Australian market. In order to do, SWOT analysis is carried out along with a discussion of Starbucks and McCafe strategies to assess the areas of opportunity where Starbucks must focus in order to gain competitive advantage.

Discussion

Key Managerial and Theoretical Issues

When Starbucks penetrated in the market of Australia, it is among the biggest coffee houses in the world. However, Starbucks tend to fail in Australian market, and management of Starbucks closed around 61 coffee stores out of 84 coffee stores in Australia. This closure took place rapidly within a month. The company has encountered huge business losses that include 685 employments and Australian dollar of about 143 million (PaRerson, et al. 2010, pp.41-47).

The case study highlighted several issues that in jointly result in Starbucks' decline in Australian market. The company start with the overestimation of the brand differentiation, along with the customer perceived its service value. Most of the Australians after giving a try to Starbucks, who lives in cities and thrive with cafe experience and culture failed to comprehend why Starbucks charged more for its beverage.

Another crucial managerial issue faced by Starbucks was the employment of less experienced and young staff due to the fast pace opening of a large number of its stores in Australia. Moreover, Starbucks has failed to modify its coffee taste according to the coffee taste of Australians that lean more according to European taste. Despite, Starbucks introduced its US offering is a serious issue, which refers that Starbucks forced itself onto an unenthusiastic public (www.nytimes.com).

On the other hand, unlike Asian markets where coffee chains did not exist and Starbucks has the first mover advantage, in Australia, the company penetrated a highly mature and competitive cafe industry. Moreover, Starbucks Corporation merely relied on its brand reputation and did not market its brand in the mass media; thereby, failed to communicate its brand name. It is possibly not in line with the corporate ethos; however, Starbucks advertise its brand via ATL (above-the-line) marketing campaigns by employing platforms such as the internet, magazines, newspapers, radio to promote its brand in the Australian market.

In addition, the business model of Starbucks was just ...