cultural differences case study starbucks in australia

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Group Presentation Appendix Cultural differences Case introduction Case analysis Recommendation Dr Hofstede's cultural dimension Psychologist Dr Geert Hofstede published his cultural dimensions model at the end of the 1970s, dimensions: - Power distance - Individualism vs collectivism - Masculinity vs Feminity - Uncertainty Avoidance - Long-term vs short-term orientation Culture Differences Power distance - Related to how a society deals with the fact that people are unequal in physical and intellectual capabilities - The fundamental issue here is how a society handles inequalities among people - Australia scores low on this dimension Culture Differences Individualism versus collectivism - It focuses on the degree of interdependence a society maintains among its members To easily understand, it is like the terms of “I” or “We” - Australia, with a score of 90 on this dimension, is a highly Individualist culture Culture Differences Masculinity versus femininity - The relationship between gender and work roles - Australia's figure was recorded at 61, This shows that females still are not considered equal to men in different fields of life Uncertainty avoidance - It measured ‘The extent to which the members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these' - Australia scores a very intermediate 51 on this dimension Culture Differences Long-term versus shortterm orientation - It describes “how every society has to maintain some links with its own past while dealing with the challenges of the present and future” - Australia scores 21 on this dimension and therefore has a normative culture Case introduction Starbuck - Starbucks Corporation is an American company founded in 1971 in Seattle - Their product mix includes roasted and handcrafted highquality/premium-priced coffees, tea, a variety of fresh food items, and other beverages - From a narrow shop front, Starbucks offered some of the world’s finest fresh-roasted whole bean coffees - Today, Starbucks has about 383,000 employees across more than 32,000 companies operated & licensed stores in 80 countries, most of which are located in the USA Starbuck in Australia - In July 2000, Starbucks launched its first location in Australia - When Starbucks first came to Australia, it grew rapidly, opening 90 locations by 2008 However, such speed “grew faster than its popularity” as it ultimately resulted in a loss of $105 million in just the first seven years - In 2008, the majority of their businesses closed, leaving only 23 Starbucks locations throughout the whole continent - However, Starbucks has not yet given up on Australia The business has started to gradually open new sites around the nation since the shutdown in 2008 - There are now more than 60 outlets The Australian coffee industry - The Australian coffee market is among the largest in the world, reaching a revenue greater than 1.4 billion U.S dollars in 2017 - The annual domestic coffee consumption in Australia reached almost 1.9 million 60-kilogram bags - On average, Australians consumed around 1.92 kilograms of coffee per person in 2017, out of which 1.39 kilograms were roast coffee and around 0.53 kilograms were instant coffee Australian's behavior towards coffee - In Australia, there is a strong fondness for coffee, with more than one-fourth (27%) saying they can't go a day without it and nearly nine out of ten (88%) saying they prefer it to some degree - 75% of Australians drink at least one cup of coffee every day, and 28% of them drink three or more - Older generations are likely to prefer instant coffee, whilst a preference for espresso coffee is higher among Australia’s younger generations - There is a strong sense in Australia of buying local and supporting the community Starbuck's competitors - ‘‘In America, Starbucks is a state of mind In Australia, it was simply another player.” - Gloria Jean’s dominates the high-street part of the coffee retailing market and McCafé dominates the convenience end in Australia - Other significant competitors include The Coffee Club and Wild Bean Café (an add-on to BP petrol stations) and Hudson’s Coffee - Also, other smaller individual coffee retailers offered better coffee and a more personal experience Starbucks' fail in Australia Australia has an advanced local coffee culture (a strong and large coffee drinking culture) - Long-standing culture: Australia's affinity for coffee is a result of the waves of immigrants that came to the nation's shores after World War II - Australians have long taken pleasure in a variant of the "lifestyle coffee experience" that Starbucks invented from scratch in the US - Australians tended to frequent more intimate, boutiquestyle coffee shops - Australians believe that connections matter just as much as the actual product when it comes to coffee Lack of understanding - Starbucks didn’t fit Australians’ tastes The company served sweeter coffee options than Australians preferred - Local brands such as Gloria Jeans and Coffee Club had a nationwide reputation for several years; they clearly understand the Australian coffee taste and offer qualified local coffee at a cheaper price - A large portion of the local Australian population preferred having side foods - The Australian coffee culture is more about socializing and probably less about coffee Lack of effort to adapt - When Starbucks launched, it launched too rapidly It didn’t give the Australian consumer the opportunity to really develop an appetite for the Starbucks brand - The mistake of Starbucks also was that despite Australia being an extremely competitive and mature coffee market, Starbucks did not advertise in the mass media Relying on its reputation, Starbuck failed to communicate its brand The 2008 financial crisis - As we know the world was experiencing the Great Recession in 2008 and so did Australia - During that time Starbucks shut down twothirds of its stores in Australia - Even though Starbucks had enough financial resources to sustain itself, the purchasing power of the customers was potentially affected Recommendation Better planning before entering a new market: Starbucks should have organized several focus group interviews in Australia prior to its launch Establishing brand image in the locals: Starbucks should have started with fewer stores, and only in main attractions, and tried to establish a loyal fan base Understanding customer insight: - Customer insights allow corporations to gain a more in-depth understanding of how their consumers think and feel about their goods and services - On top of the price adjustment to fit the locals, they will also have to re-evaluate their core product line and snacks to go with them Thank you for listening! If you have any questions, don't hesitate to raise your voice ... which are located in the USA Starbuck in Australia - In July 2000, Starbucks launched its first location in Australia - When Starbucks first came to Australia, it grew rapidly, opening 90 locations... in 2008 and so did Australia - During that time Starbucks shut down twothirds of its stores in Australia - Even though Starbucks had enough financial resources to sustain itself, the purchasing... personal experience Starbucks' fail in Australia Australia has an advanced local coffee culture (a strong and large coffee drinking culture) - Long-standing culture: Australia' s affinity for coffee