Report on case study starbucks going global fast

IUBAT-International University of Business Agriculture and Technology Course: International Marketing (MKT- 402) Report on: Starbucks – Going Global Fast Prepared for: Mr Kazi Ahmed Faculty of CBA Department, IUBAT Prepared by: Group: Sl.no Name ID 13 M.d Roman Hawlader 14102086 14 Md Shoreful Islam 14102113 15 Sanyul Islam Sany 14102131 16 Shabiha Islam 14102143 17 Aziza Mohammed 14102174 18 Abdullah-Al Mahmud 14102195 Submission date: 23rd October CASE 1-1 Starbucks -Going Global Fast Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets Answer: Fig: The International Marketing Task Figure above illustrates the total environment of an international marketer The inner circle depicts the controllable elements that constitute a marketers decision area, the second circle encompasses those environmental elements as home that have some effect on foreign operation decisions and the outer circles represent the elements of the foreign environment In the case of Starbucks, when they entered in global marketing they faced many issues Some of them are controllable and some of them are not Controllable elements are price, product, place, promotion and research They can control the price of their products, modify their products according to a particular culture’s taste, how many shops will be available and where to place them all these are managed by Starbucks also most importantly how they will promote their business or products it is also very important decision Starbucks has to decide All of these decisions can be made how much research they Uncontrollable factors or almost impossible to control in foreign environment by Starbucks are: Political or legal forces, Economic forces, Competitive forces, Cultural forces Etc When Starbucks entered in different markets in different countries, controllable and uncontrollable factors they faced were: Economy: In Japan, they cannot control the growing numbers of competition and also the economy As they had been experiencing a depressed economy and Starbuck's Japan profits were down 14% Political and legal bindings: In France, arcane regulations and generous labour benefits Culture: In Vienna, Coffee houses are old for this reason Starbucks has a possibility to capture the market through young generations It’s just a possibility Some also may like the old ones What are the major sources of risk facing the company? Discuss potential solutions Answer: Starbucks is an American global company based in Seattle, Washington It is a largest coffee house company in the world However there are some risks which Starbucks facing but we can give some potential solutions They are given below: Major sources of risk One of the major risks for the company is the market saturation in USA Another risk is losing customers, because a very few options are available for the customer and their coffee price is higher than others competitor Entering into a bigger market or Global expansions is a huge risk, in some counties cultural difference is another major issue Low wages and salary of the employees and managers of the starbucks company is another major risks for the organization Starbucks is not focused on the quality of their core product coffee and they not have other items beside coffee it also a major risk for the company Potential solutions Market saturation can be overcome by focused on international marketing or global marketing Losing customer risk can be overcome by reducing the coffee price because their core customer are the young generation but they not like to drink coffee by paying high price Global expression is a huge risk for them but they can reduce this risk by researching foreign cultural and understanding the customer needs Low wages and salary is another huge risk for this company but starbucks can overcome by paying the legal wages and salary and they can more focused on their employers needs Coffee is their core product but they so that they can improve the quality of coffee and they can arrange some new items beside coffee, it helps the company to overcome from this major risk 03 Critique Starbucks overall corporate strategy Answer: Starbucks main strategy is to expand the store globally and they maintaining some tactics to achieve the main target beside Starbucks are incurring losses for mismatch between their strategy and customer expectation Starbucks are blanketing some specific cities For dominance still eight states and United States there are no Starbucks shop They believe that the more outlet sell will be more base on this strategy they are try to increasing their outlet day by day but without the customer satisfaction need they are not get the success Their target customers are baby boomers and older generation It has no different price for X generation and old generation Though Starbucks are fully control in USA but it is franchisee outside the USA Depending on the franchisees undermines the strength of Starbucks outside the USA Starbucks became a global company but their spending does not match with his status They spend only 1% revenue for advertise Whereas the other company they spend 10% revenue for advertise So lack of advertise it is hard to establish store outside the USA One of the major problems of starbucks is employee dissatisfaction because of payment and policy of starbucks toward full time and half time employee are dissatisfaction with their duties in this reason in 2001, 470 employee are left the Starbucks company within month Starbucks are making less money on each overseas store because most of them are operated with local partners Workers are not paid well for overtime or over duty By this aggressive marketing they have created entry barriers for the competitor They focus only the product concept which myopic attitude in making corporate strategy Relying on word of mouth, Starbucks spends just 1% revenue on advertising because of their payment system employee are not satisfied with the work Not only is it claimed as an unfair attempt to drive out small, independent Competitors who could not afford to pay inflated prices for premium Store Expansion in the U.S Growing continuously rapidly, Starbucks has done clustering several locations in a small geographical area Stores Expansion Globally Starbucks their main Strategy are Expansion the store globally They use some tactics to achieve the main target Beside Starbucks are incurring losses for mismatch between the company and customer expectations Expansion in other countries is too rapid to concern the real preferences and habits of local consumer and competitors Buying out competitors leases Not only it is claimed an unfair attempt to drive out small independent competition who could not afford to pay inflated prices for premium real estate this also leads to monopoly and then leaves customer annoyed with fewer choices Starbucks pay does not come close to match the work load of their employee that created dissatisfaction among them affecting sterling service and even the coffee itself Schultz should be more cautious to various cultural and ethnic affairs As a chair of Starbucks and having market in Muslim dominated Regions he cannot make any scathing comment against Palestinian How might Starbucks improve profitability in Japan? Answer: Every company want to profit in their business, In this case study Starbucks want to improve profitability in Japan Develop new product lines • By developing new product line Starbucks can improve profitability ,They can survey & can find what the customer need & find out the way of improve profitability By reducing the price • If Starbucks corporation reduce the price of their goods ,it will bring more customer & it will improve profitability Providing Online service • Introduce US style online system in Japan, so that busy Japanese can provide their order in the internet Thinking about competitors • Due to the rival shops competition in Japan, Starbucks would have to study the pricing of their coffees products so that the price of a cup of coffee and the environment will be reasonable and customers will feel the worthiness rather than feeling expansive and switch to any other competitors of Starbucks in Japan market Renovating stores • They can continue to be profitable by renovating stores that need it and always improving on customer service and employee satisfaction Increasing Benefits • Creating new benefits for customers - bonus programs, member cards (birthday presents, special promotions, cheaper products), additional accessories related to the coffee consume Location strategy • Being in the right location is a key ingredient in a business's success If a company selects the wrong location, it may have adequate access to customers, workers, transportation, materials, and so on Consequently, location often plays a significant role in a company's profit and overall success Creating the comfort environment • Starbucks were have to create the environments where customers can spend most of their time at the same place in comfort, supply WIFI system where everyone can online for their own entertainment, studies or even spaces for business discussion These are likely to generate friendly environment where the target market will be widen • Summary: • Starbucks name came from a character in classical Novel Moby dick, published • • • • • in 1851, which takes place in sea Logo was chosen with the start of the company in 1971 Controllable and Uncontrollable elements Major source of risk Overall strategy Profitability in Japan Conclusion: There are many topics that arise throughout the case with starbucks Corporation Starbucks Coffee is located worldwide and there are many different ways to look at this situation The company offers a unique range of coffee, lattes, espressos and café style drinks The company intended to reach a specific target audience, but has ended up in many different markets and has been growing rapidly Starbucks has greatly used the Youth appeal strategy to gain entrance into new markets Overtime Starbucks has been able to require a solid brand reputation and has a world renowned company logo There have been some distinguished controllable and uncontrollable elements Starbucks has encountered when entering global markets Starbucks image has been achieved also through their ability to provide honest quality service  .. .CASE 1-1 Starbucks -Going Global Fast Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets Answer: Fig: The International Marketing... continuously rapidly, Starbucks has done clustering several locations in a small geographical area Stores Expansion Globally Starbucks their main Strategy are Expansion the store globally They use... that have some effect on foreign operation decisions and the outer circles represent the elements of the foreign environment In the case of Starbucks, when they entered in global marketing they