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Case Study: Starbucks-Going Global Fast - Essay Example

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There are various uncontrollable elements in the environment that may have been experienced by Starbucks when they entered the global arena. These uncontrollable factors include changes in cultural, political as well as economic spheres of foreign nations. …
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Case Study: Starbucks-Going Global Fast

Download file to see previous pages... For example, if the company decides to operate in the region of France then it will have to work in compliance with the generous benefits offered to the employees of the region, and they will even have to consider the arcane regulation. Similarly it will have to compete with the coffee outlets that are already operating in international markets such as Italy where outlets offer food along with coffee, and this is one area where the organization is still struggling.
The controllable factors that might be experienced by the organization due to its global operation include the price of the product. The company sells coffee at high prices, and if they operate in international regions such as Italy, they will have to control their prices keeping in mind the prices of coffee in these regions. The company can not only rely on its offering of coffee, it will have to expand its menu to attract individuals in different regions.
Three issues that the organization experienced in its host nation of the USA include the saturation of the markets, the loss of customers, and the cooperation with local organizations. Starbucks spread all over the USA at a very fast pace, and within a small period of time it was all over the USA, and, thus, they are experiencing saturation in the USA. The number of outlets providing coffee increased which resulted in an increase of competition for Starbucks. Lastly, the company cannot operate in an independent manner in other nations and needs to get into a partnership with local companies. The organization can solve the issue of saturation by expanding in different markets, and they can elevate the quality of their offerings by keeping the employees satisfied. To counter the competition, they need to cut down on their prices and increase their offerings. As the company faces the issue of cooperating with local companies in the international markets, they need to ensure that the decision making remains in their own hands, and the local companies have little to say in the company for the operations to continue to be done in the manner they want to. 3. Starbucks is following the strategy of increasing the number of outlets in host regions and international regions. This spread of outlets is taking place without taking into consideration the needs of the customers. Due to this they are failing to attain their mission of providing high quality products and services to customers. Starbucks has similar prices for all the kinds of customers. Its marketing activities are targeting those individuals who fall in the category of generation X and Baby boomers. So they have neglected the huge portion of the population which mostly includes a young generation who are not able to pay high prices for coffee. Starbucks strategy also includes low spendings on promotion; they only spend 1% of their revenue on promotion (Cateora 594). They need to increase their promotion activities if they want to take over international markets, and an integral part of expansion is promotion. Another issue with the strategy adopted by Starbucks is that they are paying lower wages to employees in comparison to the responsibility that is being carried out by their employees. This results in the employees’ dissatisfaction, but such practices may not be allowed in other nations where human rights are taken very seriously. 4. Starbucks can increase its profitability in the region of Japan by repositioning their products; individuals residing in Japan are less concerned about the prices as they pay similar prices in other coffee outlets. Since Starbucks as well as other coffee outlets are offering products at the same prices, Starbucks needs to ...Download file to see next pagesRead More
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