...Case study on the failure of Starbucks in Australia Name () Tutors () Course () Date () History of Starbucks Starbucks is the largest coffee chain operator in the world. Founded in North America in 1971, Starbucks took a great leap in its growth in 1992 by having 140 stores with a growing store count of an extra of 40-60 percent a year. It has grown further to command the largest share in the international coffee market having penetrated in 44 countries with more than 1500 stores. In the year 200, Starbucks would open a new store somewhere in the world every single day. It has its largest market share is in North America serving about 50 million people a week, followed by markets in the Asia-Pacific, Europe and Latin America (Simon, Bryant 320). Marketing strategies Starbucks managed to achieve its success by employing several major marketing strategies and for these reasons they had remarkable growth rates and had been known to have been ‘taking over the world’. Howard Schultz, the CEO in 1997 made the famous statement that Starbucks was indeed not in ‘the coffee serving business serving people but the people business serving coffee,’ a customer-oriented brand . Starbucks from the start made customer service their top priority, this policy dictating that the customer be treated with utmost personal care such as making eye contact, greeting each customer within five seconds, remembering each customer’s names and responding to customer queries promptly. They also made their...
Words: 1158 - Pages: 5
...The case of Starbucks Paul G. Patterson *, Jane Scott, Mark D. Uncles School of Marketing, Australian School of Business, University of NSW, Sydney, NSW 2052, Australia a r t i c l e i n f o a b s t r a c t The astounding growth and expansion of Starbucks is outlined, both on a global scale and within Australia. The focus then shifts to the abrupt closure of three-quarters of the Australian stores in mid 2008. Several reasons for these closures are described and examined, including that: Starbucks overestimated their points of differentiation and the perceived value of their supplementary services; their service standards declined; they ignored some golden rules of international marketing; they expanded too quickly and forced themselves upon an unwilling public; they entered late into a highly competitive market; they failed to communicate the brand; and their business model was unsustainable. Key lessons that may go beyond the specifics of the Starbucks case are the importance of: undertaking market research and taking note of it; thinking globally but acting locally; establishing a differential advantage and then striving to sustain it; not losing sight of what makes a brand successful in the first place; and the necessity of having a sustainable business model. Ó 2009 Australian and New Zealand Marketing Academy. Published by Elsevier Ltd. All rights reserved. Keywords: Service brands Service quality Global branding International business Starbucks Coffee 1...
Words: 8036 - Pages: 33
...STUDY 10 Go online to to find more case studies. Starbucks’ failure in Australia Paul G. Patterson, Jane Scott and Mark D. Uncles All authors are from the School of Marketing, Australian School of Business, University of NSW In mid-2008 when Starbucks management announced that they would be closing nearly three-quarters of its 84 Australian stores there was a mixed reaction. Some people were shocked, others triumphant. Journalists used every pun in the book to create a sensational headline, and it seemed everyone had a theory as to what went wrong. This case outlines the astounding growth and expansion of the Starbucks brand worldwide, including in Australia. It then shifts focus to describe the extent of the store closures in Australia, before offering several reasons for the failure and lessons that others might learn from the case. History of Starbucks While Starbucks may be responsible for ‘growing’ the premium in-store and takeaway coffee market in various parts of the world, competing brands are emerging in many parts of the world. Starbucks’ first store opened in 1971 in Seattle’s Pike Place Market. By the time the company was publicly listed in 1992, it had 140 stores and was expanding at a breakneck pace, with a growing store count of an extra 40%–60% a year. While former CEO Jim Donald claimed that ‘we don’t want to take over the world’, during the 1990s and early 2000s, Starbucks was opening on average at least one store a day (Palmer...
Words: 6707 - Pages: 27
...Introduction The purpose of this report is to analyse an article regarding a Starbuck’s failure in Australia. The main idea of the article is about Starbuck’s upcoming expansion opening about 1200 stores around the world in 2013. According to the article, Starbuck’s global strategies to international market seems going well considering the fact that it has the biggest coffee-chain in the world over many years. However, the article also points out a retreat of the company in Australia with the number of the stores dropping from 84 to 22 in 2008 (기사). The decreasing popularity of the company in Australia appears to be quite surprising compared to its significant success in the U.S and many other countries such as Canada, Japan and China and so on. In this manner, examining Starbuck’s failure in cross cultural factors rather than identifying reasons of prosperity in other countries can be critical for the company. Moreover, finding out the fundamental reasons of its regressive business in Australian market might lead to developing solutions for cultural markets as well. Surely, the Starbuck’s failure in Australian market can be explained by various cultural factors. In this report, however, global strategy will be discussed as a major theoretical principle and finally there will be recommended solutions for the problems. Starbucks Struggling In Australia With the growing trend of globalisation, many companies has been trying to expand their business globally for past...
Words: 1303 - Pages: 6
...Development Analysis Two Mini Cases 1 21 June 2012 Final Project: Development Analysis Two Mini Case Studies DeVry University Professor Mozinski, BUS412 Business Policy Development Analysis Two Mini Cases 2 Mini Case 1: Bikes for the World (BfW) Challenge or Problem: The Bikes for the World organization was formed to offer valid solutions to the transportation problems facing the poor around the world. Lack of affordable and eco-friendly transportation system led founder Keith Oberg to create BfW. Oberg states he did so in order to solve two problems: to help address the developing world’s lack of affordable, eco-friendly transportation, and to help find a better use for the glut of unwanted bikes in the United States (Thompson, 2010). (Pictured above a young boy from Nyariga, Ghana receives a Bikes for the World bicycle. Photo courtesy of the Shape Lives Foundation) Oberg’s mission was simply to “assist poor people overseas to become more productive through providing affordable bicycles for personal transport to work, school, and health services. Secondarily, provide satisfying community service opportunities to Americans—collecting bikes and spare parts--towards realizing this primary goal of helping others overseas” (BfW, 2012). Through a goal to achieve a sustained impact both here and abroad BfW has partnered with over 600 volunteers, donors, and agencies worldwide who all share a common concern for reducing waste and helping the poor earn, learn,...
Words: 2568 - Pages: 11
...Starbucks was the biggest coffee industry in the world. Economic recession and more competitors raised was cause Starbucks’ downturn. Howard Schultz, the CEO of Starbucks cut down many underperformance stores and offering widely range of differentiated products and services. Those developments are quiet successful in the most of countries especially China and Indian, but except Australia. According the case, there are several reasons of the failure. * Australia have a rich coffee culture * Starbucks stores operating in the cities only * Higher prices than the local coffee standards * Bad communication background in Australia 5 business-level strategy is the model can be used to evaluating firm’s current strategic position on competitive level. In this case, Australia is not only a large coffee consumption market, but also a complex competition environment for Starbucks. Because the Starbucks already can differentiate their goods and services, so the Focus cost-leadership strategy could be a feasible business strategy for Starbucks to successfully operate in the Australia. There are few things the Starbucks have to do by using the Focus cost-leadership strategy: * Market segmentation. Australia is a multicultural country with many different coffee cultures. By target the consumer groups can help the firms dividing a board target market into subset of consumer that have common needs, so the firm can designing and carrying out the strategy to attract them. Bu...
Words: 379 - Pages: 2
...STARBUCKS The company I choose to research on I Starbuck Australia. Starbuck was started in the year 1971 with a single store in Seattle Washington. It is known for selling quality and perfectly roasted coffee and since then it has grown in to different parts of the world. Starbuck entered the Australian market in the year 2000 with over 81 stores. Starbucks has had challenges in the Australian market and has seen its stores reduce significantly to date. The marketing opportunities available for Starbucks are plenty. Advertising is changing by the day and there is a new form of advertising known as Digital-Out-Of-Home (DOOH). This form of advertising is the kind where companies interact with its customers, as they wait to be served or while they are in their preferred public transport. To research for potential new market for Starbucks, I studied the people of Australia and asking a few whether they knew anything about Starbuck and enquiring if they have ever tried their coffee. I also used the internet to look for ways Starbuck may create for themselves new market right here in Australia. Through my travel from one place to another I saw that there is a lot of captive audience that Starbucks may reach out to and enlighten them of the Starbuck coffee. JCDecaux one of the companies in Australia that employs DOOH has interactive screens in the area where the captive audiences is and Starbucks may use their services to reach out. I looked at the captive audience in trains...
Words: 404 - Pages: 2
... Ethics and Social Responsibility 316 March 16, 2015 Starbucks Around the World Ethics is something that we all encounter daily. It shapes the way in which we view the world and the manner in which we behave in society. There are different levels in which we encounter ethical perspectives, the most basic being on a personal level. From there we shape our ethical perspectives to align with ethical standards at work. The more complex ethical perspectives come from Corporate America especially the companies that dominate each industry and are subjects to the public eye each and every day. It is so important for these companies to adhere to the moral and ethical norms of each culture that they encounter in order to thrive as a business. One company in particular that is known worldwide is Starbucks. Although Starbucks is a flourishing company, expanding to different cultures presents a whole new set of challenges in each place. They have to adapt both to the diverse cultural markets they plan to enter into and the ethical perspectives of these markets. Starbucks has experienced both success and failure when entering new markets and although Starbucks dominates the coffee market they are constantly looking for new places to penetrate globally. Starbucks started as a single coffeehouse in Seattle in 1971 from there it grew into a corporation that is known worldwide. In their global organization Starbucks focuses on three ethical perspectives: community, ethical sourcing...
Words: 1113 - Pages: 5
... Starbucks buys and roasts premium whole bean coffees and markets them along with original, Italian espresso beverages, a mixture of pastries and other bakeries, and products of coffee and tools. All of those products reach the hands of the customers through its Starbucks operated retail stores. Starbucks do not offer any franchises for general public. All of its stores are company owned or joint ventured. Starbucks joint venture only if the market is not accessible to them without partnering up like university campuses. Other then the Starbucks operated retail stores; the company offers whole bean coffees through big retails and supermarkets. Also, Starbucks makes and offers its customers bottled Frappuccino coffee drink and a line of high quality ice creams through its joint venture partnerships and presents a line of high quality teas created by its completely owned sister company which is Tazo Tea Company. The Company's goal is to have its customers, stockholders and investors recognize Starbucks as the most established and appreciated brand in the word. In order to reach this objective, Starbucks needs to grow on so that the company can quickly increase the number of retail shops, produces its specialty sales and other operations. They also carefully come up with new product ideas and innovative new products. As far as the competitors of Starbucks go in this aggressive coffee industry, other coffee sellers are keeping up with Starbucks by being innovative...
Words: 1223 - Pages: 5
...Topic/ Title : | Starbucks Decision Making | TABLE OF CONTENTS Introduction 3 Objective of the study 3 Scope of Study 4 Methodology 4 Drivers of Growth and rationale behind Expansionist Strategy 5 Strategy in Japan (expansion in Japan) 5 Strategy in China 6 Strategy in Australia - Too much too soon? 6 Economic downturn and its impact 7 Major problems faced by the company 7 Solutions 9 Changes in Product Range 10 Changes in Marketing Strategies 11 Key Learning from venture in Australia 12 Payoffs for various alternatives considered 13 Factors affecting decisions and their alternatives 13 Decisions to improve Customer Service 14 Customer Value and Premium Brands 15 References 18 Introduction The first Starbucks store was set up in 1971 by three individuals who had a common liking for coffee and exotic teas- Jerry Baldwin, History teacher Zev Seigel and writer Gordon Bowker. The store was named Starbucks Coffee, Tea and Spice in the tourist’s Pikes Place Market in Seattle. However, later the name was changed to Starbucks Coffee Company. The logo was designed to be a two tailed mermaid encircled by the store’s name. The name was inspired from the coffee loving character in Herman Melville’s Moby Dick The store was a success with excellent...
Words: 7135 - Pages: 29
... Seeking to grow is fundamentally a good objective if the underlying economics can support it -- meaning productivity improvements and technological breakthroughs -- and if the expectations of customers, as human beings, keep being satisfied. Unfortunately, it is not always the case. In some markets, such as the US and the UK, the pharmacy, restaurant, and video store businesses, for instance, have largely consolidated from mom-and-pop shops to large standardized chains. Economically, consolidation seems to make sense since it initially brought customers a broader choice at lower prices thanks to economies of scale; and sometimes a predictably good customer experience, e.g., McDonald's and Burger King, Barnes & Noble and Borders, and Starbucks. Too often, however, consolidation meant that unmotivated, low-wage workers replaced devoted shop-owners; ignorance replaced knowledge and know-how; and assembly-line processes -- cadenced by injunctions such as "next in line" and "proceed to the exit" -- replaced the humanity of neighborly relationships. In hindsight, it now appears that those are instances of throwing the baby out with the bath water. A poor quality of service has indeed often become the price to be paid when an industry over-consolidates. We all have...
Words: 4164 - Pages: 17
...The astounding growth and expansion of Starbucks is outlined, both on a global scale and within Australia. The focus then shifts to the abrupt closure of three-quarters of the Australian stores in mid 2008. Several reasons for these closures are described and examined, including that: Starbucks overestimated their points of differentiation and the perceived value of their supplementary services; their service standards declined; they ignored some golden rules of international marketing; they expanded too quickly and forced themselves upon an unwilling public; they entered late into a highly competitive market; they failed to communicate the brand; and their business model was unsustainable. Key lessons that may go beyond the specifics of the Starbucks case are the importance of: undertaking market research and taking note of it; thinking globally but acting locally; establishing a differential advantage and then striving to sustain it; not losing sight of what makes a brand successful in the first place; and the necessity of having a sustainable business model. Ó 2009 Australian and New Zealand Marketing Academy. As stated by Brian Raslan, who is one of only two accredited world barista judges in Australia, said Starbucks excelled in making "gimmicky drinks", but failed to make "proper" coffee. "I think here in Australia we have quite a mature coffee culture and a lot of discerning taste and people understand here what coffee is about," Mr Raslan said. "Our coffee culture has...
Words: 263 - Pages: 2
...Ratio 2014/15 2013/14 2012/13 2011/12 Turnover 952 805 670 542 Profit (Loss) before Taxation 125 93 87 67 Profit Margin 0.13 0.12 0.13 0.12 Return on Capital Employed 44 35 34 32 Number of Stores 1931 1755 1578 1392 Employees 12645 11432 10031 8196 (Whitbread Annual Reports, 2011-2015) Graph 1.1 (Whitbread Annual Reports, 2011-2015) Competitive Environment UK coffee shop market will exceed 30,000 outlets and £15 billion turnover by 2025, driven by branded coffee chain expansion and non-specialist operator growth. Current market is valued at £7.9 billion (Allegra World Coffee Portal, 2015). Harris + Hoole has been ranked number one for coffee quality. Other players like Starbucks and Caffe’ Nero, food service chains like McDonalds, Subway, Pret a Manger and Paul all compete for the market share. Costa’s customers are mainly mature adults, students and professionals segmented to upper middle and the privileged class. The key challenges will be to retain the leading market share by changing the unique selling proposition of Costa. (Euromonitor International, June 2015) 2. Costa Coffee: Resources and Capabilities Table 2.1 Strategic Importance Costa’s Relative Strength Resources • Skilled manpower • Menu range to cater for day part sales and changing trends • New products • Stores that provide customer experience • Healthy cash profits to fuel growth and refurbishment of stores • Brand Name...
Words: 2572 - Pages: 11
...com/od/retailbestpractices/ig/Company-MissionStatements/Starbucks-Coffee-Mission-Statement.htm) Strengths Strong Brand: Global presence: Starbucks are currently the largest chain in the coffeehouse industry. Operating with more than 20,000 stores in 62 countries gives the company a strong presence in the industry, arguably ahead of its competitors. Consistent messaging: Starbucks consistently communicates its vision as a ‘Third Place’ between home and work place through its communications, product and store development, and customer service. This coordinated effort has built Starbucks not only as a powerful brand for coffee, but also the coffee experience that extends beyond the coffee and cafe. Unique value proposition: By positioning itself as the ‘Third Place’ and offering a ‘coffee experience’, it also provides a somewhat unique value proposition to customers. Engaging and personalized communication and marketing: My Starbucks Idea – Starbucks’ own version of a social network where customers are asked to share their ideas. The brand has created a digital dialogue with its customers, enabling people to give their feedback and receive a response back from Starbucks addressing their concerns/comments. It also has over 705,000 followers on Twitter and over 5,428,000 fans on Facebook. The company also invites people to events. On YouTube it has 4800 people subscribers. (Noff 2010, http://thenextweb.com/2010/01/11/starbucks-formula-social-media-success/. accessed 15th Mar 2014)...
Words: 2295 - Pages: 10
...coffee shop • Specializes in sales of coffee and coffee related equipment • The Starbucks logo is an image of a twin-tailed siren • Product lines include : − beverages (coffee, Tazo tea, soda, juices) − pastries − whole coffee beans − coffee-related hardware and equipment − merchandise (mug, CDs) Corporate governance: • Originators: Jerry Baldwin, Zev Siegl, and Gordon Bowker • Howard Schultz, CEO of Starbucks • Orin C. Smith was President and CEO of Starbucks from 2001 to 2005. • January 2008, Chairman Howard Schultz resumed his roles as President and CEO after an eight year break, replacing Jim Donald Growth of Starbucks: • Starbucks was started by Jerry Baldwin, Zev Siegl, and Gordon Bowker in Seattle’s Pike Place Market. • The original owners purchased green coffee beans from Peet's Coffee and Tea, then began buying directly from growers • 1982 – Howard Schultz joined Starbucks as Director of Retail Operations and Marketing • He wanted to change the company’s focus away from in home coffee production and coffee bean retailing, to also include selling coffee drinks. • 1986 – Howard Schultz established II Giornale Coffee Company. • 1987 – II Giornale acquired Starbucks and changed the name into Starbucks Corporation Schultz's rebranded Starbucks • Starbucks opened its first locations outside Seattle at Waterfront Station in Vancouver, British Columbia...
Words: 1870 - Pages: 8
