Case Study about Starbucks Going Global Fast @MyAssignmentHelp

Question: Discuss the controllable and uncontrollable factors and critique starbucks overall corporate strategy. Answer: Introduction Starbucks is increasing in number, continuously. Their presence in different countries is different. It is important for the management to understand the culture, likes and dislikes of people in the country so that the organization can grow further. The management should try to understand the expectations of people from different countries and plan their accordingly. At this point of time, the number of stores of Starbucks is considered to be its strength but there are very high possibilities that the increasing number of cafes will not matter and the quality of coffee offered matter the most. Controllable and Uncontrollable factors Starbucks is one of the popular names in the world of coffee but they have to struggle hard so that they can be stable at their position. There are plenty of controllable and uncontrollable factors which are creating an impact on the growth and fall of the business. The management will have to understand the controllable factors and look for ways by which it can be controlled. On the other end, the management will have look for ways by which the uncontrollable factors can be dealt with (Kessler 2015). In each country, the controllable and uncontrollable factors are different than that of each other. The controllable and uncontrollable factors of Starbucks, in different countries, are elaborated below. Uncontrollable factors There are plenty of uncontrollable factors associated with Starbucks. The management of Starbucks will have to look for ways by which they can deal with these threats. It is very important for the management of Starbucks to fight against these factors rather than that of ignoring it. The uncontrollable factors in Japan are as follows: - There are plenty of coffee shops in Japan and hence, the competition from rival shops is too high for Starbucks in Japan. Most of the Japanese prefer to consume coffee from the local store rather than that of into Starbucks. The competitors are offering local flavoured coffee at a much cheaper rate. The Japanese customers are still wondering if its worth of pay a high price and taste a coffee at Starbucks (Barber 2014). The economic condition of Japan shows a downturn of 14%. This is not a good sign for any business. Economy downturn would mean that the income of the people in the nation has reduced. This reduction would mean that the disposable income of the people will reduce. Reduction of disposable income would mean that people arent willing to spend much on luxury things. For customers in Japan, Starbucks is a luxury as it is priced above all the other similar coffee stores (Anthonisz 2014). The uncontrollable factors in France are different than that of Japan. Few of the uncontrollable factors in Japan are as follows: - In France, the political laws are very strong. There are plenty of secret regulations. It is the responsibility of the management to understand them and the business should follow those regulations so that the business can stay away from legal complications. In case of ignorance of any of the legal regulations, Starbucks will be forced to leave the nation. The labour laws are very generous. Every organization in France will have to pay better and also better perks to the employees, that what they pay in other countries. Due to this, Starbucks will have to come up with employee benefits that can lure the employees and also the government (Lee 2013). The uncontrollable factor in Vienna is different than what it is in France and Japan. The culture in Vienna allows the youth in the nation to try and explore new things and this is a positive thing for Starbucks. The youth in the nation will be enthusiastic about trying the coffee at Starbucks and at the same time, they will also be willing to explore the new products that would be launched in Starbucks periodically (Liat 2014). Controllable factors There are certain controllable factors which is creating an impact on the business of Starbucks. The controllable factors are same all over the world. Few of the controllable factors which should be controlled by Starbucks so that they can stay ahead in the competition are as follows: - The price of the coffee and other non-coffee items in Italian coffee stores is much cheaper than that what it is in Starbucks. Due to this reason, a lot of people in Italy prefer to have coffee at local Italian coffee outlets rather than that of having it in Starbucks. Price of an expresso at Starbucks is $1.5 but in Italian coffee outlets, an expresso just costs 67 cents (Morris 2014). There are plenty of products available at Starbucks, like coffee, tea, smoothies, sandwiches and others. It is very important for Starbucks to continue with this expansion so that the customers continue to come to the store to explore new products. The channel of distribution used by Starbucks is very unique. All the coffee shops are owned directly by Starbucks. They have 20,891 stores available in 62 countries. This is the largest coffeehouse in the world (Kim 2015). Starbucks doesnt make much investment in marketing. Most of the marketing is undertaken by word-of-mouth communication. Starbucks just spends just 1% of their total revenue in marketing. This is also undertaken only when a new product is launched in the market. Starbucks believes in continuous research. This continuous research allows the coffee house to come up with new things at regular intervals so that they can hold the attention of the customers (Hsu 2014). Sources of risk Starbucks is growing fast but at the same time, they will have to face plenty of risks in the near future. It is the responsibility of the management to understand these threats and act accordingly rather than that of being ignorant about the foreseen threats. Few of the major sources of risks that have been foreseen by Starbucks are discussed below. USA is the home market for Starbucks and the organization will have to accept to the fact that it is becoming saturated now. The number of Starbucks cafe is already high and hence, the management cannot think of having more cafes in the USA. If the management decides to go ahead and open few more cafes in the USA then they will notice that the revenue generated by Starbucks in the USA will reduce. Rather than that of looking for ways to increase the number of coffee shops, they can increase the quality of products that they offer to the customers. This will ensure that more people are attracted to the cafe and hence, the sales in Starbucks would ultimately increase (Chou 2014). The upcoming generation (generation X) is not willing to accept Starbucks and its products. The upcoming generation thinks that the $3 coffee offered by the cafe is meant for elderly people and not for them. With increase in the number of generation X, the sales of Starbucks is getting affected. Starbucks will have to plan and position itself as an organization that is cool and trendy. This will motivate the gen X crowd to sip a coffee at Starbucks. Only coffee will not be loved by the gen X so the products will also have to be changed accordingly to meet their taste and preference (Durna 2015). Starbucks is introducing plenty of new items that can be explored by people. Due to this, lot of people arent willing to come down to Starbucks. Starbucks is known for the coffee that they offer to people so they should continue to offer the same to the people. Starbucks can introduce smoothies, lattes, and sandwiches but they should always remember that people walk-in into Starbucks for coffee so that needs to be improved continuously. Continuous improvement in the coffee flavour will help Starbucks to retain the existing customers (Becerra 2013). Starbucks is no more loved by the employees working over there. In the past, employees use to proudly say that they are associated with Starbucks but that is not the case today. Today, the employees feel that they are manipulated and misused by the management of Starbucks. The benefits offered to the employees are very low. Today, there are plenty of pizza joints and coffee houses so the employees feel that working with Starbucks is like working with a pizza joint or any other coffee house (Jayawardena 2013). It is the responsibility of the management to look for ways by which employee benefits can be improved so that they can retain the existing employees and at the same time, attracting new employees will also be an easy task. Satisfying the employees with attractive compensation and benefits will ensure that the employees are happy and they will serve the customers with a smile. This smile will make the customers feel satisfied and hence, they will be motivated to walk back in the store (Rashid 2013). Critique Starbucks overall corporate strategy Starbucks is known for the best of strategies that they have in place to attract the customers but there are certain areas which need to be improved by Starbucks. Due to the mismatch between the corporate strategies that are implemented and the customer satisfaction, Starbucks is losing huge sales. Few of the areas wherein Starbucks needs to consider and improve are discussed below. Starbucks has its presence across the globe and this is one of the major reasons due to which, Starbucks is termed as a global organization. There are few cities in the USA wherein multiple Starbucks cafe is present but that is not the case with all the cities in the USA. There are eight cities in the USA that doesnt have Starbucks Cafe at this. This is not in sync with the corporate strategy of the organization. Starbucks wants to dominant the complete USA market but their absence in eight cities states that Starbucks havent explored the USA market completely. It is very important for Starbucks to have its presence in all the cities in the USA because USA is the parent country for the organization (Willie 2013). Starbucks believes that increasing the number of stores will help them to increase the sales but this is not the right strategy and this may not work longer. The customers are in love with the coffee flavour offered by Starbucks and hence, they prefer to walk-in in the store and they are really not concerned about the number of Starbucks cafe in different corners of the world. Starbucks will have to ensure that the taste of the coffee at Starbucks should be improved continuously so that they retain the customers and also attract new customers. If Starbucks is able to team up the best coffee with best price then nothing better is going to happen (Lo 2013). No differentiation among the customers of Starbucks is one of the wrong strategies that are used by Starbucks. The 3$ is loved by the senior people but the people in the early 20s are not willing to take a sip. Starbucks can come up with products to match the taste of younger generation. This will ensure that Starbucks is attracting the senior people and also the generation X. Starbucks will have to put in efforts to understand the taste and preference of generation X as the generation X customers believe that there is nothing matching to their taste and preference in Starbucks (Ozan 2015). Low advertisement of Starbucks may be considered as strength by the management of Starbucks but that is not the fact and its needs to be accepted by Starbucks. Just 1% of the revenue is utilized by the management for the purpose of marketing. Large corporations spend a minimum of 10% of their total revenue on marketing and this helps the organization to be popular (Muhi 2013). It is very important for the management of Starbucks to make further investment in marketing so that the brand can reach to people in different corners of the world. Apart from that, marketing will also help the organization to attract more people to the cafe (Nomsa 2015). Predatory real-estate strategy is used by Starbucks so that they dont allow the competitors to enter the place wherein they are present. This is one of the wrong strategies used by Starbucks to stay ahead in the competition. Starbucks is not playing the game fair and this is not a healthy sign. They should allow the competitors to occupy a place close by. This will help Starbucks to understand their real position in the market. The competitor can be studied if they are more preferred over Starbucks and accordingly, Starbucks can improve further. Starbucks pay is criticized across the globe. The employees talk about the heavy workload and low pay that they receive and this is not a good sign for the organization. It is the responsibility of the management to pay the employees as per the work that they do. If the salary paid and the work done is not sync with each other then this dissatisfaction will be seen in the work that they deliver and hence, the customers will be ultimately dissatisfied (Promsivapallop 2015). Strategic Analysis Porters five forces analysis of Starbucks It is very important for the management of Starbucks to understand the impact of various factors on Starbucks. This will help the management to plan their strategic. The impact of various factors on Starbucks is discussed below. Rivalry among existing competitors is very high for Starbucks because there are plenty of coffee shops. Even small and local coffee shops can be considered as a competitor for Starbucks. McDonalds, Dunkin Donuts and other such cafes are also giving a tough competition to Starbucks. Bargaining power of suppliers is very high in the coffee industry. It is very important for Starbucks to ensure that they have the best quality coffee beans so that they can serve the best to the customer. Coffee beans cannot be produced at all the locations and hence, acquiring the same quality of coffee beans at all point of time will be very difficult. Bargaining power of buyers is also very high for Starbucks because the buyers can easily switch their loyalty from one cafe to that of another as there is no switching cost associated with shifting loyalty. Threats from substitutes can be considered to be limited as coffee lovers will always prefer to have coffee, over energy drinks, soft drinks or anything else. Pubs can be considered as a substitute for Starbucks as people like to meet each other and spend time in the pub rather than that of going to a cafe. Threat of new entrants in the industry is very low because Starbucks have a reputation for itself in the market. The customers who are loyal to Starbucks will never think of moving to some other cafe. Recommendations for Starbucks in the USA Starbucks will have to improve so that they can stay ahead in the competition. Few of the recommendations that can be implemented by Starbucks in the USA, so that they can get rid of the stagnated sales, are as follows: - There are 8 cities in the USA that doesnt have Starbucks. This means there are few people who dont have access to Starbucks. Starbucks can set up their store there so that the sales of Starbucks USA can be increased (Sund 2013). Starbucks is one of the oldest cafes in the USA. This is one of the reasons due to which lot of people walk-in into the cafe but the younger generation is sceptical about Starbucks. It is the responsibility of the management to introduce new products so that Starbucks can be loved by the younger generation as well. The advertising of Starbucks should be increased so that it can look appealing to the youngsters in the nation (Yu 2014). Conclusion Starbucks is one of the popular coffee stores across the globe but they are certain areas wherein they need to improve so that they can stay ahead in the competition. The management will have to work on the Japanese market so that they can survive in Japan. Improvement in the services is one of the best strategies to stay ahead in the competition, at all possible locations. 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