Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets
Being one of the increasingly growing corporations, Starbucks has faced several controllable and uncontrollable elements on its way to the global markets. The first ones contain local features presented in each country that can be considered in advance, the overall perception of the brand, and other cultural challenges. In their turn, a range of uncontrollable elements includes a volatile economy, the impact of time, and reaction to various innovations offered by the company.
What are the major sources of risk facing the company?
The first potential risk is that the company is likely to make less money because each of the foreign stores is run by a local partner. It can significantly reduce the level of profits, leading to the greater risks. Another threat is associated with the changing nature of society in which the generation of people ready to pay for the brand is steadily replaced by those who do not appreciate it. Partially, the mentioned risk can also be connected to the unstable economy and shifting values prevailing in society. The very concept of Starbucks involving its values, brand, and terminology becomes outdated, attracting less young people. However, the above assumptions cannot be related to overseas markets because Starbucks still has some sense of originality. Furthermore, it should be noted that Starbucks’ employees, namely, baristas and managers, encounter with burnout that is caused by low pay and excessive workload. Even though the company introduced an innovative strategy of part-time work, the overall level of dissatisfaction remains high. Finally, the corporation faces competition from both fast food and beverage companies.
Critique Starbucks’ overall corporate strategy
The overall corporate strategy of Starbucks appears to be rather elaborate and consistent. Run by Howard Schultz, CEO of the corporation, it expands to other countries and remains competitive within the U.S. market. The paramount goal of the company is to adopt a position as the main global supplier of high-quality coffee, keeping the growth, continuous development, and commitment to its corporate principles. In particular, the relationships with the customers are based on the immersion of the latter in the atmosphere of the coffee making process. Throughout its existence, the company focuses on the fact that all coffee is made from beans that meet stringent environmental, economic, and social standards of quality. Starbucks sets a strong and profitable competitive advantage of the product line by the wide differentiation of its coffee and related products in accordance to its capabilities and innovations. The company constantly invests its efforts in the development of new ideas, products, and experiences for customers to attract their attention and create loyalty.
How might Starbucks improve profitability in Japan?
Comparing the marketing mix applicable in the U.S. and Japanese markets, one can pinpoint that some elements in the Japanese market are different. For example, a company partially adapted its product line by adding a variety of sandwiches with local taste preferences and reducing the size of servings because the Japanese do not eat a lot. Thus, employing a partial adaptation of a range of products, Starbucks began to take into account the differences in the needs and preferences of consumers, customs, and culture along with value chains, economic, political, geographic, demographic, and other factors, as well as the competitive situation in the country.
However, profitability in Japan still needs to be enhanced. To implement this requirement, Starbucks should trust the managers of foreign subsidiaries who own the specifics of the national market and can properly direct the actions of the company. At this point, it is essential to be critical in the choice of the future partner. Furthermore, focusing on the customers, Starbucks can look for ways to increase the value of its products by providing a larger number of customers’ benefits. For instance, marketing experts can come up with the opportunity of online orders and a rapid system allowing the customers to order online or by phone, so that the nearest Starbucks store will be waiting for them with a cup of high-quality coffee. It also appears appropriate to promote various Starbucks cards, beginning from Starbucks Card eGifts to Starbucks Rewards. When a customer buys a gift card, he or she not only shows loyalty to the brand but also provides the company with free advertising and brings new customers. In other words, Starbucks can improve its profitability in Japan by means of modern technology and innovation.
Comment on how Starbucks could adapt the standardized strategy in global marketing
Starbucks’ strategy related to the global market focuses on differentiation rather than standardization. Paying close attention to the local preferences, it strives to satisfy the customers by offering the most relevant products and atmosphere. However, as for the foreign markets marked by political barriers, a high level of competition, or significant cultural differences, Starbucks can open a joint venture with a local company that has a wide experience in the production process in the corresponding business. Moreover, pursuing the adaptation of standardized strategy in global markets, the corporation can implement its core vision on an international scale. This strategy can be achieved by integration of Starbuck’s initial vision with the local ones in an attempt to provide the most suitable expansion policy.