Starbucks Going Global: Controllable and Uncontrollable Elements

Case Study 1 – Starbucks
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Case Study 1 – Starbucks
Defining the Issues
Starbucks is one of the global leaders of coffee consumption that has invested a lot to attain its business ambitions in the retail coffee and snacks store industry. Equally, Starbucks has faced ups and downs in conducting its commercial activities. For example, it negatively affected the perception level of stores after its store in Seattle was attacked. The aromatic expresso smell was replaced with the tasteful and white color smelling of tear gas. It went viral, sparking outrage on various social media platforms. Similarly, some clients expressed delays in client service (Michelli, 2006). Starbucks should deal with such issues because it can face many challenges in Japan and Africa. With close relation to the above analysis and the case study (one), the paper presents the controllable and uncontrollable elements, significant sources of risks affecting Starbucks, and potential solutions. Conversely, the report also presents personal advice and recommendations for Starbucks to thrive in Africa and China.
Controllable and Uncontrollable Elements
Analyzing the Case Data
Price, place, and promotion represent some of the controllable elements encountered by Starbucks in the global markets. The price of Starbucks coffee varies from one country to another. For instance, American coffee is more expensive than Italian coffee (espresso), retailing at $0.67 and $0.55respectively (Michelli, 2006). Concerning promotion strategy, Starbucks has become famous for its picture of a mermaid positioned on its products since the day it was founded. Strategically, the idea empowers Starbucks to translate nicely to potential clients in the new market. However, the Starbucks Organization should execute a comprehensive survey or focus group on analyzing and understanding the clients' preferred coffee brand (Michelli, 2006). The brand should correspond to their tastes and preference. The Organization frequently opens new physical stores. For example, it has about 9000 facilities in Seattle, where 12000 employees run every store. Interestingly, the Organization began with 15 stores in Africa, which has allowed them to increase to 12000 workers managing a single store.
Conversely, Starbucks Company is also influenced by uncontrollable elements such as consumer spending, competition, political and legal bindings. Advisably, the organization should deal with such elements to thrive in the global market. Typically, the economy will always fluctuate the spending rate of consumers. For example, the 2007 to 2008 financial crisis compelled consumers to become choosy when spending money on various products. Notably, the Starbucks Organization recorded a profits margin of 673 million dollars in 2007 (Michelli, 2006). Its profit margin was reduced to 582 million dollars in 2008 (Rao, 2009). It deteriorated to 494 million dollars in 2009. Critically, all business organizations cannot control these situations. Still, Starbucks Company can harmonize (reduce) the prices of their products to attract and maintain potential clients to continue being loyal to the products. Competition is also one of the uncontrollable elements faced by Starbucks Firm. The Organization should establish a loyal client base in the existing shops by preparing coffee products according to clients' tastes and preferences (Rao, 2009). The idea is essential because countries have different food, wages, and benefits regulations. It is achieved by executing a survey or research in their area of influence.
Major Sources of Risk Facing the Company
Different risks such as oversaturation, bad reputation, and comfortability of the younger generation affect Starbucks. Starbucks also experience ominously hostile reception from potential consumers between 20 to 30 years. Since it started operating internationally, the Organization has established many stores (Rao, 2009). For example, it has established about 7000 stores in the United States of America (USA), Africa, Japan, etc. One store in Seattle and Manhattan is operated by 9000 and 12000 employees, respectively. It can limit the profit margin and potential growth of the organization.
Additionally, oversaturation can also make it difficult for the products offered by the company to attract clients' attention and loyalty. With this notion in mind, Starbucks Company should continue to expand its influence in foreign countries. The notion will help the Organization create more revenue and use it to increase the salaries and wages of employees, leading to better employment rapport (Rao, 2009). A bad reputation is another risk affecting Starbucks Firm (Hutt, 2016). The issue is attributed to Starbuck's competitive nature and unforeseen circumstances. Interestingly, the Organization has been expanding by purchasing vacant stores seen as perfect places of business by rival companies (Hutt, 2016). The action has created a bad image in the center of its competitors, potential clients, and competitors.
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