Starbucks Case Study
Autor: antoni • October 2, 2011 • 1,280 Words (6 Pages) • 2,152 Views
"Starbucks-Going Global Fast"
Starbucks – Going global fast: Case study
Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets.
The uncontrollable elements that Starbucks has encountered in its entry to global markets are: volatility of market, decline consumption of younger generation, and rising dairy costs.
Volatility of market Starbucks is heavily reliant on the supply and on the prices of coffee. Although Starbucks has supply agreements with suppliers in advance, the company could still face problems due to fluctuating coffee prices. Other factors, such as weather and economic conditions in coffee producing countries, also affect Starbucks' operations.
Decline consumption of young adults. The 20-30 year-old age group of coffee consumption is decreasing now, and this group prefers other drinks, such as soft drinks. These young adults will be the key potential group for Starbucks' future market. The declining consumption of this group will bring further problems to the company's future development (The market for hot drinks, 2004).
Rising dairy costs. According to Starbucks' record, dairy costs rose about 40% year on year and this might affect the company's cost of goods. Milk and other dairy products account for around 3% and 5% of company's sale. Now Starbucks might carry out its first systematic price rise on beverages in the next four years. Since the prices of Starbucks' products are more expensive than other similar products, further price rising might affect the company's operations so the company might lose some customers.
The controllable elements that Starbucks has encountered in its entry to global markets are: strong competition and labor issues. Labor issues Starbucks' has been facing with a lot of discontent among its employees at both domestic and international levels mainly due to low wages. This is a controllable element as Starbucks' can undertake improvements and this would also result in improvement in its productivity.
The international coffee market is a very competitive market. There are increasing numbers of competitors, such as full service restaurants and other coffee shops, entering the growing specialist coffee market in recent years. For example McDonalds and their new McCafe. Starbucks must be aware of this strong competition