Starbucks is one of the companies that had grown very rapidly. They ran their business not even for 50 years, but their size of the business is very big. The fact that made Starbucks to achieve great success is how they differentiate themselves with other businesses by creating comfortable environment and offering great experience to store. They have good products to sell, made by high quality of coffee beans, and also they have good customer experience system.
They know only having good products will not work, and they know retailers should sell their products with great customer experiences.Top executives strongly believed in this idea, and they have created their cultures and belief according to these ideas. However, since their strategies are now imitated by many other coffee businesses, they are having external threats.
Since Coffee beans are grown in similar locations, make differentiation with product with coffee businesses are hard. Some Coffee businesses create new menus to compete with their competitors but this strategy can be easily copied also. For example, think about differences between Biggby and Starbucks. There are now many differences that customers can follow.They both have environment for people to study, chat, and sit. They both have great locations, which is near to Campus. They both have pastries and other food products that go with coffee and more. Only difference that can be address is Biggby now have stamp cards to create loyal customers.
Because coffees are imported in similar locations, and menus are similar, and also every cafes now imitated environment of Starbucks, Starbucks are facing great threat of substitute products and services. If customer did not like the service provided in certain store, now they can drive or even just walk to other store and have similar experiences.In order to success in many International locations, Starbucks have to develop new strategies that are actually works at every location. Reason for their success in Asian region is because they were almost the first retailer who provided new experiences. Like how it said in the case, tea cultures were highly developed in Asian region. Also the environment when Asians have when they drink tea is not comfortable. From the old time, when they drink tea with somebody, they have to show certain manners and respects. For example, Japanese have great tea cultures, and they have all these rules on how they pour tea and holding tea cups and more.
For many Asians, drinking Coffee in comfortable places might be new to them, and unlike European, since they do not have long history of coffees; there are possibilities they have made their own images of coffee that are offered by Starbucks or some other similar businesses. On the other hands, places where long history of coffees exists and have their own ways to brew their coffees, the taste and experiences that are offered by Starbucks have not suit them well. Starbucks also have to find the way to eliminate cost of import coffee beans to US first and send back to their international stores.The idea of how they trying to keep same taste and quality of their products are very understandable. However, they should find ways to keep their products in same qualities in other locations too. With transportation expenses they have, they can achieve many other factors. With that expense, they can develop more menus or find other ways to improve more of their customer experience.
Also they should price their products according to the income level of each nation. Pricing their products same as US in all over the world is not going to work that well.For example, charging same amount of money to Chinese customers, that is not a good idea. By charging same prices, Starbucks is losing market share and opportunities. What they are doing in China is only focusing certain, small segment of market, people who are rich and have money to afford their product. Starbucks should stay in where they are right now. Having another expansion is not a good idea for them.
They are already having problems in places like Europe and Latin America and I believe their failures are result of weak research and strategy development.Like how it addressed in the case, many Latin Americans did not satisfied taste of Starbucks, and many Europeans thought they do not need places like Starbucks because they already have their own places to go. Starbucks should throw the beliefs that their strategies will work in every part of the world because of the achievement they made in Asia and their local market. Instead of making investment in order to expand their business, they should invest their money to analyze and research in part where they have failed with their strategies. They should find ways to differentiate them and try create satisfaction for their ustomers.
Understanding cultures and beliefs in each different location will be essential parts for them to accomplish. Have strategic alliances or other form of partnership instead of joint venture. The companies who fully understand the cultures and values of people are the companies who actually run their business locally.
Starbucks should get help from them, and since there are possibilities to fail, instead of investing large amount of money, they should decrease the risk, and should have more time to adapt in local situations before they actually run their own businesses.