Minimalist Annual Report

CANTERBURY INSTITUTE OF MANAGEMENT
HOW STARBUCKS
MISSED THE MARK
IN AUSTRALIA
Case
Study
Report Prepared By:
Hardeep
Student ID
CIM7761
CIM Email CIM7761@ciom.edu.au

COMPANY BACKGROUND
In 1971, the world was introduced
In July 2000, Starbucks
to Starbucks, a coffee company
opened its first Australian
that would revolutionize the way
people consume and perceive store in Sydney's Hyde Park.
coffee. The first Starbucks store The organization served
opened its doors in Seattle, USA, 28,218 locations globally as
marking the beginning of a of 2018. The shops are all
remarkable journey. business- owned, not
franchised.
An influx of Italian and Greek immigrants in the early
1950s helped Australia adopt espresso drinking as a
social lubricant considerably earlier than the US.
While Starbucks introduced Americans to a European
Lite version of coffee shop culture, it arrived late in
Australia. When Starbucks arrived, Australia already had
a strong espresso culture. It had to compete with
cafes that offered a similar or better product. Unlike
practically every other developed country, Australia has
little or no Starbucks. In 2000, the multinational
coffee giant opened its first Sydney cafe, followed by
84 more around Australia's east coast. After eight
years, it had lost $143 million and had to close 60
locations.
VISION
To establish Starbucks as the

premier purveyor of the finest
coffee in the world while
maintaining our uncompromising
principles while we grow.
MISSION
To inspire and nurture the

human spirit - one person, one
cup and one neighbourhood at
a time.
Starbucks was passionate about

ethically
sourcing the finest coffee beans,
roasting them with great care, and
improving the lives of
people who grow them. We care
deeply about all of this; our work is
never done.
SWOT ANALYSIS
Strengths (S)
1- Strong brand reputation – popular and growing
population of loyal consumers.
2- Large global supply chain – the global network of suppliers to
supply the finest and quality coffee beans.
3- Market Diversification – minimize the effects of market and industry risks.
Weaknesses (W)
1- Premium price
2- Generalized criteria for its processed beverages minimize the
cultural alignment of these products with local target markets and
related customer preferences.
3- Products are capable of being imitated or copied.
Opportunities (O)
1-Expansion in developing markets
2-Business diversification
3-Collaborations with major distributors, for example, boost the
distribution and market share of consumer products of the
group, such as ready-to-drink coffee.
Threats (T)
1- Competition against local café and major restaurant chains
that offer low-cost coffee products
2- Australia’s matured coffee culture (special and unique taste
palate)
THE PROBLEMS
Customer segmentation analysis:
Geographically - Australia is a good coffee industry with ideal weather to
enjoy a good cup of coffee (at least in most parts of Australia).
Demography – Starbucks coffee is affordable for average Australian coffee

drinkers who live around the major cities. Plus the increasing of popular café
culture among educated working-class people
Competition in Australia Coffee Market

Starbucks was not a big enough brand to gain sufficient advertising through
word of mouth that they relied on so their promotion strategy also failed. It is
contradictory to some extent to target the high end Premium Coffee drinkers and
open many stores within a short period of time.
Coffee Culture
Australians are also known to be consumers who have a special taste in
espresso-based coffees (Mercer). So it would obviously be a hard thing for an
American coffee brand to penetrate such a market.
Growth Strategy
Starbucks was not at all scarce and had too many outlets. It turned out to be
a disaster as Starbucks did not give the Australians the opportunity to get to
know the brand well and develop that "need and "loyalty.
Taste and Pricing

Australian tastes are very different from American tastes as they experience the
culture of coffee before Starbucks. The main thing that Starbucks failed to do
is to make the pricing of their product market suitable and perfect.
STARBUCKS SHOULD
UNDERSTAND LOCAL
MARKET NEEDS AND
WORK TOGETHER
If you work in global marketing:
Investigate the markets and familiarize
yourself with the international teams. Trust
them to know the local etiquette. And use
their expertise to make your global
marketing campaign a success. Starbucks
Should Create an Early Global Marketing
Plan So you've built critical contacts,
investigated local markets, and established
global marketing programs that address
local demands.
SOLUTIONS AND
RECOMMENDATIONS
Starbucks should not only Starbucks Needs a More
rely on its great brand. Enthusiastic Workforce
A significant thing for Shop where the employee is

businesses to do, when they passionate and provides you with
start a new product or enter a everything with experience, and
new market, is to let go of their one where the employee is a
egos. People won't let you do teenager who lacks knowledge of
what you want just because you what they are making and what
say you want to be the world's they are using.
most powerful person.
Australians don't like it when
people bang their chests
CONCLUSION
Starbucks misunderstood Australian culture. They entered
an unwelcoming market. Worse, they failed to recognize
their failure. Sadly, Starbucks grew its unstable business
until calamity occurred. If Starbucks wants to succeed
globally, it must recognize that convergence does not
apply everywhere. Starbucks must be flexible when
entering new markets. Starbucks should perform local
market research and strengths, weaknesses, opportunities,
and threats analyses for each new region. Contrary to
management's beliefs, Starbucks' expansion plainly shows
divergence. Most international businesses cannot use a
one-size-fits-all strategy. Coffee culture has not been
“McDonaldized” into a unified global culture yet. Today's
global coffee market lacks convergence, and cultural
attachments to tradition may prevent it from ever
occurring. Starbucks may use globalization to show local
cultures that they regard their values, norms, and
traditions. If they do this, they will succeed.
REFERENCES
General Statistics on Starbucks (n.d.). Retrieved March 16, 2022 from
https://www.statista.com.
Starbucks Coffee Company (2022). Company Timeline – Starbucks

Coffee Company
Company background, Vison and Mission Statement,

https://www.starbucks.com.my
Starbucks Lessons From Australia https://mvmm.com.au/

lessons-from-starbucks-failure-in-australia/
Starbucks (Failure in Australia Market), 13 December 2017,

http://www.businessstudiesqa.com/2017/12/starbucks-failure-in-
australian-market.html
Thank
You
Submitted to :- Amandeep Mam

Canterbury Institute of Management

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CANTERBURY INSTITUTE OF MANAGEMENT

CIM Email CIM7761@ciom.edu.au

To establish Starbucks as the

To inspire and nurture the

Starbucks was passionate about

Demography – Starbucks coffee is affordable for average Australian coffee

Competition in Australia Coffee Market

Taste and Pricing

A significant thing for Shop where the employee is

Starbucks Coffee Company (2022). Company Timeline – Starbucks

Company background, Vison and Mission Statement,

Starbucks Lessons From Australia https://mvmm.com.au/

Starbucks (Failure in Australia Market), 13 December 2017,

Submitted to :- Amandeep Mam

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