Question 1
Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets.
While entering the market in Italy, Starbucks had encountered controllable elements such as price and products. Italian coffee bar prospers by serving food as well as coffee, an area where Starbucks still struggles. Also Italian coffee is cheaper than U.S. java and, says Italian purists, much better. Americans pay about $1.5 for an espresso. On the other hand, in northern Italy, the price is 67 cents while in the southern part of Italy just 55 cents.
Starbucks had encountered uncontrollable elements while entering market in Japan, France and Vienna. Starbucks had encountered competitive force while entering the market of Japan and England. In Japan, Starbucks faces steep competition. Japan’s “chilled cup” market is teeming with rival products, including Starbucks lookalikes. One of the most popular brands, called Mt. Rainier, is emblazoned with a green circle logo that closely resembles that of Starbucks. Meanwhile in England, imitators are coming in to grab the market share.
Another uncontrollable elements encountered by Starbucks is economic force. In Japan, Starbucks had experienced economy down turn by 25%. The company profits had jumped to 3.6 billion yen in 2007, but declined again to 2.7 billion yen in 2009. Other than that, cultural force is also one of the uncontrollable elements. Youth in Vienna are always enthusiastic about new and they embrace the new. So, Starbucks will get positive advantages in expanding their business in Vienna compared to existing coffee shop there. Lastly, uncontrollable element is political and legal bindings. For example, arcane regulations and generous labor benefits in France.
Question 2
What are the major sources of risk facing the company and discuss potential solutions.
There are three major sources of risk faced by Starbucks. One of the risks is saturation of...