Failure of Starbucks in Australia Report

Running Head: Starbucks
Failure of Starbucks in
Australia
Report
System04104
12/16/2019

Starbucks
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Executive Summary
The present case of Starbucks is related to its failure in Australian market where the
company closed more than 70% of its coffee chain restaurants because of underperforming of
its coffee shops and high amount of losses. The company was also failed to identify the needs
of people in Australia and did not gave chance to develop their appetite for the Starbucks
brand. The major reason of failure of Starbucks in Australia was ignoring the cultural factors
and lack of market knowledge. Apart from this, avoiding the taste and preferences of
Australian customers was second major mistake of the famous coffee chain of America. In
analysis, it has been found that if Starbucks did not ignore the cultural factor and consider the
interest and needs of Australian coffee lovers, then company can avoid the failure. To avoid
such failure in the future, the company needs to first analyse the local culture and understand
about the needs of people. Apart from this, the company should not use the aggressive
marketing and pricing strategy where large numbers of people use coffee in their daily
schedule.

Starbucks
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Table of Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................3
Key Management Challenges....................................................................................................3
What went wrong with Starbucks?.........................................................................................3
Cultural Differences between Australia and USA..................................................................4
Root Causes of Identified Causes..............................................................................................5
Lessons and Recommendations.................................................................................................7
Lessons for Starbucks.............................................................................................................7
Future Recommendations for the Organisations....................................................................8
References..................................................................................................................................9

Starbucks
3
Introduction
Starbucks is an American coffee company and coffeehouse chain that operates its
business in more than 30,000 locations all over the world. The present case of Starbucks is
related to its failure in Australian market where the company closed more than 70% of its
coffee chain restaurant because of underperforming issue (Turner, 2018). The company was
also failed to identify the needs of people in Australia and did not gave chance to develop
their appetite for the Starbucks brand. Apart from this, the failure of identifying the coffee
culture in Australia and delivering suitable taste coffee products to the people was also a
concern during its operation in Australia, when company was tremendously focusing on
increasing its numbers of stores in the country. The report talks about the causes of failure of
Starbucks in Australia and explains how company failed to identify the coffee culture of
Australian people. The report also provides recommendations for future recommendations
based on the analysis that is based in Hofstede’s culture theory.
Key Management Challenges
The Seattle-based coffee company ‘Starbucks’ failed to identify the needs of
Australian consumers despite being their deep coffee love. Despite being there is a huge
scope for coffee business in Australia because of deep coffee love of Australian people, the
company was failed to enhance the hunger of Australian customers for the Starbucks brand
because of its poor policy. The company failed to implement its policies in the country and
after grew up more than 90 locations in Australia; it had to shut down more than 70% of
underperforming coffee chain (Turner, 2018).
What went wrong with Starbucks?
The Company was failed to identify the tastes of Australian consumers because it has
been found that Australian people like sweeter coffee than Americans do (Brooks, 2012).
Apart from this, the company was also failed to provide coffee at cheap cost rather Starbucks
was charging almost double prize what others coffee chain were providing in the country.
However, the continuous loss in the country (almost $105 million) in the first 7 years forced
the Starbucks to shut down its business in more than 61 locations (Turner, 2018).
Failed to judge the Market and Make Appropriate Adjustments