International Business Australia Report 2022

Running head: INTERNATIONAL BUSINESS
International Business
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International Business1
What should Starbucks focus on avoiding in Australia?
There are a number of practices that the coffee giant must avoid in Australia to improve
their business. Firstly, the company must do away with its policy of rapid expansion through
franchising. Opening 87 stores, without properly estimating the market demand, was a major
mistake that led to significant loss. The company tried to impose its brand value on the national
market by opening several outlets, but this backfired and the easy availability reduced the
excitement of the people for the brand.
The lack of adaption of the Australian market is another reason for the brand’s
unsuccessful venture in the country. Brews like French Roast and Caffe Verona were not
accepted by the consumers as it did not meet their taste (Walters and Broom 2013). Starbucks
should focus on analyzing the market tastes and the incumbent coffee culture of the population
instead of trying to force their own products into the new market, which may have been
successful in other parts of the world.
Furthermore, the general higher cost of coffee compared to other brands and cafes is a
bad strategy to attract a customer base, especially since Australia already has an established
coffee market with many loyal customers (Patterson, Scott and Uncles 2010). In order to
penetrate this market they need to drop their existing pricing strategy and develop more
competitive pricing for its products and services. Rapid franchising has also caused the problem
of drop in quality of service as the increasing number of stores requires more personnel.
Starbucks should avoid recruiting untrained professionals and focus on quality training.