Managing Organization Change

Managing Organization Change

Starbucks is a big coffee brand and we can easily find a Starbucks café almost everywhere in the
world except in Australia. The reason behind this is the shutdown of 70 percent of its
underperforming stores. Now, there are only 39 Starbucks stores in the whole continent. The
first Starbucks store started in Australia was in 2000 and it has been grown so fast. There was a
strong coffee- culture in Australia and it was also declared as a challenge for Starbucks.
Australians did not like the taste of Starbucks and preferred to go to the local cafes that charge
comparatively lower than Starbucks. In the starting, it made an accumulate loss of $105 million
dollars and then Starbucks decided to close its 61 stores.
There are many other key issues and problems that Starbucks has faced while operating in
Australia-
1. Coffee culture- Australia has a very sophisticated coffee culture and Starbucks has never
focused on this concern. Australian café market and New Zealand market are 100%
espresso-based market and it is highly dominated by the filter style and brewed coffee.
Australia is a country that is known for its customers that possess a very different taste
in espresso- based coffees. So, it is clear that it was a very difficult task for Starbucks to
enter into the Australian market (Haskova, 2015).
2. Aggressive Growth Strategy- Starbucks has the same strategy for al the market but every
market is not similar. Starbucks has used its original strategy in Australia too and this
was not right. Success story of Starbucks was the fact that in earlier markets, there was
no tradition of European coffee and Starbucks has introduced the same. Australia has an
amazing coffee culture and when any new competitor enters into the market then it has
to face a strong competition (Bansal & Duverger, 2013).
3. Staff Differences- In Australia, people had a perception that staff work in Starbucks is
not that much knowledgeable in comparison to small brands and boutique coffee shops.
It was difficult for the Australians to understand the American coffee brand and taste of
its coffee. This perception was one of the reasons of failure of Starbucks in Australia.
4. Understanding of Market- Starbucks did a mistake in overestimating the brand and way
how customer perceived its value. Many Australians that were residing in the cities that
already have a big coffee culture tried Starbucks coffee and they were really failed to