Starbucks Business Issues

Running head: STARBUCKS BUSINESS ISSUES
STARBUCKS BUSINESS ISSUES
Yishu Liu
Shirato Kamiyama

1STARBUCKS BUSINESS ISSUES
Introduction:
The Aim of this report is to discuss the business issues related with one of the most
important international organization namely, Starbucks which is famous for its offering of
high quality coffee and other snacks, has been facing slowdown of business and planning to
close the outlets or stores in the highly dense area of mainly the market of Australia
(Stories.starbucks.com, 2019). However, this company has been suffering from sales
slowdown associated with which this research will be analysis effective factors (Cnbc.com.,
2019).
Historical information about the company
Starbucks Corporation is USA based coffee company as well as coffeehouse chain. It
was founded in Seattle, Washington in 1971. Recently the company has more than 28
thousand outlets in all over the world. This company is considered to be the main
representative of the second wave coffee that initially distinguished itself from the other
coffee serving venues in America by their quality, test and the customer experience mainly
focusing on continuously growing popularization of directly roasted coffee. The first outlet of
Starbucks was opened in Seattle, Washington by the three partners named Jerry Baldwin, Zev
Siegl and Gordon Bowker. These three friends were inspired for selling high quality coffee
beans along with the equipment by the coffee roasting entrepreneurs namely Alfred Peet who
taught them the style of roasting beans. The first store of this company was located in Seattle
but later moved to Pike Place. During the first year of operation the three founders only
purchased green coffee beans from teeth and then started to buy directly from the growers.
The company had 24.72 billion USD as revenue in 2018 which is constantly changing
positively. The company had expanded to the Australian market in the year 2000 and had
demonstrated a huge amount of growth in the country in the initial years. However, the
growth was stunted after the year 2008 (Stories.strabucks.com, 2019).

2STARBUCKS BUSINESS ISSUES
The circumstances which have led to the need to undertake research:
Despite the fact that the coffee market in Australia has marked effective growth and is
getting support of the vibrant coffee culture of Australia, competitive pressure has been
increased. According to the data published by Ibisworld.com.au (2019), the coffee and café
industry is expecting growth of 2.2% over the five years of 2013 to 2019 which is worth of
$9.8 billion. However, in spite of this progress, no company has able to stand properly in this
market. The main problem of Starbucks Limited is the slowdown of its business in every
market it has captured till date. The circumstances that has led for this research is the news
that the company has been facing fall in stocks and shares for last one year. In the first
seven years in Australia, Starbucks had accumulated $105 million in losses. This has
forced the company to close 61 locations in the year 2008 (Cnbc.com. 2019).
Symptoms of the issue:
The issue of slow down sales growth and worsening performance in the home country
has affected the sales of the company in the international level. The symptoms of this issue
has been seen firstly in the reduced visit of the customers in the locations. Rather they are
spending time at their home brewing their own coffee (Stories.starbucks.com., 2019).
Secondly, the company is being yielded by huge competition in Australia
(Stories.starbucks.com., 2019). Thirdly, the symptoms of this issue slowing down sales is
inability of the company to properly utilize the effect technology. The proper use of the
technology woukld help in the maintenance of the proper sales of the company thereby
implementing the profitability of the company. Finally, the company was never so subdued
with the retail traffic before that it is doing now (Stories.starbucks.com., 2019).
Business problem:
The company has been facing sales slowdown and lowering shares in the last one
year. In Australia, Starbucks have reportedly accumulated losses of at least $143 million

3STARBUCKS BUSINESS ISSUES
since they opened here 14 years ago (Stories.starbucks.com., 2019). Generally, the market
saturation might be the cause of the problem. As the stores do not have minimum range of
distance, it is enhancing the competition among the stores growing the threat of market
saturation. Another business problems is that the company is failing to attract new customers
(Monica, 2018). Holiday beverages, gift cards and other merchandises are not resonating the
customers as planned. Finally the higher cost of the beverages that targets the mid and higher
incoming range of customers are not being proved to be appealing to the customers in the
developing countries like the market of Australia. These business problems need to be solved
by the company as early as possible otherwise in spite of having a profitable situation in the
global business, Starbucks limited with fall in the hands of Dunkin group and McDonald’s,
two most pressing competitors of the company.
The business problem that is being faced by Starbucks in the Australian territories refer to the
problem of incurring losses due to the lack of the proper coordination within the organization
as well as the saturation of the Australian market. The research aims to discuss the issues that
the company has been facing and the factors that have contributed to the present performance
of the company in the Australian territories.
Research question:
1. What are the major reasons for the slowdown of the sales in Starbucks Australia?
2. How coffee shops can make their supply chain sustainable?
3. How the human resource of the company can help to prevent sales slowdown?
4. Can innovative products can save the company from losing position in the market?
5. What can be done to attain sustainability in business growth?
6. How does sales slowdown affect the overall business?
Research objective: