Starbucks: Failure and Opportunities Theory 2022

Running head: Starbucks: Failure and Opportunities 1
Starbucks: Failure and Opportunities
Name
Institution

Starbucks: Failure and Opportunities 2
Starbucks, despite being a household name in many countries in the world, did not
acquire much success in Australia. The failure of Starbucks in Australia cannot be in anyway
associated with the inherent hatred of coffee since Australia had already developed a strong
coffee-drinking culture even before the entry of Starbucks. Starbucks closed down most of its
outlets in Australia barely ten years after they had been opened following huge loses. The
international coffee monolith shut down most of its doors in Australia in 2008, proving the
country a tough market to venture into.
By 2000, when Starbucks opened its first outlet in Australia, there were already other
coffee brands thriving well in Australia. The Australians since the 1950s have always enjoyed a
wide range of quality coffee brands and hence did not perceive Starbucks as a special brand
(Koehn 2012). The café culture in Australia, to a great extent, contributed to the failure of
Starbucks. Starbucks’ failure in Australia would have been preventable if the coffee giant had
taken time to understand the sophisticated Australian café culture.
The business model employed in Australia by Starbucks was not well-suited for the
market. The company failed to realize that the aggressive growth strategy was not ideal for all
markets (Koehn 2012). The coffee outlet was targeting to grow its business too fast and opened
too many stores in multiple locations. This model did not allow Australians to grow an appetite
for the coffee brand. To the Australians, Starbucks was too much available for them and did not
develop any desire for it.
Product perfection, pricing, and advertisement are critical to the success of any business.
Starbucks is an American coffee brand, and obviously the Americans do not share similar tastes
with Australians. The company had a responsibility to convince the customers that the brand was
indeed a better option and required a trial through favorable pricing and extensive advertisement.