Why Starbucks coffee is failed in the Australia Market

Running Head: WHY STARBUCKS COFFEE IS FAILED IN THE AUSTRALIA MARKET
Why Starbucks coffee is failed in the Australia Market
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WHY STARBUCKS COFFEE IS FAILED IN THE AUSTRALIA MARKET 2
Table of Contents
1.1.0 Background.........................................................................................................................2
1.1.1 Problem statement...............................................................................................................3
1.1.2 Literature Review................................................................................................................3
1.1.4 Causes of business failure...................................................................................................4
1.1.5 Existing Literatures on the business Failure in Australia’s Market....................................5
1.1.6 Business failure theories.....................................................................................................6
Cognitive Biases.......................................................................................................................6
2.0.0 Research Objectives and Questions........................................................................................7
3.1.0 Research Approach.............................................................................................................7
3.1.1 Deductive research approach..............................................................................................8
4.3.5 Suggested questions..........................................................................................................11
5.0.0 References.............................................................................................................................14
Appendices....................................................................................................................................17
Appendices 1: Project schedule................................................................................................17

WHY STARBUCKS COFFEE IS FAILED IN THE AUSTRALIA MARKET 3
1.0.0 Introduction
Organization expansions into new markets always come with significant benefits such as
increased profit collection, improved market command and better competitive advantages.
However, some of the organizations tend to face market failure in their new expansion. Market
failure refers to the economic situation whereby there is an insufficient distribution of goods and
services thus leading to the failure of an organization (Eisikovits & Markelevich, 2016). Market
failures are always associated with different factors such as information asymmetries, principal
against problems, externalities, and time-inconsistent preferences. It is significant for economics
to understand various market failures to determine corrective measures. Therefore the following
proposal is based on identifying the major reason that led to the market failure of Starbucks in
the Australian market.
1.1.0 Background
Starbuck was funded in 1871, and the first site was located in Seattle’s Pike Place
Market. The store came into public in 1992 with already around 140 stores since its store-growth
rate was about 40-60% per year. In the early 2000s, Starbucks was opening seven stores per day
across the world, thus becoming the largest coffee store in the world with more than 15,000
stores across 44 countries. The tremendous growth of Starbuck across the counters is attributed
to the ability not to sell the only coffee but also customers experience.

WHY STARBUCKS COFFEE IS FAILED IN THE AUSTRALIA MARKET 4
1.1.1 Problem statement
Consequently, Starbucks successfully Americanized European coffee, an aspect that was not
achievable by other coffee houses. With that growth rate, Starbucks announced its desires to
venture into the Australian market in 2000; however, until a today a large number of people still
wonder why the world largest coffee store failed in the Australian Market (Kang & Choi, 2015).
Starbucks was able to open up 84 stores in Australia; however, by 2008 the company announced
its plan to close down about three-quarters of the Australian based stores, a decision that is
attributed to declining on the global economic constraints characterized by high fuel prices
(https://myassignmenthelp.co.uk/freesample/why-starbucks-fail-in-australia). The high fuel cost
affected the consumers’ purchasing power especially on luxurious products such as coffee, thus
led to the failure Starbucks’s market failure in Australia.
1.1.2 Literature Review
1.1.3 Australian Retail Coffee Industry
Australian coffee culture dates back during the 1980s when Greeks and Italians arrived at
the shores after World War II. Over the past decades, Australians have embraced and enjoyed
different coffee lifestyles and experience created by Starbucks in the US; therefore, unlike other
countries, Austrians did not need an introduction to the coffee concept. Australia coffee culture
is described as mature and sophisticated thus even by the introduction of Starbucks in 2000;
there were already some thriving urban coffee cafes (Gedik, Erdonmez & Atılgan, 2016).
According to Australians coffee culture, coffee is more about the relationship than the product
itself; thus why the global Starbucks had difficulty in replicating the intimacy that had been