BUS300: Comparative Management - Starbucks Australia Failure Analysis

This report examines the failure of Starbucks in the Australian market, highlighting the loss of $105 million and the closure of numerous stores. The analysis focuses on key factors such as high pricing compared to competitors, the availability of numerous coffee options for consumers, and the broader market dynamics. A PESTEL analysis is conducted, considering political, economic, social, technological, environmental, and legal factors influencing Starbucks' performance. The report references various sources to support its findings, providing a comprehensive overview of the challenges Starbucks faced in Australia and the reasons behind its market failure. The high prices, coupled with strong local competition and an established coffee culture, contributed to the company's struggles.

Global compartive management
STUDENT DETAILS
STUDENT DETAIL

COMPARATIVE MANAGEMENT 1
Market forces and entry – Failure of Starbucks in Australia
Starbucks accumulated the loss of $105million in their Australian operations. This major loss
had forced the management to close down their stores from the Australian region. Despite
being the country of coffee lover, the company had to close down their stores from 61
different locations (Sapungan, et. al., 2019). The stores which were situated under these 61
locations were delivering failure outputs and currently there are only 23 Starbucks stores
running in entire continent. Since ages, Australia has been the country of the coffee lover and
Starbucks is the renowned coffee brand at the global level but still they had achieved major
failure because of various reasons which will be discussed in this study.
 Price factor:
Starbucks is the renowned name in the coffee business at the global business.
Starbucks charges high prices for a single cup of coffee that ranges from $5 to $9++.
The objective behind setting this price range was that the management has taught that
Australia is the country of coffee lover and their targeted audience can afford this
price range. However, this becomes the major factor for the failure of the company in
the Australian region. As compare to their competitors, Starbucks have extremely
high price ranges for a cup of coffee (Surya, 2019).
 Various options for Australian people:
Australia's espresso advertise is one of the greatest on the planet. The business hit
more than $6 billion in all out income in 2018 (Saini, 2019). Targeted audience of
Starbucks have lots of options in Australian, thus availability of lots of options is also
become another primary reason for the company’s failure (Turner, 2018).

COMPARATIVE MANAGEMENT 2
PESTEL analysis
Political analysis: Starbucks have to operate in accordance with various political laws to
conduct smooth business operations such as: Australian Competition and Consumer
Commission (ACCC), Australian consumer law, etc. Following these laws are important in
order to conduct effective business operations (Sapungan, et. al., 2019).
Economic analysis: Factors like currency exchange rate, different economic levels and
taxations system operates here. For example: Starbucks have to bear 30% federal tax on their
taxable income in the Australian region.
Social factors: The primary social factor operates here is that Australia is the country of
coffee lover which is the great opportunity for the company but their extreme high prices
become the reasons for their failure (Saini, 2019).
Technological factors: Currently, the country is moving towards the incorporation of
Artificial Intelligence and Machine Learning. Utilizing these technologies will help the
company in conducting better operations (Sapungan, et. al., 2019).
Environmental factors:
The company uses the environmental friendly products. As failure in adopting environment
friendly methods can put the company in hardships.
Legal factors:
According to the Australian law, the company have to fulfilling product safety regulations,
GMO regulations and employment regulations in order to conduct smooth business
operations (Saini, 2019).

COMPARATIVE MANAGEMENT 3
References
Saini, L. (2019) Why Starbucks Failed in Australia [Online] Available at:
https://medium.com/better-marketing/why-starbucks-failed-in-australia-187bb0c21770
[Accessed on: 2nd April, 2020]
Sapungan, R.M., Lat, L.S., Legaspi, D.B., Matanguihan, J.A., Billones, S.K.G., Mendoza,
N.B. and Yap, M.G.O. (2019) Coffee Lover’s Choice: What Matters Most. International
Journal of Recent Innovations in Academic Research, 3(2), pp.165-185.
Surya, N.K.A.R. (2019) Social opportunity on coffee shop. International journal of life
sciences & earth sciences, 2(1), pp.13-18.
Turner, A. (2018) Why there are almost no Starbucks in Australia. [Online] Available at:
https://www.cnbc.com/2018/07/20/starbucks-australia-coffee-failure.html [Accessed on: 2nd
April, 2020].