Starbucks Australia: Failure and Opportunities Analysis

This case study examines the failure of Starbucks in the Australian market, highlighting the factors that contributed to its lack of success. Despite Australia's strong coffee culture, Starbucks struggled to gain traction due to its aggressive expansion strategy, failure to adapt to local preferences, and insufficient marketing efforts. The study analyzes how the company's business model, including product pricing and advertising, failed to resonate with Australian consumers. It also explores the importance of understanding the local café culture and competitive landscape. The case concludes by suggesting opportunities for Starbucks to re-enter the market with a more tailored approach, focusing on strategic planning and cultural sensitivity to achieve success. The analysis emphasizes the significance of globalization while acknowledging the need to respect and understand the local culture to succeed.

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.

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Starbucks failed to enhance the suitability of its coffee brand by ensuring perfect pricing.
Australia’s rich café culture implies that any coffee company intending to venture into its market
has to convince the population adequately that the new brand is indeed the best option. Fewer
advertisements translate to limited sales due to the competitive nature of the market.
The failure of Starbucks in its first attempt does not mean that it cannot thrive in
Australia. Starbucks holds a good customer reputation all over the world and still has so many
opportunities to re-enter Australia (Starbucks Coffee Company 2015). The coffee brand is an
ideal product to further enrich the existing coffee culture in Australia. The brand can be an ideal
product to be sold to foreigners visiting Australia who love the brand. Starbucks still has a recipe
for success in Australia if it strategizes its plan bearing in mind the Australian culture. There is a
need for the company to plan brilliantly to attain relevance in Australia.
Currently, Starbucks has opened some new locations in Australia, which are promising to
be successful if good planning is maintained. The coffee brand boasts of around fifty outlets
around Australia. The company is more cognizant of the fact that globalization is an opportunity
to grow companies, but no success can be attained without a full appreciation of the existing
cultures.

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References
Starbucks Coffee Company (2015). Company Information – Starbucks Coffee Company
Koehn, N. F. (2012). Howard Schultz and Starbucks Coffee Company. Harvard Business School.