A Report on the Organizational Challenges of Starbucks in Australia

This report provides an in-depth analysis of the organizational problems faced by Starbucks in the Australian market. It begins with an executive summary and table of contents, followed by an introduction that defines organizational problems. The report then gives an overview of Starbucks, its market share, and the current market conditions. A detailed research methodology is described, including the use of e-books, surveys, and peer-reviewed journals. The analysis section explores the reasons for Starbucks' failure to thrive in Australia, such as a lack of adaptation to local tastes, high competition, internal organizational failures, the availability of substitutes, rapid expansion issues, and negative customer feedback. The report incorporates a SWOT analysis, providing recommendations for improvement, including product diversification, mergers, and targeted marketing strategies. The conclusion summarizes the key findings, emphasizing the challenges Starbucks faces and the need for strategic adjustments to improve its position in the Australian market.

Running head- ORGANIZATIONAL PROBLEMS
Organizational Problems
Name of the Student
Name of the university
Author Note

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Executive Summary
The aim of this report is to analyse the problems faced by a leading coffee company,
Starbucks to survive and grow in Australian market. This includes a description about the
organization and its market share. It deeply analysis the challenges faced by the organization
by a proper research methodology. It concludes the discussion in a proper way. It also
includes a few recommendations for the survival and growth of the company.

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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Organization Overview..........................................................................................................3
Market Condition of the Organization...................................................................................3
Research, Analysis and Findings...............................................................................................4
Research Methodology...........................................................................................................4
Analysis and Findings............................................................................................................4
Reasons for failure.............................................................................................................4
Recommendation........................................................................................................................6
SWOT analysis of Starbucks in Australia..............................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................8

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Introduction
Organizational problems refer to the challenges faced by the organization internally or
externally which stagnates the growth of the organization. There are various types and levels
of problems in an organization, some problems are simple while some are complex. On the
other hand, some problems effect only one area of the organization while some problems are
aggressive and can affect the growth of entire organization. (Lyles, 2014). This report analyses
the problems of Starbucks in Australia. Starbucks is one of the leading Organization in the
World but somehow it failed to gain the same popularity in Australia. This report describes
the organization in a detailed way and analyses the problems faced by the company.
Discussion
Organization Overview
Starbucks is one of the leading coffee companies in the world. It was started in 1971.
It is famous for its great atmosphere, good service and rich in taste coffee. In addition to
coffees, it is also famous for its tea, pastries and other items. Starbucks is committed towards
its partners, environment, customers and stakeholders (www.starbucks.in, 2019)
Market Condition of the Organization
Currently, Starbucks is enjoying good amount of market share due to its service and
taste. The peaceful ambience, rich taste and great service is definitely adding to its plus points
(Marie, 2019). Starbucks has the highest number of coffee chains in World. It has highest
number of stores in USA. The company enjoys highest market share when it comes to coffee
industry. It has faced some crisis in 2008 due to which it had to close a few stores there.
(Latif, Bukhari & Sameen, 2014).

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Research, Analysis and Findings.
Research Methodology
The research was based on the various challenges faced by Starbucks in expanding its
growth in Australia. The research has been done with the help of various E-books, survey
records, peer reviewed journals and official websites. The analysis is done by the impact of
various problems in the organization. The analysis is based on the various internal and
external factors effecting the growth of the organization. The research also includes the
reasons due to which an organization can fail due to its internal reasons.
Analysis and Findings.
Starbucks has definitely succeeded as a global brand of coffee but it failed to impact
the Australian market. There are nearly about only 25 stores of Starbucks in Australia. There
are various reasons for the failure of Starbucks in Australia (Virgin, 2016).
Reasons for failure
1. Not Adaptable- One of the major reasons for the failure of Starbucks in Australia is
because it did not adapted itself into the Australian market. It did not followed the
taste of Australians and failed miserably to attract the consumers. Australia is known
for its sophisticated taste when it comes to coffee. It has a special taste of espresso
style coffees. Starbucks could not totally adapt it which lead to low customer
satisfaction.
2. High Competition- Starbucks faced a major competition from Mc Donald’s in
Australia.MC Donald’s has acquired the market of Australia with its product variants
and services. The craze of Mc Donald’s is very evident and it also used it to stop
Starbucks. It also started selling high quality coffees in a discounted rate than

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Starbucks. With McDonald being one of the favourites of Australia, it became
difficult for McDonalds to acquire the market. (Sakal, 2018)
3. Internal Organizational failure- Planning is an important part of success of an
organization especially when it comes to expand in a new country. An organization
needs to plan what he is expecting in future and how to achieve it. Without proper
planning, there will be a lot of confusion which can lead to losses and negative
growth. When Starbucks rushed to open new stores in a very short span of time, it
definitely had to recruit massively and in the same process, it could not recruit much
experienced employees. There was certainly disturbance in the planning of Starbucks
while entering into Australian market which also lead to its failure. (Sananda, D & M,
2014)
4. Availability of Substitutes- Australia already had well established coffee houses
when Starbucks entered the market and hence, Australia was not welcoming for it.
The consumers were very loyal to their existing coffee houses and Starbucks
somewhere became overconfident and ignored its local competition. This came as a
major drawback for the organization as they had to face losses.
5. Rapid Expansion in low time- when a firm grows rapidly, it needs to have enough
resources and planning otherwise it can create major problems and disturbance.
(Vaughan, & Koh, 2019). Starbucks tried to expand too much in very low time. It not
only created problems in the management of stores but also increased the risk. It had
to incur a huge amount of losses due to rush. The market strategy could not be
planned efficiently in such short span of time which lead to the fail of the organization
in Australia.
Customer Feedback- According to a survey, it was noted that the competitors of Starbucks
have an advantage as Starbucks does not improves with time. It is still following the same

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traditional way for years and the competitors are giving it a tough fight. There is no change in
the marketing strategy of the company. It has also been noted that since Starbucks is
overpriced, it is an added disadvantage. If customer feedback from the survey is taken into
account, it has been seen that there are number of peoples who feel that there is no specific
difference between the quality of Coffee served by Starbucks and coffee served by other
coffee houses (Starbucks: A Strategic Change and Management Perspective, 2019).
Recommendation
As per the above report, a SWOT (Strength, Weakness, Opportunity and Threat) can
be done. A SWOT analysis is done by understanding the strength or the plus points of the
organization and weakness or the minus points of the organization. It helps to make proper
strategies by analysing the opportunities and upcoming threats for the organization. (Abdel,
Mohamed & Smarandache, 2018).
SWOT analysis of Starbucks in Australia
Strengths
Product Quality.
Brand image is strong.
Good financial Support.
Weakness
Difference in taste.
High pricing.
Low Product Differentiation.
Opportunities
Diversification of products.
Mergers with relevant brands.
Targeting the tourist attractions.
Threats
High Competition
Availability of Substitutes.
Low priced coffee houses.

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According to the SWOT analysis of Starbucks in Australia, it is clear that one of the
major minus points of the organization is the different taste of Australians. Here, it can
customize its product according to the demand of the market and can also increase its
products variants by diversifying it. It can merge with relevant brands as it earlier did with
Teavana, which was a massive success. One of the major threat is to deal with substitutes.
Starbucks should follow proper promotional strategies to prove itself different and better
from the substitute brands. It can use its financial background for better advertisement than
other organizations. In addition to that it can gain customer loyalty through its product
quality. If it can prove its product quality, it will also justify its high pricing. Hence, it is true
that Starbucks is surely facing challenges in Australia but it can still manage to gain good
market share.
Conclusion
It can be concluded by the discussion above that Starbucks is one of the leading
coffee companies and it has become popular global brand but its ground is still shaky when it
comes to Australian market. It is facing massive challenge in surviving in Australian market.
It has a few weakness when it comes to the taste difference but it has also great product
quality. It needs to follow proper organizational as well as market strategies to maintain its
shaky position in Australia.

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References
Abdel-Basset, M., Mohamed, M., & Smarandache, F. (2018). An extension of neutrosophic
AHP–SWOT analysis for strategic planning and decision-making. Symmetry, 10(4),
116.
Latif, M., Gulzar, H., Bukhari, S. R., & Sameen, S. N. (2014). Starbucks sustained during
economic crisis. International Journal of Accounting and Financial Reporting, 4(1),
307. Starbucks
Lyles, M. A. (2014). Organizational Learning, knowledge creation, problem formulation and
innovation in messy problems.
Marie, A. L. (2019). The Effect of Service Quality and Services cape Towards Customer
Satisfaction, Starbucks Coffee, Jakarta. TRJ Tourism Research Journal, 3(1), 56-70.
Sakal, D. V. (2018). COMPANY ANALYSIS OF STARBUCKS CORPORATION.
Sandada, M., Pooe, D., & Dhurup, M. (2014). Strategic planning and its relationship with
business performance among small and medium enterprises in South Africa.
Starbucks: A Strategic Change and Management Perspective. (2019). [EBook]. Retrieved
from
https://pdfs.semanticscholar.org/4713/533b7f457919d6526fbc1b9c2de83f7dece5.pdf
Vaughan, Y., & Koh, Y. (2019). Role of resource slack in rapid international expansion of
restaurant companies. International Journal of Contemporary Hospitality
Management, 31(1), 2-20.
Virgin, M. (2016). Cheers! Starbucks Strategy in Italy and the Global Market (Doctoral
dissertation, University of Oregon.

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www.starbucks.in. (2019). About Us | Starbucks Coffee Company. Retrieved 25 July 2019,
from http://www.starbucks.in/about-us