Strategic Analysis: Starbucks' Business Level Strategy in Australia

This report provides an executive summary and detailed analysis of Starbucks' business-level strategy within the Australian market. It begins with an overview of the Australian coffee market, highlighting the dominance of local brands and the challenges faced by Starbucks. The report examines Starbucks' current strategies, including their focus on different customer segments and store locations. It identifies major issues, such as competition, pricing, and consumer preferences, and outlines the challenges the company must overcome. The analysis explores Starbucks' available strategies, including their focus on quality and brand loyalty, and recommends specific marketing strategies for the Australian market, including promotional methods, target market identification, and competitive advantages. The report concludes with a discussion of Starbucks' capacity to support the recommended strategies and provides recommendations for improving their market position. The report includes an introduction, current strategies, major issues, challenges, available strategies, suitable strategies, recommendations, goals, promotional methods, new target market, competitive advantages, innovation, budget, cost leadership, employee training, capacity, conclusion, and bibliography.

Business Level Strategy
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Executive Summary
The worth of coffee market in Australia is worth about $2 billion. There are 450 branches of
Gloria Jeans in Australia and 350 outlets of Coffee Club. Starbuck has only 22 stores in
Australia. Thus it has been crucial for Starbuck to become successful in the market of
Australia. Starbuck has focused on all the segment of the customers and started attracting
customers of different segments so that it can do a better business. The company has focused
on establishing coffees shop in the tourists’ location and that serves tourists and local people.
The company has made strategic policy to get the support of the customers those who prefer
for quality coffee in low price. The word of mouth strategy will prove essential for the
company to attract new customers. The assignment has studied the current strategies of
Starbuck and has also made some recommendations to get success in Australia market.
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Contents
Executive Summary...............................................................................................................................2
Introduction...........................................................................................................................................4
Current Strategies of Starbuck for Australian market............................................................................4
Major issues faced Starbuck..................................................................................................................5
Challenges to resolve by the company..................................................................................................5
Starbuck’s strategy available for Australian market..............................................................................6
Strategy suitable for the organisation...................................................................................................6
Recommendation for Starbuck for the marketing plan for Australia.....................................................7
Goals..................................................................................................................................................7
Introduction the new promotional methods.....................................................................................7
New Target market............................................................................................................................7
Strategy for getting competitive advantages.....................................................................................7
Innovation.........................................................................................................................................8
Enhancing budget..............................................................................................................................8
Cost leadership approach..................................................................................................................8
Focus on the trained employees........................................................................................................8
Capacity of Starbuck to support the strategy........................................................................................8
Conclusion.............................................................................................................................................9
Bibliography...........................................................................................................................................9
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Introduction
The majority of stores of Starbuck in Australia were closed due to the strategy of
transformation undertaken by the company. This was made to bring revival in the
performance of the company. The main focus of Starbuck’s entry in the Australian market is
to meet the demand of the customers for premium coffee. The company started its business
in Australia first and expanded its stores in other localities. The company owned stores were
opened all across the country (Brook, 2016). The company faced issues due to lack of the
customisation of product, process and for having no appropriate promotional strategy. The
company could not assess the customers & culture of Australia. The assignment focuses on
the development of the new strategic plan for the company for the customers of Australia.
Current Strategies of Starbuck for Australian market
The current strategies of the company are to win all the segments of the market in Australia.
The target of the company is very specific. The percentage of the coffee drinkers those who
prefer to drink at home is 72%. Starbuck Company has grabbed only 72% of the sector. Out
of the 72% of this category of coffee drinkers, 67% add creamer. The company may reach
7.3% of the coffee industry if the company only targets this particular segment
(digitalsparkmarketing.com, 2017).
The market study states that customers between the age group of 35-54 constitute 42% of the
coffee market. For this segment of customers, coffee is the important consumption on the
regular and daily basis. The customers demand the product and also prefer to pay high for the
quality products. Thus it is important for the company to focus on this segment (Nielsen,
2012).
The next important target group of the company is the students between the age group of 18
to 24. The research has also found that the consumption of coffee by the students has been
grown to 10%. This segment has no intact brand loyalty (Brook, 2016). The company can
increase market share by targeting this segment. The focus of the company is to win the
market and become the market leader.
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Major issues faced Starbuck
The case study 17 focuses on the major issues faced by Starbuck in order to remain
successful in the market of Australia. The company has faced following major issues related
to the survival of the company. These issues are:
1. Can the company avoid issues due to economic recession in the future?
2. How far has Starbuck been able to manage to avoid the previous mistakes conducted
earlier that have brought a huge loss in Australia?
3. Does the company face issues due to its global expansion plan and consumer packages
good?
4. Does it face problem due to tea counteract?
5. Can Starbuck manage to compete with its competitors like McDonald’s, Dunkin
Donuts etc?
6. How far the multiple stakeholders’ policy of Starbuck will help the company to avoid
dilution from the succession of future leadership?
Challenges to resolve by the company
The above questions discussed in the case study shows that there are major issues faced by
Starbuck in order to remain successful in the market of Australia. The research found the
following points that are required to be taken care by the company. These important
requirements are:
1. The customers are inclined to the low price products instead of Starbucks products.
2. The rising cost of labour & the cost in the operation contribute to the degradation of the
profits for the company.
3. The company needs to compromise with the product quality in order to face challenges
and to compete with the potential customers.
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4. The low price products are required to be supplied in order to target the customers of a
particular segment.
5. The company has also environmental issues. It requires resolving the issues in order to
enjoy the trust of the customers.
6. The people of Australia are loyal to their local brand and they do not prefer global brand
6. The premium price charged by Starbucks is not accepted by the customers.
Starbuck’s strategy available for Australian market
The focus of Starbucks Corporation is to the customers of high class who prefer finest quality
coffee. The natural ingredients are accepted and appreciated by this segment of the
customers. The premium quality of coffee has attracted all segments of customers such as
students, middle-aged customers etc. The company’s focus on the target group with quality
ingredients, quality service and taste create a brand image among the customers. The
company has created brand loyal customers (Forte, 2011). The company has its own
marketing strategies. The quality product of the company is promoted with the help of social
media and print media. The company also offers quality products and services to the
customers of Target Corporation & loyal customers in its stores.
Strategy suitable for the organisation
The company has opened stores with a nautical theme. It follows the tradition of seafaring of
the coffee traders. The company focuses on the significant & loyal customer base. The focus
of each café is to concentrate on the customers of the limited areas.
The company has another growth strategy that focuses on preferences of the customers. The
company establishes shopping centres in the locations which are tourist hubs. The
destinations are created in order to attract the customers to the stores of the company, relax
there and to spend their time with their friends (Peppers & Rogers, 2008). The customers can
also spend some time quietly. The store of the company in Sydney’s northern beaches shows
the company’s new strategy to open stores in prime tourists’ location (Gellis, 2001).
The company has developed a policy of establishing more stores in Australia. This is meant
to establish Starbuck as the successful coffee chain in the country.
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Recommendation for Starbuck for the marketing plan
for Australia
The company will plan to establish itself in the market of Australia with a successful action
plan. The company will have the following goals for the future.
Goals
1. To increase the sale by 20%.
2. Increasing the Gross profit by 20%
3. To establish more stores in the prime locations of the country and in the tourist's hubs.
4. To become the market leader of the business in Australia
Introduction the new promotional methods
This has been found that the people of Australia are fond of using the products and services
of their own country. The demand for the international products is not accepted in the context
of coffee stores or coffee business. Thus Starbuck needs to make promotional strategies to
attract the different segments of the customers. The word of mouths will be the right way to
promote its business. The company will offer discounts to the students and young customers.
This will help the company to gain the support of the customers (Brass, 2012).
New Target market
The study has found that there are different segments of the market for Starbuck in Australia.
Each segment has its own perceptions. The coffee shops in the institutional areas will help the
company to attract students. It can easily offer them quality products and services. The coffee
stores near offices and administrative buildings will help the officials to get the facility. They
can come and relax (Coulter & Coulter, 2002).
Strategy for getting competitive advantages
This has been found that people of Australia are fond of the companies they are leading the
local market. The local companies are offering coffee at a low price (Lynch, 2015).
Customers are not interested in paying premium fees. Thus in order to compete with the local
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companies and other international companies, Starbuck requires offering discount and quality
products and services.
Innovation
Starbuck knows that its re-entry in the Australian market needs something special attention.
Thus it has to establish coffee stores in the prime locations. The tourists' place will be the
most advantageous place. The tourists will get the quality coffee and also can stay for some
period of time.
Enhancing budget
The company requires focusing on giving better facilities in comparison to its competitors.
The coffee stores should be a very good place to spend some time (panmore.com, 2017). The
visitors should stay for some time. Thus the company will increase its budget so that the
ambience of the coffee shops will be good.
Cost leadership approach
Starbuck knows that in Australia it has failed earlier. In order to sustain in the Australian
market, it has to employ some new marketing plan. Instead of charging the premium fee the
company should low the price of the products. This will encourage the customers to avail the
products and services of the company (research-methodology.net, 2017).
Focus on the trained employees
There is always a need of employing good employees in the organisation. This will help the
company to manage the customers well. The trained employees will help the customers to
avail the services and this will help the company to grow its business.
Capacity of Starbuck to support the strategy
The growth of the company shows with its revenue growth. The strategic synergy has been
found all across the globe. The company with its diverse portfolio can deliver excellent
results. The company has focused more on technology & innovation (Gentile, 2012). The
company has also focused on the reinvigorated organisation systems that are aligned with the
growth strategy of the company.
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Conclusion
The study shows that Starbuck will be successful in the market for its strategies. The
company has to capture to market segments and make the customers feel the importance of
its quality products. The company needs to promote its products and also requires to increase
its budget to win the market.
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