1.

Starbuck Management orientation

Starbucks is taking a polycentric approach to staffing

2. Marketing Management Orientations

Starbucks has formulated a marketing concept

3. Global Marketing type

Global marketing nonstandard (Global localization (Adaptation for distribution or packaging.

etc.) approaches which Mixing standardization and customization in a way that minimizes costs
while maximizing satisfaction

4. Identify the controllable and uncontrollable elements that Starbucks has

encountered in entering global markets.

Figure 1 : The International Marketing Task

The above figure illustrates the international marketer total environment. The inner circle
describes the controllable elements that affect a marketers decision area, the second circle covers
the domestic environmental elements and the outer circles represent the elements of the foreign
environment. The first circle is the only controllable by the marketer but for the second and the
third its hard to control either domestic or foreign environment.
In our case, Starbucks faced many issues when entered the global marketing. Some of these
issues are controllable and some are not.
A. The Controllable elements are:

Price, Product, Place, Promotion and Research. The Starbuck’s name and logo attracts millions
of consumers around the world. Starbuck’s is usually able to adjust the product and price to fit a
county’s cultural tastes and expectations by adjusting the availability and their marketing
strategy. Further, Starbuck also adjusting the most important strategy of how they will promote
their business or products. All of these adjustments and decisions can be taken by the market
research to be sure their product has the right fit for each of its international locations. Also,
according to the Starbucks website, the company maintains a high level of success
internationally by choosing international partners who share their values and commitment to
bringing the Starbuck’s experience to customers worldwide.
Example of a good research before entering the Italian market:
Italian coffee bars grow by serving food as well as coffee, this area where Starbucks still
struggles. Also, Italian coffee is cheaper than US java say, Italian purists, much better. Americans
pay about $1.5 for an espresso, on the other hand northern Italy the price is 67 cents in the south
just 55 cents.
B. The Non-Controllable elements are:

Political or legal forces, Economic forces, Competitive forces, Cultural forces…etc.

I. Economy: In Japan, they cannot control the growing numbers of competition and
also the economy. As they had been experiencing a depressed economy and
Starbuck's Japan profits were down 14%.
II. Competitive: In Italy it needs to adjust to changing market conditions, consumer
tastes, and corporate competition with local coffee houses. Italian coffee bars
prosper by serving food as well as coffee (an area where Starbuck’s still
struggles). Italian coffee is also less expensive than U.S. coffee and is also
considered by locals to be superior. Also in Japan, McDonald's is attacking the
Japanese market with the introduction of its McCafé coffee shops.
III. Political and legal bindings: In France, hidden regulations and generous labour
benefits.
IV. Culture: In Vienna, Coffee houses are old and young are always keen about
discovering the new places and technologies for this reason Starbucks has a
possibility to capture the market through younger generations.
 5. What are the major sources of risk facing the company and discuss potential
solutions?

Starbucks is an American company based in Seattle; Washington founded by entrepreneur

Howard Schultz. It is a largest coffee house company in the world. However, there are some
sources of risks which Starbucks facing. The sources of risk will be discussed with some
potential solutions.
Sources of risks facing Starbucks
I. The market saturation in USA.
II. Possibility of losing customers as their coffee price is higher than others competitors.
III. Global expansions in some counties having a lot of cultural differences.
IV. Low wages and salaries for the employees of the Starbucks company
V. Employees have a low morale at Starbucks leading to “Employee burnout”.
VI. Starbucks is focused on the quality of their core product coffee and they do not have
other items beside coffee.
VII. Global recession and rising prices of commodities led to shift consumers to less costly
brands.
VIII. Expanding aggressively growth in stores around the world. Culture difference has been a
major problem.

Solutions:
I. Market saturation overcome by focusing on international marketing or global marketing.
II. Losing customer risk overcome by reducing the coffee price as their core customer are
the young generation and they do not like to drink coffee with high price and also
Investing more capital in Advertising campaigns with bundles to re-position their
products and
III. Global expression can be reduced by strong market researches researching the foreign
cultural and understanding the new customer needs.
IV. Low wages and salary overcome by paying the legal wages and salaries and focusing on
their employee’s needs.
V. Employee burnout overcome by setting a fixed working hours and decrease the overtime.
VI. Coffee is the core product but Starbucks can arrange adding some new items beside
coffee.
VII. Concentrate Internationally on the countries which have the highest growth.
VIII. Adaption of Starbucks products to country standards with a global Strategies depending
on locations to achieve success through researching the country’s culture and belief’s and
introduce products according to their needs.
 6. Critique Starbucks overall corporate strategy.

I. Starbucks main strategy is to expand the store inside the US and globally
II. They believe that the more the outlet the more the sale. Basing on this strategy they are
increasing their outlets day by day in their domestic region as well as abroad. Without
satisfying the customers need, by increasing the numbers they will not be able to succeed
in their mission.
III. Starbucks’s target customers are the Baby boomers or older generation, it has no
differential pricing for the Generation X or younger generation.
IV. Though Starbucks fully control its business in the USA, but it has franchisee outside the
USA. Depending on the franchisees undermines the strength of Starbucks outside the
USA. Starbucks is about to become a global company. But its spending does not match
with its status. Starbucks only spends 1% of its revenue as advertisement; whereas most
companies its size spend at least 10% revenue. Low spending on advertisement hampers
Starbucks’s brand building outside the USA.
V. By aggressive marketing strategy they have created entry barrier for the competitors
through “predatory real-estate strategy”.
VI. Starbucks pay does not come close to match the work load of their employees that
created dissatisfaction among them affecting sterling service and even the coffee itself.
VII. Schultz should be more cautious to various cultural and ethnic affairs. As a Chair of
Starbucks and having market in Muslim dominated regions, he cannot make any scathing
comment against Palestinian.

7. How might Starbucks improve profitability in Japan?

Japan’s coffee culture revolves around the "Kissaten”, a relatively formal sit-down coffee house.
Two of Japan’s well established coffee chains are the Doutor coffee company and the pronto
corp., which focus on speed of service and quick turnover of costumers. Both of them sell coffee
$1 less than Starbucks.
I. Develop new product lines, Starbucks can improve profitability by marketing survey &
comprehensive analysis can find what the customer need & find out the way of improve
profitability.
II. Gaining consumer recognition and bring the prices in the same level as competitors.
Starbucks hopes to cultivate the same kind of coffee in Japan as the one it has created in
North America. However, Operating costs in Japan, such as rent and labor, are extremely
high and Starbucks will also have to pay for coffee shipment from its roasting facility in
Kent to Japan. Retail space in downturn Tokyo is very expensive. Starbucks plans
eventually to open a roasting plant in Japan to help keep cost down.
III. The Japanese are less conscious about the price. According to the present cultural trend in
Japan, younger generation is inclined towards spending their time in a constructive
manner. The source from internet says that the Japanese youth have very less time for
their leisure. Besides sipping a cup of coffee in a coffee shop they love to learn English
Language.
IV. Starbucks and its competitors in Japan are providing the same fare. As a result
competitors can easily eat up Starbucks’s share. So, Starbuck should either reduce the
price or increase benefits in Japan.
V. Starbucks can introduce US style online system in Japan, so that busy Japanese can
provide their order in the internet.
VI. Starbucks can introduce various cultural campaign or entertainment campaign in Japan,
so that Japanese youth feel attraction to come Starbucks. In times of economic recession
extra activities are necessary to boost up sales.

So, for attracting the Japanese market in addition to coffee, arrangement of internet facility and
other amenities should also be provided.