Identify the controllable and uncontrollable elements that Starbucks has encountered in entering

global markets.
Marketing strategies is the controllable elements that Starbucks has encountered in entering
global markets. Marketing strategies refer to the marketing efforts that carried out by Starbucks
in the global market which represented their 4Ps strategies.
Taste and preferences of consumers are important in entering a global market. Thus, Starbucks
had customized their products accordingly to suit the taste and preferences of consumers in
different country. For example, Starbucks coffee was sold in cans, bottles or vending machines
rather than made-to-order at cafes in Japan in order to suit the Japanese lifestyle. Selling a line of
bottled and canned coffee enables Starbucks to expand its presence in Asia by catering to local
tastes. For instance, the new product that comes in two variations which are espresso and latte,
are less sweet than their U.S counterparts in order to suit Asian palates. A green tea Frappuccino
was first launched in Asia and was only introduced later on in United States and Canada. This is
due to green tea is a common drinks in Japan and it is acceptable in most of the Asian countries
compare to western countries. The company also has successfully developed a broader menu for
its stores, including customized product like smaller sandwiches and less-sweet desserts in Japan
to suit the local taste. This strategy had increased their overall sales and profits.
The company also has installed automatic espresso machines to speed up service in 800 locations
and expansion of a high-speed wireless internet service to about 1,200 Starbucks locations in
North America and Europe. This enable customer to sit in a store and check e-mail, surf the Web,
or download multimedia presentations without looking for connections or tripping over cords.
Price is also a controllable element for Starbucks. Italian coffee is cheaper than U.S where
Americans pay about $1.50 for an espresso, but in Northern Italy the price coffee is 67 cents and
is only 55 cents in the south. Starbucks can make decision whether to maintain their high price of
coffee in Italy to build a better bran image or to reduce the price in order to compete with the
local Italian coffee.
A big marketing campaign is not what Starbucks stands for. It got popular mainly by word-of-
mouth recommendations and help the company saves a bundle on marketing costs. Starbucks
spends just $30 million annually on advertising, or roughly 1 percent of revenues, usually just for
new flavors of coffee drink in the summer and product launches. Starbucks had offered prepaid
Starbucks broadsides, priced from $5 to $500. This shake promotions had help Starbucks in
making $70 million. The clerks will swipe the card through a reader to reimburse a change each
time a consumer pay for their goods and this cuts the transaction time by half.
Place is another controllable element encountered by Starbucks. Starbucks is willing to pay more
than market-rate rents to keep their competitors away from the smashing location. The article
stated that Starbucks has been competing for a good location by offering to pay the landlords
double the rate of the space. Starbucks as well as rent on empty store to prevent the space taken
by its competitors. Starbucks introduced its first drive-through service in Southern California in
1994; this service is then introduced to their overseas market. The drive-through is another
convenience for Starbucks customers to enjoy a great cup of coffee.
The uncontrollable elements that Starbucks has encountered in its entry to global markets are the
political, economy and cultural & competitive issues in the foreign countries that can occurred at
any time. As an example, during economic depression, consumer spending tanked in the
downturn and those $3 lattes were an easy place for people on a budget to cut back. This can
cause Starbucks in losing instead of gaining sales due to the coffee pricing; Starbucks Japans
profits were down 14% when Japan experiencing a depressed economy. Besides, fluctuations in
world currency rates are also one of the uncontrollable factors when Starbucks transform their
profit to their home base market currency.
Competition issue is another uncontrollable issue that Starbucks has encountered when enter into
global markets. Starbucks faces steep completion in its Japans chilled cup market with rival
products, including Starbucks lookalikes. One of the main competitors, called Mt. Rainier is
emblazoned with a green circle logo that looks like Starbucks. Besides, the imitators are coming
in to grab market share in England, the second biggest overseas market of Starbucks.
McDonalds is also start to attack the Japans market with the introduction of its McCaf coffee
shops.
Culture is also an uncontrollable element of Starbucks. Starbucks is something new in many
countries and to many young people, it is cool. The young populations always enthusiastic about
the new things appear around them and embrace the new, for example in Vienna. Therefore,
Starbucks will get positive advantages in expanding their business in Vienna compared to
existing coffee shops there.
Political and legal bindings that different from country to country, is another uncontrollable
elements that Starbucks encountered. In country like France, Starbucks have to adapt into
Frances arcane regulations and generous labor benefits before it can enter into France market.


What are the major sources of risk facing the company and potential solution?
Starbucks has faced many challenges during its years of existence as a high-end coffee chain.
The image that Starbucks conveys of global dominance has evoked strong emotions in peoples
mind that it leads to street protests. The problem it faces with its brand image is a looming threat.
Saturated market condition is also one of the major risks that Starbucks faced. The company
grew from 17 coffee shops in Seattle 15 years ago to over 10,000 stores scattered across the
United States and Canada. There is Starbucks outlet for every 9,400 people in Seattle, and the
company considers that the upper limit of coffee shop saturation.
After riding the wave of successful baby boomers through the 1990s, the company faces an
ominously hostile reception from its future consumers (Generation X). Those aged within
twenties and thirties are not ready to pay high price.
Beside this, Starbucks also face the low employee morale and employee burnout. Low wages and
issues with employment terms have led to a lawsuit by frustrated store managers in roughly 470
California-based stores. This resulted in a settlement by Starbucks in the sum of 18 million
dollars leading to a three cent decrease in Starbuckss share price.
Possible solutions for the above problems include investing more money into various advertising
campaigns to improve their public image.
As far as dealing with the issue of market over saturation domestically, Starbucks can
concentrate on international expansion especially on BRIC countries, which have the highest
growth in the world. As Starbucks were facing ominously hostile reception from its future
customer (Generation X), the company should reposition their product according to customers
need so that the customers feel that the $3 they are paying for a cup of coffee is reasonable.
Starbucks should consider revisiting and changing their pricing strategy. Instead of just targeting
the high income consumer, they should reposition their products and focus on middle income
consumers.
As Starbucks were facing dissatisfaction from employee due to the odd working hours and low
pay, Starbucks should focus on the fact of reducing employee disruption to increase the quality
of service and coffee for which they are well known. This will lead to a better customer-
employee relationship that could bring repeated business.