Controllable Elements Of Starbucks
Main controllable elements of Starbucks’ globalization path are:
I. Decline of stock prices due to little growth as it tends to saturate the US market,
The company has 124 cafes in Manhattan only. With more than 10000 stores across US and Canada, it offers services to every 9400 people in some cities. US market is saturated in such a degree that company encounters less same-store profits, when it opens new stores. However, company increases stores in close areas, whereas some cities still remain without Starbucks stores.
II. Less sales in new product launches,
Although launch of Starbucks cards generated 70 million USD, sales …show more content…
Furthermore, competitors such as McCafe are making an impact on company’s profit both abroad and at home.
IV. The cultural difference in several countries.
The culture of paying labour benefits in France or people in Italy who are accustomed to low cost cafes with food, or undesirable outcomes of being close to either with Israel or Arab countries is relatively beyond the total control of the company.
2. What are the major sources of risk facing the company? Discuss potential solutions.
One of the major risks to company is relations with young generation. Young people do not tend to buy high-priced lattes or desserts frequently. High-prices in Starbucks could impact young people to get accustomed to other places which will result in loss of number of customers in short term. Furthermore, year by year young people will go up in management positions, thus earning more money. However not all of them will try to change places they are used to going in favour of Starbucks, eventually leading to the decline in number of customers also in long term.The main solutions for Starbucks could be decreasing either in-store prices of products or prices of online purchasing which young people more inclined to use. Launching projects related to social networks is another solution. For instance, if company will award customers …show more content…
Economists starting from David Ricardo with the concept of comparative advantage promoted the idea of mutual profitability. Even though, the idea of free market was challenged throughout history, people relying on this concept gained profit and contributed to the science of Economics. To make unfair barriers for competitors even by paying the costs for stores that are not used is challenging generally accepted idea of mutual interest and concept of free economy. Moreover, as more and more businesses will be affected due to this treatment the image of Starbucks will openly be