Analysis Of Starbucks Expanding Process In Australia

In the community that this generation lives in today, there are numerous essentials that are now considered as a necessity. Coffee is somehow considered as an essential to the society. It is used by the people to either keep them awake or just to give them energy to hopefully last the whole day. One of the acknowledged coffee companies in the world is Starbucks. This coffee company started in the year of 1971 in Seattle, Washington. Various drinks were produced by Starbucks for the benefit of their customers. With this marketing maneuver, Starbucks was able to gain the trust and loyalty of its customers. In the year 2000, Starbucks had branched out of United States and expanded into Australia. According to Brook (2016), Starbucks had opened for about 84 stores in the country. However, with the coffee company trying to enter the market in Australia, Australians were hesitant with the new company present in their market. Apparently, Starbucks had apparently “more than 70 percent of its underperforming locations, leaving only 23 Starbucks stores throughout the entire continent” (Turner, 2018). Moreover, Starbucks had accumulated a lost of $143 million that obliged Starbucks to close and pull out most of its stores in Australia (Hurst, 2014). Another problem that Starbucks had encountered was the loyalty of the Australians because they are accustomed to the bitter-tasting coffee that their local coffee stores offer. Since Starbucks sells and offered their customers a sweeter kind of coffee that is foreign to their taste, Starbucks was not able to gain popularity as compared to the popularity they have in other countries.

The starbucks company could use two (2) strategic analysis tool known as the S. W. O. T and the P. E. S. T analysis. With the aid of these strategic tools, the company may be aware of the risks and opportunities that they may encounter under certain circumstances.

The SWOT analysis is a strategic tool used for identifying the company’s strengths and weaknesses alongside with the opportunities and threats that may accompany it. With the usage of the S. W. O. T analysis, the company would be able to identify their strengths and weaknesses, as well as the possible opportunities and threats that the company might face. It could be noted that Starbucks had somehow disregarded the research and survey procedure for introducing new products to a new community. Instead, the company of Starbucks assumed that the goods and services they offer caters to everyone in the world – which, in this case, Australia was not delighted about. If the company of Starbucks had just researched more and surveyed more people concerning the sweet tasting coffees they serve, they would be able to identify that Australians prefer their coffees either brewed or bitter. Since Australia is one of the countries to have a different preference in coffee – along with some parts of Europe, as compared to the rest of the world, Starbucks could have seen the risk of losing customers when entering the market of Australia as Australians were not as accustomed to Starbucks back in 2000. Meanwhile, their decision to pull out 61 branches out of their 84 built establishments and leaving only about 23 establishments was a good call to somehow cut the overhead cost that they would have to pay such as rent, labor, and assets that in the end did not prosper. The company was somehow able to also salvage their name even though there are articles about their ‘failed endeavor’. This could be seen as a learning opportunity to Starbucks as they would try to re-enter the market in Australia, and hopefully, by this time, as they have left some establishments in the Australian community, Starbucks would not have that much of a hard time as they would have known the strategies and preferences that Australians want. Moreover, since Australia is one of the tourist destinations of the world, people from all around the world would sometimes visit Australia and with Starbucks known internationally, this company would be the preferred coffee branch of these tourists.

Aside from S. W. O. T, another tool used for strategic planning is the P. E. S. T analysis. PEST stands for Political, Economical, Social, and Technological factors that are being considered when planning for a business endeavor. The P. E. S. T analysis is being used by businesses to identify the risks and opportunities of a business at a macro level as it not only determine the advantages and disadvantages of the business, but also the external aspects of the business. It could be noted that Starbucks had a good relationship with its external factors like their suppliers, and some of the customers in their community because of the service they offer. However, when Starbucks had expanded their company in the year 2000, they also had to pull out most of their establishments in the year 2008, as the company noticed that they are no longer earning profit from the said branch. Moreover, there was a high turnover rate during this time as 700 hundred employees were left jobless after the pulling out of the branches.

In terms of the social factors that Starbucks might have considered is the preference of Australians with their coffees. As majority of the Australian population are somehow meticulous with the way they want their coffees prepared and served, Starbucks somehow was not able to impress their customers. According to a statement of staff in Sydney’s Mecca Espresso named Tuli Keidar, “Australia already had a well established cafe culture based on espresso when Starbucks arrived. It had to compete with cafes that provided a similar product of equal or better quality. " This means that Australians are very much accustomed to the local coffee stores in the country that they are able to identify which serves the best beverages in their town. However, aside from the country’s expertise in coffees and teas, they also take into account the ambience and atmosphere of the establishments. In line with the two strategic planning tool that was used to assess the possible risks and opportunities of the Starbucks brand in Australia, it could be noted that in terms of internal assessment, it is best to use the SWOT analysis as it is mostly focused on the internal cases of situations that could be avoided or taken into account. The business could use this planning tool for its convenience and it still gets the work done.

On the other hand, when a company would want to focus on the external factors as they would want to research on the country or community they are planning to cater to, it is best to use the PEST analysis as it is mostly focused on external cases with a hint of internal cases.

With the data gathered and analyzed with the aid of two commonly used planning tools in a business, it could be noted that one of the mistakes that Starbucks had done was that it barged in a competition without introducing itself to its customers and community. However, with the advancement of technology and the variations of the preferences of people, Starbucks may have a chance to gradually expand in Australia if they still wish to do so. If ever the plan for expansion would commence, the popularity of Starbucks would increase, alongside the increase in profit as people who travel or migrate to Australia might have been accustomed to Starbucks and somehow want a piece of home to remind them of their roots.