Question

for starbucks in australia Formulation and implementation of a strategy by choosing one best fitted strategy among the following

business strategy or competitive dynamic strategy orcorporative strategy or Acquisitions and structure

Answer 1

Starbucks may have thought that Australia was the "psychic distance" closest to the USA and that its stores were expected to meet the same enthusiasm as the United States. Their Australian donations were similar to US donations.

Unlike McDonalds and Krispy Kreme, both of which opened one or two stores in a slow way, to revive demand and create a sense of deficit, Starbucks filled the Australian market with 87 stores and was soon regarded as a 'mass brand' and not the only product position thereafter.

The Starbucks team also failed to understand the social and cultural issues of the country they were entering.

Australia is not a single favorite market; it contains more than 235 races and has a culture of pride in supporting the poor - in this case, a small corner store. Many consumers have found that they do not like all the American sugar / nutritional practices that Starbucks found.

Worse, Starbucks coffee was generally considered to be 'watered' and was less than what was already available at a much lower price. Morally-built coffee and personal relationships were also important in the Australian market.

Global brands face the dilemma of whether to go solo or tie up with a local partner. Starbucks’ decision to partner up with India’s TATA Global Beverages shows a focus on leveraging multiple benefits.

The TATA Group is one of India’s ethically-driven brands, a perception passed on about Starbucks India as well. The TATA companies also offer scope for backward-linkages. Its Indian partner produces the raw material (coffee beans) in Karnataka.

Given that India produces coffee beans in only a few places, the other sourcing option was importing the beans. But this would have hiked input costs significantly. TATA’s coffee plant in Karnataka has also been contracted to supply beans to Starbucks’ globally, creating mutual synergies.

Backward linkages also hold its Starbucks’ in-store menu. It has contracted catering to TATA’s TAJ SATS, which also supplies to TATA’s premium hotel chain – The TAJ. The TATAs are also invested into the retail sector – with store brands like Westside, Tanishq, Croma, Star Bazaar, etc.

Starbucks can leverage them for knowledge-sharing on Indian real estate, area-specifics, and on tackling real estate bureaucracies. This would help its own expansion blueprint. It also gives scope for store-in-store sales.