Millions of people around the world drink coffee for whatever reason. Since I am in an operation management class I started to think about what makes Starbucks a wonderful and a successful company. I am a huge fan of coffee and the “café experience,” and I must say that the quality of coffee and the whole process is not particularly exceptional at Starbucks. So what is their secret? How can a small coffee shop, started in the 70’s in Seattle, Washington, become prosperous?
Operating a large chain is unquestionably a very challenging process. Starbucks took the risk of expanding their brand and products not only throughout United States, but also worldwide. I believe that we can definitely say that the company has succeeded in regards to operations in a global environment, and furthermore, redefined the culture of drinking coffee. In order to achieve these goals the organization had to apply KSFs (Key Success Factors). These activities helped the organization to outperform and give them a competitive advantage.
Companies who try to establish their operations outside of United States have to deal with many challenges from the aspect of operational management. They must be able to analyze in detail the environment in which the company would like to establish its operations. They have to identify the culture, their needs, traditions, and customs. Based on all of these important factors they are then able to identify SWOT analysis on themselves. Starbucks had a clear purpose and strategy as stated on their mission statement, “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”
Starbucks chain stores captured nearly the whole world and their brand is recognized by many people. However, there are a few places in which Starbucks didn’t quite succeed. One of them is Australia. The company was forced to close 61 of its 85 shops across the country. What went wrong? How did they fail at accomplishing their mission?
Mr. Urquhart, a retail consultant, says that, “With more than 235 ethnicities speaking more than 270 languages and dialects, companies wanting to get ahead in Australia should be aware that they are not dealing with one monolithic block”. In my opinion the management was too occupied with expansion, and focusing only on immediate growth instead of studying the local preference and acknowledging that not everyone is this same. Also, product standardization doesn’t always yield great results because some communities prefer customization and unique service. Lastly, Australians have a great expectation in terms of product originality, meaning the taste, texture, and history of coffee has to match their expectations.
Are you a fan of Starbucks? Do you think they overstretched their operations? What additional strategy could have been implemented to succeed down under?