Case Analysis Starbucks

Starbucks’ Challenges in Venturing Indian Market According to the case study, lack of appropriate partner in India was one of the major challenges faced by Starbucks in its internationalization venture given that Indian market was composed of many small individual retail shops.Advertising We will write a custom assessment sample on Case Analysis: Starbucks specifically for you for only $16.05 $11/page Learn More Selecting a partner from the many retail outlets was a big challenge because of their number and retail standards that did not meet the requirements of Starbucks. It was a challenge for Starbucks to find an appropriate partner and co-venture to grow and market its brand in India because of issues, such as Starbucks’ working ethics and intense advertisements for the brand to survive the cutthroat competition from the other competitors. Starbucks’ pricing was another major challenge in entering Indian market. Coffee costs at St arbucks were set at their best as compared to other world companies. In India, the prices must be lowered in order to compete with the prices of other coffee retailers, which may result in loss or little profits for the company. Another major challenge was the rising rate of sugar related diseases, such as obesity, heart diseases, increased blood pressure and diabetes. Starbucks has been the target of many consumer health groups’ movements and World Health Organizations worldwide. These groups have been campaigning against the high-fat and high-calorie products sold by Starbucks. If Starbucks products are introduced in Indian market, it may cause the increased cases of heart diseases, obesity and cancer. For example, such Starbucks product as Banana Mocha Frappuccino mixed with Whipped Cream contains 11 grams of inundated fat and 720 calories. Consumer health groups recommend Starbucks to publicize the smallest cup size and apply healthier coffee shortenings.Advertising Looking for assessment on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The North Indian culture largely prefers tea so people in the region have little preference for coffee. Research carried out by the Indian government proved that the coffee consumption had stagnated at 50,000 tons per year, hence making it a challenge for Starbucks to venture into Indian market. The purchasing power parity in India is too high, and this has attracted all coffee retailers to locate their shops in India, hence increasing the rate of competition in the market. For instance, South India has intense competition for coffee customers because the region’s culture prefers coffee to tea. All the coffee shops in the country are targeting the southern market, thereby having prompted a fierce competition. For Starbucks to survive in the southern market, it will be forced to enter it with a price below the existing market prices in order to att ract some customer. This may make Starbucks operate at negative profits for some time, thereby posing it as a challenge to the company. For example, the amount of coffee consumption in South India was estimated to be 39%, while that of North India was 15%, showing how intense competition for coffee will be focused on Southern Indian market. Indian market lacks operation efficiency in terms of operation costs. Northern Indians have very different tastes and preferences when compared with the Southern Indians in terms of coffee consumption. This factor will force Starbucks to offer a product made to suit both regions; Northern Indians believe prefer instant coffee for its convenience while Southern Indians believe that constant coffee has chicory so filter coffee is the best. Reasons for Expansion to Overseas Starbucks has pursued overseas expansion to avert competitors from dominating or identifying the market prior to it, thus the company develops the western brand in other continen ts to ensure its advantage of the growing demand for coffee in other countries.Advertising We will write a custom assessment sample on Case Analysis: Starbucks specifically for you for only $16.05 $11/page Learn More Additionally, it has reduced its operating costs, and diversified its business risk and self-protection. These are some of the reasons that have propelled Starbucks’ venture in oversees market. Starbucks has entered the overseas markets to expand its markets and raise its sales, thereby increasing the company’s profits. For example, Starbucks chose to expand to India because India has a large potential market for the products offered by the firm, such as coffee. The population of India stands at more than 1 billion people with an annual growth of 6%. When Starbucks expands to international markets, it gets a chance to make its contribution to trade related issues in the international business. Starbucks expands to internationa l markets to reduce its operating costs. Starbucks identifies the resources it needs and the place where it can get them at the lowest cost in the international market. Companies move to international markets to take advantage of the low labor, production and transportation costs. For example, Starbucks moved to Japan because Japan was the third largest coffee exporter in the world. This meant that the operating costs for the company were reduced due to the low purchasing costs. Companies diversify to spread their market evenly in different locations. The economic effects of inflation, deflation or change in trade policies of one country that the company invests in will have little impact on the company’s cash inflows. Starbucks diversification helps in reducing or eliminating the interdependence of the US markets on each other, and as a result, a negative shift in the economy does not cripple the company’s operations.Advertising Looking for assessment on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Companies expand to overseas markets for self-protective reasons, which are to guard themselves against their potential business rivals or to gain competitive advantage. By Starbucks having moved to international markets, the company has aimed at exploring markets that are less competitive. Consequently, the firm has used the income gained to finance the shops in competitive markets. Starbucks has reduced the competitive pressure from other New York coffee sellers by moving to the overseas markets. Benefits of Expanding to Overseas Expanding to overseas markets has helped Starbucks accelerate its growth. Due to venturing in overseas market, Starbucks has opened approximately 8,330 coffee outlets. This has been made possible because of the quality services that the firm offers to its customers and the increased demand for its coffee. Starbucks has also accelerated its growth through attracting many business partners and ventures all over its overseas businesses. Another benefit gaine d by Starbucks from expansion to overseas markets is that the company has created brand loyalty among its customers. Its potential and upcoming customers are in a position to enjoy their favorite coffee brand at different regions of the world. This makes Starbucks retain its customers because the firm does not have to keep on changing its coffee brand once it changes its location to India. Overseas investments have contributed to the ability of the firm to diversify the stream of revenue. Starbucks enjoys the high revenues share generated by its ventures located in different regions outside New York. For example, Starbucks is receiving profits from its shops located in Japan and China. Starbuck expansions in overseas markets benefit the firm since it outsources marketing strategies used in different regions and applies them in its local markets. Local resources are used to improve the international markets while international strategies are used in improving local markets to win ove r more customers, gaining a competitive advantage over other local companies. International opportunities give Starbucks more exposure and experience in marketing and production; for example, skills gained in Japan can be used to improve China’s market, and vice versa. Starbucks’ Core Competencies Starbucks’ main competencies are focus on quality, exceptional customer service, incessant product improvement, concern for its workforce, and its drive to expand to new markets. From the inauguration at Starbucks, Schultz’ focus has been on offering freshly roasted and poured coffee of high quality, and customers have appreciated it. To ensure the quality was maintained, Shultz discovered that smoking and foxy smells could change the taste and quality of the coffee, thus it is forbidden to smoke in coffee shops or the employees are not allowed to use full-flavored perfumes. Starbucks has the competence of diversifying and creating new ventures in different loca tions. The firm created HP (in-store CD burning), Pepsi Company (bottled Frappucino drinks), Kraft Foods Corporation and Dreyer’s (Starbucks Ice Cream). In India, Starbucks has identified Tata Beverages to collaborate with to expand its product line. Through these partners, Starbucks manages to reach different markets and grow rapidly. For example, Starbucks opened 50 shops through partnerships and joint venture outlets in China, and in Japan, it has added 360 more shops as result. Starbucks has an idea to locate a coffee shop on every building with easy access by every customer. In Boston, Starbucks had opened 24 coffee outlets because the company believed in locating coffee shops in the same region. This tactic allowed Starbucks to colonize a certain region, consequently eliminating the competitors and growing customer loyalty. Starbucks has the competence of diversifying its products and customizing it to meet the needs, demands and preferences of certain region and custom ers. In some regions, people prefer hot coffee, while in others there is an increased demand for cold coffee because of the weather, and customers’ tastes and preferences. Starbucks offers hot drinks in four different cup sizes, namely, short with 8 oz., Grande with 16 oz., Venti with 20 oz. and tall with 12 oz. On the other hand, cold drinks are offered in three different cup sizes; iced tall-12 oz., iced grande-16 oz. and iced venti-24 oz. In addition, Starbucks introduced Frappuccino, a frozen drink prepared from low-fat milk, coffee, ice and sugar. Transferring Core Competencies to Overseas Markets Starbucks has managed to transfer these competencies to its overseas markets. Starbucks has used its competencies to select Tata Beverages as its partner in Japan and China where the firm has created both the partnerships and the joint ventures with businesses to sell its coffee in the countries. In India, Starbucks plans to collaborate with Tata Beverages as well to market its brand in the market. It has also partnered with Pepsi Company, Kraft Foods Incorporation and Dreyer’s. In each overseas outlet, the quality of coffee has been maintained. Starbucks promotes selling coffee in its outlets. The company is against the idea of franchising. According to Schultz’s view and belief, franchising can make a company lose its culture, which is its strength in the market. Starbucks teaches coffeehouse employees not only how to prepare coffee but also how to impart the company’s passion to its products to the customers. Starbucks helps its partners’ employees understand Starbucks’ mission, vision, objectives, targets and goals in business. In addition, such rules as customers should not smoke in the shop and employees could wear only delicate perfume are maintained. This assessment on Case Analysis: Starbucks was written and submitted by user Gianna Jennings to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

The Great Recession of 2008 Essays

The Great Recession of 2008 Essays The Great Recession of 2008 Essay The Great Recession of 2008 Essay A recession is full-proof sign of declined activity within the economic environment. Many economists generally define the attributes of a recession are two consecutive quarters with declining GDP. Many factors contribute to an economys fall into a recession, but the major cause argued is inflation. As individuals or even businesses try to cut costs and spending this causes GDP to decline, unemployment rate can rise due to less spending which can be one of the combined factors when an economy falls into a recession. Inflation is the general rise in prices of goods and services over a period of time. Inflation can happen for reasons such as higher energy and production costs and that includes governmental debt. Great Recession of 2008 Introduction The U. S. 2008 recession was felt in nearly every country’s economy worldwide. As inflation increased and various other factors began to fail the United States economic system a global recession began to take place. The U. S. began to face hardships such as high unemployment, bank failure, rising energy costs, housing and auto bubbles that ruptured into a global crisis. Although, much of the media focus was initially known as the so-called, â€Å"super power† U. S. , now as more attention is being shifted to Japan the world’s number two economy and other nations financial markets. The global downturn had the potential to affect exports which the Sweden market experienced because of their high percentage of contributed over half to their GDP. However, during the next few pages we will elaborate further on the how the U. S. 2008 recession is dissimilar and parallel with that of Japan and Sweden’s. Also, listed will be those economic actions implemented that were effective or unsuccessful in fighting the recession. Similarities of U. S. Recession and Other Nations Japan and Sweden both had similar attributes and causes of the economic global downturn with those of the United States. Japan is the second largest economy in the world. However, experiencing two straight quarters of declining GDP Japan followed the U. S. into a massive recession. As the U. S. began to experience low consumer confidence and demand, Japan’s corporate powerhouses such as Toyota, Honda, and even Sony profits took a dive. The nation’s export driven economy watched overall global demand slow down especially since the U. S. s one of Japan’s biggest customers for exporting goods. According to CNN Money, Stocks in Japan and the United States have been equally hard hit, falling 42% and 33% respectively (CNN Money, 2010). Both Japan and the U. S. dollar weakness helped to hinder economic recovery. Slow growth in Japanese bank loans had added to the similarities as the U. S. did. â€Å"Falling home and stock prices reduced c onsumer wealth. Feeling poorer, consumers were less willing to buy goods and services at the prevailing price level. This aggregate demand led to a drop in equilibrium GDP† (Schiller, p. 167). As the known business cycle of alternating periods of economic growth and contraction, the United States financial sector affected the financial systems through its exposure to foreign financial assets with high level risks. Thus, the downward slope of the aggregate demand curve is reinforced by changes in imports and exports (Schiller, 2010). Great Recession of 2008 Sweden has more similarities with the U. S. recession than that of Japan. Both the United States and Sweden are mixed economies, and both experienced the housing crisis with helped lead to one of the worst recessions on record that has been felt globally. In Sweden the residential price falls, and a significant decline in property sales which resulted in overall slowdown of construction activity. The 2008 great recession is global and Sweden was not immune. As consumers began to spend less, other people and businesses aren’t earning any money, which eventually led to high unemployment rates such as that of the U. S. this began to spread even further. According to Sweden real estate, exports accounted for 54% of GDP, with 60% of exports and 70% of imports going to the EU (2010). However, Sweden and the United States are also significant trading partners, with the U. S. spending less and losing more jobs. As demand fell so did Sweden’s export contribution to its GDP, thus spiraling Sweden into a recession. Key interest rates began to fall in Sweden same as in the United States due to the global financial meltdown. â€Å"As the demand for loans diminish, interest rates tend to decline as well† (Schiller, 2010). Dissimilarities of U. S. Recession and Other Nations Although, Japan and Sweden had few similarities with those of the United States during the Great Recession, there were dissimilarities that displayed the U. S. failure to achieve full employment GDP and other factors. Japan’s unemployment rate of about 4% opposed to the U. S. unemployment rate of close to 10%. Even the financial debt to GDP ration is an advantage, and debt in the private sector has not increased unlike the U. S. and European countries, (Time, 2009). In addition, since Japan is a huge exporter and with the U. S. demand going downward, the international balances and growth declined especially as the dollar value dropped and the yen surged. Unlike the United States, Sweden took a double hit as weak international demand for its products and interest rates at home – GDP contracted by 0. % down, according to Sweden Real Estate (2010). Sweden’s home prices keep rising while the U. S. home prices had plummeted. As the United States continued to lose jobs monthly, Sweden kept the unemployed working thus, keeping them employed as jobs were affected globally. Internal market forces may have kept unemployment rising however, instability keep consumer confidence at bay. Great Recession of 2008 Government Economic Actions from Other Nations Both Japan and Sweden acknowledged the global economic situation that their country was now experiencing. With this acknowledge came much action to help aid in multiple shifts such as a rightward shift of the aggregated demand curve which can cause a recovery, with real GDP and employment increasing (Schiller, 2010) which was much needed not only in Japan and Sweden, but worldwide. Japan did a lot in terms of capital injection, recapitalization, public investment, and tax cuts. However, many agreed that many of the Japanese tactics helped to stabilize the economy, but these effects did not help recover the economy as originally first thought. Japan announced an economic stimulus package to help curb the recession which included the following actions: expanded credits for small business and a cash payout to every household to spur spending. Also tax breaks for workers affected by the recession and home buyers. This also injected funds into the markets and support for mid-sized businesses (Time, 2009). My favorite incentives include low interest mortgages for new home buyers and incentives for â€Å"green† technologies. Sweden was proactive in its approach to minimize and reduce the recession’s impact on its citizens and economy. Sweden kept it’s unemployment from soaring by cutting unemployment benefits and lowering taxes on low-income workers. However, this was not enough as the Swedish government presented a crisis package. One of the main actions of Sweden was being one of the first banks in Europe to make a large cut in its official bank rate. Moving further, the Swedish government provided a reduced in employment tax by half for the hiring of people who are long-term unemployed, the maintenance of railways and roads, construction programs, trainee programs, and student grants for individuals over the age of 25 years (Time 2009). Japan and Sweden received criticism for the stimulus/crisis packages to help their perspective nations to recover. Citing that packages were either not sufficient or they were short-term fixes. Also, critics were angry of the excessive spending which in short added to the rising debt of unemployment benefits, construction packages, and interest rates. Ultimately, this was and still is a global recession. There has to be a long- run self-adjustment formulated to not only entice investors, but provide confidence in the consumer again. Since the United States provides 70% in spending to the GDP while countries like Japan and Sweden provide the U. S. imports of various goods and services, this provides a healthy, global business cycle that incorporate growth in each contribution sector to every countries GDP. Great Recession of 2008 United States Economic Actions As the United States entered a new phase with a new president, a recession loomed amongst the nation. This recession was not like any other recession within the past two decades, but one that is compared to one such as the Great Depression that lasted a decade. Although the United States is known to be the biggest economy worldwide, it is not immune to global catastrophe. Many nations rely upon the U. S. for exports and imports and investors take notice. Although, the U. S. is a strong nation, a push for a faster economic recovery was addressed. The United States economic stimulus package was a $787 billion sanction which was the biggest bill since the great depression. The package included the following: Energy efficiency and renewable energy projects Science and technology to improve broadband internet Infrastructure for highways, bridges and clean water Education and healthcare Interest rate of 0% `The U. S. stimulus package was parallel to that of Japan and Sweden with the â€Å"green† initiative to save and preserve energy, also the infrastructure idea to create jobs and keep the citizens minds at bay and become more confident in the system. We must remember that economic stimulus is another means by which a government can seek to boost its economy, either in the short term, by encouraging consumers or companies to consume goods, or in the longer term, by encouraging the growth of businesses and the creation of jobs through investments in infrastructure and research. Education was a big change with both Sweden and the United States (Teslik, 2009). It certainly depends on the individual and critics to assume what was successful and what wasn’t. For example, a homeowner that receives tax credit for new more energy efficient appliances may think that the package has worked in his/her favor. Or even the person that purchases a new vehicle during the cash for clunkers deal, this may be a great experience and the stimulus is working for him/her. However, there are always the negative experiences when a college graduate wants and is eager to enter the work force, but is discouraged when him/her have been searching for over a year. Nevertheless, there is part of the stimulus that had to be altered from my experience. President Bush gave every household a lump sum depending on your household size and dependants. Many of the individuals either saved the money or spent on necessities. However, later as President Obama acknowledged did not work, he later revised and gave the tax break it increments on your payroll or unemployment check. Great Recession of 2008 Conclusion The U. S. 2008 recession was like no other, economists mention a stronger comparison with the 2008 recession to that of the great depression. The 2008 recession was and still is in fact, one of the worst recessions on record. Many individuals don’t realize the impact the U. S. has on other nations. In my opinion, if the U. S. does not recover the surrounding the neighboring nations that have a relationship with the United States will falter and potentially end up bankrupt. This new millennium does not compare to the 1920’s and 30’s. This new day and age bring mass media coverage, global corporations, extensive investing, trade, external shocks, policy levers, and international balances. There is a difference. There will always be critics to voice what went wrong and what should have been done prior to a recession occurring. Nonetheless, a recession is needed for growth and creative innovation for a country to continue to develop. The determinants and outcomes of the economy are important and is a direct effect of the nation’s GDP. The uses of monetary and fiscal policies are important when trying to shift the AD curve and have the nation recover from a recession. Although spending exists with a deficit that continues to grow, the nation will prevail as it had before. The United States have learned much from many nations such as Japan with the lost decade and Sweden’s double dipping economy. The great recession of 2008 has taught many businesses, citizens, and global governments many lessons and through these lessons is preparation for a new tenure.