Topic of the Week
The Organization and Strategy of International Business.
I need one page discussion post.
Below is a sample post. However, you can right about something else too.
The importance of businesses taking into account differences in customer tastes and preferences into their business strategy is none the more so apparent than the case of Starbuck’s attempt to enter the Australian café market. I remember watching a news piece by CNBC titled “Why Starbucks Failed In Australia,” and the concept of local responsiveness, standardization of product and strategy, and leveraging subsidiary skills all were vital factors in this case study. In 2008, Starbucks saw a dramatic hit to their market share, resulting in the closure 61 of their 90 store locations during this time. The result of this failure was because Starbucks tried to use the same business model they utilized in North America opening near suburban areas, offering the same standardized menu selection, and lack of integration and localization to consumer preferences. Australia had a historic café culture that dates back to the early 1900s that favored an drinking experience that was more tamed, personal, and connected. Whereas, the business model of Starbucks focused more of coffee as simply a product, emphasizing the “on-the-go” coffee that was a quick in and out, that did not resonate with the historic culture Australians expected as coffee being a extended social experience. Additionally, Starbucks did little to appeal to local tastes of focus on espresso and specialty coffee, therefore, the overly sugary menu options were not received with much success.
However, a North American coffee company was able to find success in tge Australian market because they did take into account the differences in consumer tastes. Gloria Jean’s Coffee, founded in Chicago, IL, leveraged subsidiary skills of two Australians back in 1996, who franchised the brand to accommodate the change in consumer taste and preference to a customized menu that fit Australia’s local café culture. This change helped enhance the perceived value of their product versus competitors and create new ideas that are consistent with the changing Australian palate. Thus, as a result of this business adapting to the local market, they currently have 400 stores across Australia.
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