Starbucks- Going global Supervisor: March 6, Starbucks- Going global Starbucks is a multinational company withits roots in the United States. It begun with 17 stores in Seattle but had expanded to the international market in which had 281 stores by the year 1999 a number that has currently passed 5500. The company has however faced risks and challenges in its domestic market and its international venture identify risks. This paper discusses the risks and their possible solutions. Three major sources of risks facing the company in the international market Declining employee morale and employee burnout One of the potential risks that face the company in the international market is lost employee morale and employee burnout.
Even though the company has a strong employee base that has a significant level of satisfaction in their job, the risk of lost morale and burnout is possible. Reports that the company’s managers were losing their motivation into work and were suffering from burn out are an indicator of the threat to lost morale and burnout among other employees. This is partly because of their existence in the same work environment that could soon expose other employees to the risk of burnout that the managers reported.
Similarly, the managers could be operating under different conditions from those of other employees but they could transfer their frustrations to employees and derail the employees’ level of motivation. The central management of the organization also means that problems that its managers face in a region could be reflected in other regions, especially if the problem emanates from top level of the organization’s structure (McGraw Hill, n.d. ). The company has also ensured strategies for motivating its employees and a change in management approaches may threaten morale.
Equal treatment of employees, focus on employees’ needs, and taking care of employees’ welfare issues are some of the measures that the company ensures towards motivating employees. This may not however be effective in the international set up in which cultural difference may identify alternative motivational factors. In addition, the factors may motivate employees to overwork and lead to ultimate burnout (Vinsmba, n.d. ). Cultural difference is another risk that faces Starbucks in the international market.
Even though the company could have achieved success in different countries, differences exist and may become significant. A consideration of the market in china explains this. Chinese have a traditional preference for tea, a substitute to coffee, which made Starbucks entry into China a risky venture. Identifying emergence of the middle class that was dynamic and promised the company a market however informed its decision that turned successful. The cultural orientation however remains a significant factor among other economic classes and the perspective may spread to the middle class that has been dynamic.
The dynamism of the middle class that offered demand for coffee could similarly turn in favor of the traditional tea. Significance of Chinese culture also influenced Starbucks’ marketing approach and strategic measures such as offering ingredients of tea influenced its success in market entry. This is however a source of threat because it offers strategies to competitors who may take advantage of the cultural allegiance to gain competitive advantage of Starbucks. Effects of culture in decision making also identifies potential threat of culture on Starbucks’ international ventures.
In China, for example, there is value for long-term relationships and this affects entry into the market. The cultural effects in the Chinese market could be significant in other regions, though with different effects and negative effects of culture or unfavorable changes in cultural values could have adverse implications in demand for the company’s products (Wang, 2012). Increasing competition is another risk that Starbucks face in its international market. Large multinational competitors have existed but emergence of local and small-scale coffee shops may be a greater risk with the role of culture as a significant factor.
In New Orleans, for example, PJ’s coffee continues to increase its significance in the local market. Cultural bias with factors such as shared values among locals then facilitates preference for local producers over multinational firms such as Starbucks. A local firm also enjoys advantages of greater understanding of consumers needs and is therefore in a better position to meet the need that a multinational entity. Further, local enterprises specialize in the local market and may therefore enjoy marketing and other interpersonal relationship efficiencies that Starbucks might in each segmented market.
Inferring this observation to other markets means that Starbucks is likely to face stiff competition from emerging new local competitors (Lopez, 2013). Potential solutions to the risks One of the major risk factors facing Starbucks is lost morale and burnout and the company’s measures towards motivating its employees and possibility of a change in practices are the significant factors to the risk. Being sensitive to needs of employees is a possible solution to the threat. Sensitivity is likely to inform the organization of trends in employee’s morale and possible factors to negative trends for preventive measures.
Sensitivity is also likely to help the organization identify burnout, at early stages, among employees, for corrective measures towards a stable workforce (McGraw Hill, n.d. ). Cultural diversity is another risk that the company faces in the international market. Collaborating with locals who can bridge possible gap between the organization and its consumers is one of the possible solutions to the risk, as it will induce the local culture into the organization to overcome differences. Cultural awareness and cultural sensitivity are other possible solutions to the risk.
With cultural awareness, the organization and its employees are able to identify cultural expectations in a market and change behavior towards the expectations. Training foreign employees on local cultures is a strategy towards achieving cultural awareness. Alternatively, the organization can overcome the cultural difference threat by ensuring cultural sensitivity among its employees, a measure that facilitates anticipation of cultural expectations to appropriate response towards cohesion with members of a local market (Wang, 2012). Aggressive marketing strategies can however help the organization in solving the problem of competition.
Factors such as brand imaging, corporate social responsibility, and incorporating locals in the organization can for example neutralize the domestic advantage of local competitors (Lopez, 2013). Even though Starbucks faces risks, in its international ventures, such as competition from local firms, cultural differences, and reduced employees’ morale, these can be managed. Consequently, Starbucks’ growth in the international market is sustainable. References Lopez, A. (2013). How regional coffee chains are competing with national heavy hitters like Starbucks. Forbes. Retrieved from: http: //www. forbes. com/sites/adrianalopez/2013/10/21/how-regional-coffee-chains-are-competing-with-national-heavy-hitters-like-starbucks/. McGraw Hill.
(n. d.). Case1-1: Starbucks- Going global fast. MmcGraw-Hill. Retrieved from: http: //highered. mcgraw-hill. com/sites/dl/free/007352994x/862122/case_1_1_Sratbucks_Going_Global_Fast. pdf. Vinsmba. (n. d.). Starbucks corporation: Case study in motivation and teamwork. Retrieved from: http: //www. vinsmba. com/admin/casestudy/teamwork_case_study_-_starbucks. pdf. Wang, H. (2012). Five things Starbucks did to get China right. Forbes. Retrieved from: http: //www. forbes. com/sites/helenwang/2012/08/10/five-things-starbucks-did-to-get-china-right/.