cultural differences case study starbucks in australia

The Australian coffee industry - The Australian coffee market is among the largest in the world, reaching a revenue greater than 1.4 billion U.S.. - The annual domestic coffee consumptio

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Group 3 Presentation

Case analysis Case introduction

Recommendation

Cultural differences

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Appendix

Dr Hofstede's

Psychologist Dr Geert Hofstede published his cultural dimensions model at the end of the 1970s,

5 dimensions:

- Power distance

- Individualism vs collectivism

- Masculinity vs Feminity

- Uncertainty Avoidance

- Long-term vs short-term orientation

cultural dimension

Culture Differences

Power distance

- Related to how a society deals with the fact that

people are unequal in physical and intellectual

capabilities.

- The fundamental issue here is how a society

handles inequalities among people.

- Australia scores low on this dimension

Culture Differences

Individualism versus collectivism

- It focuses on the degree of interdependence a

society maintains among its members To easily

understand, it is like the terms of “I” or “We”.

- Australia, with a score of 90 on this dimension, is a

highly Individualist culture

Culture Differences

Masculinity versus femininity

- The relationship between gender and work

roles

- Australia's figure was recorded at 61, This shows that females still are not considered equal to men in different fields of life

Uncertainty avoidance

- It measured ‘The extent to which the members

of a culture feel threatened by ambiguous or

unknown situations and have created beliefs

and institutions that try to avoid these'

- Australia scores a very intermediate 51 on this dimension

Culture Differences

Long-term versus short-term orientation

- It describes “how every society has to maintain

some links with its own past while dealing with the

challenges of the present and future”

- Australia scores 21 on this dimension and

therefore has a normative culture

Case introduction

- Starbucks Corporation is an American company founded

in 1971 in Seattle.

- Their product mix includes roasted and handcrafted

high-quality/premium-priced coffees, tea, a variety of fresh food

items, and other beverages

- From a narrow shop front, Starbucks offered some of the

world’s finest fresh-roasted whole bean coffees.

- Today, Starbucks has about 383,000 employees across more than 32,000 companies operated & licensed stores in

80 countries, most of which are located in the USA.

Starbuck

Starbuck in Australia

- In July 2000, Starbucks launched its first location in

Australia

- When Starbucks first came to Australia, it grew

rapidly, opening 90 locations by 2008 However, such

speed “grew faster than its popularity” as it ultimately

resulted in a loss of $105 million in just the first seven

years

- In 2008, the majority of their businesses closed,

leaving only 23 Starbucks locations throughout the

whole continent

- However, Starbucks has not yet given up on Australia.

The business has started to gradually open new sites

around the nation since the shutdown in 2008

- There are now more than 60 outlets.

The Australian coffee industry

- The Australian coffee market is among the largest in

the world, reaching a revenue greater than 1.4 billion

U.S dollars in 2017

- The annual domestic coffee consumption in Australia

reached almost 1.9 million 60-kilogram bags

- On average, Australians consumed around 1.92

kilograms of coffee per person in 2017, out of which

1.39 kilograms were roast coffee and around 0.53

kilograms were instant coffee

Australian's behavior

towards coffee

- In Australia, there is a strong fondness for coffee, with

more than one-fourth (27%) saying they can't go a day

without it and nearly nine out of ten (88%) saying they

prefer it to some degree

- 75% of Australians drink at least one cup of coffee

every day, and 28% of them drink three or more

- Older generations are likely to prefer instant coffee,

whilst a preference for espresso coffee is higher among

Australia’s younger generations.

- There is a strong sense in Australia of buying local and

supporting the community.

Starbuck's competitors

- ‘‘In America, Starbucks is a state of mind In Australia, it

was simply another player.”

- Gloria Jean’s dominates the high-street part of the

coffee retailing market and McCafé dominates the

convenience end in Australia

- Other significant competitors include The Coffee Club

and Wild Bean Café (an add-on to BP petrol stations)

and Hudson’s Coffee

- Also, other smaller individual coffee retailers offered

better coffee and a more personal experience.

Starbucks' fail in

Australia

Australia has an advanced local coffee culture (a strong and large coffee drinking culture)

- Long-standing culture: Australia's affinity for coffee is a

result of the waves of immigrants that came to the nation's shores after World War II

- Australians have long taken pleasure in a variant of the

"lifestyle coffee experience" that Starbucks invented from

scratch in the US

- Australians tended to frequent more intimate,

boutique-style coffee shops

- Australians believe that connections matter just as much

as the actual product when it comes to coffee

- Starbucks didn’t fit Australians’ tastes The company served

sweeter coffee options than Australians preferred

- Local brands such as Gloria Jeans and Coffee Club had a

nationwide reputation for several years; they clearly understand

the Australian coffee taste and offer qualified local coffee at a

cheaper price.

- A large portion of the local Australian population preferred

having side foods.

- The Australian coffee culture is more about socializing and

probably less about coffee

Lack of

understanding

- When Starbucks launched, it launched too rapidly It didn’t give the Australian consumer the opportunity to

really develop an appetite for the Starbucks brand.

- The mistake of Starbucks also was that despite Australia being an extremely competitive and mature

coffee market, Starbucks did not advertise in the mass

media Relying on its reputation, Starbuck failed to

communicate its brand

Lack of effort

to adapt

The 2008 financial crisis

- As we know the world was experiencing the

Great Recession in 2008 and so did Australia

- During that time Starbucks shut down

two-thirds of its stores in Australia

- Even though Starbucks had enough financial

resources to sustain itself, the purchasing power

of the customers was potentially affected.

Better planning before entering a new market:

Starbucks should have organized several focus group interviews in Australia prior to its launch

Establishing brand image in the locals:

Starbucks should have started with fewer stores, and only in

main attractions, and tried to establish a loyal fan base

Understanding customer insight:

- Customer insights allow corporations to gain a more in-depth understanding of how their consumers think and feel about

their goods and services.

- On top of the price adjustment to fit the locals, they will also

have to re-evaluate their core product line and snacks to go with them

Thank you

for listening!

If you have any questions, don't hesitate to raise your voice.