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Role of government in business operations
Influence of the economic environment on a business
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Number 1
The political factor can be a potential threat for Starbucks given the extent to which government intervene in the economy creating rules and framework within which they should operate. These rules can either support and encourage business or discourage it. Political factors include areas such as environmental law, labour law, trade restriction and tax laws etc. to defend against such risk, Starbuks have to do some some background research about indias’ market and from that, they can assess and evaluate all the the level of political risk in the country before setting up operations. Another way Starbucks to defend against political factors is to negotiate terms and conditions in which they will operate so that in the event something disrupt operations there would be legal basis for recourse.
The economic conditions of the country of interest is a treat to entrants in that market; such factors as interest rates, exchange rates and inflation will impact on the company given the nature of businees or industry they are in. With inflation and fluctuating exchange rate it will be costly for Starbucks to import coffee beans, they would have to consider buying coffee beans locally from small farmers and aslo provide funding to these small farmers to make farming improvements to cultivate better quality coffee beans given the economic conditions affecting them as well.
Number 2
Technology can translate into significant opportunity for Starbucks given that india is not technologically. Tapping into a market like this offering technological services at shops will send a strong message to customers as well as rivals. For Starbucks to leverage technology, they will have to ensure that the infrastructure is in place and if the infra...
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...time, marketers have to know if it will be feasible given the nature of the market, consumer buying behavior, competition, and other environmental factors like economic conditions and government influences. They will have to decide how they will position the product versus competing products in terms of quality and price; whether it is premium price or economy price.
Product &Portfolio Management: Starbucks have to review their product offering and determine if the Indian sociocultural society would accept their product offerings. They will have to decide if they will offer an existing product in the new market or diversify in terms of adding Indian variation to the product line. To determine this, Starbucks would have to do some market research to see how appealing their products would be to the Indian culture and would it be better to add Indian variation to thei
Foreign policy with foreign nations that host the Starbucks brand. Import and export tax is an expenditure that may and can become costly and profits can be lost. Other companies like McDonalds, Dunkin Donuts, and the Coffee Beanery provide consumers with an ambient environment and some specialty coffee flavors. Proximity may be the only thing required for the consumer to select the services of the rival coffee dispensing businesses.
Shah, A. J., Hawk, T. F., & A, T. A. (2011). Starbucks' Global Quest in 2006: Is the Best Yet to Come. In A. A. Marcus, Management Strategy: Achieving Sustained Competitive Advantage (pp. c468-c495). New York: McGraw-Hill.
The importance of economic indicators to the strategic planning process in any organization is the ability to benchmark economic conditions that contribute to improve profitability, business growth and market size. Leadership sets up the mission “to establish Starbucks as the most recognized and respected brand in the world.” In doing so, they have created a set of industry-leading, comprehensive coffee-buying guidelines addressing coffee quality, financial transparency, social and environmental responsibility. Starbucks strategy is also expanding market in globally to provide high quality coffee in convenient and visibility locations. They are continuing to innovate and extend the business with imaginative new ready-to-drink beverages and expanded packaged coffee offerings (Starbucks Corporation, 2007).
Starbucks is one of the most recognizable and successful coffee brands in the world. Starbucks believes in serving the best coffee possible. Starbucks’ international market that was expanded into China in 2002, still has only a tiny part of the Chinese beverage market (Harrison et al., 2005). The company President, Charles Shultz is ascertaining the possibility of establishing new coffee houses in China.
In recent years there was a time that Starbucks saw the opportunity to go global and jumped on it. As far as this article goes, when looking at company weaknesses there is nothing that is of a serious concern for the business. If you look at Starbucks today you would see a much different perspective. The corporation started off using a benchmarking strategy trying to mimic what was done within other leading competitors. (Now Starbucks is the benchmark!) The company continues to work towards its long-term goal of becoming the most recognized and respected brand of coffee in the world. In one article I read, a spokesperson from Starbucks said they hoped to be the Q-Tip of the coffee business.
This strategic capitalises on weaknesses since will decrease the cost of coffee beans/beverages but also Starbucks operating cost which they regularly ship across the world to various stores. Starbucks can capitalise on this weakness to improve their brand options. It adds value in the inbound logistics activities, operations and procurements. Starbucks should consider this option since it will decrease their operating cost and therefore will reduce the prices on their menu. The attractiveness is the exact same as mentioned in option 1.
As mention earlier Starbucks has many opportunities of which it can take advantage. These include a joint venture with McDonald’s, where the restaurant giant would supply its customers with Starbucks coffee. Another is the bottled Frappuccino product that Pepsi and Starbucks have created. This has had a very positive response in the test markets and posses to be a lucrative option. Starbucks could also look at the vertical integration possibility of producing its own beans. This could prove to be very successful if they can capture a significant amount of the production they could become a price setter in the coffee commodities. Also because small coffee retail outlets are so trendy it is possible for them to set ...
Business Environment – The firm is considered a coffee giant company that is a big brand in the business being able to expand aggressively in the market worldwide before it entered in New Zealand. But the business environment of this country is quite unimaginable for a US based company for it to venture without having a thorough marketing analysis covering all the risks in the venture considering the distance and the traditions which differs a lot in many countries thus making it very unique and incomparable. It is only when the company is able to come up with the correct strategy in entering the business that will make it thriving. Starbucks New Zealand entered the Kiwi market by way of franchise and joint ventures. They partnered with a very stable local business partner called The Restaurant Brands New Zealand Ltd. In this case, the company is able to hurdle the market barriers including business laws, taxation, physical set up, traditional and cultural differences that may come along the way. (Starbucks, 2012)
Business was good, but it was not without its problems. There was the political upheaval in the Middle East, followed by further tension after then CEO Howard Schultz commented on growing anti-Semitism in the region. Their integrity came under fire when certain Non-Governmental Organizations (NGO's) accused them of purchasing coffee beans under questionable social and economic conditions. These situations, together with difficult economic times globally, meant that Starbucks was likely going to take a hit somewhere. Eventually, they shut down their Israeli operations altogether.
I will briefly summarize and examine issues facing Starbucks. Starting from there I will pick the most important issue and study it from different positions. In the end of my I will try to suggest what steps should be made to keep the company in continuing its quest to become one of the most recognized and respected brands in the world.
The major cause of instability in any country is unstable politics. Apart from the fact that there could be a political crisis, which leads to the destruction of your industry, unfriendly political environment can lead to enactment of policies that are hostile to your investment. Because of this, we always study the political environment, study the policies on the ground, to determine how friendly they were or how the future would be for investment. People can take our coffee when there is a conducive atmosphere. Property Rights and Intellectual Property Right Protection: Patents and Trademarks to specific or unique products that Caffe Vergnano creates should be protected.
Starbucks will need to adapt its business practices to suit the Indian market. For example, Starbucks will need to consider the local customs and traditions when designing its stores. Another challenge is the competition in the Indian market. Starbucks will need to compete with local coffee chains such as Cafe Coffee Day and Barista. Starbucks will need to differentiate itself from its competitors by offering high-quality coffee and a unique customer experience.
Starbucks is a worldwide company, known for is delicious brews of coffee and seasonal varieties of tasty drinks for any occasion. Starbucks opened with two main goals, sharing great coffee with friends and to help make the world a little better. It originated in the historic Pike Place Market of Seattle, Washington in 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowker. The creation of Starbucks’ name came from the seafaring tradition of early coffee traders and the romance evoked from Moby Dick. At the time, this individual shop specialized in the towering quality of coffee over competitors and other brewing services enabling its growth to becoming the largest coffee chain in Washington with numerous locations. In the early 1980s, the current CEO Schultz saw an opportunity for growth in the niche market. After a trip to Italy he brought back the idea of a café style environment of leisure and social meetings to the United States we now see in Starbucks locations today. Schultz ultimately left Starbucks to open his own coffee shop, Il Giornale which turned out to be a tremendous success. Fast forward a year later, Schultz got wind that Starbucks was going to sell all their components of Starbucks including their stores and factories, he immediately acquired the funds to buy Starbucks and linked both operations. Within five years he was able to open more than 125 stores starting in New England, Boston, Chicago, and gradually entered California. He wanted Starbucks to be a franchise system based on the mission of telling the truth and emphasize the quality,
The threats facing Starbucks include trademark infringements and increased competition from local cafes and specialization of other coffeehouse chains, and the saturation of the markets in developed economies, and supply disruptions. Furthermore, the increasing prices of its inputs such as dairy products and coffee beans pose a threat
Starbucks has identified high value opportunity in China, India, Brazil and Japan. The large expansion opportunity of twelve billion in China alone is enough to drive Starbucks to expand globally. The organization has planned to double its footprint to 3000 stores in China by 2019 ("Starbucks Details Five-Year Plan to Accelerate Profitable Growth", 2014). Starbucks realizes that eventually there will be a diminishing return on their existing market within the US due to market maturity and there are only two ways to expand through diversification in their offerings and entering new markets. Given the international opportunity for growth and expansive tea market in Asia, the company will enjoy the benefits of the growth opportunity. Management’s decision to continue to grow globally is a driving force that has yielded