Legal issues of International trade. Starbucks

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Feb 20, 2024

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International Business Management

Q1. Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets. Ans 1. Controllable elements: Starbucks decisions about the marketing mix (4Ps), which includes product, price, promotion, and distribution, are the controllable factors it has experienced when entering international markets.  Product: Product refers to the thing or service that a business provides, and Starbucks has been successful in doing so across all of its international locations.  Price: Customers must spend a certain amount of money in order to purchase a product, and Starbucks has been able to keep its prices uniform across all of its international locations.  Promotion: Starbucks has been successful in promoting its brand internationally. Promotion refers to the marketing and advertising initiatives that the company does to increase awareness of its product and brand.  Place: Starbucks has maintained a global presence through its distribution channels, which refer to the means by which the product is made accessible to customers. Starbucks is in charge of controlling the cost of their goods, altering them to suit the tastes of specific cultures, deciding how many stores to open and where to put them, and most crucially, how to market their company and products. This is a crucial choice that Starbucks must make. How much research is done will determine how these decisions are made. Uncontrollable elements: The outside forces that affect the global market are the state of the economy, political stability, cultural diversity, and legal constraints, are the uncontrolled aspects.  Economic: The demand for Starbucks products can be affected by the general state of the economy. Starbucks in Japan, the economy and the number of competitors are out of control. Due to their struggling economy and a 14% decline in profits.  Political: Political stability, which is synonymous with governmental stability, may have an effect on a company's capacity to conduct business in a certain nation. As France has complicated rules and extensive labour perks.  Culture: The way that different cultures interpret and use Starbucks products is referred to as a cultural difference, and it can affect the company's potential to expand into new areas. Due to the age of the coffee shops in Vienna, Starbucks has a chance to gain market share from the younger generations. It's only conceivable. Others may like the older versions.  Government regulations: Legal constraints are the rules and laws that control how businesses are run in a particular nation, and they may limit a company's capacity to grow into other areas. Before coming up with the idea to speed up service by installing automatic espresso equipment in 800 locations, Starbucks did market research. Additionally, they started selling $5 to $500 prepaid Starbucks cards, which salespeople swipe through scanners to deduct from sales. The company claims that this cuts transaction times in half. For Starbucks, the cards have generated $70 million in revenue. In every business, there will always be uncontrollable factors. Your company could be made or broken by them. 2. What are the major sources of risk facing the company? Discuss potential solutions. Ans 2. Starbucks is an American global company based in Seattle, Washington. It is a largest coffee house company in the world. However, Starbucks faces several hazards, for which we have some viable remedies:

 The corporation loses money because of the operation with the local partners. Even if it is simpler to launch a business in a foreign market, the company's revenue share was sadly reduced. Starbucks must first stabilize their business in their native nation before continuing their expansion in order to address this issue.  Moreover, the wave of baby boomers in the 1990s make the company faces the unfriendly reception from its future consumers which are the twenty to thirty something of the Generation X. Since the elder age is not welcoming them, they must draw in new clients, like the younger generation.  Even if the pay at Starbucks is better than the same level workers everywhere, it is still thought of as just another fast-food employment. Disappointment with the weird hours and little pay is ruining the generally excellent service, including the coffee. Other significant concerns associated with Starbucks include employee dissatisfaction. Despite having all the benefits, the compensation is insufficient for the amount of work required. Increasing pay and benefits to match workloads can help solve this issue.  Because local businesses and residents disliked the company's tactics as well as the lack of options, the company's plan to keep competitors out might backfire. The tricks are to have a healthy competition. Customers will be drawn in by exceptional deals and exclusive products.  Starbucks does not priorities the quality of their primary product, coffee, and they do not sell any other goods outside coffee, which poses a significant risk to the business. Solutions:  Although coffee is their main product, they work to enhance its quality and add additional products in addition to coffee, which helps the business handle this significant risk.  Global expression poses a significant risk to them, but they can lessen it by learning about other cultures and comprehending the needs of their customers.  Another major danger for this business is paying low wages and salaries, but Starbucks may overcome this by doing so and focusing more on the requirements of its employees.  Starbucks must first stabilize their business in their native nation before continuing their expansion in order to address this issue. Q3. Critique Starbucks' overall corporate strategy. Ans. Starbucks primary plan is to grow internationally. Alongside Starbucks, they continue to use some strategies to reach the core goal, but they are losing money since their approach and customer expectations are out of sync. Starbucks has spread throughout some particular cities. in order to dominate There are still only eight Starbucks locations in the United States. They think that the more outlets that sell, the better. Using this technique, they attempt to grow their outlets day by day, but without the demand for consumer pleasure, they will not be successful. The baby boomer generation and elder generations are their target market. They only use 1% of their earnings for advertising. The other company spends 10% of its revenue on advertising. Due to this lack of advertising, opening a business outside of the USA is difficult. Employee unhappiness is one of Starbucks biggest issues. due to Starbucks' payment and policy. Full-time and part-time employees both express discontent with their jobs. For this reason, 470 employees departed the Starbucks company in 2001 within a single month. Starbucks primary strategy is to expand their business internationally. To reach their main objective, they employ certain strategies. In addition to Starbucks, there are losses due to a mismatch between company expectations and those of the customers. Expansion into other nations is too quick to take into account the actual preferences and customs of local consumers and rivals. Not only is it alleged that this is an unjust attempt to push out tiny independent competitors that could not afford to pay inflated costs for prime real estate, but it also promotes monopoly, which leaves customers frustrated with fewer options. Starbucks employees are dissatisfied with their salary, which falls well

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short of the amount of labour they are expected to accomplish, which has a negative impact on both the outstanding service and the coffee itself. Schultz needs to be more cautious when it comes to diverse ethnic and cultural matters. He cannot make any disparaging remarks about Palestinians because he is the chair of Starbucks and has markets in Muslim-majority area. In a few American urban areas, there are still no Starbucks locations. It must concentrate on these cities as well. It must also adhere to a differential pricing component for each of its diverse consumers. Younger people and older generations are its target market. Therefore, it can implement differential pricing to demonstrate how it can be more appealing to its clients. Q 4. What advice would you have for Starbucks in Africa? In China? Ans. They should specialize on the tastes and preferences of their clients if they want to increase profitability in China and Africa. They might increase their earnings by repositioning their goods and maintenance. China and Africa are less aware of their value. The younger generation is more likely to spend their time productively in keeping with this cultural trend in Africa and China. According to an online site, youth in China and Africa have extremely little free time. In addition to enjoying a cup of coffee in a cafe, they prefer to study English. Therefore, it should take the following steps to improve its profitability in the African and Chinese markets. Starbucks should either boost perks or decrease prices in China and Africa. In order to accommodate busy Africa/China, Starbucks could deploy a US-style online ordering system there. Starbucks might launch a variety of cultural or entertainment campaigns in China or Africa to entice young people to visit the company's stores again. Extra activities are required during economic downturns to boost sales. Therefore, in addition to coffee, arrangements for internet access and other amenities should be made to appeal to the African and Chinese markets.

Legal issues of International trade. Starbucks

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