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Nowadays, globalization has a vehement impact on international economics and trade (Surugui & Surugui, 2015). It creates new possibilities for financial growth and expansion. However, management of multinational giants often faces challenges such as cultural diversity and has to develop strategies to take advantage of this threat (Tutar, Altinoz, & Cakiroglu, 2014). This trend led to the development of a fair trade movement that helped Starbucks gain its worldwide recognition and develop the international image. Nonetheless, when discovering Starbucks’ operations in GCC countries, apart from the support of fair trade, the company faces a plethora of challenges related to specifics of culture and economic environment. For example, the enterprise had to redesign its logo, as women could not appear on it in countries such as Saudi Arabia (Cader, 2015). At the same time, these countries are highly responsive to the actions of the company and may consider some of them as offensive (Cader, 2015). For example, along with having segregated locations for families and singles, one of the stores banned women from entering the restaurant while causing dissonance in society (Hanks, 2016).
The idea of this research is unique, as it will reveal that multicultural giants such as Starbucks with certified products face challenges in particular markets. Consequently, it is vital to discuss the main details of this case, as it will help discover the trend of globalization from dissimilar angles. These findings can be actively used to understand the specifics of operating in GCC countries and avoid mistakes made by Starbucks.
A brief description of the case study reflected above clearly shows that apart from a high recognition of companies worldwide, their management may face various challenges. The example of Starbucks can be actively used to present different types of globalization. In the first place, the company can be discovered as a trend-maker since Starbucks’ products create an association with a particular lifestyle that targets premium coffee-lovers and enthusiastic businessmen and students. Aiming at these niches and having the support of fair trade organizations helps the company have high profits and become one of the leaders in the market. It is one of the critical concepts of globalization, as, now, it is possible to spread ideas worldwide. Alas, a combination of these aspects did not ease Starbucks’ entrance to GCC countries. Not being able to take into account the specifics of Islamic advertising damaged the company’s reputation in this region (Cader, 2015). Consequently, when expanding to different countries, the management has to focus on designing new products and redesigning a brand to support local culture and avoid misunderstandings.
As for political globalization, the development of fair trade can be viewed as an example that represents its idea in this context. Fairtrade certification is discovered as one of the organizations that not only establish sufficient trade standards but ensure that farms are suitable and orientated towards social change (Negash, 2016). Starbucks uses only these producers, and this action helps the company develop an image of an ecologically-friendly company with premium products. It is another benefit of globalization since it supports financial and corporate growth. Nonetheless, even the existence of fair trade does not guarantee the company’s success in GCC countries, as special attention has to be paid to labeling and marketing of the products.
Based on the aspects reflected above, the main benefits of globalization are related to financial growth, culture and idea-sharing, and well-developed control mechanisms. One of the major opportunities to be taken is the fact that Starbucks has to continue its global expansion and open more locations in new countries. Thus, the failure to adapt products to the specifics of culture may be a potential reason for misunderstandings and intercultural conflicts (Cader, 2015). In turn, operating internationally makes businesses vulnerable to political and economic fluctuations and currency exchange. These threats can lead to the need to apply the principles of global leadership that will support ethics and diversity, and this matter can be discovered as a positive outcome (Chuang, 2013). Furthermore, the conflicts and issues can be resolved with the help of a localized product strategy and a profound analysis of the market before the entrance (Muccini & Ngumo, 2014).
Overall, it could be said that globalization revolutionizes modern economics and distributes brands and values worldwide without barriers. This trend led to the development of the fair trade movement that not only controls the trade but also aims at encouraging the development of sustainability. Nonetheless, apart from using coffee beans from the certified producers and have a well-developed brand image and associated lifestyle, Starbucks had some conflicts in GCC countries. Failure to adapt the logo to the cultural specifics damaged the company’s reputation and required the company to invest in redesigning the brand. Consequently, along with financial growth and opportunities for expansion, international companies have to take into diversity and ethics. This case shows that globalization should not only be associated with advantages that lead to the increased company’s profitability but also with the major threats such as dependence on the currency exchange and cultural specifics. This case study revealed that even the multinational giants like Starbucks tend to make these mistakes. Start-ups and SMEs (small and medium-sized companies) have to learn from these examples and reflect threats, opportunities, and strengths in their corporate strategies.
Cader, A. (2015). Islamic challenges to advertising: A Saudi Arabian perspective. Journal of Islamic Marketing, 6(2), 166-187.
Chuang, S. (2013). Essential skills for leadership effectiveness in diverse workplace development. Online Journal for Workforce Education and Development, 6(1), 1-24.
Hanks, H. (2016). Women welcome at Saudi Arabia Starbucks shop after a temporary ban. CNN. Web.
Muccini, E., & Ngumo, E. (2014). Implications of globalization for international business strategy: A multi-sectoral approach. International Journal of Science and Research, 3(4), 68-78.
Negash, R. (2016). Impact of fair-trade coffee certification on smallholder producers: Review paper. Global Journal of Management and Business Research, 16(5), 33-40.
Surugui, M., & Surugui, C. (2015). International trade, globalization, and economic interdependence between European countries: Implications for businesses and marketing framework. Procedia – Economics and Finance, 32(1), 131-138.
Tutar, H., Altinoz, M., & Cakiroglu, D. (2014). A study of cultural difference management strategies of multinational organizations. Procedia – Social and Behavioral Sciences, 150(1), 345-353.