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Three main advantages factors helped Starbucks to achieve success. First, the global coffee selling industry was large, and the product was freely available in every part of the world; with the low cost of production, the commodity was also affordable, which made using it as the primary product an important cost-saving factor. Moreover, the coffee consumer market has always been characterized by its width and stability, as many people around the world love coffee.
Lastly, some of the countries were famous for having their own coffee-drinking culture, which gave Starbucks a possibility to expand all over the globe, using joint venture schemes and licensing to move into new markets. Nevertheless, most of the time, Starbucks failed to outrun the local market leader. With the only exception of Thailand, where Starbucks had achieved full control of the market and soon bought out the main competitor, expansion to foreign markets made the company face challenges it could not quite overcome, constricting it to stay one step behind the local market leader every time.
For instance, in Asia-Pacific countries, including China and Japan, Starbucks believed it would be unable to achieve the success it had hoped for due to the countries’ cultural factors. Both China and Japan, as well as some other Asian Countries had well-established tea cultures, and people did not drink coffee nearly as much as they drank tea. Moreover, the company’s market research showed that the smoking ban in Japan would affect the sales of coffee. However, both concerns turned out to be misleading. The smoking ban turned out to be advantageous for Starbucks, and in both countries, there were promising outlooks for future development.
Another challenge for Starbucks occurred when it had entered the European market. In Europe, the coffee marked had already been well-established, with certain market leaders, many of which were Italian coffee companies. Entering the European coffee market as a new challenger proved to be difficult; however, the company took a risk and became relatively well-established in some of the European countries.
Entering the Latin American coffee market was nonetheless difficult, particularly because the country has always been among the leading growers of coffee, and thus there were a lot of established local competitors. Despite being unable to achieve stable competitive positions in both regions, the company’s persistence and effective marketing could help to win over the customers and make a larger market share over time (Moffett and Kannan 3).
Moffett, M. H., & Kannan R. (2003). Planet Starbucks:(B). Thunderbird, The American Graduate School of International Management.