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Starbucks is a large American coffee company with a global market coverage. The intention of this firm to enter into Luxembourg market is timely, given its plans to expand its operations. However, Schneider (2011, p. 71) says that before getting into a new country, it is important to conduct a research in order to understand the macro environmental factors that could impact on its operations in this country.
It is important to understand all the macro factors that may affect its normal operations either positively or negatively. In order to understand the macro environmental factors of this new market better, PEST analysis would be an appropriate tool for the management to know what to expect once in this country.
Luxembourg is a democratic nation that gained full independence in 1890. This country has experienced a very stable political environment for a very long time. Successive governments have been very keen to ensure that the country remains very peaceful.
This will offer Starbucks a good environment for trading. It will boost its operations if it enters this market (Simerson 2011, p 38). The political class in this country is known to avoid any direct interference with business operations. This means that Starbucks operations will not be affected by politics.
The economic environment in Luxembourg is very attractive for this firm. The report by Simerson (2011, p 38) shows that Luxembourg has the highest living standards in the world. This means that people of this country has a higher purchasing power. If Starbucks makes an entry into this market, it will be assured of a market for its products.
This firm can also consider charging premium prices for its products in this market because of this high purchasing power. When in this market, Starbucks should focus on satisfying the need of high-end consumers. This is because they make the majority of the people in this country.
The social environment of Luxembourg constitutes the rich Europeans. It is important to note that the social environment of a country is always defined by the cultural practices of people within that environment. This means that the social environment that this firm will experience in Luxembourg will be based on the practices of the citizens of this country.
The total population of this country is slightly over half a million people, most of whom are Christians (Griffin 2010, p. 37). Most of the citizens of this country are relatively rich, a fact that makes the market very attractive. They also like spending a lot. The government has enacted laws that define the relationship between business society and consumers. Starbucks must know these regulations to operate efficiently in this country.
According to Booker (2006, p. 78), technology plays an important role in a business set-up. Starbucks must understand that in order to be successful, it must embrace the emerging technologies. The emerging technologies have made business environment very dynamic in this country, and in order to manage the unpredictable nature of this business environment, it is important to be flexible.
Most firms in Luxembourg are currently using electronic marketing to reach out to the market. This means that Starbucks must have clear plan on how it will embrace electronic marketing if it expects to be successful in this country. Technology is very advanced in this country and therefore, Starbucks cannot ignore it.
List of References
Booker, J 2006, Financial-planning fundamentals, CCH Canadian Limited, Toronto.
Boutellier, R 2008, Managing Global Innovation: Uncovering the Secrets of Future Competitiveness, Springer, Berlin.
Griffin, D 2010, Business with a purpose: Starting, building, managing and protecting your new business, Outskirts Press, Denver.
Henry, A 2008, Understanding strategic management, Oxford University Press, Oxford.
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Schneider, G 2011, Electronic commerce, Cengage, Learning Boston.
Simerson, B 2011, Strategic planning: A practical guide to strategy formulation and execution, Praeger, Santa Barbara.