Starbucks in the Australian Market

Starbucks in the Australian Market

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Starbucks is an American coffee company based in Seattle, it was founded in 1971. Starbucks use twin-tailed mermaid as their logo, the reason behind it is because, according to a greek mythology the twin-tailed mermaid used to seduce mariners into jumping out of the boat in to the water, it just simply means that it is irresistible. Today, Starbucks is one of the largest coffeehouse industry in the world. They provided high quality coffee, pastries and snacks. Regardless of its expensive price customers are still willing to pay for its quality.
When starbucks enter the Australian market in 2000, It was successful. Starbucks targeted the capital cities before going into regional centers. The reason is simple, as demand for pricey coffee is higher in the capital cities, and during that time less competition are expected. Starbucks became the leading and competitive company in the coffee chains globally. By 2007, Starbucks has opened more than 84 company-operated stores across the country. It was until mid 2008, that Starbucks realise its peak of success has ended in the Australian market.
Companies all over the world varies but yet shares a common challenge, that is to solve problem not only effectively and efficiently but also creatively. The P-O-L-C framework which stands for Planning, Organising, Leading and Controlling plays a major role in both the company’s survivability and success. The SWOT analysis looks at both internal and external factors that can affect the Starbucks’s performance. The purpose of this report is to define and analyse how Starbucks respond and should have respond to the change of its external environment on the cofee market,This report will also identify and disscuss how The P-O-L-C framework and can help starbucks to compete and reduce the loss of their failing peformance in the Australian market and how SWOT analysis helps to define some externalities that can be a threat to Starbucks.
Finally, this report will identify recomendations for Starbucks to minimze future loss and to compete with major competitors like McCafe and Gloria Jeans Coffee.

Starbucks was doing well at the Australian market for the few intorduction year, as it provide a unique original service, in which other coffee shop at that time did not provide. It was until 2003, the year in which McCafe was introduced. McCafe provided services and coffee similar to Starbucks, but in far cheaper price. The demand for Starbucks decreases significantly, and as for McCafe the demand was booming.

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People choose McCafe over Starbucks, and Starbucks did not do anything to battle this new threat. As a result Starbucks loses billions of dollars, and decided to close most of their shops in Australia. The 4 managerial Function helps to define, Starbuck’s problem and analyse what was wrong.
The first managerial function, planning involve defining or setting goals and establishing strategies for achieving those goals and developing plans to integrate and direct organizational activities. Ramona and Anca (2013) proposed a successful manager must defines goals and formulate plan which should rely on the reality condition and research rather than exaggerated idea. Starbucks was lacked at planning, Starbuck did not researched the Australian coffee market and as a result use plans they use for other country. They did not lies their goals or strategies based on research. If they did properly plan they will understand the market better. Starbucks’ Managers should first define a SMART goals. Their goals have to be spesific, measurable, achievable, relevant, and time based. At this point of time, they can rather set goals against McCafe, or minimize loses by closing their shops and focus on the New Zealand market. Then they have to set standart or benchmark, on what was expected. At this point the benchmark should be making profit and not losing more money. Then they need to develop strategy, in which for example, providing drive-thru like McCafe, or giving more offer and discount by reducing their cost of production. Then finally they will need to implement this plan into action.
The second managerial function, organising involve arranging and structure work to accomplish the organisation’s goals. “The process of formal management organizing knowledge construction is related to different social, economic and political conditions” (Sastrowardoyo and Metcalfe, 2005). Every employee has different abilities depending on their education background and experience. Which mean different staff has different skill and thus, need different level of work. If all workers with different skill do the same job, there would be uneven distribution of performance. Therefore, when managers organize tasks, they should think about who is capable of doing the job. Starbuck’s staff has a unique way of interacting with its customer. Carroll and Gillen(1984)argued that It helps the managers take correct decisions, implement the right strategies and finish a project on time and within budget. Measuring internal communication and keeping track of its development is a crucial asset that a manager should posses so that the project deliverables are handed out correctly. This means mangers can achieve information from staffs that work in the first-line and change the original plans or correcting decision making. Starbuck’s employee should report directly if they realise that less people are coming to their shops, so problem would be analyse faster and thus, can reduce or even prevent future loss.
The third managerial function, leading involve working with and through people to accomplish organisational goals. In order to work effectively a work groups and teams has to have common goals. Managers have to motivate their staff in order to achieve the best of them. Starbucks staff is trained to be friendly to customer, they have to be qualified for the job. However, eventhought they are qualified doesn’t mean they are motivated. Which mean they will igve minimum effort of work. Starbucks withstand this with their high wages and bonuses. Their leadership style doesn’t really contribute to the lose and failed plan.
The fourth managerial function, controlling involve monitoring comparing and correcting work performance. Ford and Greer (2005) observe a strong relationship between the use of management control systems based on outcome monitoring and implementation success. There are Three ways managers can implement controls, they are; feedfoward control, concurrent control and feedback cotrol. Feedfoward control takes place before work activity is done, concurrent control on the other hand, takes place while work is in progress, while feedback control occur after the work activity is done. Starbucks and McCafe uses all three ways of control. They uses feedfoward control in order to control their quality of service and product. They make sure their raw material are safe with quality and employees are qualified for the job. The key of this approach is taking managerial action before a problem occurs. Concurrent control explain why managers are present in every Starbucks shop, direct supervision is important in order to make sure staff and employees are working properly and can monitor their actions and correct problem as they occur. Feedback control help Starbucks to take corrective action after a problem occur. Starbucks are closing their stores as a corrective action after they realise the Australian market is not as profitable as other country’s market. Starbuck’s control is not the reason they are failing in the market. When McCafe was introduced in 2003, It was a direct attack to Starbucks, McCafe provided cheaper high quality product which had higher demand than Starbuck’s coffee. Starbucks should have responded by reducing their price, as a result all of their customer are going for McCafe instead.
McCafe and Gloria Jeans Coffee became the major player in the Australian market. Starbucks need to identify their weakness and threat. The SWOT analysis helps to identify externalities that can affect Starbucks performance and sales. The SWOT analysis stands for Strenght, Weakness, Opportunities and Threat. Starbucks’s strenght lies on unique environment of their coffee shop, which is a new thing in the Australian market at that time. Their staff interaction with the customer is also what makes them special during the early 2000. In fact, they are the only coffee shop that provide an interesting atmosphere at that time. Their Weakness lies on their expensive price, which was a crucial thing in the Australian economy which was declining in the early 2000 to 2003, which cause the demand for expensive coffee to drop. Their opportunities is to provide coffee which is competitive with their competitor in term of price and taste. The New Zealand market is also their opportunity, becase sales are so much better there. Their Threats is competitor “McCafe”, when McCafe was first introduced in 2003, Australia’s economy just begun to recover, which mean demand for cheaper coffee are high. McCafe took the opprtunity to provide these demands, in which Starbucks failed to respond. This cause Starbucks billions of dollars.

Works Cited

Robbins, S. P. Bergman, R. B. Stagg, I.D., & Coulter, M. (2012). Management (6th edition.). Frenchs Forest, NSW: Pearson Australia
Doeleman, H. J., ten Have, S., & Ahaus, K. (2012). The moderating role of leadership in the relationship between management control and business excellence. Total Quality Management Business Excellence, 23(5/6), 591 611.
Kráčmar, J., & Uhliar, M. (2012). THE IMPACT OF CONTROL PROCESSES ON MANAGERIAL DECISION MAKING. Problems Of Management In The 21St Century, 343-52.
Carroll, S. J., & Gillen, D. J. (1987). Are the Classical Management Functions Useful in Describing Managerial Work?. Academy Of Management Review,12(1), 38-51.
Sastrowardoyo, S., & Metcalfe, M. (2005). Knowledge management as organising inquirers. Information Knowledge Systems Management, 5(2), 101-116.
Ramona, T., & Anca, Ş. (2013). HUMAN RESOURCE MANAGEMENT - FROM FUNCTION TO STRATEGIC PARTNER. Annals Of The University Of Oradea, Economic Science Series, 22(2), 631-638.

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