Department: Business & Construction – Higher EducationTAKE-HOME FINAL EXAMINATIONBBS305 2021, Semester 2 Page 1 of 6BBS305 Global BusinessSemester 2, 2021FINAL EXAMDue Date: 11/11/2021 – 5:00 PMStudent ID _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _Student Name _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _Unit Coordinator: Esha ThukralTotal Marks: 30Contribution to unit total mark:No of Pages (including cover sheet):30%6Allowable Materials• This is a TAKE-HOME EXAM• An unmarked, non-specialist, English dictionaryInstructions to Candidates: This paper consists of one (1) case study analysis of 2000 words with 4 case study questions worth30 marks.Students MUST include all references requested.Students should attempt ALL questions.Submission to be made by 11/11/2021 – 5:00 PMDepartment: Business & Construction – Higher EducationTAKE-HOME FINAL EXAMINATIONBBS305 2021, Semester 2 Page 2 of 6Case Study AnalysisStudents are to answer the following question:You will prepare a Case Study Research Review on: “Starbucks Global Strategy”You need to address the following:Executive summary and background (4 marks)What are the risks that a company faces when going for international expansion?Identify and explain the risks. (4 marks)Identify & critically analyse the strategies used by Starbucks for its internationalexpansion in most countries? (6 marks)What were the key challenges faced by Starbucks in Australia? What mistakes didStarbucks made in Australia? What are the types of risk that Starbucks faced inAustralia? (6 marks)Provide ways that Starbucks used to mitigate the risk and enhance Starbuckschances of success in Australia. (6 marks)Conclusion, References and writing skills (4 marks)Your answer(s) MUST include the following:Executive Summary (not included in the word count)Case Background (include a minimum of 2 academic references and 1 non-academic)Case Study Research Review (included a minimum of 3 academic references and 2 nonacademic)Problem Identification (included a minimum of 2 non-academic)Recommendations & Discussion (included a minimum of 2 academic references);ConclusionReferences: You must include a minimum of 12 references (7 academic and 5 nonacademic)Appendix: you must include tables/figures where required based on your research (notincluded in the word count).Make sure to correctly reference your sources as this assignment will be checked withTurnitin.Please submit this assignment via turnitin submission link on MoodleDepartment: Business & Construction – Higher EducationTAKE-HOME FINAL EXAMINATIONBBS305 2021, Semester 2 Page 3 of 6To be completed after reading the case study below. You will also need to do furtherresearch and find additional resources to complete your Case Study Research Review.Starbucks GLOBAL STRATEGYAmerican coffee company and coffee house chain. Starbucks was foundedin Seattle, Washington in 1971. Today it operates 23,768 locations worldwide, including13,107 (+170) in the United States, 2,204 (+86) in China, 1,418 (-12) in Canada, 1,160 (+2) inJapan and 872 in South Korea (bumping United Kingdom from 5th place) (Differences reflectgrowth since Jan 8, 2016). Starbucks is considered the main representative of “second wavecoffee”, initially distinguishing itself from other coffee-serving venues in the US by taste,quality, and customer experience, while popularizing darkly roasted coffee. Since the2000s, third wave coffee makers have targeted quality-minded coffee drinkers with hand-madecoffee based on lighter roasts, while Starbucks nowadays used automated espresso machinesfor efficiency and safety reasons.Starbucks locations serve hot and cold drinks, whole-bean coffee, micro-ground instant coffeeknown as VIA, espresso, caffe latte, full- and loose-leaf teas including: Teavana teaproducts, Evolution Fresh juices, Frappuccino beverages, pastries, and snacks; some offerings(including their Pumpkin Spice Latte) are seasonal or specific to the locality of the store. Manystores sell pre-packaged food items, hot and cold sandwiches, and drinkware including mugsand tumblers; select “Starbucks Evenings” locations offer beer, wine, andappetizers. Starbucks-brand coffee, ice cream, and bottled cold coffee drinks are also soldat grocery stores.Starbucks first became profitable in Seattle in the early 1980s, and despite an initial economicdownturn with its expansion into the Midwest and British Columbia in the late 1980s, thecompany experienced revitalized prosperity with its entry into California in the early1990s. The first Starbucks location outside North America opened in Tokyo in 1996; overseasproperties now constitute almost one-third of its stores. The company had opened an averageof two new locations daily between 1987 and 2007.Starbucks Coffee International, Inc. purchases, roasts and sells whole bean coffees, brewedcoffees, Italian-style espresso beverages, and cold blended beverages. The company marketsits products through more than 15,000 stores in North America, Europe, the Middle East, andAsia and the Pacific Rim among other regions. The company was founded and is based inSeattle, Washington. As of 2008 Starbucks operates in 44 countries. Starbucks CoffeeInternational operates as a subsidiary of Starbucks Coffee Company. Starbucks diversified itsbusiness. Starbucks now offers compact discs, books, and other lifestyle products. In addition,they have created several strategic alliances with food manufacturers both domestic and abroadDepartment: Business & Construction – Higher EducationTAKE-HOME FINAL EXAMINATIONBBS305 2021, Semester 2 Page 4 of 6Company HistoryIn 1971 the first Starbucks store was opened in Seattle’s Pica Place Market by Jerry Baldwin,an English teacher, Zev Siegel, a history teacher and the writer Gordon Bowker. In 1982Howard Schultz joined the company as a director of retail operations and marketing. He sawpotential in Starbucks and started to build up a coffee house culture in Seattle. In 1984 Starbucksenlarged its product mix, adding coffee specialties like different kinds of Cafe Lattes andespresso beverages. In 1985 Howard Schultz left the company and set up his own Coffee Bar.Shortly after, Starbucks began losing money on its expansion efforts. Howard Schultzpurchased the struggling company in 1984. He then combined Starbucks with the firm’s nameto Starbucks Corporation. New and experienced managers were hired and successfully turnedaround the business. By 1991 Starbucks was doing well enough to offer stock options to all oftheir employees.ExpansionIn 1992 Starbucks once again began expansion efforts. This time Starbucks set up coffee shopsin department stores and bookstores and provided coffee to Sheraton Hotels. By the end of 1993Starbucks had opened a new roasting plant and the number of stores locations neared 275.Starbucks began operating internationally in 1996. Their first international venture was openinga Starbucks in Tokyo. In the same year, Starbucks began operating an online coffee shop calledCaffe Starbucks. This venture, in particular, was ahead of its time and not necessarily assuccessful as other ventures Starbucks was involved in. However, Starbucks kept on expandingin domestic areas like Florida, Michigan, and Wisconsin and further internationally evenopening a store in the Philippines in 1997. In the next year, Starbucks opened several stores inThailand, Taiwan, New Zealand, and Malaysia and in the UK. Starbucks entrance into theUnited Kingdom was markedly different. There they acquired an existing firm, “Seattle CoffeeCompany”, and used the existing stores to transition into the market. In the same year,Starbucks expanded its brand name into several different grocery market chains andconvenience stores. Domestically, they focused on entering new states like Louisiana, Oregon,Kansas, and Missouri. With business booming, the company continued expansioninternationally and domestically. Between 1999 and 2002 Starbucks began operations in over15 nations. After 2002, Japan had over 300 Starbucks cafes, and there were over 5,886 shopsworldwide. As of 2008, there are at least 15,756 Starbucks cafes and licensed stores inoperation.Beyond this, one of the biggest benefits of operating globally with a local presence is theopportunity it provides to develop a deeper understanding of the markets in which yourcompany operates and their potential. It enables you to prioritize and optimize your efforts andbudgets effectively. And last but not least, it gives you as many territories to test and learn from.For each campaign or activity, you run, you will gather feedback and suggestions from a rangeof markets. This is invaluable insight you can leverage by developing a repository of bestpractice and ideas which will help drive your long-term success.Department: Business & Construction – Higher EducationTAKE-HOME FINAL EXAMINATIONBBS305 2021, Semester 2 Page 5 of 6Some of the methods Starbucks has used to expand and maintain their dominant marketposition, including buying out competitors’ leases, intentionally operating at a loss, andclustering several locations in a small geographical area (i.e., saturating the market), have beenlabelled anti-competitive by critics. For example, Starbucks fuelled its initial expansion intothe UK market with a buyout of Seattle Coffee Company, but then used its capital and influenceto obtain prime locations, some of which operated at a financial loss. Critics claimed this wasan unfair attempt to drive out small, independent competitors, who could not afford to payinflated prices for the premium real estate.Vision StatementStarbucks Coffee does not readily present its vision statement. However, a careful reading ofthe company’s website reveals that its vision statement is “to establish Starbucks as thepremier purveyor of the finest coffee in the world while maintaining our uncompromisingprinciples while we grow.” This vision statement has the following components relevant toStarbucks:Premier purveyanceFinest coffee in the worldUncompromising principlesGrowthProblems with International ExpansionNot all challenges faced by companies seeking to expand internationally are so tangible innature. When negotiating a path through new and unfamiliar markets, cultural considerationscan all too often be underestimated or swept under the carpet as an afterthought. In actual fact,managing the cultural implications of international expansion is a non-negotiable ingredient forits success. Companies that get to grips with cross-cultural communication are the best placedto use shared information and experience to enhance their competitive position at home andabroad.They are also far better equipped to deliver their long-term business objectives. It’s importantto appreciate and assimilate the subtle differences in verbal and non-verbal communicationacross cultures. And language is perhaps the least of the cultural obstacles that internationalmanagers can face. If misconstrued, even barely perceptible nuances of gesture, eye contact,tone, and humour have the potential to offend, and can even derail projects if not dealt withswiftly.Business cultures themselves can also vary widely, with significant deviations among countrieson attitudes to challenging authority, resolving conflicts and even working with members of theopposite sex fluctuating significantly between countries. This is where strong, sensitive andflexible leadership from the management team can be invaluable for keeping things on track.With multi-cultural businesses fast becoming the rule, rather than the exception, managers areincreasingly recognizing the value of working with the diversity of a cross-border team to createDepartment: Business & Construction – Higher EducationTAKE-HOME FINAL EXAMINATIONBBS305 2021, Semester 2 Page 6 of 6mutual trust, recognizing that the creativity engendered by a multi-cultural team can lead tomore rounded decisions and more effective plus productive performance.Lack of understanding local culture is even more evident in Starbucks entry into Australia.When Starbucks penetrated the Australian coffee market in 2000, the company approached theEndeavor with great ambition. Not only did they build stores in major cities like Sydney andMelbourne, but they also set up stores in less populated communities that occupy the coastalregions of the country. By 2008, they had established 85 stores. All the stores were internallystructured and operated the same as they do in the United States. Essentially, they attempted toinfiltrate the Australian coffee market by establishing their presence within the market relativeto their presence in the US and other international markets.The Australians were not impressed by the Starbucks coffee culture. Starbucks had beensuccessful all around the world, but some people did not want to buy coffee from the corporategiant. Those who had tried Starbucks were not impressed by the product. Consumers said it didnot compare with the numerous local brews available which were largely better. StarbucksInternational failed to pay attention to the Australian’s passionate coffee preferences andculture.
