Starbucks Coffee Company
Starbucks coffee company is a leading roaster and retailer of specialty coffees. It has its base in Seattle and has many stores within the U.S and internationally. The objective of starbucks is the establishment of Starbucks as the most recognized and respected brand of coffee in the world. For this goal to be achieved, starbucks continues to expand its retail operations by selectively pursuing other opportunities so that they can leverage and grow the company’s brand by the introduction of a variety of new products (Balaban, s & Kieta, C. (2008
Starbucks aims to enter more and more foreign countries. Among countries that Starbucks may consider venturing into is Italy. The initial idea to set up starbucks was from the Italian coffee tradition which was infused with the leisure approach found in Seattle. Despite the fact that the idea came from Italy, Italy has been considered a mountain that starbucks is yet to climb; even though Italy does not mean so much from an entirely pure business perspective (Faris, S 2012) This paper therefore examines the challenges that may be faced by Starbucks as reputational risks when the company attempts to enter the Italian market. It will also determine if any, the strategic advantages that starbucks has to enter the Italian market. Finally the paper will identify how competitor’s marketing strategies inform and influence Starbucks’ entry into this new market.
Starbucks has not entered into the Italian market yet, no starbucks outlet is anywhere in Italy especially at a very crucial time when Starbucks views its global expansion as a great key to its future growth. It is virtually impossible for one to walk into any European city and not find any Starbucks.Though Italy represents the height of coffee culture across the world and is termed as the gold standard which all other countries measure it also represents a reputational risk for starbuck’s entry. Even though the evolution of starbucks was due to the absorbance of the Italian coffee tradition, its structure is based around the American society. This is despite the fact that it was inspired on the Italian culture, hence, it is a probability that the sturbuck’s model would not fly in Italy. Italy can be viewed as a very good market with a big potential of entry owing to the fact that Italians love coffee. However there is no form of presence whatsoever of starbuck in Italy even though it’s founding was inspired right there in Italy.
The reputational risk posed in Italy is that the coffee market is famously crowded and fragmented. In Italy there are nearly 136,000 espresso bars, this number is roughly eight times the number of starbuck’s stores all over the world ( Alini, 2012).Proof is found just across the piazza from Caffe Miani which has been known as the areas prime location of coffee bars. There is presence of MacDonald’s with their fast growing McCafes which are becoming the fastest growing part of MacDonald’s Italian business. This McCafes have an Italian style bar that serves expressos, cappuccionos and other pastries and pies.
Apart from Caffe Miani and McCafe is another establishment Arnold coffee. This is a major challenge that starbucks faces in trying to address the occupational risks that they face in Italy. It has opened six locations five in Milan and one in the major airport in Verona. They are even set to open more and more shops in the next five years. The presences of all this shops pose an occupational risk for the entry of Starbucks and in particular Arnold Coffee’s presence poses a challenge to starbucks as it tries to overcome the occupational risk of entry into Italy. Another challenge that they face is the fact that the Italians are very choosy when it comes to their coffe.this is a very difficult aspect since starbuck has to ensure that the coffee they will offer is up to the Italians expectations or their normal coffee which they are used to.
Sturbacks strategic entry.
Unless starbuck decides to develop a correct strategic entry into the Italian market then it would fail. The people in Italy would be very reluctant to abandon their traditions and hence the risks of a failure may outweigh by a very big margin the possible rewards of succeeding in the market. In Italy there are very few places where they offer the comfort of sitting down with a book or laptop as one sips their coffee. Starbuck therefore has a potential of offering a place where people can hang out and sells coffee.Starbuck has registered tremendous success since it is not just selling coffee but rather a charming experience. Therefore this can pose as a strategic entry into the Italian market since starbuck will offer a home outside the home, an office away from ones boss and also a place to sit and chat and read as they take their preferred beverage.
Even if the Italians are picky about their coffee, they can be open to companies like starbucks that offer them a new and slower way of experiencing their coffee (Innovation Zen, 2006)
Competitors marketing strategies
Starbucks marketing strategies play a big role in informing and influencing starbuck’s entry into the new market. They can inform starbucks on what the Italians expect from starbucks if it will be able to enter into Italy. Their marketing strategies give clear information to starbucks on the likes and preferences of the Italians when it comes to their coffee. Their competitors pose a challenge in their entry, because these competitors have adopted similar structure and practices of starbucks. Arnold Coffee is starbuck’s imitator who have taken advantage and capitalized on the absence of Starbucks. The business model of Arnold Coffee is on the basis of starbucks, at some point it even had a logo that was in violation of starbucks trademark. Their set up has no much difference as starbuck, they give room for people to study and even their menu features American drip coffee, shakes and caramel macchiatos (Faris,S 2012).they have also adopted paper cups that they use to serve their customers.starbuck should not even enter Italy not unless they find a local partner since its market is highly fragmented than fear of measuring up to the strong coffee culture in Italy.
Alini, E. (2012).Italy meets starbucks. Retrieved November 9, 2012 from http://www2.macleans.ca/2010/10/28/italy-meets-starbucks/Innovation Zen (2006).Why starbucks is not present in italy.Retrieved November 9,2012 from http://innovationzen.com/blog/2007/01/15/why-starbucks-is-not-present-in-italy/Faris ,S.(2012).BloombergBusinessweek. Grounds Zero: A Starbucks-Free Italy.Retrieved November 9,2012 from http://www.businessweek.com/magazine/grounds-zero-a-starbucksfree-italy-02092012.html
Faris,S.(2012).BloombergBusinessweek. Grounds Zero: A Starbucks-Free Italy.Retrieved November 9,2012 from http://www.businessweek.com/magazine/grounds-zero-a-starbucksfree-italy-02092012.html#p3Balaban ,s & Kieta ,C. (2008).Starbucks coffee company. Retrieved November 9, 2012 from http://cobweb2.louisville.edu/faculty/regbruce/bruce//cases/starbucks/starbucks.htm