What are the major sources of risk facing the Starbucks and discuss potential solutions?

Answer 1

Basically, Starbucks faces three major risks at domestic region, one of which was the saturated market condition in the USA. Fifteen years ago, they initially started with 17 coffee shops in Seattle. Now, amazingly it has over 16,000 outlets in 44 countries. It has 4,247 stores scattered across the United States and Canada. In Seattle, there is outlet for every 9,400 people, and the company considers that the upper limit of coffee shop saturation.

Another risk is losing customers, because fewer options are available for the customer. Third risk is less but not the least, the young generation (Generation X) feels comfortable.

Global expansion poses huge risks for Starbucks. For one thing, it makes less money on each overseas because most of them are operated with local partners.

Potential Solutions: Basing on the risks that Starbucks face, the following solutions may be helpful:

o The risk of market saturation which is one of the risks that Starbucks faced in USA is being solved by focusing on international and global marketing. It may also focus on the fact of reducing employee disruption to increase the quality of service and coffee for which they are well known.

o As they were facing ominously hostile reception from its future consumer (Generation X), they should reposition their product according to customer needs.

o As coffee is the core product of them to serve, they should give more focus on improving the quality of coffee. They may make arrangement for some other items beside coffee as well.

o As Starbucks is going abroad to expand its business, it will face the two great obstacles with the local partners there which are: SRC and Ethnocentrism. The firm can overcome these obstacles through proper adjustment keeping SRC and Ethnocentrism away in decision making.