Starbucks' Australian Experience

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Case Details:

Case Code : BSTR304
Case Length : 24 Pages
Period : 2001-2008
Pub Date : 2009
Teaching Note : Available
Organization : Starbucks Corporation
Industry : Coffee Retailing
Countries : Australia; Global

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"We have had to make a series of decisions that, in retrospect, have led to the watering down of the Starbucks experience and what some might call the commoditization of our brand."¹

- Howard Schultz, Chairman, President, and CEO, Starbucks Coffee Company, in a company memo to top execs on February 14, 2007.

"Part of the problem is that Starbucks' original business model just doesn't translate across markets. Starbucks original success had a lot to do with the fact that it introduced European coffee culture to a market that didn't have this tradition. Australia has a fantastic and rich coffee culture and companies like Starbucks really struggle to compete with that."²

Nick Wailes, Associate Professor, expert in strategic management in the Faculty of Economics and Business at the University of Sydney, in 2008.

Starbucks: Down Under?

On July 29, 2008, Starbucks Coffee International, a subsidiary of Starbucks Corporation (Starbucks), Seattle, USA, one of the largest coffee chains in the world, announced its plans to close down 61 of its 84 stores in Australia by August 3, 2008. As a result, 685 'partners' would lose their jobs. The company also announced that with effect from September 1, 2008, Jason Ball, store development manager, Starbucks Australia, would take up the responsibility of Managing Director. According to the company, this step toward streamlining its business in Australia was a part of the multi-faceted 'transformation strategy' to bring the company back on track, taken up by founder Howard Schultz (Schultz).

Starbucks' Australian Experience - Next Page>>

1] "Executive Leaves at Starbucks,"www.vmsd.com, August 1, 2008.

2] Daniel Palmer, "Starbucks: What Went Wrong?"www.ausfoodnews.com.au, July 31, 2008.

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