Starbucks Adapting to South American model

Starbucks being a Company that major in coffee alongside other related products like salads and baked goods started its business targeting college students. Starbucks Company has managed to expand its market globally and currently has over 200,000 coffee houses in more than 60 countries (Kotha and Glassman, 2003). The Company has made efforts in its marketing strategies to venture into South American markets and Asian Markets as well. Starbucks has therefore been able to expand into markets in Asia and successfully adapted to the unique culture of Asian countries. This has then enhanced the marketing and general trading of Starbucks products in Asia.

Expanding into South American markets is a great opportunity to the Company. Thorpe (2012), puts it that considering its marketing strategies and its model, Starbucks is in a position to successfully adapt to the business model of South American countries given that it is able to venture into countries like Brazil which has a very heavy coffee culture. Starbucks’ model aims at becoming the best coffee company that is recognized all over the world. The company’s strategy therefore is to set up multiple coffee stores and blanket an area entirely with its stores. In that case, the company will definitely be able to handle any losses and other business problems that are likely to face their venture into a new market model in the South America (Kotha and Glassman, 2003).

According to Griffin, (2007), there are some variables though that the company should be most concerned about to ensure its success. One of the variables that should be improved is customer connection with the company as well as the bargaining power of its customers. The impression created in the stores should fit the local settings and customers should be in a position to influence prices and even bargain for products and services of high quality.

Having many coffee stores packed in one area will ensure that losses incurred by the new stores are covered up by the existing stores while the company’s revenue continues to grow. Starbucks also prefers to work directly with the host country and operating jointly with a popular local firm in the particular country (Griffin, 2007). For example, partnering with a local Brazilian coffee based company. In that case with will definitely adapt to the models of the new market, in this case the South American market.

The strategy of establishing several foreign relationships has worked in marketing Starbucks’ coffee. Therefore, with several coffee stores over the world, any drop or setback in the economy is not likely to hake the company’s operations nor affect its accounting system significantly. The strategy of high pricing in selective markets also secures the company in case of any drop of economic activities. For instance, in China, a cup of Starbucks coffee is more expensive than a cup of coffee from Starbucks in America (Thorpe, 2012). This strategy ensures that the company is in a position to get profits even with very low sales volume.

It will then be obvious that the South American local coffee firm, say the Brazil based firm jointly operating with Starbucks will adapt some of Starbucks accounting policies. If the company will be able to meet Starbucks operational standards then it will be in a better position to successfully adapt the accounting policies applied by Starbucks (Thorpe, 2012).

 

References list

Griffin, R. W. (2007). Fundamentals of management: Core concepts and applications. Boston,     Mass: Houghton Mifflin.

Kotha, S. and Glassman, D. (2003). Starbucks Corporation: Competing in a Global           Market. Washington: University of Washington.

Thorpe, J. (2012). Climate change risks and supply chain responsibility: How should companies    respond when extreme weather affects small-scale producers in their supply chain?. Oxfam GB.

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