Starbucks is one the largest coffeehouse chains in the world, dominating in countries such as the United States, however has struggled to make an impact overseas, in countries such as Vietnam or Australia.
Starbucks came into Australia assuming they had a strong consumer sovereignty. For example, they thought about ideal weather to drink coffee, working class people tend to drink coffee and is slightly more expensive by still affordable compared to a standard Australian coffee. However, Starbucks instead intruded on Australians tastes on their already existing coffee culture, decreasing people’s wants for the beverage.
Starbucks underestimated the current existing coffee competition in Australia, and they opened too many stores at one given time, which made it seem as if there was no such necessity for the drink because it was so available to them.
Starbucks poorly allocated their resources. Funding into other countries such as China would have received larger profits. This is due to Australia’s already existing coffee culture, Starbucks struggled to make a large impact, however investing in another country such as China which has less distinguished coffee tastes would provide larger revenue.
If Starbucks were to completely withdraw out of the Australian economy, it would make some workers lose their jobs, having a negative effect on the economy. However, due to Starbucks low popularity, their departure from the coffee sector would still have a negative effect on the Australian economy (as less people are buying their coffee), however it would be a large shift. Starbucks also benefits from the withdrawal, as while there may be an overall loss in their time in Australia, however they would lose less money as they currently investing large amounts from different resources, such as land, labour or capital.
References
Anon, (2020). [online] Available at: https://www.youtube.com/watch?v=_FGUkxn5kZQ [Accessed 23 Feb. 2020].
Encyclopedia Britannica. (2020). Starbucks | American company. [online] Available at: https://www.britannica.com/topic/Starbucks [Accessed 23 Feb. 2020].
T1 2016 MPK732 Marketing Management (Cluster A). (2020). Why did Starbucks fail in Australia? Is it the Coffee or the Marketing Strategy?. [online] Available at: https://mpk732t12016clustera.wordpress.com/2016/04/10/why-did-starbucks-fail-in-australia-is-it-the-coffee-or-the-marketing-strategy-2/ [Accessed 23 Feb. 2020].
Whitley, A. (2020). Bunnings, NAB, QBE: Why so many Aussie companies are failing overseas. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/business/companies/bunnings-nab-qbe-why-so-many-aussie-companies-are-failing-overseas-20180404-p4z7ob.html [Accessed 23 Feb. 2020].
Year 11 MHS Economics 2020 
Alot of australian companies have also failed overseas such as bunnnings etc.
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Thanks Martin for the insightful post. Never really noticed how Starbucks was unpopular compared to other popular coffee chains like Gloria Jeans and etc. If you were in Starbucks’ position how would you try to break into the Australian Coffee market?
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A very well written article answering a question I have had for a very long time.
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Personally, I believe that although the profits of starbucks aren’t as big as their stores in other countries, it is still something which is considered popular. This is especially the case for foreigners and tourists which rely on a brand which is well known. Although their profits aren’t as expected, it is still a popular brand for tourists, and their revenue should be able cover any of their expenses.
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Nice work, Martin. Really surprised by the fact that Starbucks didn’t live up to the hype in Australia, especially because of its popularity in other countries.
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