International Business and Culture: Starbucks’s Australian Experience

The company had to pull away more than seventy five percent of its stores in Australia. In 2008, Starbucks had to close 61 out of 84 stores within the country, with a majority of its stores left in Melbourne and Sydney. Decision to close these stores was certainly not an easy one. Why it is that Starbucks was a huge success in the US, but went on to experience devastating failure in attracting and retaining the Australian coffee consumers?

Replicating the culture of operation in America within the Australian market was the primary reason for the company’s failure. As noted by Berg (2008), “Starbucks did not just sell coffee”, but far much more than coffee they sold “coffee culture”. This ploy succeeded in the United States in attracting many clients to their stores, clients who did not have liking for the drink at first. Moreover, the company strived to portray their stores as social hubs: places where their customers would love to come with friends and family but also where they would love to be seen. At the time that Starbuck entered the Australian market, it found an already existing coffee culture that had little resemblance of the American coffee culture espoused by the multinational company. Coming with this western culture, the company ignored the prevailing Australian conditions in the coffee market, deciding to impose the same on their prospective clients. It basically failed to adjust to the target market’s condition and the prevailing culture of the Australian coffee consumer.

Starting with the choice of location to begin with, Lygon Street in Carlton, Melbourne, and the imposing corporate image depicted by the coffee stores from their first launch in 2000, the company’s approach did not augur well with the Australian culture of having coffee in a much more relaxed setting without much social activity. Starbucks stores and their culture was a far cry from the existing quite and serene stores established by “home grown coffee chains” in the country (Mescall, 2008). This disparity too a far much extent displayed the cultural differences between America and Australia in regard to coffee culture. In spite of the fact that cafés had grown to be popular in Australia, their culture was to some extent dissimilar to the western culture imported by the multinational.

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