International Business and Culture: Starbucks’s Australian Experience

Labeling of their products with names Australians found weird, only served to further alienate the very customers they were targeting. Before their advent, coffee products known to the consumers were of a very limited range as indicated by the already existing coffee chains; cappuccino and about three varieties of lattes (Mescall, 2008). Names like “Decaf Mocha Grande” did at first arouse interest but not much to sustain the customers who were more at home to the basic coffee products as illustrated by Mescall (Ibid). Some innovative products designed for the highly versatile American market were doomed to fail in lieu of not factoring the local conditions as dictated by the Australian culture. Advertisements depicting the various sizes of coffee products also felt as an affront to the customers used to the standard cup size present in all coffee stores by the local rival companies. Having a much relaxed culture associated with coffee, the Australians were likely to find the fanciful and rather more socially active culture portrayed by the US multinational, on a scale different from their own. As pointed out by Mescall (2008), it was as if Starbuck was saying “that is not how they should have continued to drink coffee”, with theirs as the better way of consuming the precious cup of coffee.

Understanding the culture of the target market is a vital and very essential condition for any company after decision has been made to invest in that region. As pointed out by Hofstede, cultures are different and what has meaning in one culture most certainly would have a different meaning in another cultural region (Peng, 2010). Starbuck could have prevented its imminent failure by first ensuring it had clear grasp of the prevailing culture (Johnson & Turner, 2009). With the cultural know-how, Starbuck would have stood a great chance of adequately learning of all social cultural aspects that would have impacted on their traditional model of operations, further necessitating a corresponding change in their operation within the foreign market. As such, this would have ensured that the interests and desire of their targeted consumers went into designing and production of its coffee products. Any business in order to succeed has to pay all attention to the customer, and in like manner, Starbuck should have esteemed the Australian coffee culture and taken all measure to adjust to the local condition. The one-size fits all approach does not apply when operating in two diverse cultures, and as seen by Starbucks experience, as well as other multinational companies like Wal-mart who have failed in foreign markets due to the simple reason of ignoring local culture.

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