The Downfall Of Starbucks In Australia: Analysis Of Macroeconomic Factors And Employment Policies

Macroeconomic Factors Impacting Starbucks

There are few of the crucial macroeconomic factors that led towards the decrease in the execution of the business factors of Starbucks. It has been seen that between the years 2008 and 2009 the respective rate of unemployment in Australia got increased by 1.75% from 4 to 5.75%. This is one of the factors that affected the growth and execution of the business process of Starbucks. On the other hand, it resulted in increase in the cost of labors throughout Australia, where Starbucks had o spent more amount and this significantly affected the overall performance of the firm. This factor also forced star buck to go for inexperienced candidates at a lower rate in order to perform the required business process of the organization. The economic growth of Australia got significantly weakened in the year 2008 because of the decrease in its respective GDP ( Hwang, & Seoa, 2016)  This resulted in global financial crisis and then a program was effectively launched by the firm in order to slash the costs by $500 million USD and it also resulted in closure of a large number of the stores across different parts of Australia. On the other hand, there are several macroeconomic indicators which includes the increase in the amount of $270.82 billion USD by GDP and it is the 4.9% of the required increase. There has been rise of about 6.0% of the concerned interest rates as compared with the data evaluated in the year 2008. Also, he unemployment rate has generated great amount of impact on the execution of the business procedures of star buck and it negatively influence the growth of the organization throughout the concerned competitive market segments.

The change in the employment policies has also generated great impact on the overall performance of Starbucks. As per the far work bill of 2008 there were major changes that affected the valuation of the work processes of star buck in the business field. The policy included maximum weekly hours of the work and there was right for requesting flexible work environment which somehow affected the execution and evaluation of the business activities of Starbucks (Martins, Rindova, & Greenbaum, 2015).  Other benefits included parental leave along with the related entitlements, annual leave as well as compassionate leave. The provision of the fair work information statement as well as the notice of termination were providing barriers in not fulfilling the desired needs of the organization.  

Change in Employment Policies and its Impacts

Starbucks did not realize the local culture of Australia and tried to set up their existence on the basis of traditions of America and other global markets (LAING & FROST, 2016). The Australian Starbucks never paid attention to the taste of local brews of Australia, which was a major concern. The coffee lovers were not at all satisfied with the standard of coffee of the Starbucks (Balboa, 2014).  This led to the vital reason of the downfall of Starbucks in Australia as the major part of their revenue came from the foreign visitors to Australia.

The Australian society along with the social factors also had an essential role for the downfall of Starbucks. The success of Starbucks in other countries led them to open its stores in Australia but they failed to judge the nature of the Australian market.

The first store of Starbucks was inaugurated in Seattle in Washington on the year of 1971and it became the largest coffee chain in the world with approximately 15,000 stores all over the world. (Honack & Waikar, 2017). They came to Australia with the thought of making the similar success like they did in China or Japan where they inaugurated more than 2000 stores in few years.  

By the year of 2002 the Starbucks had reached about 90 stores in Australia according to the successful plans which were adopted in England and China. The success stories of Starbucks in other countries depends on the fact that they introduced the European coffee culture in a market where there was no tradition of coffee in the past, but Australia already had a rich tradition of coffee and so brands like Starbucks and its successful implementation of plans in the past of proves failed for the local coffee market of Australia.

The idea of fast development of Starbucks had not worked well in Australia. The people of Australia mainly depends on the local brews that means the local customers would have taken time to change their taste towards the coffee of Starbucks. The local people of Australia mostly likes the taste of their regular coffee bar.

The Starbucks avoided their prospective consumers and started inaugurating several stores in Australia in a gap of few months. The Starbucks started its first store in Australia in the year of 2000 and by the year of 2008 they already had 90 stores all across Australia (Snell, Lemley,Snell, Yemen, 2017).  The Starbucks was not fitting in the market of Australia with their doubtful services to the clients besides their high prices compared to the local coffee bars. The policy of fast growth of Starbucks in Australia also led them to appoint inexpert employees who are vital part of a coffee bar. The Starbucks ignored the necessity of exploring the local coffee market of Australia and had taken the risks of expanding their brand in a new market which led to the closing of 61 stores in Australia by the end of 2008.

The methods that Starbucks should have adopted in Australia to overcome the fall of coffee market:

• The Starbucks should have ignored their success stories in other nations considering the fact that all markets are not same. While launching a product in a new market with stable coffee market, the Starbucks should have avoided its past status and its personality.
• The famous brand would have appointed experienced employees to provide a better customer service. The employees at the Starbucks were mostly young men and they frequently compared to the employees of other coffee bars or smaller brands. The Australian public felt that the staffs of the Starbucks did not have sufficient information about their product (Wilkof, & Wilson, 2017). The brand should have employed passionate and trained staffs and if this fact was considered at that time the Starbucks would have captured the Australian coffee market.
• The Starbucks should have done detailed research of the local Australian coffee market and its culture. It is a clear fact that the culture of America would be different from the traditions of Australia. The public of Australia were not at all satisfied with higher pricing and their market product (Davila, Foster, He, & Shimizu, 2015).
• The Starbucks should have collaborated with established local Australian coffee market in order to gain local information(Schlegelmilch, 2016). The Starbucks of Australia did not promote their brand in the local market and it failed to connect with the local public to gain any information about the taste of coffee lovers of Australia.

References

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LAING, J., & FROST, W. (2016). The food revolution in Melbourne, 1980–2015. In Food Consumption in the City (pp. 136-152). Routledge.

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