How to Avoid International Expansion Mistakes – Archival Research on Starbucks' Failure in Australia

Abstract

This study examines the strategic challenges and opportunities Starbucks faced while expanding into the Australian market. Through archival and interpretative research methods, the study highlights the importance of local branding, cultural sensitivity, and customer-focused strategies. This study brings together the results of the analysis of strategic threats and opportunities for the Starbucks Company in the Australian market in the context of the historical development of the global coffee culture. The path describes the evolution of coffee houses from social and information-sharing centres through the emergence of Starbucks’ stations to a worldwide image with many related props. Based on the archival research method, this study reveals the multifaceted nature of the phenomenon studied, coffee culture, and the need for local branding and changes in the global context. The research uses an interpretative research method, mainly inductive, to come up with patterns of Starbucks’ challenges in Australia. The research wittingly identifies challenges Starbucks faced while seeking to expand its business to the Australian market, which was not limited to the local environment. These are some of the challenges that originated from peculiar features of the consumption of coffee in Australia, pointing out where Starbucks’ strategy went wrong. Based on these findings, this study provides managerial implications for global brands that target new markets. Such include the need for culturally sensitive plans, customer-oriented plans, and the need to partner. Also, it underlines the crucial role of the management of improvement programs in successfully adapting the company’s operational and organizational factors in the foreign environment. This research contributes to combining the empirical data with theoretical models, which helps understand the nuances of market entry decisions. This enlightens the working interface of cultural, branding, and consumer decisions, which are immensely handy for multinationals.