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Tuesday, September 27, 2005

Starbucks Case Study Analysis

In response to the losses generated by the oversea stores, Starbucks bought out partners in Swiss and Austrian markets and they closed six unprofitable stores in Israel and cut international expansion by 50 stores. However, Starbucks' sales and net earnings were still below the forecasting figures, which were reflected by their stock price as indicated in chart-2 (finance.yahoo.com). (chart) Underlying Causes " Competition was the major cause for Starbucks losing money on their overseas stores: o Competition existing inside US: Pea's Coffee & Tea, Seattle's Best Coffee etc.Europeans prefer a different blend of coffee. France has sidewalk cafes, Vienna has grand coffeehouses, and Italy's high-octane espresso bars, have made an art of coffee drinking. The British have long been heavy tea drinkers, plus the Starbucks coffee is more expensive than others. The Pacific Rim, including Singapore and Japan, was another challenge that Starbucks faced. These countries are also known as tea drinking nations.





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