Starbucks' reputational challenges and cultural barriers in Italy

Starbucks' Reputational Risk in Italy

Starbucks has built one of the most respected and well-known consumer brands globally through consistently high standards of execution, a focus one exceptional customer experiences, and a belief that consumers needed a third place, away from work and home to relax. These insights and more from the article Grounds Zero: A Starbucks-Free Italy (Faris, 2012) is the basis of this analysis. Starbucks' many challenges in addressing their reputational risk in Italy, the breadth and diversity of competitors, the drastic differences in coffee taste preferences present formidable challenges for their growth in this nation. Ironically it was in Milan, Italy where Starbucks CEO originally got the idea for the Starbucks experience of being in a cafe, not a traditional American coffee shop (Faris, 2012). To succeed in this market however Starbucks will need to be more effective at managing their competitive threats, capturing opportunities, and managing the differences in coffee taste preferences the nation has.

Article Analysis

Of the many challenges that Starbucks faces in attempting to launch their chain of coffee stores in Italy, the greatest is how different their definition is of a cafe relative to the traditional Italian coffee house (Faris, 2012). Starbuck's focus on being a 3rd place isn't that aligned with the Italian mindset of how coffee is purchased, consumed and the experience of being in a store. This cultural difference is significant enough to lead to the many competitors Starbuck's has in Italy choosing to further go in the direction of local customer preferences instead of emulation them, a global brand.

The second most significant challenge for Starbucks is the perception of coffee quality, taste and composition between the Italian competitors and Starbucks. The Italian competitors often mix coffee bean blends to create a more robust, acidic type of flavor in their coffees Starbucks has standardized on aribaca beans for better flavor. In addition to the flavor differences, there are also differences in serving size, temperature, and in the case of espresso, the unwritten rule it is not ordered after 10am (Faris, 2012). This presents a challenge for Starbucks as their product strategy has centered on 24/7 availability of any beverage, in any size, and with a multitude of combinations available. The Italian coffee consumer doesn't care about the finer points of the Starbucks' value proposition of having many different potential drinks available. Italian competitors including Caffe Miani, McDonald's McCafe and Arnold's Coffee are concentrating on the key requirements of the Italian coffee consumer over any breadth or depth of additional product lines. For these competitors, the focus is on having excellent Italian-grade coffee, pastries and bakery items, in addition to store layouts that lend themselves well to quick service three times a day (Faris, 2012).

Conclusion