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¶ … Cutting at Starbucks Japan
As early as 2002, Starbucks was responding to setbacks in its Japanese market by making efforts cut costs in its distribution and expansion business plans. One of its first measures was to look for new, local suppliers rather than relying upon its traditional American and international distributors. For instance, now, in-store mugs will come from a low-cost vendor in Japan rather than from the chain's Seattle home. "Starbucks is buying more of its paper goods from Southeast Asia instead of importing them from the U.S." Starbucks has also slowed its expansion in Japan adding just 80 stores in 2003, down from 115 from 2002. It closed ten stores in reliably "money losing" locations." (Dawson & Holmes, 2002)
Cutting back on the number of stores and curtailing costs, analysts say, may be the only way for Starbucks stop losing money and to "inject some steam back into the stock price. Starbucks shareholders may like their coffee with plenty of hot milk. But they like the bottom line black." (Dawson & Holmes, 2002) One reason for the company's financial troubles is Starbuck's high price of beverages in relation to local chains. Consumers also have expressed a dislike of the food -- even the supposedly specifically developed ice and-salmon wraps and white peach muffins were a flop. Such innovations indicated more about American perceptions of Japanese food tastes and needs than the Japanese palate itself.
By eliminating unpopular foods and unpopular but expensive drinks, Starbucks may be able to cut costs, especially if expensive and un-Japanese drinks like Carmel lattes are replaced by less pricey teas. Stressing the local nature of different locations of Starbucks stores to prevent competition overlap might be possible. For instance, entering into negotiations with popular local food vendors, rather than importing foods might be another way to cut costs and render Starbucks more specific and popular to Japanese tastes, as one Starbucks in one area caters more to business person's needs and tastes, and others to schoolchildren to make just one example.
Works Cited
Dawson, Chester & Stanley Holmes (December 19, 2002) "Is Japan losing its taste for Latte Already?" Business Week Online. Retrieved November 28, 2004 at http://www.businessweek.com/magazine/content/02_49/b3811148.htm
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