Drinking coffee is a social event, not the Starbucks idea of 'coffee to go'.
This is the same case in Italy, where there are literally dozens of traditional ways of making coffee. It is difficult to impose on such mature markets that have developed, during history, their own ways of attending to the coffee drinking phenomenon. It is by no surprise that the only place in Europe where Starbucks truly caught on was Great Britain, another traditionally tea-drinking country.
If we look at these risks, we can draw the conclusion that this rate of expansion on markets which are not as absorbent as others can have dramatic consequences for Starbucks. Any financial losses that might occur in these markets will have to be multiplied with the total number of stores that were actually opened. In this sense, a more cautious approach is much more recommended, with simple experimental store openings on different difficult markets, to simply see how the market is likely to react.
On the other hand, more and more we see Starbucks implementing traditional ways of drinking coffee. In Vienna, for example, the customers can actually sit at a table and enjoy the coffee the traditional European way. This increases the chances of stores such as this being successful on the European market.
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The franchise expansion will allow the organization to greatly minimize its risks and lower its expansion costs. This is also a fast way of entering a new market and, in the eventuality of a successful turn of business events, allows the franchisor to gain a significant profit at a low risk.
On the other hand, it is also probably advisable to continue the expansion in areas and countries where Starbucks was already successful instead of attacking markets where traditional coffee-related mechanisms are not likely to change and where new customers are difficult to be obtained. In this sense, places such as the U.S. And Canada, Great Britain and Japan appear as locations where the business can be further expanded. The Japanese market, for example, is still relatively unexplored and with significant potential.
This decision is simply based on the previous risky experience that Starbucks has had when expanding to unknown markets. Cultural differences significantly cut on the profits that the company was otherwise able to obtain simply because these were overlooked and not properly studied. The company can expand to known markets that still have high potential.
