Starbucks Significance of Cultural Understanding for business performance

It is of no doubt that understanding of organizational culture is highly important for successfully entering into new market places. It is justified by the fact that when culture of organization is not aligned well with the culture of host market, then issues are witnessed in the performance of the organization (Gochhayat, Giri & Suar, 2017). For instance, Starbucks has used its original business model in Australian market and opened too many stores without considering the response of consumers. Additionally, Starbucks made an effort to introduce European coffee culture in Australia, while Australians have already developed taste for espresso coffee. It is indicated from the case analysis that Starbucks has made an effort to use its differentiated brand image to succeed in Australian market. However, it has not carried out any in-depth exploration of Australian coffee market culture and thus failed to meet the taste and preferences of Australian consumers. The result was closure of many Starbucks stores in Australia. 

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This case clearly shows that prior to entering into any international market the business needs to study the market culture with relation to its organizational culture. The alignment of cultural values of brand with cultural values of market is necessary for assuring success in new market (Polychroniou & Trivellas, 2018). The consumers mainly prefer brands which match with their values, taste and preferences. The lack of acknowledgment for customers’ culture and effort to impose home cultural values in international market are key causes of failure in international markets (Gochhayat, Giri & Suar, 2017).  Therefore, lack of consideration to culture can cause serious performance problem for the organization and inclusion of cultural understanding in expansion decisions of businesses is much needed.

References

Gochhayat, J., Giri, V. N., & Suar, D. (2017). Influence of organizational culture on organizational effectiveness: The mediating role of organizational communication. Global Business Review, 18(3), 691-702.

Polychroniou, P., & Trivellas, P. (2018). The impact of strong and balanced organizational cultures on firm performance. International Journal of Quality and Service Sciences.