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Starbucks Critical Analysis

Decent Essays
2.3 Issues/ Problems with The Global Strategy
2.3.1 Lack of Rational Thinking and Decision Making
2.3.1.1 Emotional Commitment
Prior to entering and operating Starbucks in Israel, Howard Schultz had strong psychological and emotional ties to the country back in 1988. This could be explained as he was raised in a Brooklyn Jewish family and visited the Holy Land for the first time. In addition, the personal request of the Prime Minister of Israel for Starbucks to venture the business in Israel had the CEO of Starbucks to develop an emotional commitment and ignored the need of rational thinking. This led Howard Schultz to have a bias decision making, which he may not be acting upon the best interest of the company. It is risky for a company not
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Barton Goldsmith in an article in Psychology Today, “picking the right person for the right reasons at the right time is an art form”, which highlights the importance of finding and having compatible partners in pursuing common business goals. In view to this, Starbucks has a list of criterions in searching for the “right” match when engaging in a foreign partnership. Firstly, the partner must have shared values with Starbucks, that is the attitude towards employees. Starbucks believes that employees should come first, because if the welfare of the employees has been taken care of, the welfare of the customers will be well taken care (by them). Secondly, it is the product quality that Starbucks value, followed by the customer service and the mentality to give love before receiving it. Moreover, Starbucks finds a foreign partner who has real estate experience and knowhow. The final and least important element for Starbucks to consider is capital (Kotan,…show more content…
As stated by Howard Behar himself that “even all the concerns with whom we met are excellent, but it doesn’t mean they want us, and they also have their businesses to manage”. Eventually, Starbucks formed a partnership with DFIC, who has no experience in retail nor in food and beverage industry. The DIFC’s president, Giora Sarig made a rather infuriated “joking” statement that “the only connection between gas stations and Starbucks is that we both sell black liquid” (Israel National News, 2001). This showed that DFIC was unflustered by their lack of experience of products differentiated by service quality, in which it was incongruent with Starbucks values. The incompatibility between the two partners seemed to have worsened when DFIC focused on increasing efficiency in distribution such as opening Starbucks’ outlets in its gas stations, however Starbucks concerned on differentiating the product in the eyes of consumers by creating a “third place” (beside home and work) for community gathering and social interaction. Furthermore, DFIC’s termination of top executives due to poor sales performance was opposed by Starbucks’ corporate office as that practice was contrary to
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