An Analysis Of Starbucks Coffee Company In The United Arab Emirates

Mission and Vision Statement

Discuss about the Role of Brand Personality in Franchise Business.

Starbucks Coffee Company is renowned in the coffee industry because of their high quality products and the quality of service. The first initiative of the company was started in the year 1971 in United States. The first store was opened in Seattle’s Pike Place Market. Gradually the Company has proved its quality and service and today it has more than 21000 retail stores in 66 countries (mena.starbucks.com 2018). Besides providing handcrafted beverages like espresso, frappuccino and non-coffee blends like Starbucks refreshers the Company is also popular for its customer services.

In this regard, this report is going to discuss about the Starbucks Coffee Company located in United Arab Emirates. The reason for choosing such location is to understand the business dynamism of the company in a global scale. Moreover, it can be argued that the achievements and popularity of the Starbucks Company has been analysed only in the Europe and Australia. There are no such efforts to be taken in order to assess the business operation of the Starbucks Company in Asian region especially in the Islamic regions of West Asia (mena.starbucks.com 2018). Therefore, the report is very significant in order to map the impact and organisational performance of the Starbucks Company in countries like United Arab Emirates. In course of the understanding, the report takes support of different business matrix in terms of Competitive Profile Matrix (CPM) and External Factor Evaluation Matrix (EFE) which provides a detailed analysis of the operational framework and practices of the company in the United Arab Emirates region.

The US based Coffee giant Starbucks had initiated its journey in the West Asia by opening its first cafe in the Dira City Centre in Dubai in the year 2000. In fact, by the end of that year the Company was willing to open seven cafes in the region in the Emirates. In this regard, the M.H. Alshaya Company was the earliest company to set a partnership with the coffee giant. In the words of the CEO of M.H. Alshaya Company, Mohammed Alshaya it can be argued that  the investment and entry of the Strabucks Company into the market of Emirates had amde a great deal of impact on the market dynamics of the country (mena.starbucks.com 2018).

The mission and vision of the company is strictly related to its customers and for the benefits of the customers the Company sets some mission and vision statement. According to the company website, the mission statement of the company is “one person, one cup and one neighbourhood at a time” (Starbucks Coffee Company 2018). Therefore the company firmly emphasises on the quality of the products with great care and services.

Political and Economic Environment

However, in case of continuing its business operations in the Emirates there must be some addition to the mission statement of the Starbucks UAE. In this regard, the new mission statement of the Company will be “Providing the best quality coffee beans with a soothing oasis environment.”

• It is important for every Company to diversify its business operations by introducing new products that are more attractive than the existing items. In case of the Starbucks UAE, it will be beneficial if the Company introduces some special items blended with the West Asian tradition (Bauer, Matzler and Wolf 2016).
• Home delivery can be another possible opportunity for the Starbucks UAE. It can be stated that through this strategy the company will be able to attract maximum customers (Koehn et al. 2014).
• Lunch items can be considered as an important factor that will ensure more customers for the Starbucks Company.

• In respect to the marketing aspects of Starbucks in UAE, the biggest threat is resembled with the intense competitiveness in the market. In this regard, Costa Coffee is also expanding its business in a rapid pace in UAE (Latif et al. 2014).
• It can be stated that the price of coffee beans in Starbucks UAE is too high in compare to other beverages Companies. It is identified as a major setback for the Starbucks Company in a long run (Grant 2016).
• Moreover, it can be articulated that the environment and the practice of Starbucks UAE closely follows the lifestyle and culture of the European countries. However, there is huge gulf between the tradition and culture of Europe and Asia (Rothaermel 2015).

The political situation in UAE is quite stable in compare to the other regions of West Asia. Furthermore, the quality of life style is also high in Emirates. Therefore, it fosters a good environment for Starbucks to expand the business in UAE (Pangarkar 2015).

According to the annual report of the Emirates government, it can be argued that the Emirates economy relies on a good economic support with $668.9 billion amount for the GDP (Elshelmani 2018). Moreover, the unemployment rate is very low with the percentage of 3.7 (Byun and Dass 2015). In fact, the inflation rate is also restricted into a good percentage of 1.8%. These figures reflect the healthy economic environment for the company to invest here (government.ae 2018).

The local community of UAE is also very relaxed and fun loving. However, there are some customs and taboos in the Emirates society that put some ban on the rights of the women. In fact, the hostile attitude towards the western culture makes it problematic for the giant companies based on western countries to invest here (Burmann et al. 2017).

Technological advancement is another facet that can foster a great deal of boost to the economy and business irrespective of its industry and sector in UAE (Ng and Tan 2015). Therefore, it will be beneficial for the Starbucks to ventilate its interests in order to expand business in the region.

Limited water resource and the air pollution are the leading environmental challenges in UAE. Based on this understanding, it can be stated that the foreign business companies must have a framework to prevent the environmental challenges in the region (government.ae 2018). Therefore, the Starbucks Company is also compelled to deal with the limited water resource issues specifically.

The legal system in business is very transparent and direct in UAE and as a result of that it is helpful for the foreign investors to express their willingness to invest here. As a matter of fact, according to the “Doing Business 2010 Report” UAE ranked 8^th internationally which proves the better environment for business in the region (Abudhabi.ae 2018).

The internal factors of a company are responsible to identify the possible internal environments that are strictly dealt with the future development of the company (Shayah 2015). In this regard, the possible internal factors of Starbucks UAE are as follows:

• The brand image of Starbucks is very high and popular because of the quality and service they provide is exceptional. Therefore, it can be stated that despite of having issues regarding the external factors the company can develop its business operations firmly (Robinson 2016).
• Moreover, the global supply chain of Starbucks is also a key factor that facilitates a strong support to the continuous supply of raw materials to the production of the company (Nan, Y. and Li 2017).
• Diversification is also considered to be an important aspect in this regard. The Starbucks Company is strongly put focus on the product diversification. In fact, in every week the outlets change their menu based on the customer preferences (Brannon, D.L. and Wiklund 2016). Furthermore, there are a number of subsidiaries who are helping to change the course of the business orientation of Starbucks UAE. Therefore, this strategy generates more profit for the company.

• High price is considered to be a major setback for the Starbucks Coffee Company. In this respect, it can be argued that the high price strategy makes the target customers limited and identified as detrimental to maximize profit (Kumar 2016).
• The main popularity of Starbucks is their Coffee. Despite of having different kinds of products the company does not get much appreciation in this regard. As a matter of fact, customers are fonder of the coffee products of Starbucks rather than other items provided by the company (Haskova 2015).
• In addition to this, the products provided by Starbucks UAE are imitable. In fact, there are other coffee rosters that produce the same quality beverages (Khan and Agha 2015).

Environmental Challenges

There are some recommendations regarding the business operation of Starbucks in United Arab Emirates. The recommendations are as follows:

• Reduction in the product price will be an effective step to incorporate more customers. In this regard, it can be argued that the management team of the company should put emphasis on this issue.
• In this context, the product diversification is a major factor. It can be stated that the Starbucks Company should expand its business orientation with the addition of providing more services and food items in the menu list. In fact, initiating new ventures is also a better strategic step for the company.
• Due to cultural differentiation between Europe and Asia, the Starbucks Company should implement some initiatives related to the culture and tradition of Asia in order to successfully develop the business in UAE.

According to the Space Matrix, it can be argued that the Starbucks Company has to implement an aggressive strategy in terms of short to medium. In this regard, it can be argued that the WO and WT alternatives are taking extremely defensive or aggressive stance and as a result of that those elements will be eliminated. In addition to this, the reason behind such position can be identified to emulate low pricing strategies of the competitors. Subsequently, a pertinent question arises with the strategy of the Starbucks Company to sustain its business operation in UAE. The question is whether Starbucks should go for its business expansion or continue the existing market shares. Based on this understanding, it can be derived that the matrix rightly points out a conflict between SO and ST. As a result of that the dimension and evaluation of the SPACE matrix will be as follows

As far as the Competitive Advantage is concerned, in the global scale as well as in UAE Starbucks company has firm position in terms of leadership in market, superior location of the stores, supply chain management and the brand image.

In response to the strategic position of Starbucks in the UAE market, it can be argued that the financial performance of the company is quite satisfactory. As a matter of fact, the financial ratio of Starbucks UAE is highly positive and even the profitability and the liquidity ratios are increasing in a very aspiring trend.

Based on the PESTEL analysis it can be derived that the UAE market for coffee and beverages is very healthy for business. In fact, the government support and legal transparencies make the scenario more suitable for Starbucks to take an interest in expanding their business in the far East region.

Despite of having an array of issues regarding the environmental sustainability of Starbucks, the Company is doing well since its early days. Furthermore, there are innumerable initiatives taken by Starbucks UAE that will guide the company to earn more profit in future. In addition to this, the technological advance plays like a catalyst in the process the fosters a support for the future sustainability of the Company.

• For the management team, it will be helpful to add any Asian recipe in the menu list of the company. However, it will be beneficial to enlist UAE dishes specifically like Kabab so that the customers will be satisfied highly.
• As far as the marketing team is concerned, reducing the price of the product can be achieved by decreasing the expenses in the production costs. As a matter of fact, using energy saving items will be relevant in this context.
• For the R&D team it can be argued that innovation is an important factor on which they have to be relied. Therefore, preparing delicious items besides serving quality coffee is highly significant.

It can be argued that the recommendation can be developed on a better management framework. In this regard, all the stakeholders have to come forward to deal with the crisis. At first, it is important to conduct a proper marketing strategy. It will help to figure out the target customers. At the same time, the management has to reduce the price of the product so that the marketing strategy incorporates maximum number of customers. Besides this, a training program for the employees is required in order to make the service facility more effective.

Legal System

Conclusion

The report tries to figure out all the possible factors that reflect the strength and weakness of the Starbucks Coffee Company in expanding their business in UAE. At the same time, it can also be derived that there are some business opportunities and international threats that are responsible to influence the business operation of Starbucks profoundly. In course of the discussion, the report includes some management mechanisms in terms of Competitive Profile Matrix (CPM) and External Factor Evaluation which connotes the possible opportunities for the Starbucks Company in retaining their business activities in UAE. Moreover, there are some recommendations that are mentioned after getting a clear picture of the entire business scenario of Starbucks UAE. Based on this understanding it can be opined that there are some threats that create problem for the Starbucks UAE. The issues are enlisted as high pricing strategy, lack of diversification in the production and cultural gulf. Therefore, it requires some initiatives on the part of the management and the stakeholders to formulate a strong framework which can easily sort out those problems. In this context, it can be argued that despite of having a number of issues regarding its business operation, the brand value and brand image of the company are so strong that they can fix the problems. In this matter, the management has to take some extra responsibility so that the company get a firm stand in UAE.

Reference

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