Business Environment Of Starbucks In Myanmar And United Kingdom

Influence of two contrasting economic environments on business activities within Starbucks

Discuss about the Business Environment for Business of Starbucks.

With the ramified economic changes and complex business structure, each and every organization needs to take proper strategic decisions to manage the business effectively. It is analyzed that if company wants to win over the market then it will have to analysis all the internal and external factors before making the effective strategic planning. In this report, Starbucks Company has been taken and its impacting factors in two different countries Myanmar and United Kingdom.  The main aim of this report is to analyze the impact of the particular country on the business of Starbucks and preparing the strategies to improve the existing business functioning. In this report, various functional analysis have been taken to evaluate in which country, Starbucks is making good amount of return on capital investment. Starbucks should focus on migrating the talented staff employee from its origin country. It will help Starbuck to create strong brand image in Myanmar and UK as well.

Influence of two contrasting economic environments on business activities within Starbucks It is analyzed that if company uses the proper strategic program based on the economic and taxation factors then the decisions taken will be more sustainable and effective. In UK, the flow of its food and beverage products will be high which reflects that Starbucks could easily create value on its investment if it invest more capital only UK market. In addition to this, Myanmar is the good market to cover as it will strengthen the consolidated income of Starbucks on international level (Baxter, et al. 2014).

The taxation and government compliance program in UK is very tough which reflects that company needs to undertake proper compliance legal department which will assist company to comply with all the applicable rules and regulation. In addition to this, in UK, Starbucks could easily raise capital as there is very easy flow of cash funding which will positively impact the undertaken business. Company could easily use the market penetration business strategy in UK which will eventually increase the overall outcomes and efficiency of the business.  The business activities in UK are more employees oriented. It is hard for the Starbucks to find the talented employee in the business which may positively impact the future growth of the business. However, company needs to infuse more expert employees which will positively influence the sustainable business functioning (Anderson, Grewell, 2015). Nonetheless, in Myanmar, company will follow the customized business strategy in which all the coffee and other products will be customized as per the demand and needs of the clients. In UK, Starbucks has been following the market penetration strategy which is supported by the proper functional program and product life cycle work.  The legal and fiscal policy of the Myanmar has been very strengthening which reflects that company will be more exposed to foreign exchange risk while running its business in Myanmar. There are several financial hedge funding tools such as forward contract, and investing capital on the bonds and government yield securities which will overcome the foreign exchange risk faced by company  in Myanmar and UK while reporting its financial books on international level.

Factors influencing two contrasting economic environments of Starbucks on the international level

 There are several internal and external factors which are influencing two contrasting economic environments of the Starbucks on international level.  The economic factors are place where buyers and sellers trade products and services. The economic condition of the Myanmar is reflecting the positive indicator for the future growth of the Starbuck business. The GDP rate of Myanmar has increased by 2.7% since last two years and it has also impacted the purchasing power of customers has also positively influenced. The people in Myanmar are more inclined towards buying the rich quality products and services and give less weightage to the pricing of these goods. In addition to this, GDP per capital of UK is 39,899.39 USD which is 2.2% higher as compared to last year data. The positive GDP rate increment has reflected that the demand of the products and services in UK will be high as compared to other country. It will assist Starbucks to penetrate the UK market with its advance products and services. It is further observed that Starbucks Company has strong multinational work chain which will assist it to maintain the international quality work chain in its business line. It is analyzed that the political environment of UK is more stable as compared to Myanmar (Baxter, et al. 2014). The interest rate and government return available on the gilt securities is also showing the good amount of return in UK which is very high as compared to Myanmar country. It reflects that it would be easy for the Starbucks to raise funds from the international market. However, in UK, Starbucks would need to increase its overall private funding investment. It will lower down the overall cost of capital of its business.  The economic cycle will also be considered by company in both countries. This cycle is accompanied with the four important phases named recession phase, depression phase, recovery phase, and prosperity phase. In UK, Starbucks have been enjoying the boom phase which has resulted to increased overall turnover by 20% since last five years. It has been observed that in Myanmar, Starbucks has to struggle with the pricing and quality of its coffee and other products (Anderson, and Grewell, 2015). In the starting, company will have low demand of its food and beverage products and after that it could easily increase the overall sales of its products in determined approach. The recent EURO financial crises have resulted to decline in the total output, income, employment and balance of trade of the UK. It has negatively impacted the overall capital investment of Starbucks and shown the high impairment loss for the business. This depression phase in UK has negatively impacted the future growth of the business and declines the overall outcomes in negative manner (Munoz, Farmer,  Winterton, R. and Barraket, J., 2015). In addition to this, Starbucks also has to face the ripple effect of its one undertaken action on other business units. For instance, if the management of company lower down the cost of its products offered in market then it will negatively impact the future outcomes and overall turnover of business. It is further observed that the ripple effect will be seen in both business units operated in different countries. Starbucks needs to undertake its strategic program as per the economic conditions of the particular country and undertaken business functions factors (Hennig-xSchmidt, and Gong,  2014).  Therefore, it could be inferred that both economic factors have been showing the different challenges to Starbucks. However, management needs to take their financial and strategic decisions separately in different countries to mitigate the possible issues and problems in determined approach.

Political, legal and social factors impacting upon business activities of business and their stakeholders

Social Structure- With the ramified political, legal and economic changes in the particular country, organization needs to set up a proper functional program to meet the changing needs of the environment and stakeholders.

 The people in UK are more clients oriented and they have to follow proper rules and regulations.  The educational part of the UK is very high. It will require changes in the requirement policies, changes in product development, promotional activities and re-engineering of existing products and services.  It is analyzed that in order to develop business in two different countries will require Starbucks to make changes of its business as per the business factors of the different country.  Ideally, the main factors are political, social, environmental, legal and economic factors which need to be considered by Starbucks for the development of its business on international level (Izzo, 2014).

The social factors of the UK are accompanied with the high values, perception and social factors which should be considered by Starbucks Company in its offering. There are several factors which may affect the business functioning of organization in different world. It is assessed that business is always adapted to the ramified business change and needs in the market.  It is analyzed that in context with the political factors, if the political changes in the particular country are stable then it will provide the stable factors on which company could easily make the possible business strategy. 

The social factors of the UK are showing the perception, values, belief and their needs which might impact the products and services of the Starbucks (Al-Shemmeri, and Naylor., 2017). It is analyzed that people in Myanmar are more inclined towards buying customized coffees and other food products. Starbucks offers customized products to customers in Myanmar as compared to UK products. (Bacchetta, Benhima, and Kalantzis, 2016).  For instance, culture factors in UK shows that people are inclined towards buying new quality of goods and services in market.

There are following recommendations having been given which will assist Starbucks to run its business on international level.

This PESTLE factor analysis was undertaken to evaluate all the existing functions to develop effective strategies. It assists in making effective strategies to win over the market. It is analyzed that Starbucks in UK will be less prone to the changing social factors (Panayotou, 2016). On the other hand, economic changes could also affect the business largely it assists company to evaluate the existing resources and possible changes of the economic (Welford, 2016). If the recession hits on the international level then it will somehow also impact the economic position of the country.  For instance, Euro Currency crises have also impacted the UK Currency value in negative manner (Foreman, 2017).   The UK has just come out of this recession line and shown 2.5% GDP growth rate. It is further evaluated that if GDP growth of the UK will be predicated higher as compared to the GDP rate of the Myanmar. The increased purchasing power of the people in UK has been showing that company needs to focus on penetrating the market with its highly attractive food and beverage products. It will increase the overall outcomes and efficiency of the business. It is analyzed that Starbucks will have more positive outcomes in UK as compared to the Myanmar (Ryan, Carter, Delacámara,. and Ferrini, , 2015). The higher economic growth of UK is the base for the economic growth of Starbucks.

Customization

The technological factors of UK is showing the ramified advancement in the technologies which needs to be adopted by Starbucks if it win over the market. People in UK are more inclined towards buying food and beverage products through online modes.  Therefore, the cost of the initial investment in UK will be higher in UK as compared to Myanmar Country. The lump sum investment in the UK will be higher which will also increase the overall cost of its products and services offered as compared to Myanmar.

The legal changes in UK are also strengthening the rules, laws and regulations which might result to setting up separate legal department. It will require Starbucks Company to set up   proper legal department (Hassard, et al. ., 2017). 

Starbucks needs to increase its overall investment in its research and development department. It will have to pave with the advancement in technologies which will increase the attractiveness of its business towards the clients (Moutinho, and Vargas-Sanchez, 2018).  Nonetheless, Starbuck in Myanmar needs to focuses on the customization of its services and products (Hardaker, 2017). The legal compliance program in UK will also requires proper legal department program which will increase overall legal set up in Myanmar and UK.  Starbucks needs to consistently increase its investment in its research and development department. In addition to this, social factors should also be considered if company wants to invest more capital in its business (Palmer, 2016).

Starbucks is increased its overall turnover by 12% since last three years which also requires high amount of tax payment. Therefore, proper Income tax planning will also be required for the Starbucks to maintain the cash outflow from its business (Soon, and Tee, 2014).

After analyzing the external business factors, it is inferred that Starbucks needs to set up the proper capital remittance program for the easy flow of capital on international level. However, it might face high foreign currency exposure while remitting capital from Myanmar to UK or other country (Ho, 2018).

Starbucks needs to arrange the proper loyalty card approach to collect the data so that it could make changes in its existing food and beverage products offering in market. It is analyzed that company needs to focus on creating value on the investment by consistently changing the existing products and services in market (Musetescu,  Nicolau,  Athu, and Mitrea, 2014).

The Customization product differentiation strategy will also be undertaken by Starbucks in Myanmar if it wants to increase its overall turnover from its business. It is required to manage the business on international level (Hardaker, 2017).

Social perception

Starbucks in UK will need to take the proper development strategy which will requires hiring more expert employees, investing in the research and development department and increasing the quality of the Coffee and other beverage products offering. 

It is analyzed that company needs to increase the overall employee’s strength with the increase in the overall requirement of the products and services in UK (Lasserre, 2017)

The proper training and development program should also be undertaken by Starbucks while expanding business units in Myanmar and migration of its some of experienced employees will also work as supporting program in implementation of the expended work program.

The Starbucks in UK have been positively impacted by the stable political and legal factors. However, in order to compete with the rivals in market, company should use online cyber computing analytical system which will increase the coverage of its business on international level (Soon, and Tee, 2014). 

Conclusion

After analyzing all the influencing factors of both country named UK and Myanmar, it is analyzed that company needs to undertake proper strategic work functions and program which will assist in achieving the set objectives and goals. It is considered that in Myanmar, Company has to follow the customized strategic planning to attract more clients. On the other hand, in UK, company will have to focus on increasing the quality of its foods and services. The technological advancement will also play pivotal role in the business success of Starbucks in UK. It will eventually increase the overall outcomes and attractiveness of its business on international level. Now in the end, it could be inferred that if proper strategic work program is undertaken then it will increase the overall outcomes and lower down the complexity of the business. 

References

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