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  • Organic Growth WS 2

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    aisha
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    Starbucks struggled when expanding into Australia, failing to adapt to the strong local coffee culture. The Withers Group plans to take over Starbucks operations in Australia to try and turn its fortunes around. However, they will now operate stores directly rather than using franchises, which typically have higher success rates. As a result, the Withers Group is unlikely to succeed in growing Starbucks business in Australia due to losing the benefits of franchising.

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    Starbucks struggled when expanding into Australia, failing to adapt to the strong local coffee culture. The Withers Group plans to take over Starbucks operations in Australia to try and turn its fortunes around. However, they will now operate stores directly rather than using franchises, which typically have higher success rates. As a result, the Withers Group is unlikely to succeed in growing Starbucks business in Australia due to losing the benefits of franchising.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    23 views2 pages

    Organic Growth WS 2

    Uploaded by

    aisha
    Starbucks struggled when expanding into Australia, failing to adapt to the strong local coffee culture. The Withers Group plans to take over Starbucks operations in Australia to try and turn its fortunes around. However, they will now operate stores directly rather than using franchises, which typically have higher success rates. As a result, the Withers Group is unlikely to succeed in growing Starbucks business in Australia due to losing the benefits of franchising.

    Copyright:

    © All Rights Reserved
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    of 2

    Starbucks in Australia

    1. Explain why Starbucks’ expansion into Australia is organic growth’?


    -Starbucks has grown organically because its opening new business location
    overseas in Australia which is one of the strategies of organic growth.

    2. What went wrong and why?


    -Starbucks struggled to compete against the existing strong coffee culture in Australia
    because consumers criticised the quality of the Starbucks product compared to
    independent cafes and has failed in adapting it to suit the local market in Australia.

    3. What were the consequences of failure for Starbucks?


    -The consequences are that Starbucks stores have lost a lot of money over the years and
    the stores are shut down; therefore, Starbucks will now be operated by the group,
    rather than franchisees, and that the coffee stores will remain independent from 7-
    Eleven stores. Franchise businesses have higher rates of success, leading to a chance of
    success to decrease for Starbucks.

    4. How else could Starbucks grow their business? Give three methods:
    -Developing a wider range of products in its menu and differentiating products from
    competitors, making Starbucks unique.
    -Developing or expanding through the internet with its own website such as delivering
    to homes.
    -Since adapting Starbucks to suit Australia’s local market has failed, it could focus on
    diversification as a different strategy for Starbucks to grow its business.

    5. What are The Withers Group doing?


    -They planned to change the fortunes of the coffee chain but has failed to gain a suitable
    position in increasing Australian coffee market. They have indicated Starbucks stores will
    now be operated by the group instead of franchisees and independent from 7-Eleven
    stores.

    6. What type of growth is this?


    -Organic Growth

    7. Briefly evaluate whether or not The Withers Group are likely to succeed.
    - Franchise businesses have higher rates of success, since stores will now be operated by
    the group instead of franchisees, the Withers Group are unlikely to succeed. It’s easier
    to secure finance for a franchise and franchisors also supports the business by offering
    the business human resources and accounting delivering rapid growth like giving brand-
    awareness and reducing risks. However, a business operating under a franchise will have
    less control over the business and its stakeholders, therefore the Withers Group will
    have more control because the stores will be operated by the group instead of
    Franchisees. In conclusion the Withers Group is less likely to succeed.
    Other questions on this topic:

    1. Why are businesses likely to grow organically in their early stages of development?
    -They are likely to grow organically in their early stages because the development and
    launch of new products gains immediate consumer attraction allowing an increase in
    sales leading to profit gains and revenues. Opening several business units and location
    will allow more consumers in different areas to access the business and buy their
    products leading to further development of products if the business chooses to reinvest
    its profits to the business, it will likely differentiate from its competitors and will allow
    the business to gain a competitive advantage.

    2. Which is slower organic or inorganic growth? Why?


    -Organic growth is slower because the business has not burrowed money or looked for
    additional venture capital where the investors provide VC finance to the start-up
    business or acquired other companies for merging or joint ventures. Whereas Inorganic
    growth is considered faster because it increases output and business reach by acquiring
    new businesses by way of mergers, acquisitions, joint ventures, strategic alliances and
    takeovers.

    Useful links:

    https://www.youtube.com/watch?v=DSerk5urTsY

    http://www.news.com.au/finance/business/eleven-owners-the-withers-group-to-take-over-
    starbucks-in-australia/news-story/8132270ce48cca88e22f9b94157d8a4c

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