The amazing growth and expansion of Starbucks is outlined, both on a global scale and within

Australia. Despite Australia’s deep love for coffee, the Seattle-based chain didn’t meet success
Down Under as it did in other countries. Starbucks opened in Australia in 2000 and grew to
nearly 90 locations by 2008. Starbucks moved too quickly, and grew faster than its popularity.
Starbucks didn’t fit Australians’ tastes. The company served sweeter coffee options than
Australians preferred all while charging more than the local cafes, which led in its first seven
years in Australia, Starbucks accumulated $105 million in losses, forcing the company to close
61 locations. The focus then shifts to the sudden shutting down of three-quarters or 70% of the
Australian stores in middle of 2008, leaving only 23 Starbucks stores throughout the entire
continent. Several reasons for these closures are described and examined, including that:
Starbucks overestimated their points of differentiation and the perceived value of their
supplementary services; their service standards declined; they ignored some golden rules of
international marketing; they expanded too quickly and forced themselves upon an unwilling
public; they entered late into a highly competitive market; they failed to communicate the brand;
and their business model was unsustainable. Key lessons that may go beyond the specifics of the
Starbucks case are the importance of: undertaking market research and taking note of it; thinking
globally but acting locally; establishing a differential advantage and then striving to sustain it;
not losing sight of what makes a brand successful in the first place; and the necessity of having a
sustainable business model.