After its initial success in international markets, Starbucks decided to expand to Australia — opening their first shop in Sydney in 2000. By 2008, there were over 87 Starbucks locations throughout Australia. Despite this growth, things were not going so well. Early on in their Australian endeavors, Starbucks reported $105 million in losses. The biggest mistake that Starbucks made when they decided to move into Australia was that they thought they didn’t need to adjust their offerings. Australia has a rich coffee culture, where local cafe menus are dominated by complex coffee drinks as opposed to the basic offerings found in Starbucks stores. In addition to the basic drinks on Starbucks’ menus, they also have many sugary drinks, which Australians also aren’t particularly fond of. Not only did Starbucks fail to tailor their menu to fit the preferences of the Australian coffee consumer, they also failed to alter the physical stores to fit Australia’s idea of what a coffee shop should look like. Australians see their cafes as a meeting place to talk business or to catch up with friends. The actual coffee is seen as more of a bonus to meeting there. So, cafes in Australia offer a place to socialize and drink coffee. Meanwhile, a Starbucks shop treats the coffee as the main offering, where you can get your drink and then head out as you start your day. Today, Starbucks still operates in Australia, however tourists are its only consumers.

Identify which global strategy Starbucks chose to enter the market, which strategy would have been the better choice, and why. Explain how conducting market research would have identified the issues that led to their failed strategy.

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