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The coffee giant, Starbucks may be a hit at home in North America, but after some risky financial decisions, the transnational corporation has to deal with the consequences. By unlawfully funnelling money overseas, the financial accounting management of this coffee giant has had some explaining to do, including a £20 million payback to the British government. Starbucks has reported losses every year that it has been in the UK since 1998, however sales have continued to grow. In 2013 however, sales fell £14 million. Between picket lines outside of stores and David Cameron harshly telling Starbucks to “wake up and smell the coffee,” Starbucks has had a rough ride overseas.
Despite these huge losses, Starbucks has revealed their plans to open 100 new stores. After closing 6 stores that were major losses this year, the company is giving more tries in new locations. The same stigma will undoubtedly follow them to these stores. Starbucks was deemed “immoral” by British MPs, which will negatively impact the “socially conscious” brand name that Starbucks has tried to give itself. Considering their entire business model is based upon buying expensive coffee that improves the world, it is valid for these boycotts to have occurred. As Al Ries and Jack Trout put it in their book, Positioning, The Battle for Your Mind, it is key to get into the consumer’s mind, which Starbucks has done, but negatively. Changing their brand name to be associated positively in the UK will be a battle, but the trendy coffee company seems to have the confidence to try.
Campbell, Peter. “Sales slide as Starbucks feels tax backlash: Coffee chain axes six shops after £14m drop in business during the past year.” Mail Online. Associated Newspapers, 24 Apr. 2014. Web. 5 Oct. 2014. <http://www.dailymail.co.uk/news/article-2612668/Sales-slide-Starbucks-feels-tax-backlash-Coffee-chain-axes-six-shops-14m-drop-business-past-year.html>.