Legal and Ethical Issues of Mason and Shepherd Case Study - 15

Legal and Ethical Issues of Mason and Shepherd - Case Study Example Sheila’s starting a business with this kind of products circumvents the Non-competition clause, and, inevitably, leads to the circumvention of the Non-solicitation of customers clause. This is normal, as such a product needs to be sold to the same range of customers with whom ATS works with. Moreover, a lot of the work that Sheila had done on developing the concept of Intelisoft was done by her using ATS’s property: her working laptop was connected to her home computer and her Palm, which, additionally to the above-mentioned, violates the clause referring to the company property usage. Another clause which is violated by Sheila is the Assignment of Developments clause, which stipulates that any development that â€Å"(i) relates to the business of the Company or any customer of or supplier to the Company or any of the products or services being developed, manufactured or sold by the Company or which may be used in relation therewith; or (ii) results from tasks assigned to me by the Company; or (iii) results from the use of premises or personal property (whether tangible or intangible) owned, leased or contracted for by the Company, then all such Developments and the benefits thereof are and shall immediately become the sole and absolute property of the Company and its assigns, as works made for hire or otherwise.† Her further actions may involuntarily lead to her violating the non-disclosure clause, too.

How Statistics Is Applied in Our Everyday Life and Why It Is Useful Assignment

How Statistics Is Applied in Our Everyday Life and Why It Is Useful - Assignment Example The assignment analyzes the areas where statistical analyses can be applied in everyday life and how to do it in the most effective way. Statistics is defined as a branch of applied mathematics which is concerned with the collection and interpretation of quantitative data, and the use of probability theory to estimate population parameters. It can also be defined as a type of mathematical analysis involving the use of quantified representations, models, and summaries for a given set of empirical data or real-world observations. When used correctly, statistics tell us trends on what happened in the past and can be useful in predicting what will happen in the future. Police around the world in most countries release reports on crimes, mostly annually. These reports give information on whether the crime has reduced or increased over the past year. Crime statistics are collected from records compiled by the police, household survey, and hospital or insurance records. When people fall vic tims of criminal activities, they report to the police who record them down. From the number of reports they receive, they can make a conclusion about the frequencies of the crimes, the type of crime and finally be able to come up with conclusive crime rates. The area where the crime occurred is important because it helps in indicating the crime-prone areas. After analyzing the data they have, the police make a conclusive report which they often release to the public. Inferential statistics are procedures that allow researchers to generalize observations made with samples to the larger population from which they were selected. This is concerned with making predictions about a population from observations. Examples include linear regression and correlation analysis. When used correctly, statistics tell us trends on what happened in the past and can be useful in predicting what will happen in the future. Use of statistics in tackling criminal activities. Police around the world in mos t countries release reports on crimes, mostly annually. These reports give information on whether a crime has reduced or increased over the past year. Crime statistics are collected from records compiled by the police, household survey, and hospital or insurance records. When people fall victims of criminal activities, they report to the police who record them down. From the number of reports they receive, they can make a conclusion about the frequencies of the crimes, the type of crime and finally be able to come up with conclusive crime rates. The area where the crime occurred is important because it helps in indicating the crime-prone areas. After analyzing the data they have, the police make a conclusive report which they often release to the public. The crime rates are useful in determining whether a crime has reduced or increased between two relevant periods. The crime rates reported in different cities help tourists know which precautions to take while visiting these cities, and also which places to avoid while there.  

Entertaining books are useful in term of academic english Research Paper - 1

Entertaining books are useful in term of academic english - Research Paper Example The pleasure provides relaxing escape from the routine problems, and also provides leisure moments in the process of learning English. Creating adequate time and space for recreational reading, based on high quality English literature, ensures enthusiastic readers and also enhances academic achievement. The power of literature, for instance books, in provision of entertainment and recreation is immense. Ensuring the effectiveness of entertainment literature in recreation is generally the most significant result of the entertainment books program (Thompson, 2008). Experience is also ensured through the entertainment books. The readers increase their horizons through the experiences illustrated by the entertainment books. In the entertainment literary world, the readers gain more experiences, meet new individuals, and understand new places. The students adequately understand past, present, and future English language aspects. The cultural application of the English language is also ensured through adequate understanding of academic English. The readers understand common academic English goals, as applicable across different school environment and also nationalities. Examples of entertainment books that enhance academic English experience include; Patricia Giff’s Nory Ryan’s Song, and The Butterfly authored by Patriccia Pollaco. The book illustrates the survival situation during the 1845 famine in Ireland. In academic English, historical illustration of historical events is very significant. The Butterfly illustrates the Jewish pe rsecution that took place during the Second World War. The book illustrates the correct approach of explaining historical events through academic English (Thomas, 2011). The recreational literature ensures understanding of the language model; for the readers and listeners. Good entertainment book exposes the readers to the correct sentence structure, standard story format, and several word usages. The readers who use English as their

Legal and Ethical Issues of Mason and Shepherd Case Study - 15

Legal and Ethical Issues of Mason and Shepherd - Case Study Example Sheila’s starting a business with this kind of products circumvents the Non-competition clause, and, inevitably, leads to the circumvention of the Non-solicitation of customers clause. This is normal, as such a product needs to be sold to the same range of customers with whom ATS works with. Moreover, a lot of the work that Sheila had done on developing the concept of Intelisoft was done by her using ATS’s property: her working laptop was connected to her home computer and her Palm, which, additionally to the above-mentioned, violates the clause referring to the company property usage. Another clause which is violated by Sheila is the Assignment of Developments clause, which stipulates that any development that â€Å"(i) relates to the business of the Company or any customer of or supplier to the Company or any of the products or services being developed, manufactured or sold by the Company or which may be used in relation therewith; or (ii) results from tasks assigned to me by the Company; or (iii) results from the use of premises or personal property (whether tangible or intangible) owned, leased or contracted for by the Company, then all such Developments and the benefits thereof are and shall immediately become the sole and absolute property of the Company and its assigns, as works made for hire or otherwise.† Her further actions may involuntarily lead to her violating the non-disclosure clause, too.

Entertaining books are useful in term of academic english Research Paper - 1

Entertaining books are useful in term of academic english - Research Paper Example The pleasure provides relaxing escape from the routine problems, and also provides leisure moments in the process of learning English. Creating adequate time and space for recreational reading, based on high quality English literature, ensures enthusiastic readers and also enhances academic achievement. The power of literature, for instance books, in provision of entertainment and recreation is immense. Ensuring the effectiveness of entertainment literature in recreation is generally the most significant result of the entertainment books program (Thompson, 2008). Experience is also ensured through the entertainment books. The readers increase their horizons through the experiences illustrated by the entertainment books. In the entertainment literary world, the readers gain more experiences, meet new individuals, and understand new places. The students adequately understand past, present, and future English language aspects. The cultural application of the English language is also ensured through adequate understanding of academic English. The readers understand common academic English goals, as applicable across different school environment and also nationalities. Examples of entertainment books that enhance academic English experience include; Patricia Giff’s Nory Ryan’s Song, and The Butterfly authored by Patriccia Pollaco. The book illustrates the survival situation during the 1845 famine in Ireland. In academic English, historical illustration of historical events is very significant. The Butterfly illustrates the Jewish pe rsecution that took place during the Second World War. The book illustrates the correct approach of explaining historical events through academic English (Thomas, 2011). The recreational literature ensures understanding of the language model; for the readers and listeners. Good entertainment book exposes the readers to the correct sentence structure, standard story format, and several word usages. The readers who use English as their

Nortel Case Report Essay Example for Free

Nortel Case Report Essay The company also used to be affiliated with ATamp;T/Western Electric until Western was forced to sell its stake in 1949. In 1976, the company changed its name from Northern Electric to Northern Telecom Limited, and shifted its concentration on digital technology. In 1977, Nortel introduced its DMS line of digital central office telephone switches. Nortel ended its long relationship with ATamp;T in 1984, a year after deregulation named. Bell Canada Enterprises the parent company to Northern Telecom. In 1998, the company acquired Bay Networks and changed its name to Nortel Networks. In the late 90’s, Nortel’s sales of fiber optic network gear was predicted to help their sales, but the market became saturated very quickly. At the height of Nortel’s first 100 years the company amassed for more than a third of the total valuation of all companies listed on the Toronto Stock Exchange (TSX), but once the Internet bubble passed, the company fell into ethical debacle. Nortel Networks Corporation, or formally known as Northern Telecom Limited was one of the largest telecommunications equipment companies in the world prior to its filing for bankruptcy protection on January 14th, 2009. During times of functionality, they specialized in multinational telecommunications equipment manufacturing. The company is based in Canada out of Mississiauga, Ontario, Canada. Their biggest rival always was Global System Mobile (GSM). Through the early 1990s, the company invested heavily in Code Division Multiple Access (CDMA) in attempt to grow in European and Asian markets. This did not pan out so well as Nortel’s losses amounted to $27. 3 billion by 2001—causing them to lay off two-thirds of the workforce. From 2000 through 2003 there was a period of fiscal irresponsibility resulting from the work of the company’s administrators. Initially in 2000, they falsified their fourth-quarter earnings by $1 billion to meet market expectations and selectively reversing certain revenue entries. In 2002, administrators discovered $300 million in excess reserves being carried over and swept it under the rug for future benefit in addition to establishing another $151 million in unnecessary reserves. In 2003, administrators directed the release of at least $490 million of excess reserves to boost earning, fabricate profits, and pay bonuses. Losses turned to profits during this year thanks to the shifty methods taking place. Later in that year, administrators mislead investors as to why Nortel was conducting a purportedly â€Å"comprehensive review† of its assets—attributed by restatement $948 million in liabilities. They said restatement was caused solely by internal control mistakes instead of the truth that there was intentional improper handling of reserves which needed to remain hidden. 2 On October 23rd, 2003, the company announced that Nortel would restate its financials for fiscal years 2000, 2001, and 2002. Shortly after this restatement, the major players of Nortel’s administration that were responsible for all of this were exposed through an independent investigation. In March 2004, The CFO and controller were suspended, in addition to the announcement of further restatements and revisions; they were terminated a month later in April 2004. A restatement in early 2005 showed approximately $3. 4 billion in misstated revenues and another $746 in liabilities. In late 2005, Nortel admitted that restatements were the result of management fraud—beginning the downturn of their stock. The company ended up restating financials four times over four years, replacing senior management, and instituting a comprehensives remediation program designed to ensure proper accounting and reporting practices. Eventually on October 15th, 2007, Nortel agreed to settle by paying a $35 million civil penalty and admitting to violations of the antifraud, reporting, books and records, and internal control provisions of the federal securities laws. 2 On June 25th, 2009, Nortel’s price dropped to 18. 5 cents a share down from a high of $124. 0 in 2000. The company decided that month that they would discontinue operations and sell off all of its business units. Nortel’s CDMA wireless business and LTE access technology were sold to Ericsson, and Avaya purchased Nortels Enterprise business unit. Major Players in the Scandal: The major players in this scandal were the four members of the senior management: CEO Frank Dunn, CFO Douglas Beatty, controller Michael Gollogly, and ass istant controller Maryanne Pahapill. CEO Frank Dunn, who is also a certified management accountant. Dunn was mainly involved in the improper use of reserves from 2000 to 2003. CFO Douglas Beatty, controller Michael Gollogly, and assistant controller Maryanne Pahapill were also involved in this management fraud. 2 The Royal Canadian Mounted Police in Toronto arrested ex-CEO Frank Dunn, ex-CFO Douglas Beatty, and former corporate controller Michael Gollogly on seven counts of fraud. Including charges â€Å"fraud affecting public market; falsification of books and documents; false prospectus, pertaining to allegations of criminal activity within Nortel Networks during 2002 and 2003. Magnitude of the financial issue: Nortel at its peak was one of the best companies that Canada had ever seen. Just like ENRON and other financial frauds at the time, Nortel appeared to be a shining example of success in the corporate world. Again like ENRON, Nortel grew through a strategy of aggressive expansion and purchasing of smaller companies in order to create a massive conglomerate. During the good times Nortel was the largest technology company and the most valuable company in Canada. Nortel accounted for over one third of the entire aluation of the Toronto Stock Exchange. The Toronto Stock Exchange is the Canadian equivalent of the New York Stock Exchange and holds the most influential stock market in Canada. Nortel employed about 95,000 employees worldwide. About 26,000 of those workers based in Canada alone. Nortel at one point had a market capitalization of almost C$400 billion. Nortel had set up pensions and healthcare protection for its employees. All of these were lost to either the restructuring under Frank Dunne which left about 60,000 employees without jobs or the bankruptcy that followed in 2009. Canadian government officials and regulators identified how destructive a full failure of Nortel would be on the Canadian economy. The Canadian government through the Export Development Canada project tried to lend money to the falling giant. However the Canadian government could not cover all of Nortel’s debt obligations. Nortel owed about $107 million and the EDC (Export Development Canada) could only supply about $30 million in short term loans. This $107 million interest payment accounted for about 4% of Nortel’s cash and put the company into bankruptcy. The world financial crisis of 2008 had put too much strain on Nortel and they were forced to begin liquidation. Public auditor: The auditors involved with this case were Deloitte and Touche. In documents from the fraud case, which is still being heard by the Royal court in Canada, Deloitte claims that they were not given proper documentation by Nortel. Deloitte claims that they did not have pertinent information which should have been provided by administrators at Nortel. Deloitte raised concerns to the audit board of Nortel in 2003 when Nortel turned a profit after Frank Dunne’s restructuring of the company. Deloitte raised awareness of potential fraud and did their duty in that respect. However further investigation conducted has implicated Deloitte in the financial reporting irregularities in Nortel which some have claimed dates back to the time of CEO Roth who held office before Dunne. Information coming out of the case states that even if transactions were deemed suspicious, they still signed off on the verity of the financial reports. Frank Dunne and some of his officers are now charged with fraud by both the SEC and the OSC which regulate the American and Canadian markets respectively. The case is currently still under review in the Royal court of Canada and civil charges have been brought in the United States. Fraud Triangle Nortel had experienced tremendous growth throughout the 1990s, allowing it to expand operations worldwide. Nortel’s expansion came during the telecommunication and technology bubble of the 1990s that inflated stock prices of companies in those sectors. Frank Dunn had taken over for the previous CEO, John Roth, in November 2001 during the telecommunication bubble bust. Dunn felt pressured to maintain the high stock price because it accounted for over one third of Nortel’s value2. Nortel management was also incentivized to post profits that produced executive bonuses with over $7. 8million going to Dunn alone. The primary members of the Nortel fraud were able to commit the fraud because, as executive officers and controllers, they were able to go around the internal controls of the company. That allowed them to implement many accounting practices that did not comply with GAAP. Nortel management’s rationalization for these fraudulent practices must have been that they needed to maintain the high stock price in order for the company to continue operating. Moral Breach and Ethical Issues As a publicly traded company, Nortel had the responsibility of fairly reporting the company’s true financial data to stockholders and potential investors. Dunn, Beatty, Gollogly and Pahapill breached this responsibility by establishing earnings management accounting strategies to manipulate Nortel’s revenues. Nortel management also actively sought to inflate earnings to trigger very large bonuses for key members of management. Perhaps, if these incentives did not exist then there would be less motivation to commit the fraud. Finally, Nortel’s auditor for over a century, Deloitte and Touche, has come under scrutiny by the defense lawyers in Dunn, Gollogly and Beatty’s civil trial in Canada this year. The defense claims that Deloitte approved of all major accounting adjustments that Dunn and his team had engaged in. Summary of Legal Actions On April 28th, 2004, Dunn and his fraud partners were fired for financial mismanagement2. On March 12th, 2007 the SEC filed civil charges against Dunn, Beatty, Gollogly and Pahapill for repeatedly engaging in accounting fraud to bridge gaps between Nortel’s true performance, its internal targets, and market expectations. Dunn and Beatty were charged with violating the officer certification agreement that was established by the Sarbanes-Oxley Act. Nortel settled with SEC on October 15, 2007 by consenting to be prescribed from violating the antifraud, reporting, books and records, and internal control provisions of the federal securities laws. Nortel paid $35million to the SEC, and $1million to the Ontario Securities Commission to establish a Fair Fund for affected shareholders. Finally, Canadian authorities arrested and charge Dunn, Beatty and Gollogly with seven counts of fraud. Their trial began on January 16th, 2012. Current Status: Nortel, once known as the largest telecommunications manufacturer in the world, filed for bankruptcy in 2009. Now three years later, the period of bankruptcy continues as the company discloses their every operating report highlighting each cash receipt and disbursement. When Nortel went bankrupt, executives believed that selling all business assets would be the best and easiest way to fight debt. Recently, Nortel has netted $7. 7 billion from selling its patents and businesses. As stated on their website, â€Å"Nortel remains focused on maximizing value for its stakeholders, including the sale of its remaining assets, resolution of claims, the wind-down of its global operations and entities, resolution of allocation matters with respect to the sale proceeds, and other significant restructuring activities toward the conclusion of the creditor protection proceedings. † The case for Nortel executives Dunn (ex CEO), Beatty (ex CFO) and Gollogy (ex controller), who were charged with fraud for affecting the public market and falsifying books and documents to earn larger bonuses, is still in trial. In February, a former Vice President of Nortel testified in court against executives stating that they had asked him to use questionable accounting methods to manipulate the company’s earnings. Although those who committed the crime have been charged, thousands of employees will still be left without pension plans and jobs. Nortel has spent over $20 million on retirement package these past two year, but unfortunately the company will stop the pension plan and disability program payments as it continues to sell away its businesses. By the end of 2011, Nortel was split into regional entities – Nortel Networks Limited in Canada and Nortel Networks Inc in the United States, causing disagreements over how to split $7. 5 billion that was earned by selling many assets and patents other corporations such as Apple and Microsoft Corp. The following charts, graphs and financial statements analyze Nortel’s current status. Case Study Questions and Solutions: 1. Dunn is a certified management accountant. Based on the facts of the case, which provisions of the IMA’s Statement of Ethical Professional Practice that was discussed in chapter 1 have been violated? Dunn violates many of the provisions of the IMA’s statement of Ethical Professional Practice they are as follows: 1. Perform professional duties in accordance with law, regulations and technical standards. 2. Provide decision information that is accurate, clear, concise and timely 3. Retain from engaging in any conduct that would prejudice carrying out any duties ethically. 4. Abstain from engaging in or supporting any activity that might discredit the profession. 5. Communicate information fairly and objectively. 6. Disclose all relevant information, that could reasonably be expected to influence an intended users understanding of the reports analyses or recommendations. 7. Disclose delays or deficiencies in information timeliness processing or internal controls in conformance with organization policy and/or applicable law. He violated these by selective reversal of revenue entries in 2000. Followed by concealing the reserves in 2002, which violated GAAP, and then avoided posting a profit so the company wouldn’t have to pay out bonuses. In 2003 Dunn released the reserves to falsely report a profit, which allowed them to eports a profit a quarter earlier than expected, and to pay out more bonuses to senior management. Also in 2003 he misled the investors about why Nortel had restated its financials in order to avoid uncovering the unethical management techniques him and his team had been using. All of these actions take away Dunn’s integrity and credibility in the field of manageria l accounting, which are two of the standards the IMA sets out. Dunn failed to meet his professional code of conduct and his company suffered because of it. 2. What are the responsibilities of an auditor to detect fraud? How were those responsibilities compromised by the actions of Nortel’s management? It is the auditors responsibility to report fraud if they find it, however in this case the actions of Nortel’s management made it difficult for the auditors to do their job. The false financial statements and hiding of money veiled the problems of the company from the auditors. Once there was a hint of the fraud the auditors found it and perused the trail, taking the ethical route and also following the code of conduct. It was their investigation that brought down the fraudulent executives and forced the company to restate its financials properly. This would eventually lead to the failure of Nortel. Nortel made materially false and misleading statements and omissions in connection with the quarterly reviews and materially misstated annual audits of financial statements. This caused the auditors to not be able to properly do their job, and review the statements. 3. Describe the incentives that created pressure on Nortel to manage earnings. Considering the role of Nortel’s management in this regard, discuss whether it met its corporate governance obligations as discussed in previous chapters. The incentives that drove Nortel to manage its earning where greed of the management team, the pressure to deliver bonuses, the pressure to survive an economic downturn, and the pressure to make the company seem like a good investment to both current and potential investors. In an economic climate of intense competition and corporate greed the management at Nortel fell victim to their vices and allowed the pressure to perform to overwhelm their priorities. This caused them to put their own greed and personal ambition before the well being of the company. Nortel did not meet its corporate governance obligations. It did not follow any internal rules of how to run the business. It ignored any corporate ethics they might have. It lied to stakeholders several times by misstating the financials. They did not follow the professional code of conduct of their careers and also did not follow industry standards. They broke the law. No one inside the company caught the fraud therefore their internal controls where not effective. Each of these immoral acts is a case where corporate governance has failed. 4. The final quote in the case characterizes Nortel’s failure as â€Å"just another casualty of capitalism. Do you agree with this statement? Why or why not? How would you characterize the cause of the failure at Nortel? I would argue that Nortel is not just another casualty of capitalism. Nortel did not function in a system of free market capitalism where the government had absolutely no regulation and let the markets function however they wanted. The capitalism system of North America is more of a mixed economy, which combines public and private ownership of companies, and also provides government regulation and intervention to prevent and deal with fraud. Even in a free market the system is meant to come to an equal balance of supply and demand, which cannot be reached if there is fraud involved since the supply has been inaccurately disclosed by the senior management at Nortel. I would characterize this failure as one of humanity. It was not the economic system that allowed this fraud to take place, but the greed of the people and a social environment that ties success so strongly to wealth. It was the social pressure and the effect of human nature that led to Nortel’s demise. . The case discusses how Nortel’s managers prioritized themselves over the shareholders, which, in part, lead to the company’s failure. What should be a company’s first priority? A company’s first priority should be following their code of ethics. The second priority should be the shareholders, followed by the management and other employees. This hierarchy ensures that all the business that is done with be both moral and legal , meaning there is no room to commit fraud and damage the company. In this way you are putting the shareholders first, because by providing a stable and healthy company the shareholders will see an investment that will be able to reach its highest potential. 6. Was Nortel’s settlement a fair penalty? Should the SEC have imposed harsher or more lenient sanctions? Should these sanctions have been on the managers, on Nortel as a whole, or both? A fair settlement would offer compensation to all those who were hurt by this fraud. Groups that may have been hurt could be shareholders, employees and customers. Deciding what is a fair compensation is a little more difficult, however as much of what these people lost as possible should be returned to them. As for the managers who created the problems and took part in the fraud should face a sentence of termination from their company, loss of license (if applicable) and jail time. The company and the individual managers have both failed stakeholders and should both be held accountable. In the case of Nortel specifically the stockholder settlement goes with these guidelines, as for the managers their trial is still ongoing and therefore no sentenced has been given to them yet.

Case The Coffee Shop Market Starbucks Marketing Essay

Case The Coffee Shop Market Starbucks Marketing Essay Starbucks Corporation is an international coffeehouse chain, founded in 1971 in Seattle, Washington. Starbucks serves a variety of beverages including brewed coffee, tea, hot chocolate, espresso and a selection of bottled drinks. Starbucks also sells whole bean coffee and a variety of ready-to-eat snacks. The first Starbucks location to open outside of North America was in Tokyo in 1996; and from then on Starbucks became an international brand, expanding both nationally and globally. This report will attempt to examine the situation of Starbucks in Japan. It will bring out the marketing strategy to be adopted for a rise in profitability of Starbucks Japan in the next two years. In addition, it will attempt to explain the use of marketing mix to aid the chosen strategy. SWOT ANALYSIS: 1.1 STRENGTHS: 1.1.1 Strong brand image: Starbucks brand name, quality customer service and store ambience are its key strengths. It has maintained its international operations to ensure consumer recognition. Starbucks is renowned for its high quality products and has maintained a consistently positive consumer experience that has helped Starbucks build a strong brand image. Starbucks spends less than 1% of revenue on advertising and promotion each year which indicates they rely on an established company image (P. Ghauri, International marketing case study: Starbucks-Going Global Fast). Starbucks key competitor in Japan-Doutor coffee, had taken advantage of Starbucks brand image and copied its logo, while replicating the experience rendered to customers in its retail outlets. (Ono, 2003). This shows that the Starbucks image is a strength worth mimicking. With a well-established brand image in America, it was sure to expect recognition in the Japanese market, because the consumers there have a fondness for everything western . (http://azjatycka.wordpress.com/2009/11/05/international-marketing-strategy-of-starbucks-in-japan-success-or-a-failure/) 1.1.2 Commitment to community: Starbucks contributes a considerable amount of its resources to corporate social responsibility programs (Kotabe Helsen, 2004). According to Butler (2006)-CSR programs influence 70% of all consumer purchasing decisions, with many investors and employees also being swayed in their choice of companies. As a result, Starbucks involvement in the CSR programs helps its competitiveness in the business world. 1.1.3 Widespread Presence in International Markets: Starbucks has ventured into foreign markets with astonishing pace opening its outlets in 40 countries with 2068 stores worldwide. This widespread expansion has allowed its presence to be felt across the globe. 1.1.4 Retail outlets present at convenient and accessible locations: Starbucks has opened a number of coffee shops at convenient locations like shopping malls, libraries, university campuses, office buildings etc. They are typically located in high traffic, high visibility locations.(Starbucks annual report, 2008) 1.1.5 Presence of a variety of food items Beverages in addition to Coffee: Starbucks stores offer a choice of regular and decaffeinated coffee beverages, a broad selection of Italian-style espresso beverages, cold blended beverages, iced shaken refreshment beverages and a selection of premium teas. Starbucks stores also offer a variety of fresh food items, including healthier choice selections focussing on high-quality ingredients, nutritional value and great flavour. 1.1.6 Well Developed Corporate Strategy and Good Marketing skills. Weaknesses: 1.2.1 Lack of internal focus: Starbucks focuses too much on over-expansion, at times tending to ignore the problems arising withinconsistent employer dissatisfaction. The number of competitors: There are an ever increasing number of competitors that either mimic the Starbucks concept or try to get on par with its growth by providing the same line of products at a lesser price. Examples: Dotour Coffee, Tullys Japan, Mac Donalds. Self- cannibalisation: The strategy of over expansion has resulted in stores opened very close to each other, thus eating into the others sales. Product Pricing: Starbucks perceives itself as a premium gourmet coffee brand and bases its price on the quality of its beverages and in-store customer experience. Unfortunately, many competitors while offering a similar type of environment and lesser priced beverages are eating into Starbucks market share. 1.3 Opportunities: Flexible Tastes: Japanese consumers are influenced by western brands and have a fondness for them. They are open to new products and tastes and hence Japan is a viable market to test new products. New concepts can be concocted and brought out in the market at a faster pace, when compared to US or Europe. Thus those products that turn out to be popular and gain acceptance in the Japanese market can be introduced in the US market with positive expectations. For example, the Green Tea Frappuccino which was first introduced in Japan turned out to be a sensation and was thus launched in the United States too. (http://www.qsrmagazine.com/articles/news/story.phtml?id=4589). Thus, the flexible tastes of Japanese consumers give Starbucks an opportunity to develop new products and gain profits. Instant products: Starbucks recently launched its first premium soluble coffee stick product in Japan. About 60% of the total coffee sold in Japan is soluble. Hence Starbucks can capitalise on this aspect of Japans coffee market to enhance its sales through a variety of soluble ready to make coffee products. (http://news.starbucks.com/article_display.cfm?article_id=416) Diversifying its beverages: Starbucks is looking to sell regional wine and beer at its outlets in Seattle. It could introduce this concept in some of the Japanese stores as consuming western alcoholic brands is a trend among the Japanese clientele. (http://www.thestreet.com/story/10891284/starbucks-tests-alcohol-cheese-offerings.html . Growth opportunities: Though the overall market in Japan is nearing saturation, and Starbucks overexpansion in big cities has given it a lesser change at a steep growth, it could still expand to the less-saturated regions allowing it to exceed its growth potential. 1.4 Threats: 1.4.1 Cannibalisation: Starbucks extravagant growth and over expansion involves a risk of customer fatigue. Starbucks has introduced an array of new products and an increased product innovation lowers the sale of current products. Also with many stores opened close to one other, there is a risk of some stores facing loss. Thus, cannibalisation is a major threat as the coffee chain is reaching saturation in most of the big cities. 1.4.2 Dependency on raw materials The fluctuations in coffee and dairy prices are a potential threat for Starbucks. Starbucks is reliant on dairy and a rise in prices of the raw material could affect its profit margins. (Wikinvest, 2008). 1.4.3 Cultural differences: In USA, about 80% of Starbucks sales are takeout orders. In Japan 80% of consumers prefer to drink in the store outlets. Thus consumers preference to use the store atmosphere might turn out to be a threat to Starbucks plans of building a number of drive through outlets in Japan. (Chozick,2006). 1.4.4 Shrinking Disposable incomes. 1.4.5 Competition: Immediate competition from fast-food restaurants catching on the specialty coffee wave and developing products that competes with Starbucks. Tim Hortons -Nestle Dunkin Donuts McDonalds PESTLE ANALYSIS: Political Factors: Despite being far apart geographically, Japan USA have similar political structures. The Emperor is the head of the state, but the real power resides in the parliament and is mainly held by the Prime Minister.( House of Councillors, 2008). In USA, different states have the power to regulate businesses; whereas in Japan, regulations are laid down by the Diet and enforced throughout the country. This indicates that there are less complicated and less conflicting regulations to be concerned about when International businesses seek entry into the Japanese market. ( House of councillors, The constitution of Japan, as promulgated on November 3, 1946). (http://www.sangiin.go.jp/eng/law/index.htm) Economic Factors: Measured on a purchasing power parity basis, Japan is the 3rd largest economy in the world. But going by the official exchange rates, Japan would emerge as the 2nd largest economy, behind USA. Japan had a spectacular economical growth in the 1980s, however, growth slowed down considerably in the 1990s. Japan entered into recession in 2008, with 2009 marking a return to near 0% interest rates( CIA, as accessed on 24th oct,2010) with its GDP rising to 5.3%, when compared to 1.2% in 2008. Socio-cultural: Individuals from varied backgrounds are exposed to different traditions, rituals, customs and religions. All these factors provide human beings with various learning environments, which cause significant variations in standards, behaviour, attitudes and beliefs (David,1998). A comparison of the subsidiary parent countries is important for the success of a business seeking to expand in the foreign market, as this would lead to a better understanding of the local market. The Japanese as opposed to the Americans act more collectively and tend to be loyal to their respective groups. The Japanese often sacrifice their personal goals and ambitions to promote group interests. A low context society in USA shows that Americans are more direct in their communications and their messages are explicit. Whereas the Japanese use indirect ways to communicate and their voice intonation, timing and expressions play important roles in conveying information. (David, 1998) Technological: Technological factors greatly influence business strategies as they provide an opportunity to exploit innovations and inventions. Japan is one of the most technologically advanced countries in the world and ranks 18th on the list.(http://gpmgroup.info/2007/04/27/the-most-technologically-advanced-countries). Thus it is more convenient to introduce technologically driven customer service into the Japanese market. There is scope for incorporating the American system of internet ordering in to Japan with the intension of faster service. Starbucks is continuously searching for ways to better a customers experience. With the introduction of the Starbucks Card for example, the Company has created the opportunity to improve customer service, shorten lines and make a customers visit at Starbucks quicker and more convenient. Also, most stores are equipped with WI-FI. Legal: There are no significant legal factors to consider while entering the Japanese market. Though, Starbucks has chosen to enter through a joint venture with SAZABY Inc., a Japanese retailer and restaurateur, because of the peculiarities of the local market. By doing so, Starbucks has given itself a better chance of exploiting the market as SAZABY would have a better understanding of how the Japanese consumers viewed food and coffee.(http://www.docshare.com/doc/155323/Starbucks-global-expansion-strategy2) Porters Five Forces Competition Tullys Coffee, Gloria Jeans, Caribou Coffee etc. Competitors selling similar products, incl. specialty coffees high quality food. Competition nowhere in terms of volume of operations. Threat of new entrants Controlled access of distribution channels Innovation product differentiation Bargaining power of buyers More options due to no. of competitors. Large variety of products. Bargaining power of suppliers Overcrowding of market. Rise in prices of coffee beans. Choose suppliers based on quality, social, environmental economic issues Threat from substitutes Tea Soft drinks Juices Marketing Strategy to Enhance Profitability in the next 2 years: Segmentation: Segmentation is dividing the consumer market into distinct groups based on each individual groups wants, needs, preferences and behaviour. Starbucks is a company that embraces diversity, not limiting themselves to one specific demographic, behavioral, or geographic segment. Individuals appreciate how, regardless of any little difference, at Starbucks they are always treated as equals. (starbucks.com) Taking the demographic factor as the desired basis for segmentation: Gender: Sixty percent of Starbucks Japan market are woman customers in their 20s and 30s. (http://community.seattletimes.nwsource.com/archive/?date=20020819slug=starbucks19). Hence Starbucks should further penetrate the market by retaining the woman customer base and increasing its appeal amongst them by providing incentives in terms of products, ambience and experience. Age: Most of Starbucks customers are educated, working personnel who can afford the high prices of the products offered. Starbucks has a limited consumer base with females in the age group of 25-39 forming their major share of consumers.(http://www.euromonitor.com/Japan_a_nation_of_coffee_lovers). It should reach out to the younger and much older groups by introducing a line of nutritional beverages. Education Income: Starbucks genius was to redefine the meaning of affordability regarding coffee. Target consumers were identified with regards to their living environment, level of income and education. They were convinced to pay premium prices for the experience, service and quality they were getting. The company was able to capture the changing consumer behaviour since the 1980s: more out-of-home entertainment, more self- gratification from consumers towards a good movie, a good glass of wine and a good cup of coffee. By raising the perceived value of the product for the consumer, Starbucks was able to raise its prices while keeping the product affordable. Creating brand loyalty through quality and innovation was also an important factor in decreasing the price elasticity of this commodity product. Thus, Starbucks should maintain this strategy and look less towards price reduction and more towards quality enhancement, a characteristic that has helped it build its brand. Targeting: Starbucks should practice differentiated targeting as it should try and capture a more wider section of the society. As it has identified the female gender to be its major consumers, Starbucks should retain this market and further expand it by targeting the woman clientele and coming out with more products that appeal to them. Also in order that it recieves a larger share of the male consumers, it should try and blend with the Japanese culture and accept their preference for smoking in some stores. Starbucks has already established its image amongst the educated and high income society. But, it should go one step further by seperately targeting the younger generation who are bound to follow in the footsteps of their peers and elders. In order that it recieves more number of teenagers, it should try and develop an atmosphere within its stores in terms of products and store experience that would appeal to the teens. Product Positioning: Starbucks is listening to the needs of the educated by devoting its business and research to developing ways to cater to this groups wants and needs. In addition to further building on its product quality and in-store customer experience, Starbucks should make itself more accessible to a wide variety of people by opening several quick stop services that would cater to the new generation of coffee drinkers because college-age students and the general population are always in a rush with little time to spare. The quick stop services and kiosks will make the process of buying coffee easier by eliminating long lines and creating alternative ways to buy coffee faster and will avoid the prospect of impatient customers. Starbucks should position itself as a brand not reserved only for the premium, high income society, but as a quality store that reflects on the needs and wants of all. As most Japanese are health conscious, it should try and build an image which does not discourage the teens and older people from visiting its stores. By bringing out more food items that match the Japanese palate, it should position its brand image as An American taste induced with Japanese flavors. Using the Marketing Mix to assist the chosen growth strategy: 1. Product: Diversify the product line: The tradition of tea drinking in Japan has been prevalent from the early beginning. There are many varieties of tea, and some of them, especially Green tea can be bought anywhere. Tea has proved to be a popular drink for most Japanese because of its wide variety of tastes. Thus, by introducing a few select varieties of tea in its store outlets, it would touch at the roots of the consumers. It would directly be percieved as a renowned American brand that cares to accomodate the Japanese tastes. (http://azjatycka.wordpress.com/2009/11/05/international-marketing-strategy-of-starbucks-in-japan-success-or-a-failure/). The presence of soybean in Japanese dishes is indispensable. Its not only widely accepted as the staple ingredient in Japanese dishes,be it rice, curd or soup, but also has great nutritional value. It finds its place in Japanese breakfast, lunch and dinner. It contains a chemical, soy isoflavones, which when accumulated in the body, functions like the female sex hormone(estrogen), which in turn promotes bone formation. Hence it is considered useful for post-menopausal women whose estrogen levels are low. Also soy isoflavones has been found to reduce the risk of breast cancer by 40%.( http://www.mindfully.org/GE/2003/Kikkoman-Non-GM-Soy22jun03.htm). Since Starbucks has found its presence to be more popular among woman, it will only increase its appeal to them by introducing a variety of beverages and food items that contain soybean in its diet. It should also bring about innovations in its product line, making them more nutritious to consume, thus forwarding its appeal to the health c onscious society. Introduce a line of health drinks, fruit juices that would attract teenagers who percieve Starbucks as a high end store selling speciality coffee. The presence of flavored non-caffeine drinks would help capture the teen market. 2. Place: Diversify its stores: Many critics had expected Starbucks to fail because of its strict no-smoking policy within its stores. The general Japanese customer prefers to smoke with food and drinks. But this strategy attracted many young health concious women who then accounted for Starbucks majority sales.(http://community.seattletimes.nwsource.com/archive/?date=20020819slug=starbucks19). Although starbucks has so far managed to sustain its growth, competitors with a tolerance to smoking are providing good reason for its drop in sales in recent years. Hence,in order to attract a more varied clientele and improve profitability, Starbucks should make an exception in the case of Japan and introduce some stores that accept smoking; adapt to its culture. They could still stick to their rationality behind no-smoking environment to preserve the aromas flavors of the coffee beans(Starbucks website) by not allowing in-store smoking. Certain stores with a wider space facility could bring in open-air seating arrangemen ts. This way, those who wish to smoke can take a seat outside and enjoy a starbuck coffee. Another way would be to introduce balconies in some stores that have 2 or 3 storeys. Build on its in-store experience: Starbucks should build more in its store atmosphere rather focus on building drive-through outlets. In Japan 80% of the coffee consumers like to drink inside the store, while relishing the ambience.(chozick,2006). Although starbucks has an untarnished brand image, it should further build on its superior quality of store atmosphere in order to remain competitive and keep up sales. The hygiene of the stores, book readings, baby changing stations, sleek furniture and posh interiors are the key to its ability to provide a quality customer experience. Given that the majority of its customers are women and the Japanese love for the English language, it should transform certain sections of the store to accomodate a reading section that would comprise more of women oriented magazines and books that teach english. Choose a larger number of distribution units: Starbucks should improvise on its plan to introduce its instant coffee-starbucks VIA across convenience stores in Japan. It had announced the launch of its instant products in 11000 convenience and grocery stores in september. (http://www.finchannel.com/Main_News/Business/70201_Starbucks_VIA_Ready_Brew_Hits_Grocery_Aisles_Around_the_World/). By doing so, it has exposed its brand to the worlds largest instant coffee market. (http://www.reuters.com/article/idUSTRE63C1NG20100413). Now the availabity of starbucks instant products is not limited only to its retail outlets. However, the presence of its competitors( Nestle and Kraft) in the instant coffee segment is more widespread and well established. Thus, it should try to capitalise on Japans $5 billion instant coffee market by providing its instant products to more number of distribution units and seal its presence. 3. Price: Prices of instant products: Starbucks should consider reducing the price of its instant products to enable higher sales. Starbucks is to sell a box of 3 VIA instant soluble sticks for 300 yen, which amounts to 100 yen per cup, and a box of 12 sticks for 1000 yen. When compared, its competitor Nescafe has a rival offering of 15 sticks for 300 yen. (http://www.reuters.com/article/idUSTRE63C1NG20100413?pageNumber=2). Thus, there exists a wide price gap for its instant products and since Starbucks VIA will be occupying the same shelf space as Nescafe, Kraft etc., it would find it difficult to gain acceptance in the market. A customer would go up to the racks and find the rival offerings more viable. Hence, Starbucks should look to cut down its prices on instant products. It can afford to do so without the risk of diluting the brand image built on high end coffee, as the instant coffee would come without the experience of physically being in the store. Prices of in-store products: Starbucks prices of in-store products are higher when compared to its competitors. It is looking to further raise the prices of some 20 beverages and 5 coffee bean products. (http://www.japantoday.com/category/business/view/starbucks-japan-to-raise-coffee-prices). It should retain this pricing strategy as it differentiates itself from its competitors by providing an excellent quality customer experience. Also most of its outlets are located on expensive pieces of real estate in centralized, busy areas of Japan. 4. Promotion: Cultural Entertainment campaigns: Starbucks should come out with various cultural and entertainment campaigns to attract the Japanese youth, a segment of the society it has still not managed to woo successfully. Conclusion Starbucks is ahead of the rest in the Japanese coffee market, but there is still room for improvement. A decentralised structure accompanied with a mixed global strategy has helped the company to find a balance between reaching economies of scales and responding to the local market. By establishing a joint venture with local retail chain Sazaby Inc., it has reduced their risks of being unfamiliar with the market; and Starbucks has successfully gained the knowledge and channels of distribution from its partner. Starbucks strong brand image and customer loyalty has contributed to their maintaining a leading position in this market. By diversifying its target consumers and innovating its product line, it should be able to further strengthen its market share.