Starbucks Entry to China

The three most critical challenges Starbucks faced in China were political restrictions, socio- cultural, economic and financial challenges. China is highly bureaucratic country with difficult processes of getting permissions and sanctions to start and run business. The biggest challenges for Starbucks were the old tradition of tea drinking in China. At the beginning Starbucks managers didn’t how to accustom Chinese to drinking coffee; to acquaint employees and Chinese executives with coffee drinking experience Starbucks provided different training programs for them in which they learned more about coffee and Starbucks’ culture.

The first shop was a great success, and, after a few years and creating his own company (“ Il Giornale”), Schultz finally acquired Starbucks in 1987, and changed its name to Starbucks

And finally, on February 1st, Starbucks Coffee Company opened its first store in Vietnam at the New World Hotel in downtown Ho Chi Minh City. The company has studied Vietnamese market since 1991 and made VERY, VERY careful steps when entering this market. The only partner licensed to operate Starbucks stores in Vietnam is Coffee Concepts Vietnam, a subsidiary of Hong Kong Maxim’s Group. The signing with Coffee Concepts Vietnam will maximize the growth potential of Starbucks in Vietnam as the partner has experience in managing 130 stores in Hong Kong and China. Starbucks’ strategy is to bring unique coffee experience to customers at its stores. Besides, Starbucks will boost the localization of stores in its business strategy in Vietnam to make Starbucks stores the third destination for local people, following their home and office. “Starbucks provides much more than just the best cup of coffee, we will offer a place where people come together, connect with family and friends and celebrate the local Vietnamese coffee culture and heritage”, said Jinlong Wang, President of Starbucks Asia Pacific. Now let us begin our SWOT analysis. One of my team members, Lan Huong, is going to show you some strengths of Starbucks Coffee Company.

Since that point in time, the company extended its presence in the Chinese market in 2000 with a different licensee partner in Shanghai. In 2002, a third partner was added to help Starbucks expand into Shenzhen, two years after entering the Hong Kong market. Using these three major markets as a base, the company expanded from Shenzhen to Guangzhou and from Shanghai to Ningbo, Nanjing, Suzhou, Wuxi and Changzhou. By 2005, the company was ready to open its first company-owned store, in Qingdao, an area of the country not overlapping with the existing licensee agreements. Over time, the company has increased its equity positions in some of the joint ventures, and it has also opened more company-owned stores, and even bought back some stores.

Starbucks management announced its intention to double the number of retail stores and increase the number of customers to all stores. Starbucks had added 1672 stores during 2005. It continued to open new stores with 2199 openings in 2006 and 2571 openings in 2007. Earnings per share grew from 61 cents per share 87 cents per share over the period of 2005-2007. At the close of the 2007 fiscal year, the management was forecasting the opening of an additional 2500 stores in 2008.

Starbucks was founded in 1985, it is one of the most successful coffee shop company in the global coffee market, with over 16,000 locations in 50 countries(Starbucks Annual Report, 2009). Starbucks’s core product is quality brewed coffee, along with coffee beans, tea, blended beverages, and a variety of food through Starbucks retail stores (Starbucks Annual Report, 2009). In 1998, Starbucks opened its first UK store in London. Starbucks has been expanding rapidly, with over 600 locations opened by 2009( Starbucks Annual Report, 2009).

Starbucks has become the world leader as the largest coffeehouse company in the world, with 23,132 stores in 65 countries, including 12,937 in the United States, 2,004 in China, 1,416 in Canada, 1,135 in Japan and 849 in the United Kingdom (www.starbucks.com). Since its creation in Seattle, 1971, the coffee giant has several different product lines from pastries, flavored hot and cold drinks, whole-bean coffee, micro ground instant coffee, bear, wine (at some locations), entertainment to include music, books and grocery store packaged products. Their mission is to establish Starbucks as the premier

company opened its first stores in Japan and Singapore. There were a total of 1,015 stores. year later, Starbucks entered the Chinese, Kuwaiti and South Korean markets and owns 2,485

Making their chain stores very traditional and fitting with the local culture. Surprisingly Starbucks charges as much as 50% more for some of its products in China than in the U.S., the U.K. and India, but yet it is still a huge success, this is because the business catered well for the needs and adapted. Carrying a Starbucks cup is seen as a status symbol, a way to demonstrate sophistication and the capability to afford a personal luxury for the up-and-coming middle class in China. This links into the brand recognition that Starbucks has created for itself and shows how they carefully targeted their products at the new middle class, it is estimated that it's more than 300 million, already larger than the entire population of the United States. This middle class is about 25% of the total Chinese population and as Starbucks has such a recognisable brand people are more liable to visit the store.

Starbucks started to decide on expansion by about the mid 1990 's, when the market became saturated. Market saturation is when a company or firm has covered an area so thoroughly with its presence, that it can no longer experience growth. Because of the market saturation, there were declining sales throughout stores. The company 's original marketing strategy was to blanket a region with new stores. The idea behind this was to reduce a customer 's wait in lines, while also reducing the company 's distribution costs. Revenues from stores were actually beginning to decline because stores were in such close proximity to one another. Although Starbucks was still ahead of their competitors, they were

If there is one company that should have failed in China, it would be Starbucks. China has thousands of years of history drinking tea and a strong culture associated with it. No one could have guessed that Chinese would ever drink coffee instead of tea. Yet, Starbucks has successfully opened more than 570 stores in 48 cities since it first entered China twelve years ago. Building on this momentum, it plans to open 1,500 stores by 2015. What did the Seattle-based coffee company do right in China? Here are five lessons from Starbucks’s success. A)Think Different

Starbucks was originated in Seattle, Washington in 1971 in which the first shop was opened in Pike’s Place Market. Since then Starbucks has rapidly expanded to over 17,000 stores across the globe with shops in over 50 countries. In doing so Starbucks has become the leading retailer and roaster of specialty coffee. While expanding, Starbucks has encountered new markets and cultures which all have different kinds of customers. These diverse customers demand distinctive and alluring products. Starbucks

Starbucks opened its first store serving the finest coffee in Seattle in 1971. Today, Starbucks is present in 65 countries with 20,519 stores worldwide (Starbucks 2014). However, despite its successes, Starbucks had gone into an eight-year hiatus primarily because of the recession, its rapid expansion and subsequent unsuccessful innovation activities under the previous administration (New York Times 2011). This dilemma has led to the reinstatement of its current President and CEO, Howard Schultz, to become its CEO. Since then, Starbucks slowly began to recover from its drastic

Starbucks ' strategy for expanding its retail business is to increase its market share in existing markets and to open stores in new markets where the opportunity exists to become the leading specialty coffee retailer. In support of this strategy, the Company opened 647 new stores during the fiscal year end in September of 2001. At fiscal year end, Starbucks had 2,971 Company-operated stores in 38 states, the District of Columbia and five Canadian provinces (which comprise the Company-operated North American retail operations), as well as 252 stores in the United Kingdom, 25 stores in Thailand and 18 stores in Australia (which comprise the Company-operated international retail

Starbucks is one of the largest coffee shop chains in the world. In 2005 it was the leading coffeehouse retailer in the world with operations in 34 countries outside the US, counting 10.241 coffeehouses. Starbucks began its international expansion with Japan in 1995. We think Starbucks is a global company. Throughout the answer we will use Starbucks’ value chain activities to explain why Starbucks can be considered a global company.