Essay on Starbucks Risk Management

Coffee consumption in China is highly concentrated in large cities such as Beijing, Shanghai and Guangzhou. Also other cities like Wuhan coffee culture seems to expand. Recently coffee appeals to adventurous young, rich, and urban consumers. This is just because originally coffee is considered as a Western concept to most Chinese consumers. According to Subhuti (2003), the Chinese do not consume coffee because of its potential health value either in terms of modern medical data or traditional Chinese medical concepts. Rather, it has been consumed until now as part of the fascination with western culture that has grown during the past few decades. However the coffee culture is getting well known in China nowadays. Chinese

Starbucks is one of the leaders in coffee industry. Starbucks has entered into many new markets and today it has more than 16,000 outlets across the globe (Johnson, Scholes and Whittington 2011). Due to unlimited business opportunities, Starbucks Corp has set strategies to enter India as it is next major hub for development in near future. Previously Starbucks has gained wide success in China and Japan due to high consumption of coffee and tea. Since its inception, Starbucks has tapped the major markets across the world, India was left untapped. In India, Starbucks has setup alliances with TATA Global Beverages which is a unit of TATA Group of Companies. Starbucks along with TATA has started with an investment of $80 million and plans to open 50 coffee shops in a year. Currently few coffee shops has been setup by Starbucks, however in near future, it is expected that the company will achieve its target in capturing Indian market (Lamb2009). Thus, besides sourcing coffee beans from TATA, Starbucks can now explore more Asian markets (Hitt, Ireland and Hoskisson 2012).

Tea first became a mainstream drink in Asia in the first century BCE. Tea was then introduced to Europe in the early sixteenth century.

Starbucks is no doubt a phenomenon in the United States, but the brand wants to expand globally. Opening chains in various global locations such as Japan, Vienna, England; Starbucks wants to reach out to the coffee loving fans everywhere. Nevertheless opening chains globally is not that simple. There are many uncontrollable factors Starbucks need to focus on to make sure they are making profit as well has abiding by the country’s laws and regulations. Going global takes a lot of market research to make sure that the brand will be successful even with uncontrollable factors. Controllable factors can be tailored to fit the needs of each country. Starbucks has to find the happy medium so they don’t lose their identity overseas.

However, Starbucks also need to learn about the culture among the country. Starbucks is International product and well known. Some of the country most prefers tea compare than coffee. That means , that is one of the challenges for Starbucks to come out with variety of product.

I think Starbucks certainly is a force for globalization, and already is, with presence not just in North America but Canada, Japan, Britain, Thailand, etc and not just because it offers a product (coffee) that is known and sold around the world very well, so it is easier to reach customers because people are familiar with drinking coffee, as a part of the daily basis, and plus the idea of a coffeehouse, a place to go and spend some time with friends, or studying, or even for business meetings is also a hit in a lot of cultures, these are regular activities for a good amount of people, so the market is there, the coffee culture is already there too, Starbucks will have to analyze other type of situations like competitors, or purchasing power of the specific country to determine if

Upon looking at whether or not they should, they must focus on the trends that are developing in these countries. Together with Sazaby (a company known for bringing goods to Japan), Starbucks was able to combine the lifestyles of the Japanese people with the Starbucks product. One important favorable trend that was key in the development of bringing Starbucks to Japan rather than Europe and South America was the fact that Japan has been the third largest coffee consumer in the world and the other regions were more of a risk for Schultz. There are, however, unfavorable trends in bringing Starbucks over such as the fact that the Japanese have not developed the taste for espresso or caffe latte drinks, but they rather prefer instant and ready-to-drink coffee that is offered in vending machines owned by Coca-Cola, which is a highly respected American company in Japan. Another unfavorable trend is the fact that since 1982 there has been a 30% decrease in coffee bars.

By item, we can see that some of Starbucks product position in the business. In the stage of introduction, Starbucks products, for instance, frozen yogurt and coffee in business is new a product. At that point, Starbucks stores in a couple of nations like Japan, China, and Singapore ,Indonesia, and fundamentally in Asia are a star thing because it has a high market advancement where the association push Starbucks to wind up lifestyle for people especially in urban zone in these nations.

Starbucks is undoubtedly an international brand. The history of coffee traces back to Ethiopia, Africa, India, Arabia, and Europe, and has been traded abroad since the 11th century. Understanding the demand and widespread market for coffee, Starbucks has triumphantly capitalized both the domestic market, and the varied international markets as well. Possessing about 6,500 retail sites worldwide, Starbucks’ net is spread across thirty countries and has been found as one of the most recognized brands all over the globe in equality to McDonalds and Toyota. This organization’s ability to build an international brand has been unprecedented- particularly since it represents a specialty

Knowing Chinese tea culture thoroughly is a wise way for people to explore the Chinese society and culture. As a traditional drink, it has been planted and consumed for over five thousands years. The climate of China is perfect for growing tea, which leads to large quantities and good quality of tea. According to the line diagram, “Dynamics of manufacture of tea in China, thousand tons” there were about 1,200 thousands tons of tea manufactured in 2008, which made China the biggest tea manufacture country in the world. As we can see, tea has a special position in Chinese society. Due to its popularity, Chinese tea gradually raises international interest, and leads China to be a more influential country in the

Starbucks shoots segments at Hotels, Grocery Stores, Schools, Businesses, Industries Cafeteria and Airlines. Starbucks opens its coffee shops around the world, such as in Brazil, Russia, Romania, and puts its first Starbucks logo in Cairo Egypt.

Starbucks extends their coffee experience to everyone: kids, teenagers and adults. Part of their success comes from their ability to create new products that fit the culture of the country. In Japan, for instance, Starbucks launched green tea lattes, which later became popular in other countries (Allison). Starbucks is well established in countries like Canada, Japan, and the United Kingdom. In the US alone, Starbucks sells 4 million cups of coffee per day (Horovitz). Their products and services have transformed the way customers view coffee. Changing the way customers order, Starbucks makes it very chic to purchase custom drinks. Starbucks is like no other coffee shop: the dimmed lights

There are plenty of opportunities which exist for Starbucks in the international markets. In countries with growing economies, such as the BRIC nations (Brazil, Russia, India and China), there are growing upper and middle classes that want to spend money on specialty coffee. Some of these countries are traditionally “Tea Drinkers” that are expanding their tastes to include coffee.

Starbuck’s global-level strategy, according to the case, is referred to as the Starbucks way. In the case it is stated that “the company finds local business partners in most foreign markets… It tests each country with a handful of stores in trendy districts, using experienced Starbucks managers.” The case further states that Starbucks “then sends local baristas to Seattle for 13 weeks of training. Then it starts opening stores by the dozen.”

Starbucks’ retail entry model in the United States does not have the same strategy as their international model. In the states Starbucks holds great control as a corporation, but in international territory, country partnerships, cultural, government laws and politics play a very important role in Starbucks’ entry strategy. Starbucks has set it sights globally since the coffee market has come close to saturation in the U.S. which will give them the opportunity to continue to expand without fierce competition. Starbucks has looked to countries like India and other emerging markets with great growth potential to set down new roots. Starbucks recognizes India as a great choice to expand business internationally but also recognizes the complexity in the same market after several attempts to enter without success.