Starbucks in China

4917 Words Mar 26th, 2013 20 Pages
Starbucks Corporation in China

Company overview

Starbucks Corporation is one of the most famous coffee retailers in the world. According to Starbucks Corporation (2012), it runs over 55 countries in many regions including North America, Asia Pacific, Latin America and so forth. Starbucks headquarter is located in Seattle, Washington, USA. It has approximately 149,000 employees.
According to Starbucks Corporation (2012), its company verified the income of 11,700.4 million dollars during the fiscal year of 2011, which is an increase 9.3% over the fiscal year of 2010. In addition, the net profit of the firm was 1,245.7 million dollars in fiscal year of 2011, which rose 31.7% over the fiscal year of 2010. This Company is considered as
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Starbucks has criteria to choose international partner including an associate company who share the values and mutual culture, a companion with a plan appropriate with the firm, a local business leader, a firm that has a strong track record developing new ventures, and so forth. It seeks to assure that its local partner will share its value and commitment in order to bring the firm experience to customers worldwide. For example, Starbucks Corporation has many alliances in order to enter to China’ s market including Mei da Coffee Co., Shanghai President Coffee Co., and Maxim’s Caterers Limited (Santamaria 2008).
As Forbes.com (2003) asserted that Starbucks Company has improved following the process of international expansion including a selection of local partner who are local business leader. Moreover, Starbucks try to adapt the business to traditional of each country (Harrison et al. 2005).
There are many reasons why Starbucks used joint venture instead of other modes. First reason is that the government does not want foreign firms to own 100% of the business in China so it cannot use the wholly owned subsidiaries as an entry mode for this country. Second, Starbucks has seen that if it used franchise or license, the quality of the product may decrease, as the quality of both coffee and employee is low. Last, joint venture is quite safe from the financial risk so Starbucks wisely choose this entry mode for

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