STRATEGIC ANALYSIS FOR BEST COFFEE CHINA
Linda Qin
Bachelor of Economics,
Guangdong University of Foreign Studies, 1996
PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF
THE REQUIREMENTS FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
In the
Faculty
of
Business Administration
O Linda Qin 2004
SIMON FRASER UNIVERSITY
Fall 2004
All rights reserved. This work may not be reproduced in whole or in part, by photocopy or other means, without permission of the author.
APPROVAL
Name: Linda Qin
Degree: Master of Business Administration
Title of Project: Strategic Analysis for Best Coffee China
Examining Committee:
Chair: Dr. Neil R. Abramson
Senior Supervisor
Associate Professor
Dr. David C. Thomas
Second Senior Supervisor
…show more content…
Also, to my dear God mother and God father, Lucia and Frank, together with two lovely god brothers,
Johnson and Jackson.
I love you all.
ACKNOWLEDGEMENTS
I would like to thank Professor Neil R. Abramson for his endless support and help.
I would like to thank Professor David C. Thomas for his advise and support.
I would also like to thank Judy Rendek for her continuous encouragement and friendship.
I would like to thank John Dumfires for his help and friendship.
I would like to thank Bob Mackin for his help and friendship.
TABLE OF CONTENTS
. . Approval ............................................................................................................................ 11 ... Abstract ............................................................................................................................. 111
Dedication ......................................................................................................................... iv
Acknowledgements ............................................................................................................v
Table of Contents ............................................................................................................. vi
List of Tables .................................................................................................................. vl.l.l.
1 Background . Best Coffee Company
People around the world consume numerous goods every day. There are several things that determine what quantities and how frequently they are consumed and those influences can either work in tandem or act individually to influence a person. It is these foundations that set an average for what consumers will purchase and the volume of goods to be created by agriculturalists and industrialists. This is known as economic consumption patterns, and these patterns are carefully studied by economists. With the data that they glean from this assessment economists can then use that information to provide the economy with data
Coffee drinkers all have one thing in common; they want their coffee made to their specification. Most soft drinks, milkshakes, and draft beer are ready made. Coffee has many flavors and that can be an operational nightmare. Starbucks has 10 different types of coffee beans, 12 blends of flavors and loads of special toppings.
A commodity is a raw material or primary agricultural product that can be bought and sold. The market treats it as equipment or nearly so with no regard to who produced it. The original producer does not make the “big” money from the good that has become a commodity demanded by consumers. A commodity’s supply and demand is part of one universal market like corn, or wheat. A stereo is something that would not be considered a commodity. Other things are important about a stereo not that it is just a stereo but what brand and quality is in consideration when purchasing a stereo. Demand for one type might be much larger than the demand for another. This is not the case with commodities; they lose differentiation across their supply base. An
I composed this paper exclusively for this class, and it is my original work. When I have used information from other sources, I have provided appropriate in-text citations and a corresponding list of references. I also understand that evidence of plagiarism may result in a failing grade for this course.
Starbucks’ lead in the specialty coffee industry exemplifies the result of deftly executing a well-planned business strategy. Moreover, Starbucks is well positioned for what is expected to be a continuing rise in the popularity of specialty coffee products. The question before Starbucks’ leadership, however, is what avenues will lead to Starbucks’ goal of remaining true to its core, the highest quality coffee products while providing a “total coffee experience” for its customers?
Imaging if there was no more coffee in this world, how would you feel? Nowadays, coffee becomes an important part of people’s life. People who often work overtime, they drink coffee because caffeine can make you awake; people who have to wake up early in the morning, they drink coffee because instead of making breakfast, coffee is more convenient; people drink coffee during the free time, because it also tastes good.
30 3.2.6. Five Forces Analysis ......................................................................................................................... 31 Diagram 3: Five Competitive Forces in the Coffee Industry .................................................................. 32 3.2.6.1. Threat of New Entrants .................................................................................................................. 32
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 final project is going to be about the market entry of Starbucks into China. This project will focus on gauging the success of the company's market entry strategy thus far. Starbucks has announced in a press release that it believes China will be its #2 market by 2014, and the company has been one of the most successful American companies in that market (Starbucks, 2012). The company entered the Chinese market in 1999 with a store in Beijing. This followed the acquisition of greater knowledge about Chinese business culture through outlets in Taiwan. The company initially used a licensing agreement to enter the Chinese market (Starbucks, 2010).
Mr. Coffee is best known for pioneering and leading the market in the automatic drip coffeemakers. The brand was established in 1968 by Vincent Marotta and Samuel Glazer and was then part of the North American Systems, Inc.
Starbuck 's has become a staple of American culture and for the most part, if you are in your 20 's, you have grown up with it and this has become what you expect coffee to be. Who can blame you, it is everywhere, so "wake up and smell the coffee"! I plan to tell you about the strategies that this giant uses, that have taken it from humble beginnings to a worldwide phenomenon. I also intend to explain how Starbucks is taking China by storm, mainly because marketer / entrepreneur Howard Schultz 's vision and mission statement is shared by everyone in the company!An excerpt from the London Financial Times published in February 2006 states the following in regards to Starbucks entering the Chinese market; "Mr Schultz said the company was
* Establish a positive image with the local university to create additional long term clientele.
People love to drink coffee. Coffee shops, independently owned or chains are every corner. Statistics show that people are taking more coffee every day. It is a very profitable business.
Starbucks Corporation, generally known, as Starbucks Coffee is the leading retailer and a brand of world’s forte coffee in the world, with more than 15,000 retail locations in North America, Latin America, Europe, the Middle East and the Pacific Rim, wherever in this world where premium quality coffee is in demand. Starbucks is the largest coffeehouse company in the world ahead of UK rival Costa Coffee, with 20737 stores in 63 countries and territories, including 11910 in the United States, 1496 in China, 1442 in Canada, 1052 in Japan and 772 in the United Kingdom. The first Starbucks was open in 1970. The name was inspired from Herman Melville’s Moby Dick, a definitive American novel regarding the 19th century whaling industry. The nautical name matches seamlessly for a store that imports the world’s finest coffees to the cold thirsty people of Seattle. In May 1998, Starbucks have finally successfully entered the European market through its acquirement of 65 Coffee Company stores initially originated from Seattle in the UK. Both companies shared a common culture, focusing on a great commitment to customized coffee, similar company values and a mutual respect.