Starbucks Case Study In China

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1. Introduction Background Starbucks is the largest coffeehouse firm in the world, founded in 1971 as a Seattle coffee bean roaster and retailer. It expanded with more than 21,000 stores in 65 countries and territories between 1987 and 2007, which is equivalent to open an average of two stores per day. It is an American coffee firm and coffeehouse chain, with its first store established in Seattle, Washington. Starbucks offers beverages, whole bean coffee, micro-ground instant coffee, full-leaf teas, pastries and snacks, pre-packaged food like salads, and utensils such as reusable water bottle. It offers a variety of beers, wines and appetizers too for their evening locations in the late afternoon after 4pm. Other than that, they are also…show more content…
As seen in the article, in order to expand into China, a wide distribution of network is essential. However a lot of investments and time would be needed. In addition, Starbucks would face challenges from the external factors in China such as economic, political and culture issues. Hence, it would be better to establish a joint venture with a reputable and accomplished local firm. As such, Starbucks has established a joint venture with Taiwanese drinks maker Tingyi, with the brand name Master Kong, the largest firm in China that specialises in manufacturing and distributing instant noodles, beverages, baked goods and soft drinks. Starbucks would then be able to tap onto the existing network Tingyi has and ultimately lead them in achieving the status of the latest global company that has successfully expanded into the tricky market. Starbucks would have its partner to produce their beverages for the domestic market and aid them in their distribution strategy. After that, Starbucks also turns dealing with the number two drink seller in China. Starbucks sees the advantage of turning to local partners as the most effective way to reach out to their target and consumer market. If Starbucks were to do this by itself, it would be very difficult for them to face the bureaucracy, infrastructure, distribution, business practices and challenges, therefore it would be a great…show more content…
In 2001, China has entered the World Trade Organisation, therefore the market shared the exact rules as the global market, and it would be seen as an opportunity for Starbucks. China is a suitable location for foreign investment from the emerging market standards. However, Starbucks may still meet unexpected challenges due to the inconsistent China business policies. There may be stability in one party system but at the same time, little transparency in rules and other areas on establishing a business. Due to this issue, conflicts between Starbucks regarding the system might occur. China is a country whereby status matters a lot to an individual, if Starbucks or its partner were to get into a dispute with any of the politician, they might face problems in operating smoothly in

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