When the grand opening of store at Nanchang in China in 2012 happened, customers were explained the difference between ‘Latte Coffee’ and ‘American-styled black coffee’. Customers in Shanghai had started appreciating and preferring Starbucks’ service. The design centre of Starbucks China ensured look and feel of the stores according to local culture. The high roofs, local court yard style lay-out and sliding doors were unique to Chinese outlets. The cost of establishing such stores was high but Starbucks was envisaging future growth potential in Chinese
Starbucks and Tim Hortons Nowadays, the number of coffee drinkers are increasing. As the demand for coffee grows, the number of coffee chains is also increasing. Of that, the representative coffee chains in North America are Starbucks and Tim Hortons. Starbucks has the highest brand awareness amongst the world coffee chains. It started in Seattle, the United State in 1971.
• In 1987 the original owners of Starbucks sold the company to Howard Schultz who rebranded his own coffee stores to Starbucks and as a result Starbucks began to expand. • In 1987 Starbucks opened stores in Vancouver, British Colombia and Chicago. By 1989 there were 46 outlets and nearly 1 million kilograms of coffee were being brewed per year. • By 1992, they were listed on the stock market and had grown to 140 outlets with an income of $74 million. • Today Starbucks sells Coffee, Smoothies, Tea, Baked goods and Sandwiches.
Price discrimination is a practice of charging different prices to different consumers under the circumstances of keeping the same cost of production. The manufacturers always set the high price in one particular region to gain excess profit because they have the certain ability to monopolize or control consumers’ demand. However, for those markets which have lower demand, manufactures will set a relatively low price to encourage the consumption. Starbucks charges the relatively higher price in Shanghai than in New York and Mumbai to pursue the higher profit. The high price elasticity of demand of Starbucks ' coffee in Shanghai can be one factor and Starbucks also maintain the high price through taking action to influence consumers’ sensitiveness for high prices.
The strength is Starbucks is the largest coffeehouse chain in the world. Starbucks has 12,500 coffee shops in the United Status. Starbucks can promote the new product over the world. They can successfully promote their product to the customers. Another strength is Starbucks is No.1 brand in coffeehouse segment.
International Strategy Lesson Both KFC and McDonald’s are driven by focusing on focusing on customer value. However, they took different international strategies. KFC establish a strategic alliance with local suppliers while McDonald’s maintained a partnership with its global suppliers. KFC currently have more outlets in China than McDonald’s because KFC exploited environmental opportunities through franchise
There are so many articles and information is presented about “Doing business in China”. Even some MNEs, which successfully operated in numerous foreign countries, failed in Chinese market, just because of misunderstanding Chinese perceived environment (The case with Barbie). It is definitely hard to penetrate in the nature of the host country business environment. The one way to solve this challenge is to joint with local company, a local partner can help the entrant to make understand local way of doing the business. This approach suits even more in countries with developing economy such as China.
Introduction: Starbucks is one of the most recognizable brands in the world. It enjoys strong brand loyalty from its repeat customers. It is leading retailer of specialty coffee. It has more than 22000 stores in 67 countries all over the world. Starbucks differentiate itself from other coffee shops by providing unique customer experience.
“Starbucks Global Take-Over of China” Starbucks changed the concept of drinking coffee; no longer is coffee just a product it is a lifestyle. Through making coffee drinking an experience Starbucks was able to move a domestic product from a simple coffee shop in Seattle Washington to a renowned product globally. Starbucks has come a long way since its first beginnings in 1971. Today, it’s the world’s largest coffee retailer, with over 19,000 locations in more than 60 countries. What sets Starbucks a part within in the company is that the staff, which are known as partners, are responsible for the sale of over 2 billion cups of coffee every year and create what is known as, “the Starbucks Experience”(Krikorian).
Starbucks has its very own advantage compared to his competitors because they possessed the technology and expertise in verifying the quality of their coffee beans are top-notch before they used it in their products (Figure 1.1). In addition, their product is mostly made of environment friendly ingredients such as reusable cup whereas most of the competitors could not achieve the recycling and reducing waste concept due to the high cost involved. Furthermore, Starbucks doesn’t franchise its stores to the private market. It’s simply because the mentality has a lot to do with maintaining high company standards from stores to stores (Bonander, 2007). Next, they offer specialty coffee selections, flavours, and variety.