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    Starbucks' Expansion Into China

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    Jade Maertella C. Barcenas
    Starbucks has successfully expanded into China by understanding Chinese culture and tastes. A SWOT analysis identified strengths like localized products and menu innovation, but also weaknesses such as expensive pricing. Recommendations include being more strategic with locations to avoid offending cultural sensitivities, and recreating products at price points more accessible to Chinese consumers. Starbucks used similar rapid expansion strategies in both the US and China, but tailored products to each market - introducing items like moon cakes in China. To further global expansion, Starbucks should thoroughly assess local cultures to minimize costs and wasted efforts in new markets.

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    Starbucks' Expansion Into China

    Uploaded by

    Jade Maertella C. Barcenas
    422 views3 pages
    Starbucks has successfully expanded into China by understanding Chinese culture and tastes. A SWOT analysis identified strengths like localized products and menu innovation, but also weaknesses such as expensive pricing. Recommendations include being more strategic with locations to avoid offending cultural sensitivities, and recreating products at price points more accessible to Chinese consumers. Starbucks used similar rapid expansion strategies in both the US and China, but tailored products to each market - introducing items like moon cakes in China. To further global expansion, Starbucks should thoroughly assess local cultures to minimize costs and wasted efforts in new markets.

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    Starbucks’ Expansion Into China

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    Starbucks has successfully expanded into China by understanding Chinese culture and tastes. A SWOT analysis identified strengths like localized products and menu innovation, but also weaknesses such as expensive pricing. Recommendations include being more strategic with locations to avoid offending cultural sensitivities, and recreating products at price points more accessible to Chinese consumers. Starbucks used similar rapid expansion strategies in both the US and China, but tailored products to each market - introducing items like moon cakes in China. To further global expansion, Starbucks should thoroughly assess local cultures to minimize costs and wasted efforts in new markets.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    422 views3 pages

    Starbucks' Expansion Into China

    Uploaded by

    Jade Maertella C. Barcenas
    Starbucks has successfully expanded into China by understanding Chinese culture and tastes. A SWOT analysis identified strengths like localized products and menu innovation, but also weaknesses such as expensive pricing. Recommendations include being more strategic with locations to avoid offending cultural sensitivities, and recreating products at price points more accessible to Chinese consumers. Starbucks used similar rapid expansion strategies in both the US and China, but tailored products to each market - introducing items like moon cakes in China. To further global expansion, Starbucks should thoroughly assess local cultures to minimize costs and wasted efforts in new markets.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 3

    Ateneo de Davao University

    International Business and Trade

    Starbucks’ Expansion into China

    1. Prepare a SWOT analysis based on the case to support Starbucks’ expansion plans in China. Based on
    your SWOT analysis, what recommendations would you make to Starbucks’ CEO with regard to the
    market development growth strategy for this country?

    STRENGTHS WEAKNESSES
    • Starbucks associated with three partners • In order to maintain the quality standard
    as a strategy to enter the market and offer of their products, Starbucks have to keep
    more localized products to Chinese their pricing which is considered
    consumers. expensive for Asian market.
    • Starbucks innovated their menu to match • Strategic location was not properly
    the preferences of their culture. New considered, where they opened a store
    products are often introduced including near the famed Buddhist temple in east
    coffee and beverage line. China and offended the people.
    • The “western coffee experience” of
    Starbucks was brought in the Chinese
    market.
    • The smart market entry strategy was used
    by Starbucks to grow in China.
    • The human resources of Starbucks have
    been successful at recruiting and training
    employees.
    • Starbucks expands their branches
    throughout China.
    OPPORTUNITIES THREATS
    • China is a developing market because • There are other coffee companies looking
    many companies want to benefit from the for continued growth in China.
    opportunity that the China market offers. • Starbucks faces competition from
    • Many companies do not have a pleasing different food industries in China.
    environment for meeting with friends or • Chinese consumers are price sensitive in
    business executives. which they tend to spend less.
    • Many competitors cut prices to compete
    in the Chinese market.
    Starbucks should reconsider its rapid growth strategy in China. At the same time, Starbucks should
    quickly learn about the Chinese culture for the company to grow and expand more in China. The company
    should be more strategic in choosing locations since Chinese people are conservative with their culture.
    Lastly, Starbucks should recreate their product that is more worthy of their pricing without sacrificing its
    quality. This way, they can draw even more customers and maintain the existing customers.
    2. Give examples of how Starbucks was successful upon entering the China market.

    Starbucks has been successful in marketing its products by understanding the taste preferences
    of the Chinese population. In 2010, Starbucks started its processing plant and coffee bean form. Because
    of the new processing plant, they created more jobs for unemployed people and gained the trust of the
    locals. Starbucks also attracted many consumers to pay premium prices for coffee beans grown by local
    farmers.

    3. Compare Starbucks’ U.S. and Chinese strategies. What are the similarities and differences? What
    generalities can you glean from this analysis to help the company expand into other global marketplaces?
    Please use the case and the following article to frame your response. • “Starbucks’ Quest for Healthy
    Growth: An Interview with Howard Schultz,” McKinsey Quarterly 2 (2011), pp. 34–43,
    https://www.mckinsey.com/featured-insights/employment-and-growth/starbucks-quest-for-healthy-
    growth-aninterview-with-howard-schultz#

    Starbucks has successfully joined the Chinese market using different strategies that they also use
    in the US market over the years. At the same time, Starbucks also used the rapid growth strategy in the
    Chinese market, which they also used this strategy in the US where the company opened a large number
    of coffee houses.

    On the other hand, both US and China have different strategies when it comes to their products.
    Starbucks innovated its menu based on the preferences of the consumers and of the local culture. The
    company introduced and added new products such as Frappuccino blended crème, moon cakes, and iced
    rice dumplings.

    In my opinion, Starbucks should properly assess the local population and culture when expanding
    to other global marketplaces. The assessment should help them minimize expenses and not waste effort
    in building a branch. At the same time, Starbucks should innovate its products that are worth spending
    for the consumers. Overall, Starbucks can expand its branches quickly that does not cover their mistakes
    before they have been properly addressed. This will guarantee growth in the right path without
    hindrances, the same with the global marketing in the US.
    References:

    Starbucks grows coffee in China. (2010). Retrieved from


    https://www.youtube.com/watch?v=BYSiGomkGdg

    Starbucks in China. (2007). Retrieved from https://youtu.be/0A3rnWIEJY8

    Starbucks’ quest for healthy growth: An interview with Howard Schultz | McKinsey & Company.
    (2011). Retrieved from
    http://www.mckinsey.com/insights/growth/starbucks_quest_for_healthy_growth_an_inter
    view_with_howard_schultz

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