Wednesday, February 20, 2019
Integrative Running Case Study: Starbucks Essay
StarbucksA case analysis of Starbucks can will a much closer look at the company, its carriages and weaknesses, as wellhead as the companys ability to do disdain on a spheric scale. In order to best analyze this company, a SWOT analysis, along with answers to the case study questions is provided below. Further much than, a few commendations atomic number 18 included that argon brought to light by reviewing the circumstances of the Starbucks case study. This thorough investigation of the Starbucks company adds a rather complicated flavor to my favorite devotee macchiato that had never before been considered.Starbucks has been serving burnt umber bean domestically since the early 1970s. later experiencing conquest in the domestic market, Starbucks entered the global marketplace, including opening its first stores in China in 1999. (Lamb, p.139) The company entered the Chinese marketplace knowing the ample opportunities that were available, but quite aw be that many factor s had to be accounted for in its merchandising mix and product offering strategies. Cultural, governmental, and frugal factors played important roles in disc e very(prenominal)whereing the best plan for delivering a lucrative coffee business to a land where the majority of consumers had never even had a cup of coffee.Partnering with topical anesthetic developers provided a safer market- entry outline that Starbucks was ready to relinquish in 2006. After gaining some(prenominal) years of experiencing in the business purlieu of China, Starbucks embraced the chance to try its give birth hand at delivering a lucrative business operating in an environment that had many interchangeableities to its domestic marketplace in the United States. A discussion of the strengths, weaknesses, opportunities,and scourges for the Starbucks company is provided to further understand its conquest in the global marketplace.Strengths The decision Starbucks made to enter the Chinese marketplace was nt without prolonged research. Starbucks had an already-existing marketing mix that was cash in ones chipsing well and generating large cabbage in its homeland. The knowledge and expertise found in the existing Starbucks employees were an important strength for the company as it planned its business venture in China.As a successful domestic coffee-seller and cafe business, Starbucks had funding and financial resources to work with when submission the contrasted Chinese market. Furthermore, the paper of Starbucks and its business growth and success certainly attracted additional funding from shareholders when taking the Starbucks deformity globally.Weaknesses Though Starbucks was a well-tested brand in its domestic market, Starbucks faced new market-entry obstacles. The idea of entering a foreign market on its own was not a wise decision, and in that locationfore, Starbucks would shed to rely on foreign partnerships to expand its brand globally. (Lamb, p. 140) This reliance on a partnership could be dearly-won as profits are shared even though market-entry risks are lowered. The set down of making mistakes and learning from them, as well as creating a firm new marketing mix for Chinese consumers was certainly a costly investment.Opportunities Even though entering the Chinese market would prove to have some obstacles, the company certainly realized the many opportunities that existed for creating its brand in China. Entering a market that consisted of consumers who had very little experience with coffee would leave Starbucks as a droll product with potential for press stud in its pricing with very little competition from other coffee shops. Furthermore, changes in the Chinese youths view of collectivism was drastically changing as they focused more on individuality. (Lamb, p.139) This offered a similar environment to the domestic market in the United States.Additionally, the research Starbucks initiated would state that a specific need for a plac e forpeople to pick up together was in high demand in China. Starbucks knew that providing that experience unite with the distribution of coffee (a symbol of the modernizing of China) could provide a whole unique experience that youth would be quick to embrace. Similarly, economic success in the region proved the needs for disposable income for expensive coffee drinks could be met easily by the growing and expanding economy.Threats Just as there are many opportunities when a company enters a whole new marketplace, there can in addition be many external threats as well. A booming economy that may at first seem skilful for market entry could change at any time, and prove lay waste to to the Starbucks China operation. Furthermore, policy-making and effectual factors could change just as fleetly and cause many problems for Starbucks as the company has no influence over these external factors. Similarly, societal factors can al dashs pose a threat as well. With a business focused on mainly the Chinese youth, any trend that in some way denounces or disqualifies Starbucks as a meaningful experience to the youth would cause a striking breakdown in the Starbucks marketing mix.A further analysis of Starbucks entry into the Chinese marketplace can be accomplished by investigating the questions at the end of the case study. 1. Many of the same environmental factors, such(prenominal) as cultural factors, that channelize in the domestic market also exist internationally. Discuss the key cultural factors Starbucks had to consider as it spread out into China.Several cultural factors impacted Starbucks entry into the Chinese market. One such factor was the cultural reliance on mostly tea as a drink of choice among the Chinese. Starbucks knew that entering the market with a scheme of simply trying to sell various facets of coffee would be a challenge if not carefully executed in a way that would inspire and empower the consumers to actually stimulate the desire fo r coffee. A twinkling cultural factor that enabled Starbucks to overcome the obstacle of the tea vs. coffee line is that the Chinese people do not have much stead in their homes etc. for gathering with their interest groups. Starbucks quickly determined that providing a need (such as space to hang out) would be an minute way to offer its products in an environment that would beproviding a resolve to the problem of having limited spaces to just be with friends. (Lamb, p.139) 2. Discuss the key political and legitimate factors Starbucks had to consider in the Chinese marketplace. What are the risks of entering a country with these factors? What changes have occurred in Chinas political and legal body structure to the advantage of foreign companies?China is a communist country, and politically this type of government can be volatile. Any changes to the government and/or its officials could have fast and devastating effects on businesses operating in China. (Lamb, p.140) Legislati on could be created overnight that may involve the removal of foreign businesses or simply make it impossible for them to compete in the Chinese market by placing restrictions on their allowable business practices. Although there are risks associated with entering a foreign market with uncontrollable political and legal factors, China has proven to have a political and legal structure that has been very conducive to foreign companies.Beijing entered the World Trade governing body in 2001, and since has provided economic stability as well as political stability to businesses. (Lamb, p.140) Legally, China has mandated that each family is allowed one child. This mandate has resulted in a shift of the normal collective view of communist consumers to a more individualistic view for young consumers, creating a very ripe environment for businesses that provide modernistic, Western-individualism style products and marketing mixes. 3. What demographic factors were important for Starbucks to understand in China? What were the demographics they decided to target?In order to enter the Chinese market, Starbucks had to consider demographic factors such as age and population in order to be successful. According to Lamb Starbucks initially focused on the economically upwardly mobile population, including 20-40 year olds. (Lamb, p.139) Finding much success there, Starbucks wanted to grow that success over time, and is strategically focused on the youth of the Chinese population since they have the economic backing of their families to escort disposable needs, such as pricy cappuccinos. 4. What was the initial global-market strategy Starbucks assiduous to enter China? Discuss the advantages and disadvantages to this early strategy. How has their strategy changed since then and why?According to Lamb the initial global-market strategy Starbucks entered China with involved partnering with other businesses as a joint venture, along with authorizing local developers to use their brand. (Lamb, p.140) This strategy had an advantage of entering the market in a gradual way, and gaining the cartel of the Chinese while simultaneously avoiding the added risk of entering the market on its own. The disadvantage of this style of market entry is seen in the profit border for Starbucks.Joint ventures and partnerships do not share equally in profits (and Starbucks would need to work hard to find a management short letter in such ventures to make sure it could hold onto its profit boundary line as sales increased). Since then, Starbucks has bought out its partners and now individually owns its own stores. while this strategy is drastically different from its market-entry strategy, the company is now much more confident in how to do business effectively in China. Furthermore, the fact that Beijing entered the World Trade Organization has had a securing and positive economic and legal affect on foreign companies doing business alone in the Chinese marketplace.In lieu of the facts provided in the case study, it is possible to recommend additional ways in which Starbucks can continue to successfully operate in China. One such recommendation is for Starbucks to keep a very close watch on social media trends among the Chinese youth. Knowing that the Asiatic community is very embracing of social media, it is imperative that Starbucks maintain its reputation as modern and forward-moving by participating in the social media trends of the youth. A second recommendation for Starbucks is to provide social benefits to the communities in which it operates. Providing benefits to touch communities can help to establish a successful business race with local government officials as well as encouraging the authority of the local people. Furthermore, these philanthropic efforts can have an impact on the consumers of Starbucks products domestically as well. Domestic patrons can find value in these efforts of doing goodness for global communities and become enc ouraged to support the company with more purchases.In conclusion, the review of the Starbucks case study has been bothinformative and interesting as I am a consumer of Starbucks myself. The knowledge gained here has certainly changed my thoughts from salivating for a simple caramel macchiato when I pass the Starbucks logo, to wondering where and how they do business elsewhere.ReferencesLamb, C.W., Hair, J.F., Jr., McDaniel, C. (2011). Marketing (11th ed.). Mason, OH South-Western.