Coffee and Cultural Factors Starbucks

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STARBUCKS: Selling Coffee in the Land of Tea

1. Many of the same environmental factors that operate in the domestic market also exist internationally, including cultural ones. Discuss the key cultural factors Starbucks had to consider as it expanded into China.

Chinese culture was a key environmental factor that Starbucks had to consider when opening its first store in Beijing in 1999. ―The Land of Tea‖ wasn’t interested in the product Starbucks was selling: coffee. It wasn’t a part of their culture to grab coffee on the way to work or hang out with friends in coffee shops afterwards. Starbucks had to find a way to create demand for a beverage that few Chinese were familiar with or had a taste for.

2. Discuss the key political and legal 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 China’s political and legal structure to the advantage of foreign companies?

China is a communist country that has only recently opened its borders to foreign investment. Although the Chinese government is now friendly with United States businesses, analysts warn that with a one-party dictatorship everything could change overnight with a new regime that might decide to close the marketplace to foreign investors or even nationalize properties. Perhaps the most important legal factor occurred in 2001 when Beijing entered the World Trade Organization (WTO) and began opening its markets, making it easier for foreign companies to operate there without intermediaries and joint ventures.

3. What demographic factors were important for Starbucks to understand in China? What were the demographics it decided to target?

The demographic makeup of China was important for Starbucks to understand because it needed to know who its target market in the country would be. Starbucks recognized that rural Chinese would not be as accepting of coffee as urban dwellers...
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