Global Strategic Planning

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TUI University

BUS 401

Case Module 2

Global Strategic Planning

As a home grown U.S. company Starbuck's quickly saturated its market, and hence several years ago looked at the global market for growth. One of these global markets is China, the most populous nation and home of the record breaking double digit gross domestic product or GDP rates. However, the Chinese culture is so much different that the U.S. culture, in fact some Chinese observers would say that the two cultures are apposite, hence careful strategic planning enhances Starbuck's success in its global extension in China. According to Paul S. Biederman, the most pressing decision factor for Starbucks in opening a coffee shop in China is that the Chinese are predominantly tea drinkers and are unfamiliar with coffee: (2005, p. 288). Thus one of the strategic choices and entry strategies that Starbucks adopted is to upwardly mobile, predominantly young, and interested in consumer products, especially foreign items that have previously been unavailable (2005, p. 288) who belong to a middle class which have been appearing in coastal areas and China's capital. The success of Starbucks' venture into the Chinese market is supposedly smashing, but how smashing we don't know as financial data is not available largely due to the role of the Chinese government. That is, Starbucks manages its Chinese operations while the local licensee owns a controlling interest in the coffee company's shares. The fact that there is a licensee is one of the peculiarities of doing business in China. Thus, foreign companies operating in the country have to be flexible and need to understand the special difficulties associated with investment (Harrison, Chang, Gauthier, Joerchel, et. al., 2005, p. 280). Another strategic choice that Starbucks must face is how fast its Chinese expansion should be given that its target market is substantially increasing. This is also a decision that must be made in view of the fact...
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