CASE STUDY: STARBUCKS
SELLING COFFEE IN THE LAND OF TEA (p. 127-128)
Many of the same environmental factors, such as cultural factors, that operate in the domestic market also exist internationally. Discuss the key cultural factors Starbucks had to consider as it expanded into China. The key cultural factors Starbucks had to consider is that Chinese’s culture of tea drinking. They decided to market coffee and the brand Starbucks as China’s “new sophistication”. As being a communist country, Chinese youth do not like collective goals and prefer the Westerner’s beliefs on individualism and culture. It is interesting how Starbucks noticed that drinking coffee was not the number one reason why the Chinese go to Starbucks, rather it was more to meet up and talk with family and friends. Because there is a massive population in China, Starbucks had to consider making the cafes larger to allow more spacious hangout places and making Starbucks as the “third space” as well as accommodate those 90% who prefer to eat and drink coffee in the store. Not only that, it was important to offer a Chinese style menu in Starbucks such as the duck sandwiches, moon pies, and green tea cheesecake mentioned in the article.
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? Since China is a communist country as stated in the article, businesses could be easily affected by change in the dictatorship. Furthermore, there are always risks when establishing business in a foreign market since the cultural values and ethics are different. When first entering this foreign market, Starbucks found local partners who understood the legal and business factors for establishments in China. They set up local ventures with partners and allowed local developers...
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