Starbucks in China

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Starbucks Corporation in China

Company overview

Starbucks Corporation is one of the most famous coffee retailers in the world. According to Starbucks Corporation (2012), it runs over 55 countries in many regions including North America, Asia Pacific, Latin America and so forth. Starbucks headquarter is located in Seattle, Washington, USA. It has approximately 149,000 employees. According to Starbucks Corporation (2012), its company verified the income of 11,700.4 million dollars during the fiscal year of 2011, which is an increase 9.3% over the fiscal year of 2010. In addition, the net profit of the firm was 1,245.7 million dollars in fiscal year of 2011, which rose 31.7% over the fiscal year of 2010. This Company is considered as a great business, which grows rapidly in past two decades. To illustrate this, in 1987 Howard Shultz and David Olsen bought Starbucks Company, and then five year later, it expanded from 6 shops to 165 retail outlets in Pacific Northwest. In 2001, Starbucks has more than 7,500 retail stores (Harrison et al. 2005). Nowadays, this company operates more than 17,000 stores over 55 countries (Starbucks Corporation, 2012). In the past decades, Starbucks Company has expanded globally comprising open branches in Republic of China. Starbucks Company first opened in China, found in Shenzhen in 2002. It is held by Coffee Concepts, which is a joint venture between Starbucks Company and Maxim group from Hong Kong (Harrison et al. 2005). In order to acquire 100% equity of its business in the Chinese cities of Hainan, Sichuan, Guangdong, Hubei, and Shaanxi, in June 2011 Starbucks authorized a prescribed agreement with Maxim’s Caterers. This led to the complete control of more than half of the Starbucks stores in Central of China (Starbucks Corporation 2012). Even it is still a small segment of Chinese drink, the firm anticipates in growing of Chinese population and also Chinese middle class including office workers, university students, and so on. By concentrating its attention on the employees and university students, Starbucks Company has created a great service quality that fit to Chinese. Pedro Man, president of Starbucks coffee Asia pacific, noted in Harrison et al. (2005, p. 276) that “the international expansion is difficult for many American firms, especially in Asia, somehow Starbucks have defied the odds as they have done all long.” Starbucks created two keystones to cope with this difficulty. First one is their coffee. Starbucks produces top standard of excellence to every detail of coffee. Second are their people. Its employees can assist to produce an exceptional involvement for clients by using their expertise, knowledge, passion, and enthusiasm. This essay will be covering the analysis of Starbucks in China including how Starbucks internationalise itself and the impact of these actions on the organisation, and broader community will be explored.

Internationalisation of Starbucks

Entry mode
According to Santamaria (2008), Starbucks Company uses different entry modes to internationalise itself. It modifies the international strategy to fulfill with every market’s requirement in respect of cultures and traditions of each country. Before enter to new countries, Starbucks Company do a quantitative market research. It also advances wide focus group interview to get the potential of market. Starbucks uses three types of entry modes including joint venture, licenses, and wholly owned subsidiaries in order to enter new countries. To illustrate more regarding the joint venture which Starbucks used for entering to China, Starbucks Company realised that it is hard to operate the business itself since it takes high threat. It needs help from other entrepreneurs and companies, which can reduce and share risk of finance. Their partners helped Starbucks to enter the market by obtaining the product and service to be available in the market rapidly. Plus, they helped the firm to be in trend with the...
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