Starbucks in China

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College of Business

MGT6503: Comparative Management: Asian Perspectives
Dr. Jixia (Jane) Yang

Study of Starbucks' case in China

Student ID:

52775337

52326355

50417599

50376619

Summary:

In Iceberg Model of Culture, the difference of the people come from varieties countries is not only their behaviors, but also their attitudes, assumptions, values, beliefs which cannot be seen easily. The difference can influence almost every aspect of natives' living. That is the reason why some good management styles didn't have much work in other regions. So comparative management is really useful to analyze the extent to which management principles are applicable from one country to another.

In this assignment, we choose Starbucks as the case to research. Because we think Starbuck is one of the firms can operate their business well in Mainland China. Its opreation principle and management style in China can be a good example for other foreign enterprises who want to set foot in China market. However, we still found some problems or potential business issues of Starbucks as well. Therefore, we will apply the Five Force Model and Value Chain Theory to analyze it and try to come up with some suggestions to help Starbucks become more successful in China.

Introduction:

When it comes to tea, it is believed that you may think about China at the first time. In China, there are ten great Chinese teas, such as Dragon well, Spring snail, Iron Goddess, etc. In their culture, they will drink tea after having meals and at spare time in several thousands years.

How about in Western? It must be coffee, like Latte, Cappuccino, Mocha and single estate, etc. People in Western will drink coffee in breakfast, in lunch, in tea, in dinner, when sleepy, whenever they want. The drinking culture is completely similar with China, but the content is different. Coffee is in western and tea in China. If you are given a task to promote coffee in China, you may think impossible. However, Howard Schultz, who is the Starbucks chairman, president and chief executive officer now, achieves this impossible.

Let introduce the history of Starbucks first. The first Starbucks was opened in Seattle in 1971. The name comes from Herman Melville's Moby Dick, a classic American novel about the 19th century whaling industry. Howard Schultz joins Starbucks in 1982. While on a business trip in Italy, he visits Milan's famous espresso bars. Impressed with their popularity and culture, he sees their potential in Seattle. He's right - after trying lattes and mochas, Seattle quickly becomes coffee-crazy. In 1990s, Starbucks expands beyond Seattle, first to the rest of the United States, then to the entire world. After becoming one of the first companies to offer stock options to its part-time employees, Starbucks becomes a publicly traded company. Starbucks opened the first store in Peking in China on the January of 1999 and the second in Shanghai on the May of 2000. The third store was in the Central in Hong Kong. Today, there are over 230 stores opened in China while over 17000 stores in 55 countries. Starbucks sets an aggressive target in China, 1500 stores in 2015.

According to the collected data, it is discovered that Starbucks did well in exploring the Chinese drinking market. It not only has become one of the Top 10 valuable coffee brands in China in 2012, but also the biggest coffee chain brand in China. Besides, the net income of Starbucks in China and Asia-Pacific region had reached 214 million USD in 2012. Comparing with 2011, the net income from Asia-Pacific increased 28% while the whole company’s income (global) was 11%. However, it is not denied that there are still some problems in Starbucks in China drinking market.

Starbucks' problems:

The collision between western culture and China traditional culture is always attractive in Mainland China. The culture gap made a big obstacle for...
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