Raymond F. Charest Jr.
BUS 401 International Business
Module 2 Case Assignment
Coordinator Professor: Dr. Joseph Thomas
Core Professor: Dr. David Hunt
The purpose of this paper is to write an essay about Starbucks global expansion strategy with a focus on China. Starbucks first went international in 1996 in Tokyo Japan; today there are over three thousand coffeehouses in thirty-seven different countries. “The number one priority of our company in terms of new growth is China,” said Howard Schultz, chairman of the coffee chain. “The US company has two hundred and nine stores across eighteen mainland Chinese cities, about one hundred and twenty of which lie in the capital or around Shanghai” Andrew Yeh wrote. Compared to the six hundred coffee shops in Japan Starbucks is behind in growth for China. With China’s emerging economy and booming population it is a no-brainer that a rapid expansion into China would be a great business opportunity. There are a couple of decision factors that Starbucks assesses during this intercontinental venture. Where to place new stores? “Future success in China would largely depend on the steady addition of new stores in medium-sized cities, as Beijing and Shanghai already had dozens of Cafes.” The decision here is to get away from the bigger cities where competition is greater. If they decided to go into these areas the chance of thriving would be limited due to the fact many other coffee shops already exist. The next decision factor Starbucks considered is the opportunity for world growth and success for Starbucks in China. China’s economy and population were prime factors for expansion into that region. Mr. Schultz said, “ the company was looking at new ways to tailor the menu to local tastes, as US fast food chains have done”. When first entering the market in China back in 1999 competition wasn’t a major concern since most Chinese prefer tea to
References: Starbucks aims for new tier in China Cafes Financial Times Andrew Yeh Building Competitive Advantage: Lessons From Other Countries by: Michael Porter Restaurants: Starbucks chairman calls growth in China a priority The Wall Street Journal Asia Rebecca Blumenstein Converting The Masses: Starbucks in China Far Eastern Economic Review Gregory A. Fowler Starbucks Calls China Its Top Growth Focus Wall Street Journal Starbucks aims for new tier in China Cafes: Financial Times. London: February 14, 2006