Integrative Running Case Study: Starbucks Essay

StarbucksA faux pas analysis of Starbucks can provide a much closer hear at the company, its strengths and weaknesses, as considerably as the companys ability to do chore on a global scale. In order to best analyze this company, a SWOT analysis, along with answers to the case study questions is provided below. Furthermore, a few recommendations are included that are brought to light by re seeing the facts of the Starbucks case study. This complete(a) investigation of the Starbucks company adds a rather complicated flavor to my favorite caramel macchiato that had never forrader been considered.Starbucks has been serving umber domestically since the early 1970s. After experiencing achiever in the domestic commercialize, Starbucks entered the global marketplace, including open up its first stores in china in 1999. (Lamb, p.139) The company entered the Chinese marketplace knowing the vast opportunities that were available, only quite aware that many factors had to be accounted for in its merchandise mix and product offering strategies. Cultural, semipolitical, and scotch factors played important roles in disc overing the best plan for delivering a lucrative coffee business to a land where the majority of consumers had never even had a cup of coffee.Partnering with local anesthetic developers provided a safer market-en assay strategy that Starbucks was warm to relinquish in 2006. After gaining several years of experiencing in the business environment of chinaware, Starbucks embraced the chance to try its own hand at delivering a lucrative business operating in an environment that had many similarities to its domestic marketplace in the United States. A discussion of the strengths, weaknesses, opportunities,and threats for the Starbucks company is provided to further understand its supremacy in the global marketplace.Strengths The decision Starbucks made to enter the Chinese marketplace wasnt without extensive research. Starbucks had an already-exis ting marketing mix that was working well and generating large put on in its homeland. The knowledge and expertise found in the existing Starbucks employees were an important strength for the company as it planned its business venture in chinaware.As a successful domestic coffee-seller and cafe business, Starbucks had funding and financial resources to work with when entering the contrasted Chinese market. Furthermore, the reputation of Starbucks and its business growth and success certainly attracted additional funding from shareholders when taking the Starbucks brand globally.Weaknesses though Starbucks was a well-tested brand in its domestic market, Starbucks faced new market-entry obstacles. The idea of entering a irrelevant market on its own was not a wise decision, and therefore, Starbucks would have to rely on foreign partnerships to expand its brand globally. (Lamb, p. 140) This reliance on a partnership could be costly as profits are shared even though market-entry stakes are lowered. The expense of making mistakes and learning from them, as well as creating a whole new marketing mix for Chinese consumers was certainly a costly investment.Opportunities Even though entering the Chinese market would prove to have some obstacles, the company certainly realized the many opportunities that existed for creating its brand in China. Entering a market that consisted of consumers who had actually little realise with coffee would leave Starbucks as a unique product with potential for elasticity in its set with very little competition from other coffee shops. Furthermore, careens in the Chinese youths view of collectivism was drastically c attend toing as they focused more on individuality. (Lamb, p.139) This offered a similar environment to the domestic market in the United States.Additionally, the research Starbucks initiated would show that a specific need for a place forpeople to gather together was in high demand in China. Starbucks knew that pro viding that experience have with the distribution of coffee (a symbol of the modernizing of China) could provide a whole unique experience that youth would be quick to embrace. Similarly, economic success in the region proved the needs for disposable income for expensive coffee drinks could be met easily by the growing and expanding economy.Threats Just as there are many opportunities when a company enters a whole new marketplace, there can also be many foreign threats as well. A booming economy that may at first seem ripe for market entry could change at any time, and prove devastating to the Starbucks China operation. Furthermore, political and profound factors could change just as swiftly and cause many problems for Starbucks as the company has no influence over these external factors. Similarly, social factors can always pose a threat as well. With a business focused on mainly the Chinese youth, any trend that in some way denounces or disqualifies Starbucks as a meaningful ex perience to the youth would cause a dramatic breakdown in the Starbucks marketing mix.A further analysis of Starbucks entry into the Chinese marketplace can be staring(a) by investigating the questions at the end of the case study. 1. Many of the same environmental factors, such as heathen factors, that get going in the domestic market also exist internationally. Discuss the key cultural factors Starbucks had to consider as it expanded into China.Several cultural factors impacted Starbucks entry into the Chinese market. One such factor was the cultural reliance on mostly teatime as a drink of election among the Chinese. Starbucks knew that entering the market with a strategy of simply trying to sell various facets of coffee would be a challenge if not carefully executed in a way that would inspire and present the consumers to actually stimulate the desire for coffee. A secant cultural factor that enabled Starbucks to overcome the obstacle of the tea vs. coffee concern is that the Chinese people do not have much space in their homes etc. for gathering with their interest groups. Starbucks quickly determined that providing a need (such as space to hang out) would be an excellent way to offer its products in an environment that would beproviding a consequence to the problem of having limited spaces to just be with friends. (Lamb, p.139) 2. Discuss the key political and ratified 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 Chinas political and legal structure to the reward of foreign companies?China is a communist country, and politically this type of regimen can be volatile. Any changes to the government and/or its officials could have fast and devastating effects on businesses operating in China. (Lamb, p.140) Legislation could be created overnight that may involve the removal of foreign businesses or simply make it impossible for them to compet e in the Chinese market by placing restrictions on their allowable business practices. Although there are risks associated with entering a foreign market with uncontrollable political and legal factors, China has proven to have a political and legal structure that has been very conducive to foreign companies.Beijing entered the World Trade Organization in 2001, and since has provided economic stability as well as political stability to businesses. (Lamb, p.140) Legally, China has mandated that each family is allowed one child. This mandate has resulted in a shift of the usual collective view of communist consumers to a more individualistic view for young consumers, creating a very ripe environment for businesses that provide modernistic, Western-individualism style products and marketing mixes. 3. What demographic factors were important for Starbucks to understand in China? What were the demographics they decided to target?In order to enter the Chinese market, Starbucks had to con sider demographic factors such as age and population in order to be successful. According to Lamb Starbucks initially focused on the economically upwardly mobile population, including 20-40 year olds. (Lamb, p.139) Finding much success there, Starbucks wanted to grow that success over time, and is strategically focused on the youth of the Chinese population since they have the economic setting of their families to support disposable needs, such as pricy cappuccinos. 4. What was the initial global-market strategy Starbucks employed to enter China? Discuss the advantages and disadvantages to this early strategy. How has their strategy changed since then and why?According to Lamb the initial global-market strategy Starbucks entered China with involved partnering with other businesses as a joint venture, along with authorizing local developers to use their brand. (Lamb, p.140) This strategy had an advantage of entering the market in a gradual way, and gaining the trust of the Chinese w hile simultaneously avoiding the added risk of entering the market on its own. The disadvantage of this style of market entry is seen in the profit edge for Starbucks.Joint ventures and partnerships do not share equally in profits (and Starbucks would need to work awkward to honor a management position in such ventures to make sure it could hold onto its profit margin as sales increased). Since then, Starbucks has bought out its partners and now individually owns its own stores. While this strategy is drastically different from its market-entry strategy, the company is now much more confident in how to do business in effect in China. Furthermore, the fact that Beijing entered the World Trade Organization has had a securing and positive economic and legal affect on foreign companies doing business alone in the Chinese marketplace.In lieu of the facts provided in the case study, it is possible to recommend additional ways in which Starbucks can continue to successfully operate in C hina. One such recommendation is for Starbucks to keep a very close watch on social media trends among the Chinese youth. Knowing that the Asian community is very embracing of social media, it is imperative that Starbucks swan its reputation as modern and forward-moving by participating in the social media trends of the youth. A second recommendation for Starbucks is to provide social benefits to the communities in which it operates. Providing benefits to surrounding communities can help to establish a successful business relationship with local government officials as well as encouraging the trust of the local people. Furthermore, these philanthropic efforts can have an impact on the consumers of Starbucks products domestically as well. Domestic patrons can find value in these efforts of doing good for global communities and become encouraged to support the company with more purchases.In conclusion, the review of the Starbucks case study has been bothinformative and interesting as I am a consumer of Starbucks myself. The knowledge gained here has certainly changed my thoughts from salivating for a simple caramel macchiato when I pass the Starbucks logo, to wondering where and how they do business elsewhere.ReferencesLamb, C.W., Hair, J.F., Jr., McDaniel, C. (2011). Marketing (11th ed.). Mason, OH South-Western.