GLOBAL EXPANSION STRATEGY WITH A FOCUS ON CHINA

Starbucks Global Expansion Strategy with a Focus on China

Starbucks Global Expansion Strategy with a Focus on China

Starbucks entered China in 1999 and has now made it their number one target for growth. Why and how did Starbucks venture into the orient? Let's begin by taking a look at their global/entry strategy along with decision factors. Secondly, we will focus on the Chinese government's possible influence on the company. Finally, we'll touch on future strategic factors.

Starbucks international entry strategy for China was basically two-fold. The first phase of the entry was to build the brand. In the initial stages Starbucks tested the waters by offering free cups of Starbucks coffee to hotel guests within the city of Beijing. This allowed Starbucks to see how coffee would sell in a primarily tea drinking market. With the combination of foreigners familiar with brand and the Chinese willing to blend-in with the western ways, Starbucks soon realized they had something brewing and pursued the China market.

The second phase of entry, although equally important, was research and development. Since Starbucks refused to use franchising they created a joint venture with Chinese President Group which allowed them to cut out the middle-man, thus enabling all stores to be company-owned. This overall strategy helped Starbucks to successfully penetrate the Chinese market with success. Now that we've seen how Starbucks entered China let's take a look at where the Chinese government fits in.

Initially you could say the Chinese government has an indirect involvement in Starbucks' presence there due to their entrance into the World Trade Organization. This economic step has proven both beneficial and detrimental to foreign companies alike due to the simple fact that while being able to broaden your market in China, competitors, both foreign and local, ...