Starbucks Case

Case Study: Starbucks

Selling Coffee in the Land of Tea

Question 1:

Many of the same environmental factors such as cultural factors, that operate in the domestic market also exist internationally. Discuss the key cultural factors Starbucks had to consider as it expanded into China.

One of the key cultural factors that Starbucks had to consider was the fact that China is known as the land of tea. It has been their tradition to drink tea instead of coffee. Thus, they have to consider how to turn avid tea drinkers to coffee lovers.

Another cultural factor is that the Chinese loves gatherings whether it is with their family or friends. They enjoy spending time with their friends and family but the living spaces are small and cramped in China. This could be an advantage point for Starbucks, as they are known to provide a "third space" between home and work for them.

Also, the Chinese consumers are comfortable of what they eat, thus, Starbucks has to know what their targeted consumers enjoy eating. Starbucks has to get familiar with the Chinese menu, as they are very much into culture and tradition, even with their food. Therefore, by knowing what the Chinese consumers enjoy having with coffee, it could really help Starbucks to grow.

Starbucks has to know about the communist country how much a change in its one-party dictatorship could affect business. The risk is there so Starbucks has to know how to plan for their business in the long run before expanding to China.

Question 2:

Discuss the key political and legal 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 China's political and legal structure to the advantage of foreign companies?

Political key factors to be considered is that China is a communist thinking country as they are and it did affect the lifestyle of citizen. They used to have Chinese style drink like milk tea, Chinese tea, chrysanthemum, Longan and so on. Also, it is a one party dictatorship country.

Legal factors are by only using local developers to use their brand and setting up joint ventures with partners, Starbucks are only to receive royalty fees from the licensee.

The risks are about Chinese are supportive to their own lifestyle due to China was being a dictatorship country. Any change within its one-party dictatorship, it could potentially affect their business. The return of investment will only be out of small portion due to only getting profits from the royalty fee.

Until China started to develop and entered World Trade Organization around 2001, they had open for overseas investors to come in China and have very good relationship with United States; peoples are getting started to trying overseas product like Starbucks.

Question 3:

What demographic factors