Starbucks Case Study
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China had several cultural factors that Starbucks had to consider when expanding their company, one of them being that China is a tea drinking country. They are not accustomed to drinking coffee, so Starbucks has to introduce their product in a way that will make the people willing to try it. Another factor is that they are a bit strict on their disposable income, which is why Starbucks really marketed itself on the younger generations because they believed that is where they will make the most sales. The way that they did this was marketing themselves as “Chinas new sophistication.”
When Starbucks entered into the Chinese market, the political factors that they had to consider was that China is a one-party dictatorship. This made China set in certain ways so it risked Starbucks because this could affect business quickly without seeing it coming. One major change is that since Starbucks first opened in China, is that Beijing entered in to the World Trade Organization. Before this the way that they established stores was by finding local developers to use their brand and to set up joint ventures with partners. This strategy was very successful because by 2006 they were able to buy their partnership out. Now foreign companies have a high advantage in China because when they hold a partnership rather than just a joint venture, they are able to more profitable.
One demographic factor that Starbucks had to understand when moving is that people in China live in small places, so to really bring them in they have to make their shops a bit larger than normal to accommodate families and friends coming in to sit and drink their coffees while being together. Another demographic factor they had to consider was location, they could not just put their store anywhere due to China not knowing much about coffee. Their sales would not be high if it was not in a well-trafficked spot. The first place they decided to target was Beijing, which was obviously perfect since they now have hundreds of stores located through out China.
The initial global-market strategy that Starbucks employed when entering China was that they believed that China would eventually be the companies largest sales industry. They had an idea of promoting it as modern-China bringing the younger generations in, they are the called the “Chuppies”.