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Starbucks global expansion strategy with a focus on China Essay

As globalization has strengthened its root in every country and around the World it is becoming more and more important for different businesses to operate with maximum efficiency and effectiveness. This makes it obvious to have a strong and large customer base to attain larger profits. As the geographical distances vanish due to different drivers of globalization companies have now found ways to expand globally. Global expansion has many benefits apart from the complexities it brings along with it. Companies not only expand to increase their market share but also focus on reducing costs through various strategies.

These strategies can be different for different companies no single strategy is suitable for every organization. We have seen in the past and present that different successful companies have poised themselves with different strategies which have worked for them effectively and efficiently. Every organization tends to have a unique competitive aspect that differentiates them from others. This enables the organization or business to position itself at a unique position in the industry that it belongs to. The same is the case for Starbucks, as they have positioned themselves uniquely from other companies in the industry. Read about Starbucks HR strategy

This company originated from the United States of America in Seattle, Washington. The company is basically an international Coffee and Coffeehouse chain which is the biggest currently present in the World. Starbucks has a total of 16120 stores in a total of 48 countries. The largest share of stores present in United States of America, Canada and Japan. Starbucks has focused greatly on global expansion and have carried it out successfully in most of the global sites they have moved to. In this paper we would examine the global expansion of Starbucks focusing on China.

In 1996 Starbucks opened their first location outside North America which was in Tokyo, Japan. Starbucks bought the United Kingdom based Seattle Coffee Company in 1998 in order to enter the market; at that time 60 outlets operated in UK the stores were renamed as Starbucks. By November 2005 Starbucks had become an international brand as the number of outlets in London exceeded that of Manhattan. In April 2003, Starbucks bought Seattle’s Best Coffee and Torrefazione Italia from AFC Enterprises in April 2003 to increase the number of total stores of Starbucks to more than 6400 around the globe.

Four Seasons

During the September of 2006 Diedrich Coffee which was a major competitor of Starbucks also sold most of its company owned stores to Starbucks. This also included the purchasing of the locations of the Oregon based Coffee People chain by Starbucks. All these locations and stores were converted to Starbucks style and renamed Starbucks. Many of the currently operating bookstores in US and UK have Starbucks outlets within them. During the year 2008, Starbucks sustained its growth, expanding to Portugal, Argentina, and Bulgaria. Starbucks plan to open new stores in Hungary, Algeria, Poland and Colombia during 2009.

Starbucks entered China in 1999 right after it entered Japan; China is still seen as a place having great growth opportunities by the Starbucks. The have expanded rapidly inside China after entering. Starbucks faces stiff competition by some major competitors in China as it is the country where tea and coffee have a strong bonding with their cultural values. Starbucks have gone in to some major contracts and relationships with partners in China helping them in meeting the standards of Starbucks. Starbucks is currently pursuing an aggressive expansion strategy in China focusing on the 1st and 2nd tier cities of China.

The company sees China as one of the major markets after United States of America and does not hesitate in buying local equity to establish firm holds in the country. They see China as a potential market by the fact that the younger generation is adopting the American way of living their lives. Starbucks still has fewer numbers of stores in China as compared to Japan but they see this as an opportunity to grow in China. Starbucks plan to expand their operations in China further as they have only 200 stores operating their which is very less compared to the 600 in Japan. The Chinese population on the other hand likes the coffee that is being sold by Starbucks, and the likeness has given a morale boost to Starbucks for their expansion.

It is simple and very obvious by the facts and figures that Starbucks expansion in China has been slow as compared to their expansion rate in other foreign markets. This is due to the fact that they have faced stiff competition by the local industry players and some cultural extremists, but this does not affect the confidence and morale of Starbucks. Starbucks plan to continue with its slow progress as they see China as a strategically important component of their long term plans. They have diagnosed a change in the living styles of the Chinese population and its direction towards the American way of life which is a positive sign for Starbucks.

Bibliography

Anonymous. Starbucks Calls China Its Top Growth Focus, Wall Street Journal, 2006.

Economist.com/ Global Agenda.The forbidden latte Business view. 2007, p.1.

Financial Times. Starbucks aims for new tier in China Cafes, February 14, 2006

Inkpen A., Ramaswamy K. Global Strategy: Creating and Sustaining Advantage across Borders, Oxford University Press, 2005

Michelli J. The Starbucks Experience: 5 Principles for Turning Ordinary into Extraordinary, McGraw-Hill, 2006.

Reuters. STARBUCKS IN CHINA. September 5, 2007.March 20, 2009. < http://www.nypost.com/seven/09052007/business/starbucks_in_china.htm>

Inkpen A., Ramaswamy K. Global Strategy: Creating and Sustaining Advantage across Borders, Oxford University Press,2005

Reuters. STARBUCKS IN CHINA. September 5, 2007.March 20, 2009. < http://www.nypost.com/seven/09052007/business/starbucks_in_china.htm>

Economist.com/ Global Agenda.The forbidden latte Business view. 2007, p.1.

Anonymous. Starbucks Calls China Its Top Growth Focus,

Need essay sample on "Starbucks global expansion strategy with a focus on China"? We will write a custom essay sample specifically for you for only $ 13.90/page

Wall Street Journal, 2006.

Michelli J. The Starbucks Experience: 5 Principles for Turning Ordinary Into Extraordinary, McGraw-Hill.2006

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