The customers were given some samples to smell as well as sip and then describe their experience. The market penetration pricing would involve charging a slight premium for the products and service offered in order to establish and keep the brand name in the market as a well renowned and famous entity. Stated Objectives The internal resources, which are available to the KFC company in order to compete in the market while establishing itself in the Chinese fast food industry are derived form the strengths of the company. Starbucks’ retail entry model in the United States does not have the same strategy as their international model. From professional to students they had different ways to attract them. The company chose to opt for its own culture and sell the idea of the ‘Coffee drinking experience’. Starbucks Coffee around the World The long standing rival of the company in this region is the chain of McDonald fast food stores. The Asian coffee market has emerged as the largest in the world. In response to that Starbucks started offering some popular Chinese foods like, curry puffs, moon cakes, and traditional cookies. Read about Starbucks HR strategy. Starbucks started by projecting the stores as a place for social gathering. One of its entry strategies is to introduce Starbucks as a premium brand (Clark, 2008) to differentiate it from direct competitors in the coffee industry and local competitors. Industry Competition A diverse and expansive industry of restaurant, food and beverage and fast food items is present in the region. We chose China because it is the world’s most populous country with over 1.3 billion people live there and second-largest country by land area. The customers were willing to pay a higher price for the brand name. In September 19… Through various innovation strategies, the company has expanded successfully into the international markets. Local people, who strived to imitate the Western lifestyle, also showed interest for coffee drinking. The number of stores in China has grown from 800 to 3,200 in the past five years, with an average of one new store opening every 15 hours. Barriers to Entry The KFC is an established brand name so when other companies think of entering the industry/ market they are somewhat constrained by the brand name and the competition in the industry. At times if the customers did not enjoy the sample, the store employees asked them to come back again later for another ‘tasting’ session or they offered them some other drink that they enjoyed. Starbucks accepted the reality that maximum people in China like tea more than coffee though young generation is more likely to go for coffee. instead of adopting the general strategy of under-pricing their products in the Asian market, Starbucks cups have become a status symbol in the urban areas of Beijing and Shanghai (Schiavenza, 2013). “We want our customers to recognize that we’re not coming to China just to make money, we are coming to China to build an enduring company that they can trust and they can view as one of their own”. The new strategy will help re-accelerate earnings growth for years to come. Starbucks, the world''s leading retailer, roaster and brand of speciality coffee, opened its first store in China in 1999. The company adopted a strategy of having three different partners to enter different regions in Chinese market. To build up its presence in China, Starbucks is opening stores at a rapid pace. The power of the buyers is highly strong in China as KFC is an international and foreign chain to them and they yield the power of determining which products should be made available by KFC. This initiative indicated that there was a strong demand for their products, particularly among foreigners in China. Number: 016-8515159 E-mail: [email protected] com Study Centre: SEGi College. Despite initial scepticism about the entry of a coffee brand in a traditional tea-drinking nation, Starbucks was well received in China and had established its presence there. Starbucks has also done an amazing job at recruiting, retaining, and training employees. Business Week and Interbrand have listed the top 100 global brands (market study in China) and Starbucks Coffee ranked in at 91st overall thanks to its $3 billion brand value. The The results show that the internationalization process of Starbucks presents as a prominent feature People in China spent main slice of their monthly budget on foods. can use them for free to gain inspiration and new creative ideas for their writing assignments. On May 16, 2018, Starbucks hosted its first investor meeting in China, revealing its ambition to venture into another 100 new cities of China, at a … When Starbucks started in China, one of the biggest challenges it faced was to make the consumers accustomed to drinking and appreciating coffee. Why Starbucks Is Betting Big on China Starbucks is doubling its store count in China over the next four years. China is highly bureaucratic country with difficult processes of getting permissions and sanctions to start and run business. 48 Vitosha Boulevard, ground floor, 1000, Sofia, Bulgaria Bulgarian reg. First of all, Starbucks choose a good local partner to form a joint venture which can help it better understand the local laws and negotiate better with the authorities. Company’s managers were aware that Chinese Gross Domestic Product (GDP) continuously grew approximately 9 % on an average and a GDP per capita was US$3.800. December 6, 2020 14 views. “Starbucks Entry to China” Starbucks modified its menu and tried to localize its brand name by selling some food items. This can allow the company to be proactive in its strategies for change and business management. Once Starbucks decided to enter China, it implemented a smart market entry strategy. Starbucks realized that local partners can have the best understanding of local cultures customers and some related laws. – Howard Schultz. It highlights the strategies of entry and expansion and also discusses some of the localization strategies followed by Starbucks in the country Customers and partners connect with Starbucks in unprecedented ways in China, in Starbucks stores as well as through social impact in the community. Within few months of opening the coffee stores, the company started observing that coffee culture is different for Chinese people than US, where people are very busy in their daily lives and they just grab their coffee and leave, but in China coffee stores were more like a place for social gathering where they can sit and talk for hours with their friends and families. Aside from this the company will have to employ diversity management strategies. There are many theories about entry modes such as Chen and Mujtaba (2007), Root China is a tea-drinking nation and Starbucks’ entry into the market was not easy. As regards local competitions, it was a well-known Chinese brand Li Shen and Japanese brand Zhen Gou Coffee. The global expansion strategy employed by the company tends to combat the challenges of the domestic market while providing for growth. The case particularly talks about Starbucks entry into China. Starbucks, the world''s leading retailer, roaster and brand of speciality coffee, opened its first store in China in 1999. But contrary to McDonald’s strategy, Starbucks in July bought out its East China joint-partnership – formed with Uni-President Enterprises Corp and President Chain Store Corp – to take over full control of its market operations. The news seems to be even more popular than an iced guava passionfruit apple latte topped with whipped cream – if such a thing exists – and is trending on Weibo with 90 … The company's strategy is to reposition coffee as a luxury good, comparable to a good wine. Rather than mass advertising from the beginning to introduce its products as other food and beverage companies, Starbuck hires enthusiastic people who can build good interactive relationship with the customers102. Through various innovation strategies, the company has expanded successfully into the international markets. KFC is one of the most famous brands in the global fast food industry. In China, Starbucks needed to be creative. You may also read "Starbucks pricing strategy". This also led to success for the company. We think our investigation has enabled us to better understand the key to Starbucks’ strategy of internationalization. conducted market research to enable a deeper understanding of the Chinese markets, After the analysis of the company and its prospect in China it was determine that the best strategy for entry in the Chinese food and beverage market would be to focus on increasing the profitability of the company while proving high quality products and services to the customer and increasing the market share in China as well as across the world. Starbucks’ retail entry model in the United States does not have the same strategy as their international model. These strategies mainly refer to 2 different modes of entering foreign markets: licensed agreement and joint venture. The company priced its coffees at around US$ 6 for a cup, which was considered by analysts as too costly, even though it was too costly by Chinese standards but they decided to continue with it because in China, high price was directly associated with quality. …. Starbucks has announced that it will open 600 new stores in China in its coming fiscal year. The case particularly talks about Starbucks entry into China. The strong brand image of the company allows it to establish itself in the new industry with ease while the customer orientation of the company enables it to build a loyal customer base. Scholars In January 1999, Starbucks opened its first store in mainland China at the China World Trade Building located in Beijing. 2. Their knowledge, organized way of business left a good impression on customers’ mind. Starbucks is one of the largest coffee chains in the World. This site uses Akismet to reduce spam. Increase variety on menu Starbucks is one of the most popular foreign brands in China, with more than 2,600 outlets at the end of March 2017, representing 10 percent of the company’s presence worldwide. Starbucks Coffee: Standardization and Adaptation Strategy Introduction Starbucks’ Business Concept and History When academics Jerry Baldwin, Zev Siegel, and Gordon Bowker established Starbucks Coffee Company in 1971, their vision of Starbucks was that of a local business specialising in “selling fresh roasted whole beans in ...specialty stores.” (Darguste et al., 2006 p.655). To promote themselves in China the company chose a different way. Retrieved from https://phdessay.com/entry-strategy-for-starbucks-in-china/. According to analysts, compared to other countries in which Starbucks operated this task was more difficult in China because of the age old tradition of tea drinking in the country, where coffee was seen as nothing less than a kind of Western invasion. Starbucks articulate an entry strategy that would address the dominant Chinese markets and that was design to as inoffensive with respect to the Chinese culture as possible. As a result young, urban Chinese, who solely started to associate visiting Starbucks or being seen with a Starbucks cup, as a symbol of social status. They also spoke to the customers about the positive effects drinking coffee. We find it interesting to investigate the reasons for why Starbucks uses different entry mode strategies in its expansion abroad. Starbucks in China Starbucks entry strategy in china Starbucks entered the Chinese market in 2014 and started the business in Taiwan through a joint venture with Uni-president a Chinese food, and Beverage Corporation (Chang et al., 2014). The partnership marks Beyond Meat's entry into the Chinese market. 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