FACULTY OF BUSINESS

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Student Name Student ID
1. LOGANAIYAGEE MANOGARAN 201809040009

Assignment Details:
Assignment Title
Lecturer
ASSIGNMENT 1 – HOW STARBUCKS BROUGHT
COFEE TO CHINA
NUR ZAFIRAH ABDUL RAHIM

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 HOW STARBUCKS BROUGHT COFFEE TO CHINA

QUESTION 1

In 1994, Starbucks started distributing coffee for free to guests in many Beijing’s hotels
in order to explore the Chinese market and to introduce the brand in China. The results indicated
that there was a strong demand for Starbucks coffee offerings especially in the local people who
liked and wanted to adopt Western lifestyle. The company had chosen two main entry strategies
to enter in the China that were licensed agreement and joint venture.

QUESTION 2

When Starbucks opens a new store in an emerging market like China, the best baristas are
sent for the launch and to conduct training of the baristas who will carry on when once the
launch has completed. The baristas (bartenders) in China acted as brand ambassadors for
Starbucks and helped in merging the Starbucks culture in the local markets. They also ensured
that high standards for product and service quality are maintained regularly at each and every
new store opened locally

QUESTION 3

Four years after opening its first café in China in 1999, Starbucks had registered all its
major trademarks in China. A number of Chinese businesses have overstepped legal bounds in
their efforts to mimic the successful Starbucks model.
QUESTION 4

The consumer spending power inland was lower than the spending power in coastal cities
at that time [ CITATION Gig17 \l 1033 ]. Therefore, the diverse culture and complexity of Chinese
markets led Starbucks to make local licensing agreement and joint ventures. The major
advantage of local partnerships that Starbucks gained wad the complete understanding of
consumer insights; Chinese tastes and buying preferences and it helped the company penetrate in
the diverse markets. There were the three major partnerships (licensing and joint ventures)
Starbucks formed with local organizations in Chinas.

QUESTION 5

 Northern China – Starbucks developed a joint venture with Beijing Mei Da coffee
company.
 Eastern China - partnered with Taiwan-based Uni-President and opened stores in
Shanghai.
 Southern China – Starbucks made a licensed agreement with Maxim's Caterers in
Hong Kong
QUESTION 6

Expanding abroad and realizing a greater market area is one of the first strategic
imperatives of a company. The main motivation that pushes Starbucks to expand its business
internationally is to gain access to larger markets. Crossing national borders early on helps to
overcome the fear of expanding abroad and encourages cross-border integration. With people
having access to Starbucks at more convenient places, it allows for a larger market scope. By
entering other countries, Starbucks be a tough competitor among the other café outlets in each
respective country. Moreover, Starbucks to achieve competitive advantage in market by having
skilled labor, unique locations and etc.

Each of the countries that Starbucks entered has its own culture and practices. Every
culture has a different set of values and beliefs that affects what it buys and what it sells.
Starbucks was careful in researching every country that it went into it insured its success and
ability to expand into difficult and different countries and regions. Starbucks realized the need
for local differentiation and responsiveness.