Starbuck's Global Expansion Strategy

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Starbuck Corporation is a coffee company that is based in Washington D.C. in the United States of America. This company usually buys, roasts, and sells coffee and other drinks related to coffee in the whole world through a global chain of retail outlets. This company has evolved from a coffee house where people used to purchase beverages and coffee drinks to a company that package whole bean and ground coffee. The success of this company has attracted global attractions and hence it has been able to venture through joint ventures into other countries of the world like China. Currently, Starbuck Corporation is downsizing in the United States of America as a result of increased global expansion. The expansion and growth of Starbuck Corporation has been well known especially by its desires to venture in China as China is an emerging economy.

Haoting (2009) outlines that; Starbuck is becoming very aggressive in entering into Chinese market. This is done in three ways which include; protecting the company’s trademarks and intellectual property rights, this company is improving in terms of financial aspects and hence joint venture strategy is made easy for this company (Waite 2008). It can be globally contended that, Starbuck produces very tasty coffee. This has resulted to many people increasing their purchases in this company and hence it is able to increase its revenues and profits. As reported by Wall Street Journal (2006), Starbuck Corporation is expanding at very high rate and the main focus is in China. In this respect, the company’s strategy of becoming a global player has been its forefront. This company has aggressively campaigned to become the leading coffee in the United States and after attaining this, it has made further steps of considering global leadership.

Starbuck Corporation is downsizing in the United States of America as a result of economic downturn in this country. As a result of this, this company has closed more than 600 coffee shops across the country. Since the need for international coffee has increased, Starbuck is opening up 1,000 coffee shops in the whole world especially in Asia. This, as put forward by Yeh (2006), shows that by closing some shops in America Starbuck is expanding globally in order to compensate for the closed shops.

According to Yeh (2006), in order for Starbuck Corporation to excel in global markets especially in china, it needs to assess some factors such as when to open, when to close, what to serve, and the prices to charge customers. In this respect, opening and closing hours are very essential in any business as they determine the type of customers to target. It should be noted that coffee is not taken at all times of the day and hence opening and closing hours are very crucial in the pursuit of attracting and retaining customers (Barraclough 2006). Starbuck Corporation can destroy its reputation if it decreases the quality of coffee. It has been globally recognized that this company provides the best coffee. In this case, if the quality decreases, people will transfer to other companies providing the same. According to Haoting (2009), Chinese are very sensitive when it comes to prices and they always pay for products that are worthwhile. In this case, if the prices of coffee are increased the company will realized decreased sales.

The China’s government has played a very crucial role in maintaining that Starbuck is able to operate smoothly in China. In this case, this company is given incentives by the China’s government in order to boost its performance (Wall Street Journal 2006). The Starbuck’s China operation is becoming very successful because there has been supply chain integration in China. This has therefore made the supply of coffee in the whole of China very easy and cost effective hence increasing the sales and profits of this company (Waite 2008).

Starbuck is able to enter into Asian markets and China in particular by empowering China’s middle class and bringing about new lifestyles while at the same time maintaining coffee and other beverages as affordable luxury. Barraclough (2006) reports that, Chinese are traditionally known for their increased preference in coffee and hence this company is able to convince many customers to take coffee. American products are highly admired in China and Japan and hence buyers or customers increasingly adopt for American trends and products. This indicates that Starbuck Corporation took advantage of the culture of China to enter into the China’s market (Haoting 2009). Providing high quality products in the China’s market has been the company’s strategic choice in order to remain in the market for a long period of time. At first people thought that Chinese do not like American products but they were proved wrong when this company excelled in China.

In conclusion, Starbuck company has been able enter into the international market as a result of many diverse reasons. The downsizing in the United States of America has positively impacted the company’s desires of becoming a global player.


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Starbuck's Global Expansion Strategy

This article was published on 2012/03/30