CASE 14 Starbucks s Expansion into China pages 503 505 Case Study 1 Spring 2022 Due 2 11 22 Synopsis This case examines Starbucks s expansion strategy into China Focusing on the marketing mix elements product promotion price and place and human resources Starbucks s success in China is revealed over years since the decision to concentrate in China in 1998 Today Starbucks mission is to continue expansion efforts in China As of 2015 Starbucks had more than 2 500 stores in 118 cities Students completing this case will learn about what made Starbucks successful in this emerging market and debate whether Starbucks can continue to profitably expand in China Answer the following questions by reading the case study on page 503 in the textbook and utilize the resources listed with each question QUESTIONS 1 Prepare a SWOT analysis based on the case to support Starbucks s expansion plans in China Based on your SWOT analysis what recommendations would you make to Starbucks s CEO with regard to the market development growth strategy for this country List a minimum of four points under each SWOT and two suggestions for the CEO 5 points SWOT Analysis for Starbucks s Expansion into China Strengths Keep Maintain Weaknesses Improve 1 Strong brand image 2 Extensive global supply chain 3 Moderate diversification through subsidiaries 1 High price points 2 Generalized standards for most products 3 Imitability of products Opportunities Take advantage of Threats Manage 1 Expansion in developing 1 Competition involving low cost markets coffee sellers 2 Business diversification 3 Partnerships or alliances with 2 Imitation 3 Independent coffeehouse other firms movements Starbucks CEO should reconsider his quick development approach in China He could concentrate on improving the quality of the current installments and go forward gently taking in mind the state of the Chinese economy as a whole The CEO may also want to examine their premium pricing approach which does not align their rates with Chinese clients local purchasing power They will be able to attract even more clients while also retaining the ones they already have 2 Give examples of how Starbucks was successful upon entering the China market Please use the following videos to frame your response List and explain a minimum of four examples provide detail in your explanation 10 Points Starbucks grows coffee in China Reuters video available at Starbucks Growing Coffee in China YouTube Starbucks in China available at Starbucks in China YouTube Starbucks wakes up to China Reuters video available at Understanding Starbucks and how coffee connects with the Chinese YouTube Starbucks has succeeded in establishing a market for their high end coffee Starbuck has achieved this by recognizing the requirements and taste preferences of the local Chinese people and tailoring its flavor accordingly In 2010 Starbucks launched its first coffee bean manufacturing and processing facility in China Starbucks has been able to gain the faith and trust of the community by providing more employment as a result of this Starbucks has also recruited local Chinese customers by paying top dollar for high quality coffee beans cultivated by local farmers Starbucks has also unveiled a new logo that is more international in nature and does not include words 3 Compare Starbucks s U S and Chinese strategies What are the similarities and differences What generalities can you glean from this analysis to help the company expand into other global marketplaces Please use the case and the following article to frame your response Explain your answer using details and giving examples 10 Points Starbucks quest for healthy growth An interview with Howard Schultz McKinsey Starbucks has been successful in China by employing a combination of methods that it has used in the United States over the past few decades Starbucks has followed the same quick development strategy in China as it did in the United States where it has established coffee shops in a variety of locations Starbucks has also been concentrating on gaining the confidence of its employees in both regions by providing perks and possibilities for advancement Starbucks made the mistake of opening new coffee shops across the US without careful consideration according to Howard Schultz the company s CEO and as a result many of the coffee shops had to close within the first 18 months of their operation Starbucks quest for healthy growth An interview with Howard Schultz McKinsey Company 2011 He believes they must learn from their errors in the United States and avoid making the same mistakes in the Chinese market When it came to the flavor of their products Starbuck had a distinct strategy in the US and China They investigated the demands of the Chinese community and created coffee with a flavor that the Chinese clients liked It s possible that they would have failed in the Chinese market if they had gone with the American taste Starbucks in my opinion may benefit from their experience and use the same methods of gauging the local population s taste and spending preferences in every nation before establishing a real presence there Attract local workers by offering them training and development opportunities that will help them earn the trust and support of their coworkers Starbucks may concentrate on developing their coffee shops at a rate that does not obscure their flaws until they are handled effectively This will ensure that growth continues in the correct path without the hiccups that the US industry experienced