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College of Business
MGT6503: Comparative Management: Asian Perspectives
Dr. Jixia (Jane) Yang
Study of Starbucks ' case in China
Student ID:
52775337
52326355
50417599
50376619
Summary:
In Iceberg Model of Culture, the difference of the people come from varieties countries is not only their behaviors, but also their attitudes, assumptions, values, beliefs which cannot be seen easily. The difference can influence almost every aspect of natives ' living. That is the reason why some good management styles didn 't have much work in other regions. So comparative management is really useful to analyze the extent to which management principles are applicable from one country to
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But it is not the native enterprise after all, so there are several culture problems are waiting for being solved.
Firstly, even though Starbucks has explored the Chinese coffee market and attracted many long-term customers, it is far away from enough. As you may know, the tea-drinking culture has been lasted over several thousand years. Moreover, there are a lot of products about tea in high-class, mid-class and low-class market. It is hard for Starbucks to enter the China market. As a result, Starbucks targeted the middle class market, especially the young people. In details, this kind of people contains some students, overseas returnees, foreigners, and white-collar employees. Due to the narrow range of customers, Starbucks limited herself to become more popular in China. Besides, the Chinese traditional tea drinking culture affects Starbucks expansion. Since China has 56 nations and huge size of land, there are different drinking styles in China. For example, the people in the north of China prefer to drink tea using bowl and drink fast, while the people from south are keen on drinking Gongfu tea and drink slowly. That’s why it is difficult for Starbucks to attract all kind of people by only one business model. Additionally, some researches show that tea is more suitable for the physical conditions of the oriental people. It is showed that the culture problem is still a big challenge for Starbucks developing Chinese market further.
In Chinese
There are many cultural and ethical differences between countries and it is important for mutual trust and respect that no organization try to strong-arm another into their way of thinking or take a position that their culture is more valuable than the other. According to Pitta, Fung, and Isberg (1999), it is vital for success to have a basic understanding of the culture and the expectations within cultures as they affect all business transactions. Failing to understand and consider the cultural differences will likely result in failure.
Choice of not seeing diversity of culture results in limiting the ability for its management. This involved minimizing the issues being caused while there is maximization of advantages and key benefits allowed (Latimer, 2012). When there is lack of consideration across diversity of culture, foreigners end up becoming mere projections related to organizations.
Starbucks is undoubtedly an international brand. The history of coffee traces back to Ethiopia, Africa, India, Arabia, and Europe, and has been traded abroad since the 11th century. Understanding the demand and widespread market for coffee, Starbucks has triumphantly capitalized both the domestic market, and the varied international markets as well. Possessing about 6,500 retail sites worldwide, Starbucks’ net is spread across thirty countries and has been found as one of the most recognized brands all over the globe in equality to McDonalds and Toyota. This organization’s ability to build an international brand has been unprecedented- particularly since it represents a specialty
The three most critical challenges Starbucks faced in China were political restrictions, socio- cultural, economic and financial challenges. China is highly bureaucratic country with difficult processes of getting permissions and sanctions to start and run business. The biggest challenges for Starbucks were the old tradition of tea drinking in China. At the beginning Starbucks managers didn’t how to accustom Chinese to drinking coffee; to acquaint employees and Chinese executives with coffee drinking experience Starbucks provided different training programs for them in which they learned more about coffee and Starbucks’ culture.
The final project is going to be about the market entry of Starbucks into China. This project will focus on gauging the success of the company's market entry strategy thus far. Starbucks has announced in a press release that it believes China will be its #2 market by 2014, and the company has been one of the most successful American companies in that market (Starbucks, 2012). The company entered the Chinese market in 1999 with a store in Beijing. This followed the acquisition of greater knowledge about Chinese business culture through outlets in Taiwan. The company initially used a licensing agreement to enter the Chinese market (Starbucks, 2010).
Starbucks started to decide on expansion by about the mid 1990 's, when the market became saturated. Market saturation is when a company or firm has covered an area so thoroughly with its presence, that it can no longer experience growth. Because of the market saturation, there were declining sales throughout stores. The company 's original marketing strategy was to blanket a region with new stores. The idea behind this was to reduce a customer 's wait in lines, while also reducing the company 's distribution costs. Revenues from stores were actually beginning to decline because stores were in such close proximity to one another. Although Starbucks was still ahead of their competitors, they were
Starbucks is always looking for the invitation to expand within the communities of the American people and worldwide. They are predicted to increase their visibility with more storefronts and, “Some analysts suggest it ultimately will exceed McDonald 's 29,000 storefronts” (Plug, 2005. p. 285.). Communication and cultural boundaries can be a conflict for an American company expanding into foreign markets; however Starbucks has already penetrated Asian markets, like Japan, and performed well. They have learned to communicate effectively and overcome both cultural and communication borders based on their philosophy of being “invited” in rather than forcing their brand on a country. Starbucks
In entering China, Starbuck looked for local partners and considering the complexity of Chinese market, they partnered with three regional partners. In the north, Starbucks entered a joint-venture with Beijing Mei Da coffee company. In the east, Starbucks partnered with the Taiwan-based Uni-President. In the south, Starbucks worked with Hong Kong-based Maxim’s Caterers. (Wang, 2012) For its first store in Beijing it worked with its partner Beijing Mei Da coffee company, which was previously the distribution agent for Starbuck’s wholesale operations. (AdvertisingAge, 1998) Working with local partnerships, provided Starbucks with access to local knowledge, and people. Which it used to structure Starbucks to appeal more to the Chinese customer.
The main challenge for any manager is to understand the culture of other countries and to know how to use this basis for conducting business and managing staff in that new country. “Managers who readily accept that the cuisine, the literature, the music and the art of other countries run parallel to one another, must also learn to accept that the art of management differs
Starbucks is one of the largest coffee shop chains in the world. In 2005 it was the leading coffeehouse retailer in the world with operations in 34 countries outside the US, counting 10.241 coffeehouses. Starbucks began its international expansion with Japan in 1995. We think Starbucks is a global company. Throughout the answer we will use Starbucks’ value chain activities to explain why Starbucks can be considered a global company.
China is a fast-changing market and it has paid off for Starbucks. The middle class citizens of mainland China consider Starbucks coffee a luxury. The customers are willing to pay the premium price just for the customer experience. The success of this strategy is due in part to the in-store training and people-development model used in China. This way, Starbucks ensures its brand positioning is consistent with customers’ expectancy of having the Starbucks experience that is provided in the United States.
However, Starbucks also need to learn about the culture among the country. Starbucks is International product and well known. Some of the country most prefers tea compare than coffee. That means , that is one of the challenges for Starbucks to come out with variety of product.
Firstly, this paper briefly introduce about the background of China economy to look for an opportunity of doing business in China. Moreover, it includes an overview of the competitive environment, the growing market demand for coffee shops and the situation of coffee shop franchise in China
How is this theoretical framework similar to or different from other cross-cultural management frameworks which you have studied in this module?
Starbucks has been a world leading company in premium quality coffeehouse since 1971. Starbucks makes a commitment to deliver fine coffee as well as better hospitality from friendly staffs. Starbucks has developed a good marketing strategy. The company attempt to upscale its product, which benefit from its competitive advantage. The company competitive advantages not only focus on brewing a cup of coffee but also provide fine hospitality experiences to its client in relaxed atmosphere with coffee aroma. Primary, the coffeehouse target group is young college