it about presentation from MM UGM student after their home work

1. ‘Starbucks Aims
to Alter China's
Taste in Caffeine’
Group 7
Bertand Meunier
Kenthi W. Lantasi
Jesiska Jappy
Master of Management
Gadjah Mada University
INDONESIA

2. Case Summery
•Seattle, Washington-based coffee company
•First, seller of packaged, premium specialty
coffees
•Now, known for its coffeehouses
•To continue this rapid pace of growth, the
firm’s senior executives are looking to expand
internationally
•For Asia Pacific market, Starbucks sees China
as its next big international opportunity and as
priority

3. Chinese Market
“Citing its large urban population,
rising economy and increase in
coffee consumption, Starbucks
estimates that China could
ultimately be one of its largest
market, and in the long term it has
the potential to be second to the
U.S.A. in the number of stores,"
Mr. Coles, president of Starbucks
Coffee International, said.

4. Current situation in China
- Entered in 1999 and up to 2005, Starbucks had 120 stores
in mainland China
- Although China considers itself as a land of tea drinkers
but the expansion of a coffee shop in China is striking
as in Japan
- Offering only three or four kinds of tea in its shops in
China, in addition to the usual coffees of all flavours
- In HongKong in which many drink tea, Starbucks has 51
stores and is already considered to be part of the local
culture and did not seem like an American import
- Though Starbucks is growing quickly in China, it has run
into some of the same intellectual property disputes
that have bedevilled many companies

5. Main Issue
Starbuck’s main goal is to become ‘the most
recognized and respected brand in the world.’
Many people in the global market have different
preferences between coffees and teas as well as in
China. However the growing rate of coffee shops
in its market shows that coffee has become more
and more popular. The main issues related to this
matter concerns more on cultivating the love of
coffee in the Chinese market.
Starbucks has to enter a market which has different
culture and preferences toward coffee.

6. Problem Statement
How should Starbucks tackle local/
cultural differences in tapping
the global market?

7. Analysis
To tap into the global marketing, there are five
major decisions that need to be made by a
company
1. Whether to go abroad
- International markets present higher profit
- U.S market is starting to saturate
Thus the company decides to go abroad in order to continue the
company’s growth by exporting its concept aggressively.
But mainly they expand to achieve their goal to be
‘the most recognized and respected brand in the world.’

8. Analysis 2
2. Which market to enter, how many markets to enter and
how fast to expand
After successfully entering and growing in North
America, Starbucks has interest in further expansion to
Europe (including the Middle East), Asia Pacific
(including Australia and New Zealand) and Latin
America.
Waterfall Approach - This approach carefully plans the expansion and is less
likely to strain human and financial resources. The first international store
was opened in Tokyo, Japan. The company hired blue-chip consulting
firm to guide the Starbucks to succeed in Japan two years before the
opening. Markets’ attractiveness influenced by its geography, income,
population, and political climate is also important.
Starbucks sees China as the most potential growing market because of its citing
large urban population and rising economy despite of its intellectual
property rights enforcement.

9. Analysis 3
3. how to enter the market
(indirect and direct export, global web strategy,
licensing, joint ventures and direct investment)
 Through license or joint ventures with a local company
The company looks for the local business partner which shares Starbucks values,
culture and goals about community development as follows:
• Similar philosophy to the company in terms of shared values, corporate
citizenship, and commitment to be in business for long haul
• Multi-unit restaurant experience
• Financial resources to expand the company concept rapidly to prevent
imitations
• Strong real-estate experience with knowledge about how to pick prime real
estate locations
• Knowledge of the retail market, and
• The availability of the people to commit to the Starbucks projects

10. Analysis 4
4. The marketing program
How to adapt their marketing strategies to local
conditions in which the company is planned to enter
- Product adaptions
- Retail expansion
- Intellectual property violations
- Country of origin effects

11. Analysis 5
5. The marketing organization
Starbucks used a subsidiary called Starbucks Coffee
International Inc.
This subsidiary consists of twelve managers that decide
on the strategy and operations for the global
expansion of Starbucks. This can be considered as a
global organization that plans worldwide marketing
policies, financial flows and logistics systems. The
global strategy of Starbucks can be seen as a ‘glocal’
strategy. They use a global concept and adapt this to
local customs and needs.

12. Conclusion
• The Chinese market is a crucial part in achieving its goal,
therefore Starbucks has to carefully establish their strategy in
conquering the Chinese market.
• Difference in culture and country taste and preference towards
the coffee, thus use of adaptation to the local culture without
loosing its American’ tastes of their products.
• Use of Starbucks country of origin effects
• Starbucks’ way of getting known is to be everywhere. This has been proven to
be a successful strategy in North America and will also be successful in China. -
 shorter queues and better consumer services
 people can find their Starbucks in a short distance and therefore can integrate
the Starbucks coffee in their way of living
• Intellectual property problems are hard to tackle
 government regulations are still not well developed yet
 many counterfeiting companies and counterfeiting is rooted in the culture.
Stopping counterfeiting will be very difficult, but Starbucks can try to set up a
special unit to track the down the fake Starbucks locations and sue them.

13. Recommendations
• Main focus should be integrating Starbucks in the Chinese way
of living. Starbucks should continue the retail expansion. A
high presence rate in the streets of China will improve the brand
awareness. With higher brand awareness Starbucks can
penetrate into the life of the Chinese customer.
• Brand awareness is not enough. Starbucks needs to be accepted
by the Chinese customer. Brand loyalty can be achieved by
providing products that relate to the Chinese culture. Meaning
the Chinese customer would have associations with the products
and are more willing to buy and try out Starbucks. Once they
are satisfied (Starbucks can achieve this by delivering high
customer service), people would embrace the Starbucks brand
and the retention rate will be high.
• Not only the beverages should be adapted to local interests, but also other
products like the music and merchandize should be adapted to local interests.
• Tackling counterfeiting can be done by setting up a special unit to track these
fake Starbucks stores and report them to the local authority. Starbucks can
also