The Starbucks Cooperation

The Starbucks Cooperation

The Starbucks Cooperation is an American coffee eatery and coffeehouse chain. The cooperation was originated in Seattle, Washington in 1973. By 2015 the Starbucks Cooperation has expanded to have more than 20000 outlets all over the planet. The main dishes served at Starbucks Cooperation are coffee, cakes, bowls, fruits, yogurt, spreads, and sandwiches. The Starbucks Cooperation has had easy times penetrating into global markets in recent times owing to the fact that the level of experience of the kind of services they offer is worth the amount of money customers pay at their outlets to be served. This treatise is going to feature the pros and cons that Starbucks Cooperation will face when entering the Chinese market.

Analysis of the Chinese Market

China for the longest time has remained to be the leading food and beverages market in the world.  Having a vast number of spices has allowed China to generate the specific types of menus that attracts a unique set of food lovers.  Franchise food eateries in China are conquered by established brands such as Panda Express, PF Changs, RFC, MacDonald’s and Pick Up Stix (Andersen & Narus, 1999). The food industry in China comprises of both fast-service and complete-service. Demand for the foods and beverages industry formations is geared by; china’s stable economy, drifts in consumer expenditure, dining styles, healthy eating habits and the comparative price of alternates, like fast-service and complete-service. Established food and beverages brands in China have always had the confidence to sell alcoholic drinks.

Going Global

It is a natural law in business to venture into international markets if foreign markets offer high-profit potential. As a company prepares to penetrate into international markets, it will encounter different social and legal frameworks different from the kinds of frameworks in the mother country (Andersen & Narus, 1999). The business often has to choose the degree at which it will respect the kind rules existing in international markets while it upholds a core of ethical and social values in which it declines to compromise.

Pros of entering Chinese Market

Big Market Share

With China recording the world’s largest population, Starbucks Cooperation will have a high number of prospective customers that will deliver its service to (Davi & Brush, 1997). Through the significant number of customers in the Chinese food market, Starbucks Cooperation’s will subjected to huge profits (Evans & King, 1999). By huge market potential at china, Starbucks Cooperation will have at China; risks will be diversified hence reducing operational costs.

Reduced Competition

Existing in a local market with stiff competition will consent other competitors offering the same kinds of services such as that of Starbucks Cooperation to suppress them by providing cheap prices list (Andersen & Narus, 1999). One way of locking out competitors is by moving out from the markets that they operate in. In China, Starbucks Cooperation will be advantaged by the perception owned by customers that new international joints offer the best food packages compared to other local food providers in China.

Increased Innovation

By Starbucks Cooperation going internationally, it would allow its innovation team to go an extra mile in new product development (Davi & Brush, 1997). Generating sophisticated products and services will lock out competitors. Having new ideas will increase the kind of confidence Chinese customers will have for Starbucks Cooperation.

Cons of entering Chinese Market

Language and Culture

Going international has always been subjected to language barrier and conflicting cultural norms challenges. When planning to go global, Starbucks Cooperation will have to invest in training its employees so that they can learn the Chinese language to let them communicate excellently in the work environment (Davi & Brush, 1997). The Starbucks Cooperation will have to customize their menu to suit the sort of foods that are being viewed as ideal by the Chinese culture.

Currency

Going global will mean that Starbucks Cooperation will have to consider currency implications for its coffee house.  With the American currency strengthening against China’s currency close to historical levels, projected profits for Starbucks Cooperation will abruptly vanish founded on the variations of worth in worldwide currencies (Davi & Brush, 1997). Shifting to international markets will attract diffract laws forcing Starbucks Cooperation to hire legal teams eventually attracting unnecessary expenses for the company.  Credit card transactions will trigger transaction fees consequently lowering the level of profits margin Starbucks Cooperation is expected to attain.

Political Concerns

Political issues have always been an element to dictate how a particular business performs its roles in a particular trade zone. The political setting in China can look very dissimilar for Starbucks Cooperation compared the United States’ political atmosphere (Davi & Brush, 1997). It is not unusual for global authorities to seize control of a commercial if they determine that it is their advantage to do so. Should that occur, the entire operative profits can fade. Nevertheless, there would still be an anticipation to work and function normally (Evans & King, 1999). In China dimensions might change, they might opt to favor their local food joints first and give them first priorities compared to any other international emerging companies such as the Starbucks Cooperation.

References

Andersen, J. C. & Narus J. A. (1999). Business Market Management, Understanding, Creating and Delivering Value. New Jersey. Prentice Hall.

Davis W. & Brush, K. E. (1997). High-Tech Industry Marketing: The Elements of a               Sophisticated Global Strategy. Industrial Marketing Management, 26(1), 1-13.

Evans, J. R. & King, V. E. (1999). Business-to-Business Marketing and the World Wide Web: Planning, Managing and Assessing Web Sites. Industrial Marketing Management, 28(4), 343-358.