Starbucks' Success Story in China

Case Code: BSTR306
Case Length: 23 Pages
Period: 1998-2008
Pub Date: 2009
Teaching Note: Not Available

Price: Rs.400
Organization: Starbucks
Industry: Food and Beverage
Countries: China
Themes: International Business, Globalization Business

Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

Starbucks, one of the largest coffee chains in the world, was started in 1971 in Seattle, USA. It is regarded as the pioneer of the coffee culture in the US and in many other countries. Earlier, Starbucks dealt only in coffee beans and equipment. It was only in the 1980s, with Howard Schultz taking charge as the marketing chief and later as CEO that the company ventured into building coffee houses. In 1995, the company started its international expansion by entering Japan, followed by many other countries in the later years. It entered China around the mid-1990s with a distribution business, before making a full-fledged entry with its retail stores in 1998.

The case particularly talks about Starbucks' entry into China. It highlights the strategies of entry and expansion and also discusses some of the localization strategies followed by Starbucks in the country.

At a time when the company was facing severe pressure in its home country and in certain other international markets due to a host of factors, its success in China attracted the attention of experts. This was particularly so as the Chinese market was considered a hard market to crack for Western companies and also because of the fact that China had a tea drinking culture with the beverage market predominantly controlled by tea. The case ends by highlighting the challenges and future prospects of Starbucks in China.