Starbucks' Success Story in China
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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
"We want our customers to recognize that we're not coming to China just to make money, we are coming to China to build an enduring company that they can trust and they can view as one of their own."
Howard Schultz, Founder and CEO, Starbucks Corporation, in 2006.
"China's growing middle class wants to enjoy life. We don't want to replace tea, we just want to add another choice, a new lifestyle."
Wang Jinlong, President, Starbucks China, in 2007.
"The coffee giant may be closing 616 stores here in the U.S. due to poor performance, but in China, the familiar mermaid logo is popping up all over."
Jane Wells, CNBC Business News Reporter, in 2008.
Introduction
In September 2007, Wang Jinlong, President, Starbucks Greater China, the Chinese arm of the US-based coffee chain, Starbucks Corporation (Starbucks), announced that it was planning to source coffee for its growing China operations from the country itself, within a couple of years. According to news reports, the company had already begun working in this direction by assisting Chinese farmers in the southwestern province of Yunnan in the process of coffee cultivation. Starbucks had reportedly also sent shipments of the cultivated coffee to the US for being tested.
Some analysts were of the view that the company had decided to take this step in order to avoid the high import tariffs, ranging from 20% to 60%, which it had to pay on importing coffee. However, Caren Li, Shanghai-based Spokeswoman of Starbucks China, dismissed this view and said that the prime objective of this step was to add some new flavors to the existing menu. Starbucks, one of the largest coffee chains in the world, was started in 1971, at Seattle, USA, by three entrepreneurs who were inspired by the European culture of drinking coffee.
Initially, the company only sold coffee beans and coffee making equipment but not any ready to drink beverages. The idea of a coffee house as a place for drinking coffee and socializing was brought up in the company only in the early 1980s, with the coming of Howard Schultz (Schultz) as the marketing head of the company. In 1987, Schultz bought the company from the founders. From then, he set the company on a new trajectory of growth and development. Very soon, the stores expanded to all regions of the country. By the early 1990s, Schultz realized that the US market would soon saturate and started looking for opportunities in the non-US markets...
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