ECN501 Grantham Starbucks Business Opportunity in Asia Presentation

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Business Finance

ECN 501

Grantham University

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Running Head: BUSINESS OPPORTUNITY Business Opportunity Shafonia Johnson Grantham University April 9, 2019 1 BUSINESS OPPORTUNITY 2 Introduction Starbucks is a company that has established itself as an outstanding company by creating and sustaining its own coffee culture. It’s often been referred to as a third place after home and workplace. Starbucks quality coffee products and offer high-quality services to its customers. The primary states in which Starbucks has been offering their quality products include Europe, North America and Asia (Rajasekaran, 2015). The company has been the largest coffee house since its establishment since it has well-established growth strategies. This paper, therefore, discusses an analysis of the business opportunities of Starbucks in foreign countries, specifically Asia, it's past and present achievements in the global market and its strategic positioning. It also focuses on competition and market strategies of Starbucks. The reason why I focus on Asia is that the Asian region has many emerging markets and therefore a possibility for Starbucks to penetrate. Global Business Opportunities Analysis for Starbucks Starbucks currently has more than one thousand stores across the world. The company enjoys a market dominance in states such as North America where it has established a healthy competitive advantage over their competitors. Starbucks exports coffee from Indonesia, Guatemala, and Ethiopia among countries. In its mission statement, Starbucks puts into consideration the cultural diversity among its customers worldwide and ensures adherence of ethical values while conducting their business. The company contributes to different charity programs to improve the lives of people in coffee producing nations (Wei, 2016). In the international market, Starbucks has been depending on finding the right local partners to help them in negotiating for local regulation in different countries. In Asia, consumer's disposable income is on the rise because economies are rapidly growing. Asian people are also opened to adopting western cultures and lifestyle. Coffee consumption in this area is, therefore, BUSINESS OPPORTUNITY 3 most likely to increase at a higher percentage. Starbucks has managed to expand into several Asian countries such as Japan, China, Singapore, and Indonesia, for the international expansion of Starbucks. Japan is such a great opportunity due to the higher coffee consumption rates as it is ranked the third world after Germany and the USA. Japan also is likely to increase coffee consumption due to its fast-growing specialty lends industries. In Singapore, the market here has a tremendous expansion rate in the coffee industry which is an excellent opportunity for Starbucks. In relation to the international market, Starbucks has boosted its operations by introducing mobile payment options for its products (Wei, 2016). This has enabled customers to pay for their products quickly. Starbucks also has a mobile application where customers can join this community. Here they provide activities such as loyalty plans, adding value to shopping cards and these are processes that have greatly encouraged their customers. The key to the success of Starbucks can be attributed to the excellent customer experience their customers get. Starbucks Company views customers as business partners and not commodities, and this relationship has boosted its performance (Lovelock, 2015). However, in countries like China, Starbucks faces weakness in that despite the high populations that may mean high demands for their products, coffee demand is extremely low since most of the people here prefer taking tea. This a significant cultural challenge Starbucks faces, and it has been working to establish niche markets in such countries to expand their markets. Starbucks also faces stiff competitions from other cheaper options like the McDonald’s McCafé and Dunkin Donuts coffee which has been able to imitate their style of business. Major products and industries in Asia Currently, Asian markets are among the world's leading coffee markets. This coffee industry in Asia has been facilitated by the emergence of innovation of coffee products. Since the BUSINESS OPPORTUNITY 4 year 2011, the number of coffee products launched in Asia has increased by 95% compared to that of tea products which stands at 55%. Asian markets have notably contributed so much to the growth of the coffee industry across the world. Traditional tea drinking consumers are slowly being ripped off that culture and are opting for coffee hence the rise of the coffee industry. The current economic conditions In Asian countries such as Indonesia, fiscal spending is still active, and there are no expected interruptions of economic activities. However, the trade tensions between China and the United States of America has slowed down the possibility of growth of global trade across this region, and therefore Starbucks needs to find ways to meet this challenge. Factors that might affect the movement of Starbucks coffee Starbucks faces the challenge of having to maintain low product prices to outdo its competitors. Economic collapse has also increased the bargaining power of customer hence hindering operations of Starbucks. Lastly, Starbucks must comply with the political requirements of the countries they operate in such as considering ethics when outsourcing raw materials. This limits their operations. Conclusions and recommendations Starbucks is a leading provider of coffee products in the world with several stores in different locations. Operating in an international market means that Starbucks must consider the economic status of the countries they work in and the ethical requirements. They also must thoroughly incorporate the idea of cultural diversity as this will help them get a lot of acceptance from different parts of the world. With these considerations, I believe that Starbucks will be successful in the international market. Starbucks in its activities has been able to hedge all the challenges and is establishing itself as a favorite among Chinese people. One of the factors has BUSINESS OPPORTUNITY 5 helped Starbucks to enjoy the success it has achieved so far in Asia is its efforts in upholding the culture of the people in these markets. Asian people are the most cultural and any company that enters their market and fails to support their culture is destined to fail (Hazan, Bae, & Halo, 2018). It, therefore, recommended that the company should consider establishing manufacturing industries within the market. Although such a move will require the company to revise its international entry methods, it will help the company to reduce costs of operation. Starbucks has been recognized as a champion of maintaining superior supply chain networks. Locating manufacturing plants will further improve its supply chain since the company will plan for each market segment better. Lastly, it is recommended that Starbucks pursues standardization of its product offering in the Asian market due to the segmentation that exists. People living in different countries such as India and Japan will have different preferences; hence the company cannot ignore these characteristics in their expansion strategy. Succeeding in one market after using a specific approach does not mean the application of the same strategy will yield similar results in other market segments. The success of the company will depend on its dynamism in the future (Hazan, Bae, & Halo, 2018). BUSINESS OPPORTUNITY 6 References Hazan, I., Bae, Y., & Halo, V. (2018, October 18). EXCLUSIVE INTERVIEW with Starbucks. Retrieved April 8, 2019, from https://retailinasia.com/in-people/exclusive-interview-withstarbucks/ Lovelock, C., & Patterson, P. (2015). Services marketing. Pearson Australia. Rajasekaran, R. (2015). Starbucks' Entry into Tea-Drinking India. IUP Journal of Brand Management, 12(3). Wei, C. (2016). MARKETING STRATEGY FOR SETTING UP AN OWN COFFEE SHOP IN CHINA: Using Starbucks as a case study.
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Business Opportunity

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Introduction


Starbucks is a company that has managed to create and sustain its own
coffee culture. It offers high quality coffee and its products, and gives high

quality services to their customers. Starbucks has been the leading coffee
house since its established (Rajasekaran, 2015). This has been due to the
international strategies the company has adopted. This study focuses on
Starbucks business opportunities in Asia because of the rapidly emerging
markets in the Asian countries.

International operations of Starbucks


Starbucks has more than one thousand coffee house stores across the

world. Internationally, Starbucks offers quality coffee products in
Europe, North America and Asian countries. In North America,

Starbucks has m...


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