Starbucks Going Global Fast Marketing Essay

3122 words (12 pages) Essay

1st Jan 1970 Marketing Reference this

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The purpose of this ‘Starbucks Going Global Fast’ report is to gain thorough understanding about the emerging cultural and economics on Starbucks’s growth strategies of a Starbucks going global fast.

Firstly we need to have a clear understanding about what is meant by culture and the term has been further explained by providing a definition of one of the best authors.

My plan was carry out detailed Starbucks growth strategy, Economics on Starbucks Strategy, Culture on Starbucks growth strategy to identify the Emerging culture of Starbucks by analyzing of Starbucks.

2.0 Introduction

Starbucks has become one of the most recognized brand in the world, known for selling highest quality coffee products. The company exposed that there was a prospective in beverage trading and nowadays activates 8337 stores in globally. The initiator, Howard Schultz started in Seattle through an idea of elevated quality product in a comfortable environment. But it is not so often that a coffee house gets to tell so much about culture. Imagine in relation to a Russian coffee house that be able to tell foreigners concerning our standard of living and our personality, in relation to stuff that are significant to us in business plus in individual relationships, in gastronomically tastes and political affairs… I would not dare to name one. Up till now when I consider of American culture, I wonder at how fascinatingly it is replicated in Starbucks, the majority well-known and the leading coffee and coffee house sequence in worldwide.

Mission of Starbuck is “Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow”.

Following theses ethics are helping Starbucks to determine the suitability of conclusions.

Offer an immense work atmosphere and delicacy everyone through respect and dignity.

Embrace variety as a vital constituent in the method we do business.

Apply the main principles of superiority to the purchasing, boiling and fresh delivery of our coffee.

Increase passionately fulfilled customers every time.

Give positively to our society and our surroundings.

Distinguish that abundance is important to our prospect achievement.

The present global condition for Starbucks appears to be an emerging element of their trade and the restructuring of this is established by their aim to turn out to be a foremost international company throughout creation dissimilarity in people’s living place worldwide. This aim is pretty close to being attained as established the Starbucks present locations in global marketplace and the successfulness of these gambles. The existing countries in which Starbucks are placed in are United Kingdom, Thailand, Malaysia, United Arab Emirates, Canada, United States, Switzerland, New Zealand, Taiwan, Australia, South Korea, Philippines, Israel, Peoples Republic of China, Qatar, Hong Kong, Saudi Arabia, Lebanon, Egypt, Oman, Kuwait, Japan, Singapore and Bahrain.

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3.0 Starbucks Going Global Fast

In the 1980s, No unified global coffee brand, it just have instant coffee brand in the world. But from that time, Starbucks become too strong coffee brand in the world. Schultz, He was the founder of Starbucks. He just use thirty years developed Starbucks from small coffee shop to 4500 coffee chain. The company departed to huge extents to create certain the accumulate equipments, the assortment displays, the colors, the design, the music, and the coffee aromas all blended to generated a constant, appealing, interesting atmosphere that evoked the romance of coffee, that signaled the company’s passion for coffee, and that rewarded customers with ceremony, stories, and surprise. To build a romantic spaces and beautiful sceneries in the city.

The core Starbucks marketing strategy is based on the coffee history culture to produce a good taste, good quality coffee. Moreover, the success of Starbucks is not only attributed to its innovation, but also to aggressive expansion, both in the US and worldwide. As it began to expand worldwide form 1996, Starbucks is a leader within corporate globalization, considering itself to be a global company. The company has a three-pronged strategy-joint ventures, licensing and wholly owned subsidiaries-to expand globally. Starbucks has total more than 10,000 outlets worldwide now, while the number in its ambition is around 30,000. Starbucks is the world’s largest multinational chain of coffee shops without major competitors. However, it still encountered competitive, collaborative and cultural challenges in the process of its global expansion.

Economics on Starbucks Strategy, Starbucks has come to be associated with globalization, where markets, economies and ways of life across the worlds are merging closer together. It is generally associated with the growth of huge American businesses across the globe. As such Starbuck’s impact on other cultures is a good example of the impact of giant multinational companies generally.

However, the net revenues increased 3 percent to $2.5 billion for the fourth quarter of 2008, compared to $2.5 billion for the fourth quarter of 2007. For the 13-week period ended September 28, 2008, Starbucks reported net income of $5.8 million, which included $105.1million of restructuring charges and other transformation strategy costs. Net income was $158. Five million for the similar period a year ago. The company actions announced in July of 2008 to close approximately 600 companies operated stores in the U.S. and 64 company-operated stores in Australia, and reduce approximately 1,000 open and filled positions within its management structure and non-store organization.

The plan sparked a comeback for the coffee powerhouse. In 2010, Starbucks said its earnings improved more than eightfold in the next quarter, as more customers visited its stores and spent more. Its international arm and sales outside its own stores both helped increase profits to $217.3 million.

Starbucks in China ,In order for Starbuck Corporation to excel in international markets particularly in china, it wants to assess some factors such as when to open, when to close up, what to serve, and the price to charge consumers. In this respect, opening and finishing hours are very important in any business as they establish the type of consumers to target. It must be noted that coffee is not in use at all time of the day and hence opening and finishing hours are very essential in the pursuit of attract and retaining consumers. Starbuck Corporation can destroy its reputation if it decreases the value of coffee. It has been internationally known that this company provides the most excellent coffee. In this case, if the worth decreases, people will move to other companies providing the equivalent Chinese are extremely sensitive when it comes to prices and they for all time pay for goods that are worthwhile. In this case, if the price of coffee are greater than before the company will realized decreased sales.

The China’s government has played a very crucial role in maintaining that Starbuck is able to operate smoothly in China. In this case, this company is given incentives by the China’s government in order to boost its performance. The Starbuck’s China operation is becoming very successful because there has been supply chain integration in China.

This has therefore completed the provider of coffee in the total of China very easy and rate effective hence increasing the sales and profits of this company.

Starbuck is intelligent to go into Asian markets and China in particular by empowering China’s middle class and bringing about new daily life while at the similar time maintaining coffee and additional beverages as affordable luxury. Chinese are traditionally recognized for their improved preference in coffee and hence this company is able to convince many consumers to take coffee. American products are highly admired in China and Japan and hence buyers or consumers more and more adopt for American trends and goods. This indicates that Starbuck Corporation took advantage of the culture of China to enter into the China’s market. Providing high quality products in the China’s market has been the company’s strategic choice in order to remain in the market for a long period of time. At first people thinking that Chinese do not like American goods but they were proved incorrect when this company excelled in China.

Starbucks in India, Entering the Indian market also jives well with the company’s long−term growth strategy. The majority of Starbucks’ future growth is expected to come from the detection of global opportunity, mainly in BRIC countries (Brazil, Russia, India and China), which are the global engines of growth. Of these, India is the only one that Starbucks has not entered, mostly because of issues with the Indian Foreign Investment Promotion Board over foreign direct investment (FDI) regulations. With the economic crisis behind it and India’s ruling Congress Party eager to liberalize its lucrative retail sector, entering the country in partnership with other established Indian companies makes sense.

The trickier problem will be “Indianizing” Starbucks to account for local tastes, which no Western brand name has been able to break away from. McDonald’s introduced the now famous the McAloo Tikki, a vegetable burger stuffed with potatoes, peas, spices and a vegetable−tomato mayonnaise, while Taco Bell additional menu items for as small as 37 cents. Coffee outlets in India tend to join food with coffee to draw bigger crowds and offer a grouping of lower prices, vegetarian options and local favorites. Starbucks will thus have to customize its goods and practices somewhat; possibly by adjust its cost and adding a little Indian teas, coffees and foods.

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Starbucks in America, Starbucks may be the ultimate American success story; for people who just want a cup of black coffee, it might be the epitome of American excess. At one point, Starbucks was opening a store every four hours. Over the last year, it’s closed 600 of them. Temple University professor Bryant Simon sees in that history something more than economics; he sees a parable about America. Simon has visited 425 Starbucks locations in nine countries

Starbucks put itself in the way of cultural leaders; the kinds of people that others wanted to emulate: highly educated, successful in their jobs, moderately hip. It got those people as their early adopters. Once they had them on board, others who wanted to emulate them would buy the brand so they, too, would seem like these moderately hip, sophisticated, successful people. That’s the perfect model for a product that trades on culture.”

The company went from 1,800 stores in 1998 to 16,000 in 2008. This level of market penetration and hegemony may have had some unintended consequences for the coffee giant.

Starbucks will donate a portion of each sale to its Create Jobs for USA Fund. The fund awards grants “to help create and sustain jobs in underserved communities throughout America.”According to the company, the fund has already raised more than $11.5 million, which Starbucks used to get loans for about $80 million in financing. Starbucks estimates the fund has helped create or retain 4,000 jobs so far. “In these troubling economic times, we believe that we can all do our part to help make a encouraging impact on the jobs crisis face our country,” Starbucks’ CEO, Howard Schultz, said in a statement. The ceramic mug retails for $9.95 and the tumbler is priced at $21.98. Starbucks will donate $3 from each purchase to the Create Jobs for USA Fund. Starbucks is also offering a pound of American coffee for $14.95, with $5 going to the fund.

Culture on Starbucks growth strategy, As a result of Starbucks closely follow their objectives; the company has installed a list of principles that further outline the company’s willingness to make sure that its affect on the environment is as positive as possible. These principles are stated as:

Understanding of environmental problem

Sharing information with our partners

increasing inventive and flexible solution to bring about change

Striving to purchase, sell and use environmentally friendly goods

recognize that fiscal duty is necessary to our environmental future

Instilling environmental duty as a business value

measure and monitoring our development for every project, and encourage all associates to share in our mission

Those can only be seen as a encouraging for the image of the company and show that they are willing to utilize their assets in order to more than satisfy requirements

The Chairman of Starbucks, Schultz determined to treat staff as family, and call them partners. Both full time and part time employees could benefit from training and health insurance. Starbucks paid some more salaries than competitors to gain highly qualified employees .Starbucks relied on its baristas and other frontline staff to a grand extent in create the ‘Starbucks Experience’ which differentiated it from competitor .staff had choice to stock chare according to their base salary .as well Starbucks had shared values by their workers who made them proud to work in such winning company, and this created good culture. Schultz decided also to be open and honest with his employees, and let them share in the decision making process. He gave extensive guidance to staff particularly barista employees to give careful concentration to customer’s .location was important to Starbucks. Using this idea Starbucks give high-quality attention to their suppliers by helping them technically and economically as part of their corporate social responsibility. Also it encouraged all partners to share in the company’s mission. Starbucks has deep tacit information, which is hard to be imitated by competition.

In the coffee shop market, small single‐site establishments, regional chains, and national franchises like Seattle’s Best all occupy competitive positions that are mapped in relation to Starbucks. The contours of this hegemonic brands cape are formed by Starbucks’s iconic cultural status its bold and expressive latte lingo; its international product offerings; its Euro‐inspired modern decor; its upscale, corporate ambiance and last, but not least, a nexus of oppositional brand meanings that are largely beyond the immediate control of Starbucks’s management. These oppositional meanings freely circulate in popular culture and, most particularly, in local coffee shops and their emplaced social networks.

Emerging culture of Starbucks, Starbucks announced that it had formed a 50/50 partnership with Tata Global Beverages and that they planned to open 50 Starbucks across India by the end of 2012. Investors are watching this carefully given the growing importance of emerging markets in Starbucks’ plans for expansion. In the end of January, the company’s CFO Troy Alstead shared that while the company’s China stores do between one-half and two-thirds of the sales volume of their North American stores, their stores in China is more profitable.

It is worth considering why this might be the case and whether this is healthy for Starbucks. After all, many analysts who believe the stock is poised for new highs point to its expansion across China and now India as justifications. Amid the excitement over the disconnected between sales and profits is the problem that it is, in fact, a potential fatal flaw. Lower sales volume is, after all, lower sales volume. As competitors enter the market, they do not have to engage Starbucks in a price war in order to wound the chain; they only need to drive traffic away from Starbucks towards their new shops. In this scenario, lowered sales volume at some point begins to eat into fixed overhead a process that can quickly invert the profitability of Starbucks’ Chinese operations. Granted, Starbucks is not a static brand in China and has a large base of new customers to tap into, but it will have to do this by continuing to innovate and localize in order to be successful. In this way, the chain’s expansion westward into China will likely allow it to continue tapping into a virtuous cycle as it goes inland towards new markets in Tier 2 and 3 cities.

In China, Starbucks did not face as established a local competitor in the early days (it is worth pointing out that while Costa is ahead of Starbucks in India, it badly lagged Starbucks in China; Costa only entered China in 2006, while Starbucks first entered the country in 1999). This difference also is one contributing factor to why Starbucks in China decided in 2011 to go it alone, buying out its long-time partner the Maxim Group versus Costa who is maintaining its relationship with its partner, Beijing Hualian Group and equally why Starbucks chose a dominant company like Tata to partner with as it entered India.

Starbucks might want to consider how they can cater to a handful of key niche markets unique to the Indian culture. These include tailoring their store to students being tutored (furniture design and placement might need to be tailored to accommodate this) as well as making space and services available for India’s vibrant software entrepreneurs and programmers. Catering to the latter might involve adjusting hours certain stores are open or special Wi-Fi access.

4.0 Conclusion

While we are discussing about the Starbucks Going Global Fast, Starbucks’s emerging culture, it has been evolved over the past years effectively and successfully. And the way they have adapted too many local cultures has clearly mentioned in this discussion and in mast of the cases they had faced it in a successful manner and had gained the maximum benefits over that. The ways in which this global food serving giant expanded its business across the globe have been highlighted in this discussion.

In conclusion, Starbuck company has been able enter into the domestic marketplace as a result of many diverse reasons. The downsizing in the United States of America has positively impacted the company’s desires of becoming a global player.

The purpose of this ‘Starbucks Going Global Fast’ report is to gain thorough understanding about the emerging cultural and economics on Starbucks’s growth strategies of a Starbucks going global fast.

Firstly we need to have a clear understanding about what is meant by culture and the term has been further explained by providing a definition of one of the best authors.

My plan was carry out detailed Starbucks growth strategy, Economics on Starbucks Strategy, Culture on Starbucks growth strategy to identify the Emerging culture of Starbucks by analyzing of Starbucks.

2.0 Introduction

Starbucks has become one of the most recognized brand in the world, known for selling highest quality coffee products. The company exposed that there was a prospective in beverage trading and nowadays activates 8337 stores in globally. The initiator, Howard Schultz started in Seattle through an idea of elevated quality product in a comfortable environment. But it is not so often that a coffee house gets to tell so much about culture. Imagine in relation to a Russian coffee house that be able to tell foreigners concerning our standard of living and our personality, in relation to stuff that are significant to us in business plus in individual relationships, in gastronomically tastes and political affairs… I would not dare to name one. Up till now when I consider of American culture, I wonder at how fascinatingly it is replicated in Starbucks, the majority well-known and the leading coffee and coffee house sequence in worldwide.

Mission of Starbuck is “Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow”.

Following theses ethics are helping Starbucks to determine the suitability of conclusions.

Offer an immense work atmosphere and delicacy everyone through respect and dignity.

Embrace variety as a vital constituent in the method we do business.

Apply the main principles of superiority to the purchasing, boiling and fresh delivery of our coffee.

Increase passionately fulfilled customers every time.

Give positively to our society and our surroundings.

Distinguish that abundance is important to our prospect achievement.

The present global condition for Starbucks appears to be an emerging element of their trade and the restructuring of this is established by their aim to turn out to be a foremost international company throughout creation dissimilarity in people’s living place worldwide. This aim is pretty close to being attained as established the Starbucks present locations in global marketplace and the successfulness of these gambles. The existing countries in which Starbucks are placed in are United Kingdom, Thailand, Malaysia, United Arab Emirates, Canada, United States, Switzerland, New Zealand, Taiwan, Australia, South Korea, Philippines, Israel, Peoples Republic of China, Qatar, Hong Kong, Saudi Arabia, Lebanon, Egypt, Oman, Kuwait, Japan, Singapore and Bahrain.

3.0 Starbucks Going Global Fast

In the 1980s, No unified global coffee brand, it just have instant coffee brand in the world. But from that time, Starbucks become too strong coffee brand in the world. Schultz, He was the founder of Starbucks. He just use thirty years developed Starbucks from small coffee shop to 4500 coffee chain. The company departed to huge extents to create certain the accumulate equipments, the assortment displays, the colors, the design, the music, and the coffee aromas all blended to generated a constant, appealing, interesting atmosphere that evoked the romance of coffee, that signaled the company’s passion for coffee, and that rewarded customers with ceremony, stories, and surprise. To build a romantic spaces and beautiful sceneries in the city.

The core Starbucks marketing strategy is based on the coffee history culture to produce a good taste, good quality coffee. Moreover, the success of Starbucks is not only attributed to its innovation, but also to aggressive expansion, both in the US and worldwide. As it began to expand worldwide form 1996, Starbucks is a leader within corporate globalization, considering itself to be a global company. The company has a three-pronged strategy-joint ventures, licensing and wholly owned subsidiaries-to expand globally. Starbucks has total more than 10,000 outlets worldwide now, while the number in its ambition is around 30,000. Starbucks is the world’s largest multinational chain of coffee shops without major competitors. However, it still encountered competitive, collaborative and cultural challenges in the process of its global expansion.

Economics on Starbucks Strategy, Starbucks has come to be associated with globalization, where markets, economies and ways of life across the worlds are merging closer together. It is generally associated with the growth of huge American businesses across the globe. As such Starbuck’s impact on other cultures is a good example of the impact of giant multinational companies generally.

However, the net revenues increased 3 percent to $2.5 billion for the fourth quarter of 2008, compared to $2.5 billion for the fourth quarter of 2007. For the 13-week period ended September 28, 2008, Starbucks reported net income of $5.8 million, which included $105.1million of restructuring charges and other transformation strategy costs. Net income was $158. Five million for the similar period a year ago. The company actions announced in July of 2008 to close approximately 600 companies operated stores in the U.S. and 64 company-operated stores in Australia, and reduce approximately 1,000 open and filled positions within its management structure and non-store organization.

The plan sparked a comeback for the coffee powerhouse. In 2010, Starbucks said its earnings improved more than eightfold in the next quarter, as more customers visited its stores and spent more. Its international arm and sales outside its own stores both helped increase profits to $217.3 million.

Starbucks in China ,In order for Starbuck Corporation to excel in international markets particularly in china, it wants to assess some factors such as when to open, when to close up, what to serve, and the price to charge consumers. In this respect, opening and finishing hours are very important in any business as they establish the type of consumers to target. It must be noted that coffee is not in use at all time of the day and hence opening and finishing hours are very essential in the pursuit of attract and retaining consumers. Starbuck Corporation can destroy its reputation if it decreases the value of coffee. It has been internationally known that this company provides the most excellent coffee. In this case, if the worth decreases, people will move to other companies providing the equivalent Chinese are extremely sensitive when it comes to prices and they for all time pay for goods that are worthwhile. In this case, if the price of coffee are greater than before the company will realized decreased sales.

The China’s government has played a very crucial role in maintaining that Starbuck is able to operate smoothly in China. In this case, this company is given incentives by the China’s government in order to boost its performance. The Starbuck’s China operation is becoming very successful because there has been supply chain integration in China.

This has therefore completed the provider of coffee in the total of China very easy and rate effective hence increasing the sales and profits of this company.

Starbuck is intelligent to go into Asian markets and China in particular by empowering China’s middle class and bringing about new daily life while at the similar time maintaining coffee and additional beverages as affordable luxury. Chinese are traditionally recognized for their improved preference in coffee and hence this company is able to convince many consumers to take coffee. American products are highly admired in China and Japan and hence buyers or consumers more and more adopt for American trends and goods. This indicates that Starbuck Corporation took advantage of the culture of China to enter into the China’s market. Providing high quality products in the China’s market has been the company’s strategic choice in order to remain in the market for a long period of time. At first people thinking that Chinese do not like American goods but they were proved incorrect when this company excelled in China.

Starbucks in India, Entering the Indian market also jives well with the company’s long−term growth strategy. The majority of Starbucks’ future growth is expected to come from the detection of global opportunity, mainly in BRIC countries (Brazil, Russia, India and China), which are the global engines of growth. Of these, India is the only one that Starbucks has not entered, mostly because of issues with the Indian Foreign Investment Promotion Board over foreign direct investment (FDI) regulations. With the economic crisis behind it and India’s ruling Congress Party eager to liberalize its lucrative retail sector, entering the country in partnership with other established Indian companies makes sense.

The trickier problem will be “Indianizing” Starbucks to account for local tastes, which no Western brand name has been able to break away from. McDonald’s introduced the now famous the McAloo Tikki, a vegetable burger stuffed with potatoes, peas, spices and a vegetable−tomato mayonnaise, while Taco Bell additional menu items for as small as 37 cents. Coffee outlets in India tend to join food with coffee to draw bigger crowds and offer a grouping of lower prices, vegetarian options and local favorites. Starbucks will thus have to customize its goods and practices somewhat; possibly by adjust its cost and adding a little Indian teas, coffees and foods.

Starbucks in America, Starbucks may be the ultimate American success story; for people who just want a cup of black coffee, it might be the epitome of American excess. At one point, Starbucks was opening a store every four hours. Over the last year, it’s closed 600 of them. Temple University professor Bryant Simon sees in that history something more than economics; he sees a parable about America. Simon has visited 425 Starbucks locations in nine countries

Starbucks put itself in the way of cultural leaders; the kinds of people that others wanted to emulate: highly educated, successful in their jobs, moderately hip. It got those people as their early adopters. Once they had them on board, others who wanted to emulate them would buy the brand so they, too, would seem like these moderately hip, sophisticated, successful people. That’s the perfect model for a product that trades on culture.”

The company went from 1,800 stores in 1998 to 16,000 in 2008. This level of market penetration and hegemony may have had some unintended consequences for the coffee giant.

Starbucks will donate a portion of each sale to its Create Jobs for USA Fund. The fund awards grants “to help create and sustain jobs in underserved communities throughout America.”According to the company, the fund has already raised more than $11.5 million, which Starbucks used to get loans for about $80 million in financing. Starbucks estimates the fund has helped create or retain 4,000 jobs so far. “In these troubling economic times, we believe that we can all do our part to help make a encouraging impact on the jobs crisis face our country,” Starbucks’ CEO, Howard Schultz, said in a statement. The ceramic mug retails for $9.95 and the tumbler is priced at $21.98. Starbucks will donate $3 from each purchase to the Create Jobs for USA Fund. Starbucks is also offering a pound of American coffee for $14.95, with $5 going to the fund.

Culture on Starbucks growth strategy, As a result of Starbucks closely follow their objectives; the company has installed a list of principles that further outline the company’s willingness to make sure that its affect on the environment is as positive as possible. These principles are stated as:

Understanding of environmental problem

Sharing information with our partners

increasing inventive and flexible solution to bring about change

Striving to purchase, sell and use environmentally friendly goods

recognize that fiscal duty is necessary to our environmental future

Instilling environmental duty as a business value

measure and monitoring our development for every project, and encourage all associates to share in our mission

Those can only be seen as a encouraging for the image of the company and show that they are willing to utilize their assets in order to more than satisfy requirements

The Chairman of Starbucks, Schultz determined to treat staff as family, and call them partners. Both full time and part time employees could benefit from training and health insurance. Starbucks paid some more salaries than competitors to gain highly qualified employees .Starbucks relied on its baristas and other frontline staff to a grand extent in create the ‘Starbucks Experience’ which differentiated it from competitor .staff had choice to stock chare according to their base salary .as well Starbucks had shared values by their workers who made them proud to work in such winning company, and this created good culture. Schultz decided also to be open and honest with his employees, and let them share in the decision making process. He gave extensive guidance to staff particularly barista employees to give careful concentration to customer’s .location was important to Starbucks. Using this idea Starbucks give high-quality attention to their suppliers by helping them technically and economically as part of their corporate social responsibility. Also it encouraged all partners to share in the company’s mission. Starbucks has deep tacit information, which is hard to be imitated by competition.

In the coffee shop market, small single‐site establishments, regional chains, and national franchises like Seattle’s Best all occupy competitive positions that are mapped in relation to Starbucks. The contours of this hegemonic brands cape are formed by Starbucks’s iconic cultural status its bold and expressive latte lingo; its international product offerings; its Euro‐inspired modern decor; its upscale, corporate ambiance and last, but not least, a nexus of oppositional brand meanings that are largely beyond the immediate control of Starbucks’s management. These oppositional meanings freely circulate in popular culture and, most particularly, in local coffee shops and their emplaced social networks.

Emerging culture of Starbucks, Starbucks announced that it had formed a 50/50 partnership with Tata Global Beverages and that they planned to open 50 Starbucks across India by the end of 2012. Investors are watching this carefully given the growing importance of emerging markets in Starbucks’ plans for expansion. In the end of January, the company’s CFO Troy Alstead shared that while the company’s China stores do between one-half and two-thirds of the sales volume of their North American stores, their stores in China is more profitable.

It is worth considering why this might be the case and whether this is healthy for Starbucks. After all, many analysts who believe the stock is poised for new highs point to its expansion across China and now India as justifications. Amid the excitement over the disconnected between sales and profits is the problem that it is, in fact, a potential fatal flaw. Lower sales volume is, after all, lower sales volume. As competitors enter the market, they do not have to engage Starbucks in a price war in order to wound the chain; they only need to drive traffic away from Starbucks towards their new shops. In this scenario, lowered sales volume at some point begins to eat into fixed overhead a process that can quickly invert the profitability of Starbucks’ Chinese operations. Granted, Starbucks is not a static brand in China and has a large base of new customers to tap into, but it will have to do this by continuing to innovate and localize in order to be successful. In this way, the chain’s expansion westward into China will likely allow it to continue tapping into a virtuous cycle as it goes inland towards new markets in Tier 2 and 3 cities.

In China, Starbucks did not face as established a local competitor in the early days (it is worth pointing out that while Costa is ahead of Starbucks in India, it badly lagged Starbucks in China; Costa only entered China in 2006, while Starbucks first entered the country in 1999). This difference also is one contributing factor to why Starbucks in China decided in 2011 to go it alone, buying out its long-time partner the Maxim Group versus Costa who is maintaining its relationship with its partner, Beijing Hualian Group and equally why Starbucks chose a dominant company like Tata to partner with as it entered India.

Starbucks might want to consider how they can cater to a handful of key niche markets unique to the Indian culture. These include tailoring their store to students being tutored (furniture design and placement might need to be tailored to accommodate this) as well as making space and services available for India’s vibrant software entrepreneurs and programmers. Catering to the latter might involve adjusting hours certain stores are open or special Wi-Fi access.

4.0 Conclusion

While we are discussing about the Starbucks Going Global Fast, Starbucks’s emerging culture, it has been evolved over the past years effectively and successfully. And the way they have adapted too many local cultures has clearly mentioned in this discussion and in mast of the cases they had faced it in a successful manner and had gained the maximum benefits over that. The ways in which this global food serving giant expanded its business across the globe have been highlighted in this discussion.

In conclusion, Starbuck company has been able enter into the domestic marketplace as a result of many diverse reasons. The downsizing in the United States of America has positively impacted the company’s desires of becoming a global player.

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