Starbucks Case Study In China

e number one concern in all business is profit. When someone wonders why Starbucks’ business is so successful they can find their answer in the statistics. In Q3 2015, the total net revenues rose about 18% amassing a new record at $4.9B. The company cited this substantial increase in revenue to obtaining Starbucks Japan and the opening of 1,592 new stores in the last year.1 The company also witnessed a 22% rise in profitability credited to sales leverage.2 Starbucks saw continued growth globally, in the Americas, and the China/Asian Pacific at 7%, 8%, and 11%, respectively, accounting for an increase in customer transactions climbing towards 18M in the U.S. and 23M globally.3 These increases across the board could be accredited for the 21%

People saw China as a nation based strongly on traditional values and one being strong consumers of tea, not coffee. Starbucks saw something different and catered to the Chinese culture. They introduced certain types of teas and created an environment that appealed to younger generations who wished for the Western lifestyle. By withholding the need to force American culture on the Chinese, Starbucks ' new endeavor had very positive effects on their business. Starbucks now sees China as the largest market outside of the United States for their product. Forbes reported in an article that “Starbucks now has 570 stores in forty-eight different cities in China and planned for 1,500 by the end of 2015”.6 As the market for Starbucks continues to grow they have continued appeal to the younger generations who now view Starbucks as a way to feel connected to the Western lifestyle.7 This has allowed Starbucks to charge more for their products due to the trending demand and therefore has resulted in outlets in China to be more profitable per outlet than that of the United States.8 China has become an expanding market with great demand and promising return for profits. As Starbucks continues to expand globally to other countries such as India, they will continue to be successful as long as they can adapt to the culture. India resembles China in similar ways such as they have a large population with a

Each time I go to a Starbucks, the employees are welcoming and very polite. They act as if they genuinely enjoy their work and being social with the people they serve. I am not a fan of the price of coffee, considering I have a coffee maker and can make a cup for much cheaper. Therefore, I only go to Starbucks once or twice every other week. When I do go to Starbucks, I feel I can accept the price knowing they invest in their workers and in the communities. I am not as devoted of a customer as some who feel they have an emotional tie to the brand. I do not feel like I need the coffee daily or weekly, or feel as if I have become connected to the company. The Starbucks ‘social conscience’ allows me to rationalize why I do spend so much money for a cup of coffee when I do decide to go to Starbucks. Knowing their involvement in the community and other various aspects and their treatment of employees makes me feel as if I know where my money is going and the good causes it contributes towards. In the end, I would say Starbucks’ ‘social conscience’ is the main driving force for why I choose their