Starbucks

Tea has been the traditional beverage of East Asia for the past 5,000 years and evolved to become deeply ingrained in its culture. As time passed, other beverages came to be appreciated in Asia – including coffee. During its initial introduction, coffeehouses gradually appeared in elite cities and urban centers. In the late 1900s, the East truly experienced a tangible increase in coffee consumption.

Starbucks Coffee Company debuted overseas in 1996 opening a coffeehouse in Tokyo, Japan. The Asia Pacific region now consumes more than five million cups of Starbucks coffee every week. Starbucks has stores in Australia, Hawaii, Hong Kong, Indonesia, Japan, Malaysia, Beijing, Shanghai, Southern China, the Philippines, Singapore, South Korea, Taiwan, and Thailand. Starbucks reached the first milestone with its 1000th Asia Pacific store opening in Beijing during the summer of 2003 (1). On average, the company opens three to four stores each day, and aspires to open an astonishing 25,000 outlets worldwide, including 6,000 in Asia, of which a significant portion will be in China (2). Though there were many initial obstacles, including an entire history of tea culture against which coffee had to compete, Starbucks successfully launched itself into the Chinese markets and continues to prosper.

The current study explains the phases through which multinational corporations go when expanding into foreign territories, and explores Starbucks’ specific market entry strategy with respect to these phases. This research also covers challenges faced by Starbucks in finding and retaining a loyal customer base in China, and interviews conducted in Shanghai by the researcher illustrate the degree to which Starbucks responded to these challenges.

HISTORY OF STARBUCKS

Starbucks’ humble birth as a local business began in Seattle in 1971. The original Starbucks store was modest but full of character; it featured a narrow storefront with a solo violinist playing Mozart (3). In 1981, Howard...