Starbucks the Company That I Case Study

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There are other coffee chains in the country, but none of them are American, so Starbucks has an edge there. However, in more fashionable areas of Beijing there are Chinese coffee shops that offer their own take on a relaxing coffee shop experience. Starbucks must position not only against foreign competition and traditional Chinese tea culture, but against the inevitability of a Chinese-grown competitor. As CEO, I would recommend that Starbucks double down on the American-ness of its experience. This gives the company an edge that cannot be easily matched. However, the company must also work with its local franchisees to ensure that it leads trends, rather than follows them, as Chinese competitors emerge. Many of the new competitors will emulate the more successful aspects of Starbucks' business model, so branding and brand protection are going to be critical elements of the company's expansion strategy going forward. Starbucks must enter the remaining major Chinese markets, and ensure that its brand becomes well-established, and work with local legal authorities to uphold the integrity of the brand as best as possible.

The COO is responsible for the tactics that will bring about the growth strategy. The first recommendation for the COO is to ensure that reliable financing is available. Much of the growth in China early on for Starbucks was financed by the cash cow operations in the U.S. Given that the U.S. business has effectively plateaued, the COO needs to ensure that the Chinese subsidiary is self-financing or that local partners have access to local financing.

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The second issue is with regards to logistics capabilities. Starbucks needs to ensure that it has the ability to produce the decor and acquire the equipment needed to growth in China. Perhaps more important is finding good managerial talent, something that China often imports from Taiwan and Hong Kong. It is recommended that Starbucks open a teaching academy in China that will allow it to train managers within its ranks. The company can therefore use foreign managers to run the education program, and then use the local talent it has developed. Some of the other issues, like people staying too long, are less critical and will not significantly affect the trajectory of growth in China, but money and talent are key constraints to growth that must be addressed.

Starbucks is faced with an interesting challenge in that the core growth of the business is in the Chinese market, because it has saturated the American market. The company could undo the good it has done in China if it fails to execute a growth strategy effectively. Going forward, the recommendations to the CEO and COO will help the company to manage growth in China without compromising the integrity of the brand, but still dealing with the challenges presented by rapid growth and the emergence of intense competition from Nestle and upcoming competition from local players.

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