Strategic Management Analysis of Starbucks - Essay Example

The scope of this report has been limited to the exploring the strategic fit of the Starbucks in the International segment and the market selected for the purpose is China. The reason for this is Starbucks being declared a success story in China in contrast to other entrants’ failure (Szabo, 2012). Starbucks’ world revolved around coffee, in fact premium coffee. Broadly, Starbucks’ operations can be categorized in three domains that are: United States (“US”), International, and Global Consumer Products Group (“CPG”) (Rein, 2012).

Along with premium coffee servings, Starbucks offers tea beverages and fresh food with large variety in their store (Rein, 2012). Operations (under company owned or licensed store) are under their flagship brand of Starbucks with other portfolio components include: Tazo ® Tea, Seattle’s Best Coffee ®, and Starbucks VIA ® Ready Brew (Rein, 2012). Starbucks entered in China in the year 1998 with its first store in Taipei, Taiwan (Starbucks Newsroom, 2012) and currently it holds more than 570 stores in 48 cities (Wang, 2012).

Chinese market has been dominated by tea drinking habits and it was an exception considered that Chinese welcome bitter and expensive drink of Starbucks (Szabo, 2012). On contrary to this notion, China has become Starbucks biggest market after US (Szabo, 2012), hence, made scope of the study. EXTERNAL ENVIRONMENT ANALYSIS China has taken driving seat of the world’s economic van. Businesses to achieve the status of being global take China on the checklist of success foremost. Chinese external environment is discussed below: PESTEL ANALYSIS RANKING ( from 1to 5 with 1 rating least and 5 rating best) ENVIRONMENT RANK COMMENT POLITICAL China is politically driven by capital state model but the country has mixed in its recipe the success driving elements of capitalism as well as socialism (The Economists, 2012).

The democratic system of China is more flexible than US and has been providing leadership more adaptable to growing challenges of the world (Li, 2011). More importantly, US-China relations are constantly growing vertically as well as horizontally (U. S. Department of State, 2012). It has been rated 4 out of 5 for overall positive conditions China mainly to support the business environment. Moreover, since the country has managed to transform the power war with super power China chances of any further discrepancy in this environmental factor is least expected.

ECONOMIC Economically it’s enough to state that China is everywhere in the air. Though growth momentum has declined and expected to further slowdown, still the prospects are most attractive to big giants like Wal-mart, Siemens, Air France KLM, and Daimler etc (China Daily, 2012). Highest GDP average growth rate among BRIC countries (Global Sherpa, n.d.). Controlled CPI to 2.8% after going high to 5.5% in year 2011 (OECD, 2012)