Starbucks, being an international firm might consider factors like geographical variances, cultural differences, regulations of host countries, and market conditions as they intend to export the business to foreign regions. According to Pahl (6), selection of business area, scope of business place, ways to attract customers, and speed and accuracy of business moves etc, are the inevitable factors that an international company should take into consideration while planning to expand its business to new regions.
As Starbucks had increased its business areas by launching a number of subsidiaries globally it faced the risk of exposure. Eventually, the company reduced its subsidiaries in USA and exported the business to China. The decision was appropriate that made Starbucks coffee one of the most popular coffee brands among the Chinese people (Fowler). Moreover, Starbucks’ downsizing in the USA and the new Chinese focused business brought remarkable changes in their financial reports. “The company’s net profit for fiscal year 2008 plunge 53 percent from 2007 to 315.5 million US dollars” (China Daily). More than 70% of the Starbucks’ business is spread in China; and subsequently, the lion’s part of its revenue is derived from the same market. Starbucks had its own unique strategy to enter the Chinese market. For instance, they undertook social responsibility programs as one of their entry level tactic including many charitable works favoring Chinese society. Therefore the Chinese government affectionately welcomed Starbucks’ project home. However, the advent of Starbucks caused the peril of several traditional Chinese industries that prompted the government to initiate certain regulations to control Starbuck’s business operation in China.
Therefore, Starbucks declared a $5 million educational program for the well being of the new generation. The Starbucks constituted a committee consisting of Starbucks executives and Chinese