Starbucks Corporation - Essay Example

 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), the selection of a business area, the scope of the business place, ways to attract customers, 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 several subsidiaries globally it faced the risk of exposure. Eventually, the company reduced its subsidiaries in the USA and exported the business to China. The decision was appropriate which 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 the fiscal year 2008 plunged 53 per cent from 2007 to 315.5 million US dollars” (China Daily). More than 70% of Starbucks’ business is spread in China; and subsequently, the lion’s part of its revenue is derived from the same market. Starbucks had a 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 favouring Chinese society. Therefore the Chinese government affectionately welcomed Starbucks’ project home. However, the advent of Starbucks caused peril to several traditional Chinese industries that prompted the government to initiate certain regulations to control Starbucks’ business operation in China.

Therefore, Starbucks declared a $5 million educational program for the well-being of the new generation. Starbucks constituted a committee consisting of Starbucks executives and Chinese government officials to implement the program successfully. In addition to this, Starbucks created many employment opportunities in China and strategically called the labourers “partners” instead of calling them employees. The company also started a separate team set up for the community development of their ‘partners’. Similarly, Starbucks gave great emphasis on customers’ health and safety for they developed a ‘Quality Assurance Team’ which would control and direct production and storage of Starbucks products. Likewise, the company always paid its genuine concern to maintain a good relationship with the local government. Thus, due to the complexities of political and market situations, the company had to give priority to social responsibilities other than profit maximization.