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Culture at Wal-Mart - Essay Example

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Influence of national culture on the success of Starbucks in China In the article “Starbucks Tightens Focus on China”, Burkitt (2011) informs us that Starbucks is concentrating on its full expansion in mainland China by gaining full ownership of Starbucks retail outlets in six Chinese regions…
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Culture at Wal-Mart
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Culture at Wal-Mart

Download file to see previous pages... In fact, John Culver, president of Starbucks International is categorical that the organization wants to make China its largest market outside Europe. This can be realistically construed to mean that the organization is succeeding in China. Furthermore, there is still room for growth in China considering that its single-store sales are on average 40% less in China Starbucks than in the US shops. This paper seeks to explore the influence of national culture on the success of Starbucks in China. The success of any new product introduction in a foreign market is dependent on several factors, some of which are fundamentally controllable, while others are not. Culture is one of the significant, uncontrollable, intrinsic factors that affect new product introduction in a foreign market. Starbucks too had to overcome these market entry barriers posed by the Chinese cultural influences with the commonly cited being the Chinese tea culture. The majority of China’s one billion-plus population is tea drinkers who did not know what coffee was until Nestle introduced a powdered version on store shelves in the 1980s. Nevertheless, Starbucks has been able to overcome this and other barriers through the following three strategies: market segmentation, and localization. According to Yeniturt and Townsend (2003) globalization has created progressively a more homogenized world market, with an increasing number of consumers from diverse geographic locations and cultural backgrounds sharing the same preferences. With the opening of the Chinese economy, Western cultural influences have continued to permeate the Chinese. Globalization has nurtured a new generation of Chinese that is upwardly mobile and has higher disposable income. This new youthful generation, referred to as “Chuppies”, ranges from 20-somethings to 40- year-olds. Chuppies are after sophistication and are very willing to embrace behaviors that demonstrate change. Starbucks therefore used this cultural shift in China to sell coffee, like Golf, as an emblem of change and sophistication. The careful identification and segmentation of this market has proven to be a key factor for Starbucks success in China so far. Another factor that has indirectly helped Starbucks is China’s one-child law. This law has spawned a generation that is not interested in the collective goals that their ancestors were renowned for. Instead, these children of post one-child law have embraced the Western belief in individuality that Starbucks embodies. This assures Starbucks that its target market is not about to reduce considering that the one-child law generation has just reached its targeted market segment age, income and attitude bracket. The second strategy that Starbuck used to succeed in China is to carefully study the Chinese culture and then to offer a localized value proposition. Starbucks conducted a survey of Chinese consumers and compiled a list of the top reasons why they go to cafes. They identified that the number one reason was to socialize with friends and family while drinking coffee placed sixth in the hierarchy of reasons. On realizing that the Chinese lacked places to congregate because of their small and cramped living spaces in their expanding cities, Starbucks took the idea of making a place to gather and gave Chinese city residents a “third space” beyond work and home. Starbucks utilized the localization strategy to offer more ...Download file to see next pagesRead More
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