Starbucks

Jeffrey S. Harrison and his associates provide an interesting view of the latest Starbucks venture— its expansion into China. They cover some of the history of an intriguing company that has grown from its first Seattle coffee bar in 1971 (in Pike Place Market) to more than eight thousand locations worldwide in 2004. Although Starbucks officially states that the U.S. market is not yet saturated (because adding new coffee bars near existing locations increases the number of coffee drinkers), its virginal opportunities clearly lie overseas. After describing differences between Chinese culture and American lifestyles, the authors raise several central questions as to whether Starbucks can really succeed in a land vastly different from its home turf. Can tea drinkers be converted to coffee? How will it handle local competition? Will American culture be accepted in China? Beyond all that, will Starbucks be able to charge premium prices for its product? No answers are provided, but digging deeper into the Starbucks phenomenon provides some insight. It should do quite well, thank you! Japan offers the closest example. In a nation with a tightly knit Asian culture that also drinks tea, Starbucks opened its first outlet in 1996 in Tokyo’s Ginza district (it always chooses premium spots). By 2003, it counted 503 locations in Japan. But its U.K. venture also is relevant. In yet another tea-drinking nation, the company opened a London location in 1998, quickly acquired the 64 stores of a copycat competitor called the Seattle Coffee House, and now has more than 130 coffee bars. The BBC, in announcing entry by Starbucks into Great Britain, wrote that “if the company succeeds in establishing a major foothold in Europe, it will indeed be the equivalent of carrying coals to Newcastle.” It looks like Newcastle, in fact, has more coals, based on the quick acceptance and success that Starbucks has seen. The English are changing their habits. They now drink more coffee. Conse-