BUSS4 Emerging Markets : Starbucks’ challenges in China

We’ve recently switched our focus away from Section A research them questions to consider how some of our Tutor2U twelve businesses may be used to answer potential Section B questions. Whilst focusing on an essay on emerging markets, one of my students came across this excellent article about the hurdles Starbucks has faced in China.

The question we were addressing was “To what extent do you believe a strategy of targeting emerging markets is a good one?” and we were looking for examples of firms who had perhaps found it more difficult than might have been expected for cultural reasons or through not understanding the market fully. This was to form our ‘against point’ to sit alongside arguments for targeting emerging markets (spread of risk, economies of scale, maintaining market share against rivals).

I love some of the data in this article on Starbucks and it’s plans to grow in China. In particular :

* that the average Chinese worker would need to work between 1.3 and 1.9 hours to be able to afford a tall caramel macchiato (which goes some way to explaining why Starbucks have found many people going in to their coffee shops but staying for a long time without buying very much)
* that the Chinese drink 3 cups of coffee a year on average, compared to 3 cups of coffee a day in the US. This makes clear that one of Starbucks’ challenges is to ket China to get the coffee ‘habit’.

There is a debate to be had here about whether Starbucks were being to greedy, and whether some of these problems in targeting this particular emrging market have been self-inflicted. What lessons can be learnt and built in to an evaluative final paragraph on this question?