Starbucks Coffee: Expansion in Asia
...n – low level of experience; lack of understanding local customers; External analysis Threats 1) Japan and Singapore: Being at the end of economic explosion; Japan entered into long growth recession; Singapore started experience low growth rate; labor cost and real estate fee in Japan is too high – its early flagship store must open at the most symbolic area; fierce competition in Singapore; possible conflict with Singapore licensee over expansion to other Chinese networked countries; Threats 2) overall Asian market: Hard to find a right partner; instability of political and economical situation; increase of nationalism; experience learned from Japan and Singapore would not be applicable to other Asian countries; hard to expect local market trends; competitors also have expansion plan so that initial marketing cost would be higher than it expected. Opportunities 1) Japan and Singapore: The most westernized countries in Asia; huge needs for high end products – prestige brand; well developed infrastructure in physical and non-physical system(legal and business practice); social trend change from working hard to enjoying life; high spillover effect to other Asian countries because they are leading countries in the terms of economic success and civilization(lowest corruption countries among Asia); especially, Singapore is connected to international Chinese network; Opportunities 2) overall Asian market: high potential of market explosion – estimating that coffee consumption will increase 20-30% annually; China and India, the most populous countries, entered in the stage of economic boom; newly emerging middle class has highly pursued westernization; domestic coffee competitors don’t have originality in the terms of “coffee.” Alternatives 1. Status quo: Just focus on Japan and Singapore. May avoid the aggregate risk of Asian political and economical instability but would result in losses of the leadership in other Asian countries. In addition, operation plant would not be economical in terms of scale. 2. Expansion to only relatively developed countries such as Hong Kong and South Korea; Regarding the success of Japan and Singapore, expansion into Hong Kong and South Korea would be promising in terms of attracting customers; its inevitable step to own its Asian plant would be more feasible based on the absolute size of sales. Only concern is how long Starbucks can take to support other market in case of initial deficit in spite of successful launching. The countries are too dependent on world economy because they are export-drive economic system. Therefore, their markets would be vulnerable. However, overall effect in the long run base is recommendable. 3. Expansion to even relatively developing countries such as China and India; This approach is a result of the most long-run vision, focusing on brand value in Asian market. It would be final goal of its entire step to Asian market, however, its risk is relatively high. Finding suitable local partner would be intervened by political regime and possible conflicts with potential partners would lead Starbuck to local courts in favor of local partners. Even though middle class has increased rapidly, the size of it and the degree of disposable income are still questionable. 4. Expansion to only relatively developed counties with bu...