Challenges of Starbucks

Starbucks, the world's leading retailer, roaster and brand of specialty coffee opened its first store in China in 1999. Despite initial skecpticism about the entry of a coffee brand in a traditional tea drinking nation, Starbucks was well received in China and had established its presence there. It was rapidly expanding and announced that it looked to China as the largest market outside the US. Although Starbucks was confident of its growth there, it faced some challenges. Following its entry, a number of imitators which tried to replicate all the features of the Starbucks stores had opened. A number of international players also operated and planned to expand their presence in China. Revenues from its Chinese operations were not significant since Starbucks operated mainly through partnerships and licensees. Marketing analysts wondered if the initial success of Starbucks in China could be sustained.

Starbucks, one of the largest coffee chains in the world, was started in 1971 in Seattle, USA. It is regarded as the pioneer of the coffee culture in the US and in many other countries. Earlier, Starbucks dealt only in coffee beans and equipment. It was only in the 1980s, with Howard Schultz taking charge as the marketing chief and later as CEO that the company ventured into building coffee houses. In 1995, the company started its international expansion by entering Japan, followed by many other countries in the later years. It entered China around the mid-1990s with a distribution business, before making a full-fledged entry with its retail stores in 1998.