Market Entry Challenges in Asia Term Paper
- Length: 5 pages
- Sources: 5
- Subject: Business
- Type: Term Paper
- Paper: #30332519
Excerpt from Term Paper :
A third strategic effort made by eBay in conquering the Asian market is represented by diversification -- not the diversification of its operations or provision of services, but the diversification of the markets served. Traditionally focused on China as a source of increased gains, eBay has come to redirect its attention to other countries as well. The online auction company is as such focusing on launching and expanding operations in Japan, South Korea, Singapore, Malaysia, Thailand or even the Philippines (Chan). Through this strategic expansion to more Asian countries, eBay is decreasing its dependency on the revenues generated in China and is striving to create a stable expansion on the Asian continent.
Starbucks is one of the largest American corporations, with stores opened throughout the entire globe. The global expansion strategy at the coffee company is that of physical expansion through the opening of more and more Starbucks stores across the globe.
Throughout the past recent years, the coffee monolith has placed an increased emphasis on its expansion in China. The Starbucks managerial team has recognized the potential of the Chinese market place and has been emphasizing on opening more stores here. Aside from the actual stores, the Starbucks managerial team has also been considering the opening of coffee plantations in the country. Such a strategy would help it reduce costs with the imports of coffee beans, but it is also a beneficial decision as it is supported by the Chinese government and it would create new employment opportunities for the population, enhancing as such the reputation of the company in China.
"China will be the biggest growth market for the largest coffee supplier within the next two years.
Starbucks has even started to develop its own coffee farm in southwestern China to maintain the supply of coffee beans and help manage the costs. Starbucks said it would hire coffee growers in the province of Yunnan to grow Arabica seeds during the next year. Schultz hopes the quality and quantity of the Yunnan-grown coffee would meet the standards to be sold in China and around the world. He also sees this farm as an opportunity to produce a single-origin coffee that would eliminate the need to blend it with beans from elsewhere. Moreover, the Yunnan provincial government is planning to invest 3 billion yuan to increase coffee production to 200,000 tons over the next 10 years" (Business Today).
All in all, Starbucks considers a wide array of factors in its expansion in China, such as logistics efforts, coffee beans production, the relationship with the government and so on. But most importantly, this commitment to expansion in China is important from a different angle -- that of the economic crisis. In more specific terms, the global economy is facing severe threats from the financial crisis and economic agents across the world encounter challenges. Starbucks considers that its expansion in China would help it overcome the challenges of the economic crisis and provide it with the necessary growth.
While in China, Starbucks is focused on expansion, the situation is more dramatic in the United States, where the company was more pressed by the crisis and it resorted to downsizing as a means of cost restructuring. Only recently, Howard Schultz, chief executive officer at Starbucks, announced that the company would close 600 of its stores in the U.S. And downsize an estimated 12,000 employees; these figures represent the largest downsizing in the corporate history of Starbucks (Waite, 2011).
The corporate decision to downsize staffs generated a chain reaction on the part of the American stakeholders, but the impacts were also felt in China. Here, the corporation's image and reputation had suffered a hit as the stakeholders lost trust in the company. Specifically, they feared its stability and its subsequent ability to preserve jobs in China.
Chan, S., eBay has its eye on southeast Asia, Bloomberg Businessweek
Ihiwan, M., Hof, R., 2006, Out-eBaying eBay in Korea, Information Technology
Ihiwan, M., 2006, Gmarket eclipses eBay in Asia, Bloomberg
Mangalindan, M., October 12, 2006, China may be eBay's latest challenge as local rivals eat into market share, Wall Street Journal
Waite, A., 2011, Starbucks to lay off 12,000 workers, The…