Starbucks Downsizing USA Impacts Global Growth Strategy.

¶ … Starbucks downsizing USA impacts global growth strategy. Starbucks, - coffee chain, pursues an aggressive international strategy expands globally. Please visit web site conduct research global expansion.

Starbucks downsizing and global strategy

Starbucks is one of the largest and most successful corporations in the United States, being the epitome of business triumph and an emblem of American culture and corporatism. Starbucks is also the global leader of the coffee and coffee-based beverages and the company's expansion has been based on aggressive growth through the opening of numerous stores across the globe. Today for instance, Starbucks operates nearly 20,000 stores (19,972, to be more exact) in 60 countries, including the United States, China, Mexico, South Korea, Great Britain, India and so on (Website of the Starbucks Corporation, 2012).

In China, the company operates 657 stores and the growth plans are still on their way. Still, within the United States, the company has been severely affected by the decrease in demand as a result of decreasing consumer power (due to the economic crisis). Profitability was as such negatively impacted and the company decided to downsize. At this level, a question is being posed relative to the impacts likely to be perceived in China as a result of downsizing in the United States.

2. Growth strategy in China

Starbucks' success within the U.S. And the global market place has been based on the company's ability to create a pleasant experience for the customers. The experience of consuming coffee has been transformed by Starbucks in a more pleasurable one, an entertaining one, combined with the company of friends, in a friendly ambiance, where delicious snacks can also be served. This strategy has also been adopted in China, where each store was specifically designed as unique, and a promoter of a superior experience for the customers. In China then, Starbucks sought to be perceived as the retailer not only of coffee, but of an attitude (Fowler, 2003).

Looking towards the future, the Starbucks executives recognize the immense potential of the Chinese market place. For instance, some notable factors influencing expansionist decisions in China include the fast growth of the Chinese economy, the increasing purchase powers of the consumer base, as well as the changing tastes of the Chinese consumers, who become more demanding and more likely to consume high end products. In such a context, the company seeks to further increase its presence in the country and attain a total number of 1,500 stores by 2015 (Business Wire, 2011).

In the massive expansion of Starbucks in China, an important role is played by the government in Beijing. Throughout the past three decades, the Chinese government has emphasized on the liberalization of the country and the attraction of foreign investors through tax deductions, proprietorship possibilities, easing bureaucracy and so on. Today, these initiatives continue and they stimulate the operations of foreign investors.

Aside from these however, several federal problems remain and continue to negatively impact Starbucks. For instance, the Chinese government limits the investments and the owned subsidies of the company. Also, they restrict the licenses and they employ unclear legislations regarding the operation of the stores. This generates uncertainties for the Starbucks Corporation, which is unsure whether it complies with the legislations or whether it is likely to be fined (ABRS). The governmental hurdles for instance have prevented the coffee company from opening stores in the Forbidden City (The Economist, 2007).

Upon entering China, Starbucks implemented the market expansion strategy, through which it sold its already existent products onto new markets. It conducted research and an important challenge was represented by the low levels of coffee consumption in China. Then, it entered the market through partnerships with local food and beverage companies (Yeh, 2006).

From a strategic standpoint, emphasis has been placed on issues such as:

The replacement of aggressive branding with the creation of a powerful store experience; the stores were as such placed in highly populated and visible areas (Wang, 2012)

The creation of a new product line, inspired by the local culture, from coffee beans grown in Yunnan (Haoting, 2009).

3. Impact of downsizing

The downsizing process commenced by Starbucks in the United States has yet to reveal its long-term impacts upon the company's stability in the domestic and the foreign markets. Still, at this level, it is expected for some negative effects to be felt in terms of the corporate expansionist effort into China. The more notable example in this sense is represented by the damaging of the organizational image, which would then result in less trust being felt by the Chinese stakeholders. For instance, the Chinese government could come to further restrict the company's operations in the country for fear of failure. Then, the employees could also fear the loss of their jobs, and their morale and performances would decrease.

4. Conclusions

Starbucks is one of the largest and most successful companies in the world and it has ensured this leading position through a combination of powerful management and business models adapted to meet customers' needs and wants. Today, Starbucks operates globally, with emphasis falling on expansion in China, due to the great potential of the Chinese customer base.

The expansion strategy in the country is impacted by the features of the local market place, such as ambiguous legislations or different customer behaviors. Still, the company is committed to increasing its stores to 1,500 by 2015. An impediment in this plan could nevertheless be represented by the downsizing process commenced in the United States, which could decrease the trust of the Chinese stakeholders.