Essay about PYT 337report

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The Report of External & Competitive Environment Analysis of Starbucks in China

Name: Yutong Pan
Registration Number: 139173840
Tutor: Mathew Teale
Contemporary Developments in Business and Management
Executive Summary

Back in 1999, Starbucks entered the Chinese market and has achieved a great success. China is the "second home market" for Starbucks, it goes without saying that the importance of the Chinese market for Starbucks. The main purpose of this report is to describe the state of the external environment and the competitive environment of Starbucks in China. There will be some objective assessments and recommendations for improvement after the analysis.

Contemporary Chinese political situation is stable, low political risk, so Starbucks almost does not worry about the risk of political problems. Chinese law is constantly improving, and foreign patents and brands have a good protection mechanism, so Starbucks has good protection in China. The economy of China is booming and living standards of people are improving, so Starbucks can make a lot of money in China. As the Chinese people have a strong ability to accept new things, and the number of Chinese large population, so speciality coffee industry in Chinese has great market potential. Starbucks is a speciality coffee industry, the impact is caused by the natural environment it is very small. Overall of external environment is very favourable for Starbucks in China.

Threatening rival of Starbucks are only a few large speciality coffee chain in China, such as COSTA, MANABE and UBC Coffee. Due to the product prices of Starbucks for the target consumer groups are not high, and Starbucks customers have a high customer loyalty, so the bargaining power of buyers is low. The threat of substitutes for speciality coffee industry in China is mainly tea, ice cream shops and some competitors who may offer similar services, but because of the role and the spiritual values of coffee, which are not threat alternatives. In special the coffee industry, coffee supplier bargaining power is not high, because Starbucks for his suppliers is undoubtedly a big customer, and there are a large number of suppliers can be selected by Starbucks, so the bargaining power of suppliers is low. Since the development of speciality coffee industry in China, the barriers to entry is very high now. If the new entrants want to build brand awareness and customer loyalty is a very big challenge, so the threat of new entrants is low. Overall Starbucks competitiveness is very strong in China.

Starbucks successfully connects the coffee and communication, and to provide customers with a place to chat, which is particularly beloved by white-collar workers and students. Starbucks offers elegant lounge space and office space to the customer, so that customers can make a cup of coffee when they want to do anything. Starbucks in China market, the perfect blend of Chinese local culture, which provide a good experience for the Chinese local customers. Starbucks does not rely on advertising to promote the brand in China, but to support cultural activities and word of mouth in the form and get significant results. Obviously these actions of Starbucks have been successful in China.


1. Introduction 5
2. The External Environment of Starbucks in China 5
2.1 Political Evironment & Legal Environment 5
2.2 Financial Evironment 7
2.3 Socio-Cultural Environment 7
2.4 Technological Environment 9
2.5 Ecological Environment 10
3. The Changing Competitive Environment of Starbucks in China 11
3.1 Five Forces Analysis of Starbucks in China 11
3.1.1 Rivalry Among Existing Competitors 11
3.1.2 Bargaining Power of Buyers 12
3.1.3 Threat of Substitute 13
3.1.4 Bargaining Power of Suppliers 14
3.1.5 Threat of New Entrants 14
3.2 Critical Evaluation 15
3.2.1 The Successful Combination of Coffee Drinking and Socializing 15
3.2.2 Elegant Lounge Space & Efficient Office Environment