Starbucks China: Managing Growth Through Innovation

A set of Q&A flashcards covering key concepts from Starbucks China: Managing Growth Through Innovation, including expansion strategy, culture, competition, technology, and macro factors.

What expansion targets did Howard Schultz announce for Starbucks in China in 2016 and by 2019?

Open 500 stores in China in 2016 and reach at least 3,400 stores by the end of 2019.

What is the Fourth Industrial Revolution as described in the case Exhibit 3?

The fusion of technologies that blur the lines between the physical, digital, and biological spheres and require an integrated, comprehensive response.

Where and when did Starbucks open its first store in China?

Beijing, 1999.

Who is Kelly Smith in the Starbucks China case?

Vice President of Digital for Starbucks China.

How did Schultz propose differentiating Starbucks in China beyond the standard retail model?

By transforming from a retail-focused model to a service-focused model that emphasizes the coffee experience.

What does the 'Third Place' concept refer to in Starbucks' strategy?

Starbucks as a space beyond home and work where people meet, relax, study, or hold business discussions.

What does 'guanxi' mean in Chinese business culture?

Personal relationships and trust; networks and relationships often matter more than formal contracts.

What does the saying 'Above there are policies, below there are ways' imply for business in China?

Policy exists, but firms develop practical ways to operate around or around constraints; flexibility is essential.

What challenge does rapid growth pose for quality control at Starbucks China?

Maintaining consistent quality across many stores, especially with a higher share of licensed locations.

Which awards were highlighted for Starbucks China (2012–2015)?

100 Trusted Brand Award; Best Employer Award (Guangzhou Daily 2012, 51 Job 2014, Aon Hewitt 2013 and 2015); Seven Star Food Quality Award.

How did Starbucks approach the management of Greater China’s size and diversity?

Through local partnerships and joint ventures with Beijing Mei Da Coffee, Uni-President, and Maxim’s Caterers.

What strategy did Costa Coffee use to enter China, and what was its aim by 2020?

A joint-venture model with local partners; aimed to increase Chinese locations from about 365 to 700–900 by 2020.

What is the 'Stealth Starbucks' concept?

A debranding strategy—opening stores that minimize or remove visible Starbucks branding to appear more local/independent.

What is the 'paradox of growth' in Starbucks’ China expansion?

Rapid growth via licensing can reduce revenue per store, increase labor costs and rents, and worsen quality control, diluting the brand.

What is 'premium positioning' in Starbucks China, and why is it used?

Maintaining a premium brand and higher prices to preserve perceived quality and prestige amidst cheaper competitors.

What is the 'Third Wave' of coffee, and how does Starbucks relate to it?

A movement focusing on bean provenance and expert roasting; Starbucks responded with Reserve Roasteries to create premium experiences.

What are Reserve Roasteries, and where did Starbucks emphasize them?

Premium, experiential roasting and tasting venues; Starbucks opened Reserve Roasteries in major cities, including seven in Chinese cities by 2014.

What digital/mobile initiatives did Starbucks pursue in China according to the case?

Mobile Order & Pay and broader mobile payments; 14% of transactions were via mobile; aim to expand cashless services.

What did Schultz say about the digital opportunity for Starbucks?

There is a digital opportunity to leverage the brand’s equity and mobile platform as a potential new revenue and profit source.

What macroeconomic context for China did the case discuss in 2016?

China’s economy showed slow growth and a shift from export-led to consumption/service-driven growth, with debates about the exact growth rate (6.8% in Q4 2016 vs around 4.5%).

What is Lyancoffee, and why is it significant in China?

A WeChat-based coffee-delivery platform that delivered Starbucks and other brands; became its largest distributor with ambitions to scale rapidly (Coffee Box brand).

Which two global quick-service brands were identified as expanding coffee offerings in China?

McDonald’s and KFC.

What is Delocator.net, and why is it mentioned in the case?

A site that helps consumers locate independently owned stores; used to illustrate potential brand antipathy toward chains.

What region in China is known for coffee production and mentioned in the case?

The Pu’er (Puer) region in Yunnan, which historically grew Pu’er tea and is expanding coffee production.

What role did 'local partnerships' play in Starbucks’ China strategy?

They provided local know-how and reduced the learning curve, enabling faster expansion and adaptation to local markets.