Is Starbucks high pricing strategy the appropriate positioning in the Chinese market?
Starbucks is the largest American company. It has about 20,900 shops all over the world. Starbucks it’s a company that its main purpose isn’t to sell their coffee, instead, Starbucks tries to sell the essence of “feeling at home”.
The company is facing legal issues with china due to their increasing prices on every single product. Chinese media is harshly criticizing Starbucks for its prices. Starbucks is being accused for charging 50% more for some of its products in china than in other countries in the world.
Starbucks according to this problem, said that the cost in every country vary because of different costs, labor, commodities, real state and infrastructure investment.
My paper is going to analyze whether Starbucks has the right to increase the prices in china due to their market, or is Starbucks increasing prices unfairly because of the rapidly increasing economy in china. I will analyze both parts of the story and will use two specific business functions; human resources and finance. I will also compare the prices and expenses of the united states and China.
The taxes in China depend on the income of each person. If a person gains more, then they will be obligated to pay more taxes. The taxes in the United States depend on the situation and the income that each person has.
Electricity, heating, water garbage etc. is about 163 dollars in the United States. Electricity, heating, water garbage etc. is about 56 dollars in china.
Internet in the United States is 46 dollars.
Internet in china is 21 dollars. Rents in the United States on the city center are 982 dollars per month. Rents in china on a city center are 607 dollars per month. The monthly salary in the United States after tax is 3264 dollars. The monthly salary in china after tax is 724 dollars. Mortgage in the United States yearly is 4.20%. Mortgage in china yearly is 6.17%.
Analysis of findings
According to my findings, we could say that opening a store on china is cheaper than opening one on the United States. By Starbucks opening a store on China, they are lowering their expenses. Even though my findings prove that Starbucks in china is cheaper than in the United States, according to (appendix B) the income statement of the company, we can observe how Starbucks during the past few years has been increasing its sales but at the same time decreasing its profit gained. This could be a result of a higher cost in the production of the product.
According to (appendix C) Starbucks has a very unique strength; it is a global known company, which means that it is doing a great job by satisfying costumer’s needs and wants all over the world. Also Starbucks company has been able to expand all over the world, as a matter of fact; Starbucks opens 2 stores somewhere in the world every single day. They use a specific technique “Starbucks at every...