Question

Please explain about the PESTEL of the Starbucks in China ?

Political ( 150 words )

Economic (150 words )

Social (150 words )

Technological ( 150 words )

Environmental (150 words )

Legal (150 words )

Please inspire from the internet .

Answer 1

PESTLE analysis of Starbucks in China

Political:

The presence of communist party in China gives the company a very stable economic environment for doing business in the country. Along with the presence of good business ecosystem, there is less corruption involved with business houses and ease of doing business conditions are very good in China. The presence of strong internet rules in the country gives negative impact on the Starbucks digital marketing strategy as Google, Facebook, Instagram and other popular platforms in the world are ban there, so the company needs to adopt a different marketing strategy for China. Also, more than 3000 websites are blocked by China under their Internet Censorship policy so Starbucks needs to be very careful while uploading content on their websites as well. The tax chargers are moderate on companies and it is boosted by quick decision making which helps the company to perform their operational work

Economic:

China is one of the world's fastest developing nation with world's second largest economy in the world. Their domestic retail market growth rate is very high and is growing more than 11% per year. Their inflation rate is also in the right zone of 2-5%. Strong economic growth back by their strong infrastructure facilities of transportation, big warehouses, corporate houses and developed cities help the foreign managers to move into the new cities with less concern about their lifestyle. China's economic growth is backed by both strong domestic industries and companies as well as by Foreign direct investment. The presence of strong domestic companies and backing by the government will give a tough competition to Starbucks. Starbucks needs to change their product line along with the requirements of native citizens in terms of their purchasing capacity as well they money spending habits.

Social:

The demographics of China include mostly 25-54 age group having near 48% of the total population which we can say, it shifted more towards middle age group persons. The urban population is around 50% and is also growing at a steady rate of 2.8% annually. There has been a considerable rise in the standard of living of Chinese people and they are spending more money towards better enjoyment. As the young population is very much influenced by the western culture and love to spend money on fast food corners like Pizza Hut, McDonald's etc. But there is one issue with the culture of China as there are more tea lovers than coffee which can be little negative to Starbucks which is majorly enjoying brand identity of the premium coffee cafe. The presence of huge market potential will surely help to mitigate this issue and it depends how brand positioning Starbucks wants to do in China

Technological:

China has seen the fastest technological advancements in the world. Their rapid growth in the technology sector was well shown in Olympics 2008 and they considerably moved after that. Presence of strong transportation facilities, shopping malls, IT and business hub gives an ideal condition for Starbucks to flourish in China. There are more than 500 million internet users in the country and the youth of the nation which is the target customer of Starbucks is tech-savvy and love to enjoy adapting to emerging technology. The presence of cheaper and efficient technology will help the company to flourish in their supply chain management and other operational tasks.

Legal:

Legal laws in China for business companies from outside the country needs to be understood carefully before going into the market. Although Chinese laws save the rights of the company but there are several factors to be kept in mind while doing the business. The Chinese company who is having the joint venture with Starbucks will have the right to go to the court anytime and take their money back even the other company has a majority stake in the venture. They need to understand the employee laws, as you can not fire like America without a strong valid reason for firing and without any prior notice. The Company needs to take care of their employees because of the culture as well as their cultural beliefs are strongly backed by the laws of the nation

Environmental:

Chinese government plays an important role in maintaining the environment of the nation. Because of increasing pollution issues in the past, a strong focus is being given on the environment protect factors at any cost. Companies which are harming the environment with their production or not dumping the waste from their end product are panelized heavily by the government. Along with the government, there are many environmental pressure groups which keep a vital eye on the companies touch point with the environment and plays a crucial role if there is any harm caused by the company towards the environment. Starbucks need to take care about setting the process to eliminate the food waste and also take care about the raw material supply chain as well.