Question

Case study:

The success story of Starbucks, the Seattle-based Coffee retailer, has been a source of inspiration for Li Gang and many other young entrepreneurs in China. Six years ago, Li opened 5 teahouses in his hometown, Chengdu, Sichuan, and all of them have been profitable. Starting from 2004, he has opened 10 more teahouses, 7 of them on other places like Beijing, Shanghai and Dalian. This year, most of the 10 new teahouses are starting to report profits. Greatly encouraged, Li is considering expanding his business again, perhaps beyond the country border, because he believes that, compared with coffee and other drinks, tea is healthier. He also believes that, in an era of cultural diversity, tea drinking, which is also a cultural experience, has unique appeal to people who traditionally drink coffee.
please answer the questions below:

(1) Do you think Li Gang can repeat Starbucks' success if his teahouses also go global?

(2) If Li decides to go global, what suggestion do you have for him?

Answer 1

( 1 ) I think if Li focuses on continuous expansion in China as well as across the globe with right business strategy there is always going to be a possibility of his teahouse business repeating Starbucks' success. However, it would require the teahouse business to adopt best business strategy along with a right team and the stakeholders, emoloyees as well as investors.

For example, Alibaba, an e-commerce company founded by Jack Ma who was inspired from Amazon, is today almost as successful as Amazon.

( 2 ) If Li decides to go global my suggestion for him would be to adopt business strategy for different countries or geographies on individual basis taking into account the taste and needs of the local population. Such strategies have proved to be more effective in expansion of businesses in geographies other than its home market.

For example, Macdonald's changes its menus by bringing in local taste as well as naming of its offerings in countries according to the local needs.