Coffee is not just coffee but more a way of life in Vietnam. This business strategy successfully connects tea and coffee, and cultural conflicts can be transformed into creative advantages. Ralf Matthaes, a regional managing director at market research and consultancy firm TNS said that Local consumers will be drawn by the Starbucks name and young people desire that modern, hip culture. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. Their employees, whom they call partners, are at the heart of the Starbucks Experience. Retrieved from, Qian, Y & Xing, T. (2016) Starbucks VS Chinese Tea—Starbucks Brand Management Strategy Analysis in China.  Retrieved from, Rajasekaran, R. (2015). Starbucks will seek to profit from surging consumer demand. One Vietnamese, Nguyen Tien Tam, 35 had been quoted as preferring Vietnamese coffee, which is stronger than Starbucks and that as a Vietnamese, he only love local coffee. No plagiarism, guaranteed! Free resources to assist you with your university studies! Back then, the company was a single store in Seattle’s historic Pike Place Market. It's easy to find a Starbucks cafe almost anywhere in the world, but in … According to the General Statistics Office, it exported 1.73 million metric tons of coffee in 2012, and is the world’s biggest exporter of bitter- tasting robusta. Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. (“sustainable competitive advantage analysis | blekko”) Competitive advantage is defined as the strategic advantage one business entity has over its rival entities within its competitive industry. Son Group member: Le Quynh Anh Nguyen Phuong Uyen Le Thi Truc Ly Quach Minh Thanh 3. Starbucks is also monitoring Vietnam’s rising coffee demand. (“Starbucks Coffee Company”) Starbucks purchases and roasts high-quality whole bean coffees. Culver said Starbucks will price its products in a premium position that is competitive. Location is the key to success, and getting the right site usually comes with high prices. Thuan Pham, a commercial airline pilot and a Vietnamese-American who now lives in Ho Chi Minh City who goes patronizes Coffee Bean & Tea Leaf in Hanoi expects to be a frequent Starbucks visitor and said he will be surprised if Starbucks doesn’t succeed in Vietnam. The company also offers Chinese dishes to blend in with its beverages, such as moon cakes and Chinese puddings, to associate with Chinese festivals. They believe that by buying coffee this way, it helps foster a better future for farmers and a more stable climate for the planet. Retrieved from, Talpau, A., & Boscor, D. (2011). Registered Data Controller No: Z1821391. The chain’s 60 shops across the country serve Vietnamese-style individually brewed cups, along with varieties including Italian espresso and Turkish-style coffees, a mix which Vu expects to sell well in the United States as well. He developed Trung Nguyen from a shop he founded as a student into a coffee retailer with more than 3,000 employees. (“Starbucks enters entrenched Vietnam coffee market |”) Vietnam is the world’s second-largest coffee producer and it has dozens of local chains as well as small coffee shops on nearly every street corner which present a major challenge for Starbucks. When the first Starbucks store opened in Seattle's historic Pike Place Market in 1971, it meant to be a different kind of company that not only selling coffee but also focusing on a feeling of connection.  The company's mission is to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time (Starbucks, 2020).  The company sets its stores to become a place where everyone is welcomed to spend their time while enjoying excellent service and exceptional beverages.  As of June 30, 2019, Starbucks has 30,000 stores across over 80 countries and 300,000 employees.  The company has become the largest roaster and retailer of specialty coffees in the world. Dang Le Nguyen Vu, founder and owner of Trung Nguyen said he’s ready to compete against Starbucks with a plan he’s developed over the past three years. Tea culture: History of tea drinking in Vietnam has been thousands of years. According to the World Bank website, Vietnam had reached what the World Bank calls lower middle-income status in 2009, with per-capita income having increased more than 10-fold since the ruling Communist Party started market-oriented reforms in 1986. They also have an ongoing relationship with Vietnamese coffee growers. A company’s relative competitive advantage will depend on the type of structure the value chain of the company has versus the competitors and also the position of the cost drivers in each activity. Starbucks has far less coverage than in regional countries. Starbucks offers the finest coffees in the world, grown, prepared and served by the finest people. In order to uphold a sustainable competitive advantage, Starbucks must achieve its value activities in a way difficult for competitors to replicate or imitate. Starbucks looks forward at growing with Vietnam’s already vibrant coffee industry and making a positive impact in the communities where they operate. Starbucks also offers Ready‐to‐Drink (RTD) beverages which include Starbucks® bottled Frappuccino® coffee drinks, Starbucks Discoveries® chilled cup coffees, Starbucks Doubleshot® espresso drinks, Starbucks Doubleshot® Energy+Coffee drinks;Seattle’s Best Coffee® Iced Lattes, Starbucks Refreshersâ„¢ beverages, Tazo® bottled iced and juiced teas. He said Starbucks is not worth worrying about as it doesn’t sell coffee. (“Starbucks Coffee Company”) Starbucks have always believed in serving the best coffee possible and it is their goal for all of their coffee to be grown under the highest standards of quality, using ethical sourcing practices. And Nestle instant coffee which is engineered to suit the Vietnamese palette is sold widely in Vietnamese supermarkets. Pham added that the cool factor is crucial and it’s important for young people to be seen at these places and is not about the coffee. John Culver, president of Starbucks Coffee China and Asia Pacific, said during the ribbon cutting ceremony that Vietnam is one of the most dynamic and interesting market in Asia, and that they are proud to open a Starbucks store in the country. To export a reference to this article please select a referencing stye below: If you are the original writer of this assignment and no longer wish to have your work published on the website then please: Our academic writing and marking services can help you! Members also enjoy complimentary slice of cake on birthday month. And they are honored to be acknowledged for their efforts which earned Starbucks its awards and recognition. Key factors in opening a high-end coffee chain in Hanoi City, Vietnam through analyzing customer satisfaction. Some speculated about how the Starbucks will compete with Trung Nguyen Coffee and Highlands Coffee, a homegrown brand that credits Starbucks as an inspiration. Competition from local retailers: Competition is considered intense with many well-known coffee domestic brands like Highland coffee that owns 240 stores.Â. The first Starbucks store is opened in District 1, Ho Chi Minh city in January 2013 and after 5 years, Starbucks Vietnam has more than 30 stores in 4 cities Ho Chi Minh City, Ha Noi, Hai Phong and Da Nang. Vu even visualized Starbucks opening up to a hundred cafes in Vietnam in the next 10 years, but it remains questionable whether people in a country with such a low GDP per capita, and a different taste in coffee, would really accept Starbucks. Starbucks is the world's number one brand in coffee and coffee-related products.  The company has 30,626 retail locations around the globe.  Entering the Vietnam market in 2013, Starbuck has brought its dominant coffee culture to the country that is well known for its passion for coffee.  Despite the high expectation of the company's success, Starbucks has also moved slower than expected.  Eight years after its entry, the number of Starbucks stores reaches just 34, which is much lower compared to 4,100 Starbuck stores in China, 326 in Indonesia, and 330 in Thailand.  Local coffee chains are challenging the giant with lower prices, convenience, and localization experience.  The Vietnam Starbuck has announced the plan to close some stores in the next few years due to poor performance (Vietnam Investment Review, 2018).  Starbucks is struggling in a coffee market that worth more than $5.9 billion (USDA Foreign Agricultural Service, 2019).  The purpose of this paper is to examine the challenges that Starbucks is facing in the Vietnam market, learn the company's strategies to overcome difficulty, and analyze factors that influence the company's future business. “Starbucks is deeply respectful of Vietnam… Laos marks Starbucks 17th market in the region, where it continues to accelerate locally-relevant retail innovation in more than 10,000 stores within the region. While it’s consumed as a morning pick-me-up in parts of the western world, it’s a social activity that takes place throughout the day here. Disclaimer: This work has been submitted by a university student. Other internal threats would include the effect of supplier’s power and the buying power of the customer. Besides, providing excellent service quality and top quality products, high-end customers appreciate fast service for their busy schedule and quite environment where they can discuss business. Financing: Total net revenues increased 5% to $22.4 billion in fiscal 2017 compared to $21.3 billion in fiscal 2016. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on then please: Our academic writing and marking services can help you! You may also like. Venue options, which range from mobile coffee carts to locally-owned cafes to big-but-still-local names like Trung Nguyen, are pretty much unlimited. (“Starbucks Coffee Company”) In 1981, Starbucks chairman, president and chief executive officer, Howard Schultz, was drawn into Starbucks from his first cup of Sumatra, and joined Starbucks a year later. They share their customers’ commitment to the environment. Tran Doan Kim, a business management professor at National University said the coffee chain will attract young Vietnamese who like to be fashionable, live a Western lifestyle and enjoy brand names. Product attributes and preference for foreign brands among Vietnamese consumers.Â, Lin, E. (2012) Starbucks as the Third Place: Glimpses into Taiwan's Consumer Culture and Lifestyles.  Retrieved from. The company values its workforce and treats its employers as partners. A study was conducted on Starbucks's regular customers reveals that they have a unique cultural experience with the company (Talpau & Boscor, 2011). Vietnam's economy is the fastest-growing in the world, with a 7.1% GDP steady growth in 2019.  As Vietnam grows and incomes rise, so the desire for a better life deepens.  Young people crave way of life and need places where they come together to talk and relax.  Vietnam is a lucrative market for coffee companies to exploit and develop their brands.  With the expansion of participation in the Vietnamese coffee market, many other competing companies, such as Coffee Bean and Tea Leaf, Coffee House, and Highland Coffee, began to realize the enormous potential of this market. Unlike China, where tea is the caffeinated drink of choice, Vietnam inherited a coffee culture from French colonizers in the 19th century. Cà phê espresso đậm vị và bốc hơi sữa - ngon tuyệt hảo khi thưởng thức riêng hay khi thêm đường. Company Registration No: 4964706. Some stores even feature shelves lined with books that customers are encouraged to browse including books that inspire and encourage young Vietnamese patrons. Lee and Nguyen (2017) conducted a study to examine important product traits in purchasing decisions for American brands versus local fashion brands revealed by Vietnamese consumers.  The finding showed that consumers value subjective standards, and symbolic attributes such as the latest fashion, country of origin, and popular brands.  Even though local businesses are advantages to lower prices, American brands can better compete by actively promoting their brands, offering quality products, and having the right marketing campaign (Lee & Nguyen, 2017).  Indeed, Vietnamese buyers find that foreign brands from developed countries are more attractive, higher quality, and more reputable than local brands (Dao & Heidt, 2017).  However, western companies like Starbucks are facing copyright infringement.  Nguyen states that copyright enforcement in Vietnam has become challenging as the violation of copyright rate is high.  Shopfronts that appear to be rip-offs of famous brands like Starbucks are not challenging to find.  Fake stores like Sunbucks in Ho Chi Minh city or Wumart in Shanghai are examples of violations.  Such lack of brand awareness causes customers are more likely to systematically reprocess information and allow those kinds of unethical businesses to compete unfairly against foreign brands that have been massive investment and effort put into building their brands (Sun, Zheng, Su & Keller, 2017). All work is written to order. Free resources to assist you with your business studies! Well, it has happened – Starbucks has finally. Reference this. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. It would be tourists and guests of the New World Hotel and young Vietnamese, who are seeking to try this internationally-known brand and perhaps to impress others with it, who would also likely to be there as well. Nowadays, things are different.  Companies build marketing strategies based on an understanding of value customers (Baidya, Maity, & Ghose, 2019).  The function of marketing is to make a profit based on satisfying the wishes and needs of the customer.  To understand and influence people's requirements, marketers need to follow a culture of market penetration, especially in an international environment.  Each key market has its cultural heritage. Tho whose morning routine includes a cup of drip coffee at Hanoi’s Cafe Hanh said that he like his coffee black, dark and strong and that he would go to Starbucks once in a while for the ambience, but not for the coffee as the flavor is too light. Do you have a 2:1 degree or higher? Their coffee buyers travel personally to coffee farms in Latin America, Africa and Asia to select the highest quality beans. Starbucks has acquired this market with its localization and personalization strategies. You can view samples of our professional work here.. Any opinions, findings, conclusions, or recommendations expressed in this material are those of the authors and do not reflect the views of On those trips, they are regular Starbucks customers who go not for a standard cup of coffee but for the specialty drinks. Vu further added that Starbucks no longer has the personality it had when it first started and that its regime will soon end and will soon be replaced. Tho and his friends are part of the sizeable under-35 generation that Starbucks, the Seattle-based company, will seek to convince and switch from stronger and cheaper coffee at their neighborhood café to Starbucks coffee. (“Starbucks Coffee Company”) Starbucks have always believed in the importance of building a great, enduring company that strikes a balance between profitability and a social conscience. Market Entry in India: The Curious Case of Starbucks. Fischer, D., & Roy, K. (2019). (“Starbucks enters entrenched Vietnam coffee market |”) There is a strong demand among youth in Hanoi and Ho Chi Minh City for branded goods and services. Starbucks® Ice Cream is also available in Super‐premium coffee and coffee‐free flavors. *You can also browse our support articles here >. A customer, Nguyen Phuong said many in Vietnam know of Starbucks and want to be fashionable. Vu said he intends to build a “coffee empire” and a global brand within the next 10 years, rivaling Starbucks. In late 2011, the coffee giant also brought out Evolution Fresh, a juice company. FILE - This Oct. 27, 2020, file photo shows a sign at a Starbucks Coffee store in south Seattle. An hour after the official opening hour, the long line in front of the store still remained, as there were more people like Tram coming to become one of the first to taste Starbucks in Vietnam. Other Consumer Products Coffee and Tea include Whole bean and ground coffee (Starbucks and Seattle’s Best Coffee brands), Starbucks VIA® Ready Brew, Starbucks® K‐Cup® portion packs, Tazo® tea filterbags and tea latte concentrates. While every Starbucks store in the United States set up as a format outlet that is allied with global branch store design, in China, Starbucks comprises Chinese elements into its specialty plan that every detail expresses a strong flavor of oriental culture (Qian & Xing, 2016). VAT Registration No: 842417633. 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