The ultimate goal of any business is to expand and broaden their customer-base. This is because a big customer-base implies that the profit margin of that business will increase. Primarily, each business that enters a market is usually oriented on the goal of optimizing its profits. Optimal profits can be infinite. However, having many outlets and branches in different places pushes the profit figure towards the attainable optimal. The expansion of business into foreign markets can be challenging. Apart from interplaying the concepts and dynamics market structure and demand, intricate matters can arise from the locals or even the government. Many businesses that try to open up new branches in foreign countries do not get the warmest reception, which on some occasions can be attributed to external or internal factors or forces of a business.
Demographic Business Environment
Demographic setup is an external environment of a business. Demography embeds matters of religion and culture. For instance, one cannot open a pork joint in Muslim demography. It would be a bad business idea. When assessing possible effects that may result from unfavorable demography, two things matter most. One is the type of product or services the business trades and the second is the processes involved in service or product provision. If any of the two aspects infringes negatively on the cultural or religious beliefs of the target market, then it would not be a favorable market to pursue. Starbucks persuasion to the Forbidden City’s market does not tamper with the demographic setup. As much as the locals want to preserve the city’s cultural heritage, Starbucks’ presence does not cause a threat to this. The reason is that Starbucks is a coffee (beverage) business, serving edibles, which are essentially part of the basic human needs. If it were a mining company or manufacturing business, it would be tampering with the demographic structure hence not thrive (Lewis & Dan, 2015).
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Market Niche
The essence of the existence of a business is to bridge the product or service gap in a certain market. This gap that a business seeks to bridge is referred to as a market niche. Starbucks sought the Asian market as opposed to the European market due to the fact that there was a bigger market niche. It is, however, important to note that this point is based on the perspective of Starbucks’ management as opposed to the consumers and overall market structure. It is a ‘natural instinct’ for any business to spot a market opening and pursue it. It is what defines a successful business (Zook, 2004). The Asian market, and Forbidden City, in particular, did not have a reputable world-renowned coffee outlet. As it is expected of an ‘aggressive’ business, Starbucks was only right to take a step in filling the market gap. For that reason, Starbucks should maintain its setup and continue providing services for its customers.
Demand and Supply Structure
One of the most common curves in business studies is the Demand-Supply curve. The curve rudimentarily outlines how forces of demand and supply should be interplayed by consumers and suppliers to strike a balance in product/service availability and cost. If there is an imbalance in the demand and supply of a product or service, two things are likely to happen. One is that the prices of that commodity or service will increase or the prices will fall/surge. Either of the consequences is undesirable and usually have an implication on the consumers or suppliers. Considering that Starbucks is still actively operational in the Forbidden City, it means that it is playing a role in harmonizing the forces of demand and supply despite the criticism from some individuals. Therefore, it is critical that Starbucks holds its place in that particular market, failure to which the formerly mentioned consequences may apply to the Forbidden City market structure (Zook, 2004).
Ultra Vires Operation of Business
Every country that is independent and runs on principles of democracy has a constitution and a government. The government is often referred to as the largest regulatory body of a country. It foresees that individuals, companies, and businesses operate within the stipulated rules and regulations. A government has the authority and power to prohibit or ban the operations of a company or business from its definitive jurisdiction. A business is said to operate in an Ultra vires manner if it engages in illegal activities or those that a country considers dangerous from any dimension (Lewis & Dan, 2015). Starbucks is an international company operating in a foreign country. Having the permit to set up and operate in the Forbidden City means that Starbucks is in total compliance with all stipulations of the local and federal governments of China. This also means that Starbucks is a legitimate business that poses no danger to the demography or environment, which is another validation for the business to continue operating.
Expansion and growth are very pertinent issues of the life of a business. The case of Starbucks is a vivid example of the quagmire managers can find themselves when trying to put up expansion efforts. Ethical questions arise in most instances of this dimension. If not well tackled, such matters can cause serious damage to a business’ reputation and image. Consumers on a worldwide scale can engage in what can be deemed as a boycott of a certain company, which would lead to its demise. However, the managers and stakeholders of businesses should tremble at threats or reports voiced by single individuals who may have personal issues regarding their operations. Most markets in the world today are free for different players to enter and exit. Therefore, as long as a business is not operating in Ultra vires and it spots a market niche with a favorable demographic environment, they should seize the opportunity hastily.
References
Alan Lewis, A. & Dan, M. (2015). Edge Strategy : A New Mindset for Profitable Growth. MA: Harvard Business Press.
Zook, C. (2004). Beyond the Core : Expand Your Market Without Abandoning Your Roots. MA: Harvard Business Press.
