Unit 1.6 Multinational Companies

#1 Starbucks’ Brewing Ambitions in China: A Mixed Blend of Impact

Starbucks entered China, its “host country,” in 1999, with a vision to tap into the nation’s growing consumer market. Aiming to introduce American coffee culture to an emerging middle class, Starbucks saw China as an opportunity to establish its brand for long-term growth in Asia. Since then, its expansion has been rapid, with thousands of stores now dotting major cities across the nation.

On the positive side, Starbucks has made notable efforts to adapt to its host country’s tastes—offering tea-based beverages and other culturally relevant items that have contributed to strong brand acceptance. This tailored approach has boosted demand and garnered customer loyalty across China. Additionally, Starbucks has created thousands of jobs, particularly for young adults, and collaborated with local coffee growers, providing a boost to some regional coffee-growing areas.

However, Starbucks’ influence has also raised concerns. While the company has stimulated job growth, its market power has introduced new challenges for smaller, local coffee producers. Starbucks’ scale and brand reputation can act as barriers to entry for smaller businesses that cannot compete with the resources of a global giant. This dynamic may foster a less hospitable environment for local businesses, as Starbucks’ dominance can crowd out smaller competitors, thereby consolidating its own market position further.

Further scrutiny centers on Starbucks’ financial practices in its host country, with critics highlighting that much of its profit is repatriated to the United States, leading some stakeholders to question the brand’s true commitment to supporting China’s economy.

In terms of social responsibility, Starbucks promotes fair sourcing and employee benefits, though environmental advocates claim it could still reduce its environmental footprint more effectively.

Ultimately, for stakeholders—including employees, customers, local coffee producers, and environmental groups—Starbucks’ presence in China has reshaped the coffee market. Yet, its stronghold brings both benefits and concerns, as stakeholders evaluate whether its impact on the host country’s coffee market will foster healthy competition or create barriers for domestic growth.

#1 Questions

  1. Define the term host country [2]

  2. Outline how repatriation of Starbucks profits may impact the Chinese economy [2]

  3. Outline one stakeholder conflict that results from the presence of Starbucks in China [2]

  4. State 3 potential benefits and 3 potential drawbacks resulting from Starbuck’s presence in China [6]

  5. Explain two positive impacts of Starbucks’ expansion on China’s economy [4]

  6. Analyse how Starbucks’ market power might create barriers to entry for smaller, local coffee producers in China [6]

  7. Discuss whether or not Starbuck’s presence in China creates a net benefit or a net loss for China [10] 

#2 Uber’s Tumultuous Ride in France: Analyzing the Impact on Stakeholders

Uber launched in France in 2011, aiming to disrupt the country’s transportation sector by offering a flexible, cost-effective alternative to traditional taxis. Hoping to attract tech-savvy consumers and provide affordable, on-demand rides, Uber initially gained traction among urban users seeking convenience. However, Uber’s journey in France has been anything but smooth, stirring strong reactions from stakeholders.

One primary group affected by Uber’s arrival has been local taxi drivers, who view the ride-sharing giant as a direct threat to their livelihood! With stringent regulations governing traditional taxi services, many French drivers felt that Uber operated with an unfair advantage, bypassing regulatory costs and cutting into their customer base. This perception has fueled ongoing protests, some of which have turned violent, highlighting the deep resentment within the industry.

Labor unions and government authorities have also voiced concerns, particularly over Uber’s employment model. Unlike traditional taxi firms, Uber classifies drivers as independent contractors, sparking debates about workers’ rights, job security, and benefits. French courts and regulatory bodies have clashed with Uber over whether the company should provide employment protections, resulting in legal battles that question Uber’s commitment to social responsibility in its host country.

Moreover, critics argue that Uber’s revenue primarily benefits its U.S. headquarters, as profits are often repatriated, limiting the economic benefit for France.

However, Uber supporters claim that it has increased transportation accessibility, created flexible job opportunities, and driven technological innovation. For stakeholders such as urban customers and tech entrepreneurs, Uber represents progress. Yet, for local taxi drivers, labor advocates, and regulatory authorities, Uber’s presence is seen as a destabilizing force, one that raises critical questions about market fairness, job quality, and economic contribution.

#2 Questions

  1. Identify two stakeholders affected by Uber’s brand development in France, and briefly explain how each stakeholder might perceive the brand differently [4]

  2. Explain two potential advantages for Uber’s brand value from its expansion into France [4]

  3. Construct a diagram showing potential economies of scale that Uber may benefit from having moved into the French market [4]

  4. Analyse how Uber’s entry into France could help the company increase its customer base while spreading risks across different markets [6]