Please watch the video case of Michel’s patisserie and answer the following question in written format (also prepare the answers to other questions listed on the tutorial agenda for tutorial discussion): What is your assessment of Michel’s initial launch into China? What would you have done differently?
China has a tea-drinking culture, and tea has dominated for centuries. The coffee consumption in China is relatively low and although the coffee consumption is growing in some particular cities in China e.g. Shanghai and Beijing. The coffee market giant such as Starbucks has already had 500 shops in China and Chinese people are more attracted by the Starbucks image and experience than to the coffee itself. Michel’s may face the difficulties when operating in Chin in China. First, the key source of competitive advantage of Michel’s is about its successful franchising system, which prepared in a central bakery and then delivered to the franchisee’s stores and hence franchisees need only minimal preparations to start their business. However, this competitive advantage may blur because of the issues of logistic and bakery set up (localized central bakery). If Michel’s could not deal with those issues, which comprised with their competitive advantage, results in less attractive and profitable of the brand.
Therefore, it is hard to Michel’s to maintain its competitive advantages to compete with other coffee giants in this case- Starbucks, which has invested heavily in the brand development as one of the key competitive advantage in China. In addition, the franchise system in China is not mature; the local managers don’t have much managerial skill to understand the franchise concept, and often they might do what they want to regardless the franchise agreement, which may cause the inconsistent brand image and operations between home and host country. Before Michel’s initial launch into China they should had a more depth understanding of the Chinese coffee market. In the current case, the Chinese franchisee mentioned that the taste of Australian cakes is too sweet for Shanghai people and the English menu is difficult for local customer. All this kind of question can be solved by pre market research. Marketing plans are better to be consistent; Michel’s changed their franchise system and some marketing plans.