Aug 14 2007

Starbucks arrives in Zhudi Town, Hooray!?

40 responses so far

40 Responses to “Starbucks arrives in Zhudi Town, Hooray!?”

1. # Howard Jingon 14 Aug 2007 at 3:47 pm

   1. Starbucks felt that opening a branch store in Zhudi had the potential to bring in money, as many teachers and students study/work in the area.

   2. Fast food/coffee restaurants work by establishing a brand name in order to increase recognition of their product. They also often serve cheap or convenient food so that people can come in whenever they feel like it. They compete with each other by underpricing each other or making new combo meals.

   3. Probably not since if somebody feels like going to Starbucks, then they will go to Starbucks. To the average Starbucks customer, 5 RMB is not that much of an increase anyways.

   4. Yes, although it is not very sanitary. In the US (or at least where I lived), people sometimes throw away unwanted furniture or electronics on the sidewalk. If one were to take said furniture, that would be ok, as it was intended to be put in a dumpster. My friend found a perfectly functional computer this way, although it had a bunch of viruses.

   5. If Rendezvous has enough loyal customers then I see no reason why it can’t survive.

2. # Dannyon 14 Aug 2007 at 10:36 pm

   1. With the increasing amount of foreigners
   in the Zhudi area, Starbucks sees the
   potential to earn profits by opening
   up a store. Starbucks is a universal
   known coffee shop with more shops in China
   compared to the US in 2010. Also, rental
   costs in Zhudi is probably a lot less
   than downtown Shanghai.

   2. Fast food/ coffee restaurants try to
   sell with brand recognition. The symbol /
   sign of the retaurant can always be seen
   from the outside. They compete with advertisements and brand recognition techniques. McDonald’s for example spends millions and billions a year sponsoring famous people and putting commercials on primetime.

   3. For a costumer who is likely to pay 28-32 for a cup of coffee, they would most likely pay an extra 5 RMB for that cup of coffee. This is less than a 20% increase.

   4. No, as we learned in the first week of economics, everything has an opportunity cost.

   5. Most probably. Rendezvous is not exactly similar to Starbucks. Starbucks is more of a coffee shop rather than a restaurant. For people wanting a meal, they would still likely go to Rendezvous.

3. # Jennifer Choion 14 Aug 2007 at 11:41 pm

   1.Certainly Starbucks saw profit in establishing another branch in Zhudi. There should have been many people around Zhudi Town who had to make their way to Gubei just to buy Starbucks’ coffee beans or just to drink it’s coffee. Starbucks, therefore realizing that there are enough demands in this area to invest its money, decided to establish another branch in Zhudi.

   2. I agree to what other commenters said above. Fast food/coffee restaurants rely on their brand names to sell their goods, and it is the reason why they spend so much money in advertisements. For them, establishing as many branches as possible is the best way to advertise their names, so they continue to establish more branches.

   3. No, I do not think so. Even with the increased prices, Starbucks will have its regular customers. The increase in the prices might affect the decisions of JUST coffee-buyers, but for people who are already used to buy their coffee at Starbucks, 5RMB increase will not affect their decisions that much.

   4. No, I do not think so. The ‘free’ gifts that the kids got are not actually ‘free’. The free gifts that Zhudi Starbucks gave out that day were some kind of investment for the future customers. For Zhudi Starbucks, the ‘free’ gifts were just a part of their marketing plan.

   5. Yes, I think Rendezvous cafe will still be able to survive the competition with Starbucks. Rendezvous is more like a restaurant than a coffee shop, so a new Starbucks coffee in Zhudi Town won’t really be a problem for Rendezvous. But what actually is a problem for Rendezvous, I think, is Johnny Moo. My friends and I were actually hesitating whether to go to Rendezvous or Johnny Moo, while before we just went straight to Rendezvous. But considering the fact that Rendezvous already have so many regular customers in SAS, I don’t think the competition would be real hard for Rendezvous.

4. # Ennoon 15 Aug 2007 at 1:08 am

   1. The economic forces that brought Starbucks to Zhudi are basically us, the students and faculty of SAS, and the entire Zhudi international community in general. Since we demand a high amount of foreign products, including western restaurants and Coffee Shops, we have increased the size of demand of the market for western food in Zhudi Town. Therefore, in a demand-supply graph of this market, the demand curve would shift out as the market size is a determinant of demand. This increases the equilibrium price; however, as Starbucks and other western restaurants enter Zhudi, the supply curve will shift out as well. This lowers equilibrium price back down again.
   2. Since there are roughly countable famous western food/coffee restaurants available in Zhudi, they probably have an oligopoly. Thus, brand recognition is very important to them. Starbucks is extremely competitive due to its long established brand. This allows them to rise prices more frequently than other less famous restaurants. Of course, other than branding, their prices are the most important factor of competition.
   3. Yes, it certainly will to some extend because an increase in price should theoretically always lead to some kind of decrease in quantity consumed according to the Law of Demand. However, it probably will be a smaller effect to Starbucks due to its widely recognized brand. In other words, Starbucks has a more inelastic demand curve, a change in price leads to a smaller change in quantity demanded.
   4. No, everything serves a designated purpose. Since Starbucks is such a large corporate company, it has the ability to compete because it has reached economy of scale. In other words, Starbucks’ success and size allows it to minimize their costs and thus maximize their profit. Since they are already making so much profit from minimizing cost and branding, they have the ability to use that extra money to perform this marketing tactic. If needed, Starbucks could even sell below their costs to attract costumers and bring other competitors out of business because of its grand economies of scale.
   5. This will depend on many factors, but I think it will because Starbucks and Rendezvous can technically be considered in different markets because Starbucks focuses on post-meal coffees and drinks, whereas Rendezvous focuses on making meals. However, Rendezvous’ profit will definitely be affected, which might force them to lower prices, thus lower their prices to compete with Starbucks.

5. # Daniel Yeungon 15 Aug 2007 at 11:06 pm

   1. With such a large number of international schools in Zhudi area, it was obviously unreasonable for shops like McDonald and Starbucks to not open up a shop here. The demand for things such as coffee is definitely extremely high. Considering that those demand come from mostly foreigners, their willingness for price levels are also much higher than the locals, so a local price here will be considered low here.
   2. Fast food, coffee restaurants have oligopoly market structure such as those of KFC and McDonalds. These firms deals with intensive advertisement of all forms for brand recognition. There are always non-price competitions in the market.
   3. An increase in price will certainly affect people’s decision to buy coffee from Starbucks, however, the decrease in the quantity demanded will not be very much as Starbucks contains a very inelastic supply curve. This is because the quality of coffee it is able to produce is still very hard for its competitors to reach here in Shanghai and that its brand name is simply made to solid for any other firm to compete against in Shanghai.
   4. There is no such a thing as free lunch as they are merely things that attempts to regulate u into buying more products later on. The benefit u gain from the “free lunch” is nothing compare to the profit gained from the purchases you make later.
   5. I think the hardest part for Rendezvous Café is how it will be able to maintain a reasonable price with the growing price for all the raw materials. If it fails to do so, then it will really be off bad against Starbucks as the redenzvous café is yet to small a firm to achieve any economics of scales.

6. # DavidTayon 16 Aug 2007 at 9:02 pm

   1. No. Having a Starbucks in ZhuDi wasn’t a good move by those capitalist giants. I feel that the main reason why they put a Starbucks there was simply because they had ablsolutly no idea where else to put a Starbucks. There are stores EVERYWHERE in Shanghai. Of course, it would bring in revenue from all the international people. But having only 1000+ people living around the area profits wouldn’t be a great as the store in GuBei or down by the Bund. I guess they’re trying to pull every penny out of our pockets. Sneaky guys. ZhuDi itself is a very poor town and having a Starbucks there would not only make “us” look like consumer whores by local ZhuDiers but it seems very disrepectful, since many of them cannot afford it and it makes them feel 2nd class in their own town. But for us, it gives us a place to cash in our money to meet our caffine addiction. Huray for Starbucks.

7. # Dennison 16 Aug 2007 at 9:08 pm

   1. Starbucks opened another branch in the Zhudi area because not only is it a growing community with more people overall, but also more and more foreigners especially the international schools surrounding the area. Because starbucks is known across the world, they are likely to target citizens from other countries since they are the most likely to buy a cup of coffee from their shop.
   2. Fast Food comapnies or coffee shops are most likely an oligopoly. Although there are numerous fast food companies, only few are world known and only very few stand out above the rest for example: McDonalds, Burger King etc. Most of these fast food companies, at least the famous ones compete through advertisements, setting up new companies/shops around the world, and proving their brand to be the better one, in the oligopoly of fast food, brand recognition is a major factor.
   3. A price increase may cause few buyers to stop buying coffee from starbucks and may take their money to another coffee shop, but on a whole the regular starbucks customer wont mind a change in price unless its extreme.
   4. There is no existence of a free lunch, by giving you this free lunch, starbucks expects for the customer to buy products later or in higher quantitites, nothing in life is free.
   5. Yes, rendevouz competes at a different level than Starbucks, selling lunch/dinner and less focus on coffee, it should be able to survive.

8. # Carloson 16 Aug 2007 at 9:39 pm

   1. Profits have caused Starbucks to open a branch in Zhudi. Since not only are there several international schools and luxurious compounds in the area, but the local population is also gaining wealth as the economy of China grows. This causes more demand for higher-class coffee in the area, allowing firms to make a profit here.
   2. This market is probably a oligopoly. Although there are many firms in the market, the market is dominated by a few very large firms, like McDonald’s and Starbucks.
   3. Yes it will, increasing the price would stop some people from buying coffee from Starbucks, and cause some buyers to buy less. This is the law of demand (price has a inverse relationship with quantity demanded).
   4. No, everything has a opportunity cost, although it may seem free to someone who does not think like an economist.
   5. This would depend on how Rendezvous competes with Starbucks in the future. Both price and non-price competition would be important.

9. # Balbina Wongon 16 Aug 2007 at 10:14 pm

   1. As we all know, Zhudi Town is an ever growing expatriate community, and the growth is inevitable from the increasing numbers of international schools all around. Starbucks is an internationally well-known coffee company and it is much easier for them to compete with local markets with new-comers in town, especially because of brand-loyalty. Starbucks-Shanghai recognized that Zhudi Town will probably continously supply them with a fresh batch of customers every year, happy to find that they have a branch there.

   2. Fast food/coffee restaurants tend to have many branches and shops in a small area so as to provide convenience, especially in busy cities like shanghai. Because each branch would ideally serve the same food or coffee, fast food chains and coffee companies would compete in their quality consistency and their service.

   3. That really depends on where you are. If you are in the states then it might affect people’s decision to buy coffee from starbucks because of their abundance in choice of coffee in the states i.e. – Seatle Best, Pacific Coffee. However, when you are in China, these choices are scarce, which limits the conumers, so the price raising might not affect people’s decision in buying starbucks coffee in China as much as in the states.

   4. No there is not really such a thing as a, “free lunch” partially because I just read the assigned pages from the text book and it specifically emphasized that and because it makes sense in this world, unless every one was completely selfless. Anything that may be free to you costs somebody else something, so nothing is ever truly free.

   5. I believe rendezvous can survive with its loyal customers, and students who find starbucks too expensive to afford. And also, rendezvous offers much more than starbucks, so I think they can be healthy competition in a sense that they complement each other.

10. # yufangkon 16 Aug 2007 at 10:19 pm

    1. Starbucks opened a branch in Zhudi as they felt it would bring them more profit. The rent is probably not expensive and they can count on the international community to buy their goods.
    2. Fast food restaurants and cafes compete by coming up with new foods and making their brand more famous through advertisements.
    3. Probably not since Starbucks has many loyal customers. Like me
    4. Like we learnt today, there is no such thing as a free lunch. The toy was to try to make the kids come again.
    5. Rendezvous can survive! The kind of food they serve is different from Starbuck so I don’t think it’ll make much of a difference.

11. # Vivian Chenon 17 Aug 2007 at 7:56 pm

    1. the economic forces that brought starbucks to zhudi was the idea of being able to make a profit from SAS students and teachers as well as people who live around the area. the rent in Zhudi is still considered low, since its not considered and downtown. there are 2 types of profit starbucks can make from opening a store in zhudi and that is real estate profit as well as their coffee and desserts.

    2. fastfood/coffee has become something that some people depend on becaue of how convient it is and due to the time limit people have.

    3. i believe that the increase in price of starbucks coffee will not affect people’s decision to buy coffee from starbucks because people enjoy the quality of the drinks starbucks produces.

    4. I do not think so because a free lunch cuts down a company’s profits. the workers gave kids clay because first you have bought their product and secondly they want the parents to feel how caring they are and feel safe coming again and buying something for their kids as well. its a way to bribe kids in asking their parents to go to starbucks again.

    5. i believe Rendezous can survive its competition because Rendezvous is different branch of fast food compared to Starbucks. Rendezvous is a place where we can actually get cooked yummy food while starbucks is more of a dessert and coffee place.

12. # Angeline Chenon 17 Aug 2007 at 11:18 pm

    The economic forces which caused this Starbucks to open up in Zhudi was the number of people going in and out of SAS 5 days a week which guarantee groups of students and staff to be hanging out at Starbucks sometime during their breaks. Furthermore, the increase in prices for drinks as well as the increase in demand (considering there is no other coffee shop nearby) will increase profit!

    2. Having the big, well known name always helps to publicize their products. The way they must compete with others is to continue to provide good service, being a “fast food” their service must be fast. Starbucks for example, is where people will run into early in the morning before school/work to grab a quick coffee and rush out. If service is slow, it will lose popularity and costumers. Quality and quantity are important too.

    I think increase in prices will definitely make people think before buying something. After all, spending more on one thing means spending less on something else. However, the caramel fraps and their cappuccinos can’t be found elsewhere which will definitely keep costumers.

    No. What may be a free lunch for you, is an extra lunch for someone else. Well, then I guess a free lunch does exist, but somewhere along the line you will have to return the favor. In the end, it all equals out.

    I’ve never been to rendezvous cafe. BUT if it has realized that it has competition and is trying to improve it’s food and services, it should survive. After all, there are no burgers and fries at Starbucks!

13. # Wei Liangon 18 Aug 2007 at 3:18 pm

    1. I believe that Starbucks chose to open a store near to SAS because of the sheer number of students, teachers, and parents that live in the expat community is sure to bring in profit as most of the people have money to buy coffees . I have also noticed that there is close to no competition for this Starbucks out here in Zhudi, thus causing the demand for it to go up.

    2. Fast Food Restaurants rely on their brand to entice people and passerbys into entering and purchasing food or drinks. Brand recognition is brought about by advertisements put out by the company

    3. It may deter some of the less regular customers from buying the products, however, the regular drinkers will, probably, not hesitate in buying the products.

    4. No,there is no such thing as a free lunch. Even if it costs nothing to you, it will cost someone else. If anything came with it free, it’s safe to say that this would be a sort of marketing strategy in order to maintain a regular flow of customers.

    5. I don’t think that Rendezvous will see this expansion of Starbucks in Zhudi as competition. This is due to the fact that Starbucks is primarily a coffee shop that offers small snacks, while Rendezvous is a Restaurant where people go for full meals.

14. # Steve Kangon 18 Aug 2007 at 4:58 pm

    1. The economic force that brought Starbucks to Zhudi is surely its purpose of making more profit. After all, Zhudi is full of SAS students and faculties willing to pay the money to get some caffeine.

    2. The primary components of the market structure owned by fast food/coffee restaurants are the goods and services of the restaurant just like other businesses. As a “fast food” restaurant, delivering meals should be quick and the interior of the restaurants must look comfortable enough to entice pedestrians to chance coming into the restaurant.

    3. The increase in the price of Starbucks coffee will surely affect people’s decision to buy from Starbucks. Starbucks coffee is already known in shanghai for its high costs compared to cheap Chinese products. Gubei Starbucks for example, is used by many students as a place to hang around with friends more than as a place to buy coffee and other desserts. If its price is raised even more, I doubt as many people will go to Starbucks as they do today.

    4. Free lunch may seem to exist in an individual’s point of view. If your friend is willing to buy you Mcdonalds for lunch, you will be getting a “free” lunch for you won’t be spending any money. But even in a case like this, you may not be using your money, but you would be using your precious time to eat Mcdonalds instead of staying home and studying IB economics. Therefore it can’t be called “free” lunch for every action done by an individual is done under a principle called oppportunity cost, in which one have to forgo an activity to participate in another activity.

    5. Surely Starbucks is a famous coffee shop and is enjoyed by a lot of students in shanghai. However, the new branch of Starbucks in Zhudi has just begun to flourish and compared to Redevous which has remained as the primary supplier of foods, snacks, and drinks to the people of zhudi, I think Redevous will continue to attract many people.

15. # Philip Ton 18 Aug 2007 at 5:23 pm

    1. The reasons for Starbucks moving out to Zhudi are numerous. For one, Zhudi is the “the new place to be.” As Shanghai’s population is so large, we continue to expand out in the search for new land and places to call home. Zhudi is the victim of just that. Within a decade four large western housing complexes have opened up in Zhudi along with the American, British and Singaporean schools, all being within a kilometers radius of the new Starbucks location, meaning a large supply of customers are available. A second reason would be that the Zhudi area is one of the largest “western” settlements in all of shanghai. As a country of mainly tea drinkers, Starbucks has had a harder time to make it in china than other countries. Therefore by opening shop in a more coffee oriented environment, there is a larger chance of success, making the westernized Zhudi is the perfect place to open its new shanghai shop.
    2. The fast food and coffee shops, such as Starbucks, mainly sell because they are brand names. As chains, they are able to create a global standard, therefore if you’ve been to one Starbucks or a McDonalds, you’ve been to them all, in a way. They make their customers enjoy them once, if they do that, they have created a customer that no matter where they go in the world they will choose the place they trust and know versus an unknown and unfamiliar place. In other words, they succeed by feeding off peoples’ dislike of change. They compete by managing their prices and improving their menus. Starbucks introduced the “Venti”, which is the big gulp of the bean world. McDonalds started “Super sizing,” which made all other fast food joints think bigger. They all aim to have the more for less.
    3. Honestly, I don’t think the increase in price will affect that many peoples’ decisions on Starbucks. The reason for this, I believe, is that Starbucks is so amazingly expensive in the first place that people wont notice that they’re paying 38 kuai instead of 33 kuai for a venti mocha with whipped cream. People will do whatever to get they’re daily fix of deliciously brewed caffeine (me included).
    4. No, I don’t think there is such a thing as a free lunch. Maybe we aren’t the ones who are paying but somewhere someone is. If I was to get a free coffee from Starbucks, that’s costing the Starbucks corporation. When City Diner and Johnny Moo, they offered free milkshakes and burgers. That again costs the restaurants money. The only reason they offer you anything “free” is because they are attempting to create a new group of regular customers. People do anything if the word “free” is in involved, and that is how you make a great first impression.
    5. Rendezvous in my opinion has it all. Although Johnny Moo has the milkshakes, Rendezvous quickly came back with the infamous pearl ice tea which I am willing to put money on raked in more money than the shakes did as they were cheaper to obtain and therefore cheaper to sell. Plus they have a regular group of customers and more food for your money than Johnny moo. I don’t think Rende will receive much competition from Starbucks, as Starbucks is mainly a coffee joint versus Rende being more like a family restaurant.

16. # Jun Hyuk Kimon 18 Aug 2007 at 6:01 pm

    1. The SAS community is the main economic force that brought Starbucks to Zhudi, since there are a number of students and teachers who can afford and are willing to buy Starbucks coffee.

    2. Like most fastfood/coffee shops, Starbucks provide “fastfood” that can be provided to customers in a short amount of time. Also, Starbucks creates a comfortable space for customers to have conversations in, as a way of service.

    3. Quite unlikely, because despite the increase in price, the close distance of the Starbucks from SAS will certainly entice many students and teachers in SAS to go there.

    4. No. As we learned in class, there is a opportunity cost for every actions, even for “free” deals.

    5. I think the appearance of Starbucks in Zhudi will produce some positive effects on the Rendezvous restaurant, too, because with the competition going on, the Rendezvous restaurant will most likely try their best to improve its quality in order to win competition. And by this mean, there is no reason why the Rendezvous can’t survive the competition.

17. # Seong Da Eun (Jill)on 18 Aug 2007 at 8:21 pm

    1.One of the major economic forces that has brought Starbucks to Zhudi is the increasing demand for its good and services that it provides through coffee and snacks. This increasing demand mainly occurs through two determinants in this case, which are the number of buyers and income.

    An increase in the number of buyers in a market increases the demand, and larger the demand, the larger marginal benefit Starbucks would make. In Zhudi, this number has shown a sharp increase significantly after many foreign/international schools shifted into the area, including the Shanghai Korean School and the Shanghai Singapore International School last year, bringing even more potential Starbucks customers alongside with Shanghai American School; a large (in fact the largest) contributor to the number of buyers for it is the largest international school in Shanghai. Moreover, the existence of many schools in the Zhudi has encouraged more people to reside in the area who may also go to Starbucks.

    Another factor is the income. The customers Starbucks will have in the Zhudi area are mostly people with satisfactory standard of living with reasonable amount of family income, as the population mainly consist of students and teachers studying and working in costly international schools. This nature of the customer group indicates that most of them can, despite its relatively expensive products, afford Starbucks.

    2.Fast food/ coffee restaurants oligopolistic market structure, meaning that their industry is dominated by a small number of large sellers. Thus, to survive under such a structure is almost completely based on the brand name and the effectiveness in its marketing, together with the quality of the goods and services the fast food/ coffee restaurants can provide. Starbucks, for example, sells products independent of their primarily services (coffee/snacks) such as mugs and bottles, organized “AIDS Walk for Life” to improve on its brand image, and has even teamed up with XM, Dave Matthews Band last month for an event to win free concert tickets. Fast food/ coffee restaurants in such ways try to constantly publicize and improve on its brand image for their customers to remember and visit them. In terms of improving on the services, Rendezvous café is a good example; as stated in the article above, it has came up with new menus that would attract the customers, making them revisit the place to increase their utility.

    3.Yes, an increase in price of Starbucks coffee drinks will affect people’s decision to buy them in most places though the extent may vary, as under the Law of Demand, the quantity demanded falls as price rises. The extent to how much this quantity demanded will change is dependent on the location of the Starbucks store; if located at a place where there are many people who can afford coffees of such high prices, or at a place with less of other coffee shops that may give customers a wider range of choice to choose their coffee from, the increase in Starbucks coffee prices will not affect people’s decision to buy coffee from Starbucks to a big extent, and vice versa.

    4.No, there isn’t really such thing as a “free lunch” in this world, because resources – are always required to produce goods and services, whether they are inputs of land, equipment, labor, technology, or managerial talent. Since these resources that are used could actually be used in other production activities, those resources as well a other goods and services that could have been produced are sacrificed. This means that a “free lunch” does not exist; while one side may not have lost anything, another side has to sacrifice something to make it happen.

    5.I feel that Rendezvous café will more likely survive. Although Starbucks may be more well-known and attract many of its customers, there would be loyal customers who would still purchase goods in Rendezvous café. Also, since Rendezvous café does not only sell coffees but also meals, people will still go there for meals as it is not something that Starbucks offers. Also, in contrast to Starbucks, Rendezvous café offers coffee at lower price levels that can be an advantage in attracting customers who do not necessarily have to consume a particular brand’s coffees. For such reasons, Rendezvous café would have to be more careful of the Johnny Moos, because depending solely on loyal customers will not guarantee a success. However, because Rendezvous café is currently trying its best to retain its customers through updating the restaurant’s appearances and so on, and because it had a head start to be recognized amongst the customers in the area, I feel that it will survive.

18. # Andrew Changon 18 Aug 2007 at 11:28 pm

    1. Err, does this have to do with marginal benefit exceeding marginal cost?
    Because Starbucks probably opened a new shop here believing that the profit this shop will earn for them will exceed the cost it takes to build and maintain this shop, I think so, yeah. Instead of not opening a new shop, Starbucks made the choice to open a new shop…
    But then I also agree to others before me who answered with the word “demand”, because it makes sense that with more demands for coffee, Starbucks will open more shops near where the demands are coming from. But I don’t know too much about demands yet, so I’m really just guessing here.
    At least that’s what I got from reading the textbook…
    Oh, and I have no clue what to graph for this question.

    2. Jee, what’s a market structure?
    Judging from the comments posted above, it seems like advertisement is a big part of this thing. But I don’t know and I’m not sure yet. I think making good products, like delicious coffee and cakes, is also a big part of competition between these restaurants.

    3. Yes. Because money is scarce and there’s a limit to which we can spend to get our coffee.
    Is that right?
    Anyhow, according to the textbook, there’s a point where marginal cost meets marginal benefit called “at the margin”. Spending more than the marginal cost will not get us more benifit, and a rise in price of coffee drinks will mean a rise in marginal cost for the coffee consumers. So for individuals who couldn’t afford to spend too much money because of the scarcity of their money, a rise in price will mean that they’ll be spending too much money for the same amount of benefit, and they may choose to not make the payoff for the benifit, meaning that they will decide to buy Starbucks coffee less often now.
    Hey wow, do I sound like an economist?

    4. No. Because the textbook says so many many times.
    To be more specific, there’s this thing called the “opportunity cost” that is spent everytime the society gains something. Gaining one thing will mean that the opportunity for gaining something else is lost, and so a cost exist right there by the gain. For example, you can gain a car if you win the lottery, but you would have spend some dollars buying the lottery ticket, so there’s your cost. No wait, on second thought, the material, labor, tools and skills used in making that car can be used to made, say, a better car. Okay, make that a rocket. And so the “opportunity” of you, or the society, gaining that rocket is now lost. It was spent to build the car. Besides cars and rockets, this process works for just about everything. Seriously, try it if you don’t believe me. And so since the opportunity cost is always there, there is no “free lunch” in this world. How sad.

    5. Err, I’ve never been to the Rendezvous place before, so I guess I wouldn’t be able to make an accurate prediction. I certainly hope that the restaurant wouldn’t be crushed by Starbucks, because the restaurant owners sounded like some really nice people and they will need to find other jobs if their restaurant is closed down.

19. # Teemar Ratanasirigulchaion 19 Aug 2007 at 11:45 am

    Although my sister believes that the “dark forces” have brought Starbucks to Zhudi, it is more likely the international community gathering in the area which affected the Starbucks decision. Considering the various international schools in the area, such as Shanghai American School, BISS, the Singapore School, and the French and German School, there would be an abundance in customers. Because the foreigners mostly have the power of buying, Starbucks strategically located in the zhudi area. In addition, there is a potiential growth for the company and profit. The Shanghai community is rapidly growing, as Zhudi will become a communications hub, with an expansion of the subway system, trains, et cetera. Furthermore, the rent for the Starbucks Restaurant is cheaper than downtown.

    As many have stated before, Starbucks, similar to other fastfood/coffee shops, create a brand name. Especially in China, these fast food restaurants advertise an upper-class image, to attract customers. Starbucks chooses opportune locations, mostly in busy areas. As can be seen, the Starbucks in Shanghai are the meeting locations of both teenagers and working people. Fast food restaurants and coffee restaurants also sell convenient, simple products for expensive prices. In addition, their quality control is very consistent. Plus, the consumers eventually become addicted to the product, especially with Starbucks coffee.

    With regards to the price increase, Starbucks may lose some customers. However, many of the customers would most likely not notice the price increase. Looking at the target audience, most Starbucks consumers are teenagers, who have an endless supply of money from their parents. Thus, the teenagers would continue to buy the product. In addition, the caffine in the coffee creates a coffee addiction, causing the customers to continuously buy the product. For convenience, the customers would also prefer to buy pre-made, quality controlled coffee, rather than to make his or her own.

    As for “free lunches,” they do not exist. “Free lunches” are used as a promotional tool by the marketing team of a certain brand. Most of the time, the price that would have been paid for the “free lunch” would be included in the price that is paid. Even in Starbucks, the customers pay for the atmosphere that the restaurant gives. The resources used for the product are also used, thus technically putting a cost on the product.

    Although I am a rare customer to Rendezvous, I believe that the restaurant can survive. It has been in Zhudi for a while, earning it many loyal customers. In addition, the two restaurants can arguably be selling different products. While Starbucks sells mainly coffee, Rendezvous sells its meals. The latter is a family restaurant, while the prior is a hang out place. Johnny Moo’s, on the other hand, is possibly the bigger threat. However, it can be observed that loyalty remains with Rendezvous.

    Starbucks has an extremely high profit margin. It is said: “Sell a cup, drink a cup, throw away a cup, and it still makes money.” It will continue as a brand name, and as far as I can see, everyone seems to love Starbucks.

20. # Teemar Ratanasirigulchaion 19 Aug 2007 at 12:03 pm

    As an after thought to the above message, Starbucks may have also chosen Zhudi in order to fill ther quota of stores they must open each year. Thus, choosing Zhudi as one of their sites.

21. # ElaineLungon 19 Aug 2007 at 12:54 pm

    1. Well, I can’t really make a graph to answer this question given the one class of experience I’ve had with econ, but I can take a shot at the other part of the question! Even with a limited knowledge of economics, it is apparent that high demand for what Starbucks offers – that is, coffee and lovely little calorie packed pastries – brought them over, in conjunction with the large potential consumer base: all of us loaded kids and expats that live in Zhudi.
    2 Market structure? I’m not terribly sure, but I can say that Starbucks is no different from the other fast food/coffee joints that spend big bucks on advertisement and really make a name for themselves. You often see advertisement wars, so to speak, between big names, e.g. the public taste tests between soft drink brands.
    3. The annoying thing about living in Shanghai is that even if we’re irked by the price of Starbucks, we don’t really have anywhere else to go. In the US and in many other countries, you have a plethora of other nice coffee shops: small local places, Peet’s Coffee, etc. Although rising prices would affect people’s decision to buy from Starbucks, it’s to a limited extent thanks to its big name and pretty solid base of customers, mostly rich expats who won’t care/notice a few kuai difference in the cost of their favorite drink.
    4. No, there isn’t such a thing as a “free lunch.” Even if, for instance, Starbucks decides to give out free tiramisu, it’s in the hopes that we’ll continue to buy from Starbucks – essentially the reciprocity norm in psychology. Additionally, there are still resources used on the part of Starbucks to create that tiramisu, so a cost exists for Starbucks.
    5. Rendezvous Café might suffer a bit in coffee sales, but people generally go there for food and meals, not beverages. Besides, where else can you get the awesome chicken strips, besides Johnny Moo’s (which Rendezvous should worry about more, what with their yummy curly fries..) In any case, they have many loyal customers who would continue going even if there’s a new swanky coffee place down the street; I’d predict that most people would just go to Rendezvous for lunch and Starbucks for a frapp.

22. # Nicoon 19 Aug 2007 at 1:40 pm

    1. Starbux came to Zhudi for one main reason, cause Zhudi is expanding. Every shop obviously wants to make money and money is made where the most people are to buy their goods. With the new train staition being build and the government putting a lot of money into expanding Zhudi, shops such as Starbux move in. Why? To earn cash. It is obvious that the area around Zhudi is becoming an area full of western people. With 5 western schools and plenty of new houses being build, a new city is evolving. Thus, bringing shops such as starbux in. The people are demanding more, and now new shops have come to supply.

    2.Fastfood and coffee shops have one market structure, selling cause their amazing brand names. They rely on huge advertisements on selling their products. It’s like mcdonalds, you see that big M and you know what it is. The team that advertises the most, wins. They also compete with eachother by opening up more shops/restaurants as starbux has here in zhudi. These two crucial points help raise or fall the sales of these restaurants.

    3. Sadly no. We will continue to go to these places even if the prices have raised simply because we crave for these drinks and ignore the prices. Yes we will complain from time to time but we have already gotten use to the fact that prices dont matter much anymore.

    4.No, there is no such thing. The case where a child walks in and gets a free present is just a trick to get their parents to like the shop and buy more goods. Yes a gift is given for free at first, but it is repayed when more good/drinks are bought.

    5. Yes, rendevous can survive. It might be tough with surely more competition coming in but if rendevous really wanted to survive they could. While other shops are raising their prices rendevouz could drop them a little atracting more customers. Rendevous is still a great hangout where many people still like to go. The owner is very liked amougst their customers. I think they have a chance to survive.

23. # davidgolesworthyon 19 Aug 2007 at 1:42 pm

    1. Zhudi Town is populated which a large percentage of expatriates in its surrounding areas. These expatriates are often stereotyped to have much money to dispose of, and also needing coffee in the morning to help cope with their high demand, high stress level working environment. What the Starbucks Organization saw in Zhudi Town, was a safe chance for expansion. Expansion which they could make their profit margins, and also increase their international brand name awareness. As Starbucks is already famous throughout most of the western world, increasing its brand name with the local Chinese is a must do for them, as not only do product bring in money, brand name awareness goes a long way as well. So, I therefore think, that Starbucks are in Zhudi for two reasons.
    1a. They saw an easy and safe place to expand because of the high percentage of expatriates living there, and there “need for coffee”
    2a. To increase their brand names presence with the local Chinese.

    2. Oligopoly: The market condition that exists when there are few sellers, as a result of which they can greatly influence price and other market factors.
    (For those who were wondering what it was, just as I did)

    After reading previous posts, I heard the name oligopoly thrown around quite a lot, and wondered what it was. After a little bit of my trusty friend, Dictionary.com. I came to realize that it meant something very similar to the situation that we have in Zhudi Town. The fact that there are only a handful of restaurant in Zhudi and very little competition for Starbucks, means that if they do start to beat out competition, they can begin to dictate prices, and margins for themselves, rather than having to think about their nearest rivals. Often times, Fast Food chains are forced to look at one another, and drop prices in order to seem like, “the better buy”. However, in this case, Starbucks is not forced to this as much; at least in Zhudi Town.

    3. If Starbucks were to increase their prices upon their drinks, I believe that it would largely depends on the percentage increase in which they did it buy, and whether there was another quick, fast, coffee to get. Although, many may complain about Starbucks, it is really the only place in Zhudi Town, that one may run into, and grab a fast cup of coffee, and walk out, in less than two minutes. Competition in this sense, Starbucks in unmatched, and people will be averse to change their beverage stop because of a slight increase. This is just because we, being lazy, hate inconvenience will be unhappy about changing out daily routine. We would rather pay a little extra and turn a blind eye, rather than going out of our way to find something new. However, for the local market, I feel there will be a much bigger hit. Locals in the surrounding Zhudi Areas are not known for being a wealthier district of shanghai, and therefore, and slight increase in prices for us, will be a massive hit for them. They will have no choice but to relocate their water hole, as they just cannot keep up with Starbucks raising profit margins.

    4. No, there is never such a thing as a free meal. A meal that is given to you, on the house, is just intended to get you to come back for more. The better memories you have of visiting, the more you wish to return. The gift that your children received was just a marketing gesture, to get your kids to pressure you to return to Starbucks again, because of your children’s hopes to receive yet another, freebee. This whole gesture was designed solely, at somehow getting you back into the Starbucks chain.

    5. I personally think that although Starbucks is a huge multi million dollar chain, Rendezvous Café have a much better chance of overcoming the competition than Starbucks do. Rendezvous has been in Zhudi longer, and has already built up a sound reputation among locals and expatriates alike. Starbucks still has yet to prove itself largely to the local community. Also, Rendezvous is local, and Starbucks is multinational. Even though for us foreigners bigger is better, for the locals, this may not be so. They may enjoy and take pride in the fact, that a local Chinese run restaurant, is competing with the likes of a multimillion dollar revolution. Never underestimate the feeling of prides the local may get when they witness what is happening.

24. # bryanbockon 19 Aug 2007 at 3:20 pm

    1. In Zhudi Town, the demand for coffee is very high. SAS and many other compounds surrounds the new Starbucks. Many people doesn’t always mean there is going to be a high demand for coffee, however, for most adults and a fair number of students, coffee is their daily need. As for teachers and students, to be ready for the challenges in school, coffee is essential. Therefore, with high demands from the people in the Zhudi area, Starbucks will gain profit.

    2. Establishing a brand name of their own is a way of making themselves known to customers. In order to compete with other fast food/coffee restaurant, fast and good service is required.

    3. By increasing their price, it may slightly affect the customer’s decision in coming to Starbucks for coffee. The profit, however, balance out the little customers they would lose.

    4. There is no such thing as a “free lunch”. Even if Starbucks decides to give out some souvenirs to every customers to hope that they will come back, it will still cost Starbucks. So in order to get more customers, they sacrificed they money to buy the souvenirs.

    5. Rendezvous Café might lose some of their customers due to the popularity of Starbucks, however, i do not think that Rendezvous Café would survive because compared to Starbucks it is more of a restaurant than a cafe. It still has food that Starbucks doesn’t have.

25. # Jeth Leongon 19 Aug 2007 at 3:23 pm

    1. Starbucks is still too expensive for most chinese people, so most Starbucks are opened where a lot of foreigners reside. Starbucks was opened in Zhudi because many students here know Starbucks well so the company is exploiting their popularity in the area by opening a store here.
    2.Many companies establish a brand name worldwide. Everyone in our school knows starbucks and mcdonalds. For fast food its all about convenience, getting the food as fast as possible. For coffee joints, its all about necessity, you need coffee to stay awake etc.
    3.No it will change their decision. First theres craving, lots of people like coffee, secondly, most of the people are so loaded/rich that 0.60 USD is nothing to them.
    4.Anything free comes with strings attached. Mcdonalds bundles free gift with happy meal but you still have to pay. Even if someone pays for your lunch, you technically lose money cuz you wasted time eating lunch instead of working.
    5.Yes it will survive. Rendezvous has sort of a brand name established in the zhudi area. Additionally, they are competing in different markets, Rendezvous more american burgers, Starsbucks more coffee and baked goods. You wouldnt go to Starbucks if you wanted a burger, and you wouldnt want to go to Rendezvous just to get a coffee.

26. # Anna Grauerson 19 Aug 2007 at 4:09 pm

    1. As the area of Zhudi is expanding and more and more foreigners (many of whom are willing to pay more than 25 rmb for a latte) are settling down there, Starbucks saw the potential and its opportunity to make more money from this growing clientele. The area was also alluring because of the prices for rent and possibly staff; considerably lower than at prime addresses downtown.

    2. Normally they spend a lot of money on advertising to get customers to choose their products instead of their competing equivalents. They build their brands to stand out and to attract customers.

    Franchising is also very common, e.g. for fast food restaurants such as McDonalds. Centrally, they have put in a lot of effort and money to become a familiar brand to all consumers and the offer a “concept package” to the local businessman: nowadays you do not have to look for long to find a big, shining, yellow “M” downtown and immediately connect it to the food McDonalds offers. However, it is the local businessman, the franchisee, who takes the risk of failure of the particular, local, restaurant.

    3. No, at least not in the Zhudi area where Starbucks offers coffee and tea drinks you cannot find elsewhere. In the city it could be different but I believe that if you normally pay 25-35 RMB for a cup of coffee, then a few extra RMB will not matter. Also, a higher price may attract customers because they think they buy a more exclusive product. There is also a certain amount of loyalty among customers to stick to the brand they have first decided they like.

    4. No, there is not. Even if you don’t have to pay for the lunch someone else will, normally producers or manufacturers. And they will seek to get their money back somehow. A result of the free lunch is probably that you will visit the place again and then by paying (over price) for your food, the company will get back its money.

    5. Difficult question. I tend to believe so because Rendezvous has many different meals to offer which Starbucks does not and also I believe Rendezvous may already have built its own, loyal, customer base. The question is really how many of Rendezvous’ customers have chosen that restaurant because there was not a Starbucks close by and how Rendezvous will act now that it has competition. It may to choose to increase its offerings compared to Starbuck’s menue.

27. # Mondon 19 Aug 2007 at 4:45 pm

    The main force is profit. Think about it, in Zhudi town there are several international schools. This means there are many foreigners and students living around that area, which translates into a high demand for Starbucks coffee. These groups are all potential customers, as they are willing to spend money on coffee. I’m not quite sure how to graph this though, perhaps a supply versus demand graph?

    They establish a well recognized and well known brand that is distinguished from the rest of the competition. They are also convenient and accessible. They compete with each other through their food products, environment, pricing, promotions, and advertisement.

    No, because most Starbucks’ coffee addicts are willing to spend an extra 5 kuai for a good cup of coffee. There is a high demand for it, and 5 kuai is not enough to make customers buy another brand of coffee.

    Most “free lunches” might be given if you purchase a certain amount of things or it requires you to buy another product. Even if it is offered to you free with no-strings attached, it is just a marketing technique to make you buy their products in the future. However, as we learned in the AP econ book, these free products are “never free to society.”

    Yes, because they offer different items and are targeted towards different markets. Starbucks is more of a “hangout” place for people to relax and chat around with friends. Rendezvous is a family restaurant and offers meals not just desserts, snacks and drinks.

28. # Jameson 19 Aug 2007 at 11:43 pm

    1. The increase in demand for for coffee in zhudi, and the fact that the number of consumers in the market is continuously decreasing. Another factor is that caffiene is addicting, and as SAS is around the corner, if Starbucks can get younger people addicted to their coffee, they can gain more long term customers.

    2. Fast food resturants and/or cafes have an oligopoly. They compete with each other through advertising, as said above numerous times, and through product differenciation; which starbucks does, being a well-known american coffee company that serves imported coffee, and is well advertised.

    3. To some consumers it will, and to some consumers it won’t, it depends how addicted the consumer is!

    4. No, all goods have some cost, monetary or opportunity.

    5. Yes, but they will not sell any coffee!

29. # maxinehytanon 20 Aug 2007 at 10:05 am

    1. considering the fact that there is a growing expat community in this area, starbucks would make a lot of money to open a branch here. Once open, teachers and students will definately go to starbucks for a coffee.

    2. They are usually based on advertising and opening many different branches all over the place. this would allow people to get to know the brand and thus, eventually pick this “popular” brand, that they have seen everywhere, over something that they have never seen before

    3. I do not think so. Most people who already pay for a starbucks would prolly not think much of a price increase. Star bucks was not cheap in the first place and thus, those costumers who think starbucks in expensive would not have gone there in the first place.

    4. No there isn’t. This is because people and companies sacrifice something for a greater benefit in another area. For example, if you really want friends, you would sacrifice some money to buy then lunch and then they would be your friends. Thus, both people benefit.

    5. It probably will. This is due to the fact that some people think that starbucks is not worth the money. These people would gladly hang out at the Rendezvous café. In addition, if starbucks gets too full, people would think of Rendezvous café as another hang out option.

30. # serenatuon 21 Aug 2007 at 10:26 pm

    1. There are lots of international schools around the area, which means tons of students and teachers who love coffee, especially Starbucks. Starbucks would make lots of profit once they open the a branch.

    2. Fast food restaurant and coffee shops tend to rely on their brand name to sell their products, they compete mostly by coming up with new ideas and combinations. Most of these stores will spend money on advertising.

    3. I think people will keep going to Starbucks, most of the people won’t mind as long as the price increase is not significant.

    4. I used to think there’s free lunch when other people give me stuff for free. But after the class, i know that there’s no such thing like “free lunch”, everything comes with an opportunity cost.

    5. Yes, because most of us are used to the food, and they have nice services, so i think the Rendezvous cafe will be fine.

31. # Cassy Changon 22 Aug 2007 at 9:12 pm

    What economic forces brought Starbucks to Zhudi? Name them and graph them.
    ~The whole effect is like a rolling snow ball. Since schools and houses have established themselves in town, people become more concentrated in the area. More people equals a bigger market. Starbucks chose to come in because it foresees potential in the market.

    What kind of market structure do fast food/coffee restaurants have? Explain.
    ~Locally, fast food relies on reputation of the quality of food, so does coffee shops. Also, customer-friendly policies attract people.

    How do they compete with each other.
    Will an increase in price of Starbucks coffee drinks affect people’s decision to buy coffee from Starbucks? Why? Why not?
    ~Well, Starbucks technically has a monopoly on coffee, or I should say the only shop that specialize and is known for coffee. So without other prices to compare to, people will most likely be willing to pay a few extra quai.

    Is there really such a thing as a, “free lunch? Explain.
    ~As Ms. Close explained, there is no free lunch. It may be explicitly free for the person getting the free lunch, but somebody else had to pay for it. And there is also an implicit cost of a free lunch, for example the act of repayment.

    Can Rendezvous café survive given its competition?
    ~Personally, I don’t like Rendezvous’s food. But that’s not significant to its survival since quite a few of my friends like it there. I think it will survive just because it’s not competing in the same category with Starbucks. Rendezvous would be for a quick meal, and Starbucks would be for a quite drink or dessert.

32. # Jessica Chiangon 22 Aug 2007 at 9:14 pm

    1. Starbucks chose Zhudi town because it is growing quickly; new DVD stores, restaurants, and supermarkets are moving here. Because Zhudi town is not like Gubei yet, there is little competition for a joint such as Starbucks. Also, there is a steady flow of customers who are SAS students, people who live in Forest Manor, SRC, Rancho Santa Fe, or even the occassional passerby. These people will go to this Starbucks because it is close and it is convenient.

    2. Fast food restaurants rely on brand name to get customers. There are loyal customers who always go to the same restaurant, and there are customers who go to the restaurant just because they heard that it was famous.

    3. An increase in price will probably cause the amount of money they make monthly decrease, although not by much. They will lose the customers who just buy a cup of coffe to quench their thirst. On the other hand, most people, who are zealous coffee drinkers, will continue to buy their coffee even if the price is raised. Also, people who live near and want to drink coffee will have no choice but to buy their coffee, as they do not have another coffee shop to go to.

    4. There is no such thing as a free lunch. Although it may seem like you’re getting presents or free gifts, it is always at the cost of something. Even if you’re not paying a cost, someone is. In this case, your kids are getting a “free lunch” that Starbucks is paying for. By giving your kids the clay, they will want to go back to Starbucks, which means that you have to buy coffee, which costs about 35 RMB, much more than the cost of the clay.

    5. I think Rendezvous will survive because Starbucks is more of a coffee place while Rendezvous serves burgers and meals. Rendezvous might lose some customers, but not much. The Rendezvous fans will still go to Rendezvous. Also, no matter how many new restaurants open up, so far, Rendezvous is still the only one that sells bubble tea.

33. # Kai Lin Fuon 23 Aug 2007 at 1:39 am

    1)Foreigners are steadily increasing in population in Zhudi Town due to the international schools, especially SAS. Thus, this brings Starbucks and its hopes that business will flourish.
    2)Fast food restaurants and coffee shops rely on good advertising and loyal customers. They use advertisements that appeal to your senses. They give away free merchandise to keep you coming for more.
    3) I don’t think the increase in price will do much damage to their income. However, the number of customers they receive might decrease by a small amount. Those who are loyal, who are addicted to their coffee most likely will continue drinking Starbucks.
    4) There is no such thing as a “free lunch”. Somebody has to pay for that product. The free gift from Starbucks had to be purchased by them to give out for free. It had to be made with ingredience that also had to be obtained and purchased. Time was taken to create the clay.
    5) Rendezvous cafe will survive mostly because of their unique products that Starbucks doesn’t have. It has great food, especially chicken strips and you can only get the same ones there. It is also the one place that sells bubble tea. It has tons of loyal customers and that won’t change because of a mere coffee shop.

34. # Jo Loon 23 Aug 2007 at 9:03 pm

    1． There are many economic factors that brought Starbucks to Zhudi. One is the number of people (expats) that live in the area and have a constant need for good coffee, and what is better than the world’s most famous and best coffee chain? Starting in the morning right before school, just about all of the teachers living in the SRC or in close proximity, and are coffee drinkers will not be able to resist the temptation of getting a cup (besides, most either walk or ride a bike, so it is much harder to resist). During the day, (the owners probably don’t know this) but a lot of seniors will go out and will usually get a cup of coffee and bring back to school. When the teachers go home for the day, they may get another cup so they can stay up all night just to grade our papers. Other than the fact that the land price in Zhudi is so low, by putting a store right by SAS, the owners have set themselves up perfectly to gain a ton of profit.
    2． The market structure of fast food/coffee restaurants are very similar. The reason why they are the easiest of the food restaurants to make profits is because of the “fast food” label they have. They are able to take the order, make it, and then give it to the customer very quickly. It’s this quickness that makes it possible for some to have a drive-thru where you order your food at a window and pick it up at the next. This is part of the reason why some of the biggest names in the food business includes McDonalds, Burger King, and Starbucks to name a few are international icons all over the world. This ‘fast food’ label, helps many consumers narrow down their choices from the regular restaurants. Because of economics, they also compete with each other. They compete for customers at their location. They do this by constantly adjusting their menu to try to suit the consumers’ needs, tastes, and local trends; and if they have to may lower their prices if they are seriously desperate for customers.
    3． It all depends on how much the price of Starbucks drinks increase. If the increase is a lot, yes, but if it is slight, no. Because a lot of Starbuck’s customers are Western expats, it won’t matter if the price is increased slightly. If I drank coffee and it raised by a price no greater 5 kuai, I probably would still buy Starbucks coffee. The locals would probably think Starbucks would be too expensive anyway so they are out of the picture. If the prices continue to increase, it probably wouldn’t matter anyway because us teens will spend it if we have it. It’ll take a huge increase of the price to force us to back away and look at other options and go back to the school coffee. The people that would be affected the most because of the price increase would be the adults because they typically are more money cautious and are the money earners of the family. A huge increase would only happen over a long period of time so if and when that increase does happen, most of us using this wiki will not be in China.
    4． No, there is no such thing as a free lunch. All of the resources used to make that lunch will have cost something. Because of opportunity cost, any resource used to make that lunch, either capital, consumer, or entrepreneur will have been used at a cost of something else. If that lunch had not been made, the resources used could have been directed to create something else that can be of use to the society. The person getting the free lunch may be happy because he or she did not have to pay a cent, but another person from the group distributing the food may not. Because of scarcity and the limits on the resources on this planet, anything made would have been a sacrifice of something else.
    5． If there are no more new openings, Rendezvous stands a pretty good chance of surviving the competition from Johnny Moo’s and Starbucks. If you ask most people, they would say Rendezvous is a whole lot better than JM. Starbucks and Rendezvous aren’t really in competition because one has coffee while the other has coffee and good food. The only competition Rendezvous receives is from JM. Rendezvous has been at Zhudi for a long time and it is very common to step into the restaurant and see both expats and locals alike. JM, on the other hand has been in operation far shorter than Rendezvous across the street. The food at JM is practically the same as Rendezvous, and people usually don’t want to change unless the new place is a lot better and JM isn’t.

35. # calebliaoon 24 Aug 2007 at 9:30 pm

    I think that Rendezvous Cafe is going to still be standing at the end when all the “chips have fallen.” Starbucks offers snacks, Rendezvous offers a meal. The blow to Rendezvous I feel will be to the sale of its drinks.

    I think that Rendezvous’ move to renovate the Cafe shows that Rendezvous is flexible to the demands of the market. The marginal cost of Rendezvous’ renovation is outweighed by the marginal benefit of gaining customer satisfaction, which in the end, is what will have Rendezvous customers coming back.

36. # calebliaoon 24 Aug 2007 at 9:33 pm

    sorry Guys, I was just commenting and totally ignored the questions. Hahahahaha, just like, disregard what I said before. I don’t even know how to answer this question yet… -_-

37. # kxc.024on 25 Aug 2007 at 12:49 pm

    The company for starbucks probably realized that we – the always hard working high schoolers and teachers – need some kind of coffee boost each morning. Although their coffee may be on the expensive side, we are an American school after all. We spend big money on a lot of things: clothes, food, luxuries. Therefore, they probably were not worried about the prices and the fact that the inhabitants surrounding our school are all local and probably cannot afford Starbucks. They most likely make enough profit just from SAS faculty and students alone. However,
    their choice of increasing the price of Starbucks coffee even more is definitely going to affect how much customers they get. Even if SAS students like to splurge at times, I really doubt that they’re going to be buying lattes that cost over 30 kuai, when Rendezvous right beside it, sells it for a lot less. I think it is because of this that Rendezvous will survive. Their food might not be awesome, but the prices are certainly more reasonable than Johnny Moo’s or Starbucks (not to mention the fact that they’re a bit healthier as well…but just a bit).

38. # julie.linon 25 Aug 2007 at 7:25 pm

    # What economic forces brought Starbucks to Zhudi? Name them and graph them.
    # What kind of market structure do fast food/coffee restaurants have? Explain. How do they compete with each other.
    # Will an increase in price of Starbucks coffee drinks affect people’s decision to buy coffee from Starbucks? Why? Why not?
    # Is there really such a thing as a, “free lunch? Explain.
    # Can Rendezvous café survive given its competition?

    1. Starbucks had become more and more popular among the chinese people in mainland china as the average income rises during the transition and fast-growing stage of China and China’s economics. Starbucks is clearly affordable by students from our school, and everyone who lives in luxurious houses in zhudi. i think it’s pretty smart of them to come into zhudi, since zhudi is not very developed yet.

    2. Fast food and coffee shops basically have pretty similar market structures, since Rendezvous and johnny moo and starbucks are located just around our school, they have to do very careful market researches about what students our age likes, and since its near forest manor and SRC, perhaps what foreigners likes too. they might’ve noticed, students who go to those restaurants are usually, if not always, in a hurry. we only have one or two tops class periods to eat and travel there, serving foods faster should be listed in their
    considerations.

    3. Yes. a 3-5 kuai raise is a lot for a cup of coffee, i wouldnt spend 30 kuai for a cup of latte if i know it used to be 25. especially in countries like china. economically put, marginal cost exceeds marginal benefits/utility. exception for caffeine addicts.

    4. NO! NO FREE LUNCH! SOMEBODY ALWAYS HAS TO PAY FOR IT! haha. this is what i learned in the first ap econ class. NO. NO FREE LUNCH. even if someone else pays for your lunch, there are opportunity costs. the time u spent eating that food is not free. you could be doing something else.

    5. Yes, i like rendezvous, and it is the only restaurant in that area that serves chinese food and “bubble tea” that everyone loves. it has all sorts of discounts, breakfast specials, business lunches…etc. and its opened by Taiwanese. haha. go Taiwan

39. # Chan Min Parkon 26 Aug 2007 at 9:27 pm

    The reason Starbucks decided to come to Zhudi is because they weighed out the marginal cost and marginal benefit, and decided that the marginal benefit exceeded the marginal cost. Although here at Zhudi, there aren’t as many people as Gubei, I believe Starbucks thought that with many schools and students around who can afford a cup of Starbucks, they thought it was good to make a store here.

    What I recently learned in a Korean Academy was that Starbucks is a ‘Masstige’ product. Masstige is the combination of the words “mass” and “prestige product.” Masstige is simply the popularization of prestige products. These people who use the masstige marketing idea know that rich people don’t just buy expensive things, and poor people don’t only buy cheap things. I think Starbucks really fits this masstige product. Starbucks I believe mainly targets people like the students at SAS, and people who fit into a more wealthy population of the world. Starbucks continuously raises their prices, but people continuously buy them. Having a cup of starbucks coffee, I know most people drink it for the taste, but some also probably like that ‘feeling’ of drinking the STARBUCKS coffee. Starbucks has made their products seem very high class. It is a problem in Korea, where some people eat a 10 rmb cup noodle for lunch, but drink a 50 rmb Starbucks coffee. I personally think it is not wise to drink a 50rmb, or even a 30rmb coffee. I don’t think I really explained the masstige product concept well, but other examples could be something like Haagen Dazs. This marketing strategy I think is really sneaky and tricky, but I think it works really well.

    Increase in the price will DEFINATELY influence people’s decision to buy their products. A coffee that was 27rmb before, if it is 30rmb now, people certainly will drink it, but maybe less than before.

    There is no free lunch. Everything has an opportunity cost. The resources used, which could have been used for something else, the energy needed to get that free lunch, and mostly if you are eating a free lunch with Mr.Welker, the cost would be having to see him.

    I really hope Rendezvous Cafe will survive, and I think it will. It offers what Starbucks doesn’t and I think their bubble tea has been a real hit. The 2 for 1 idea, and many other strategies has made me think that it is reasonable and fairly cheaper than other restaurants.

40. # judychenon 27 Aug 2007 at 11:59 am

    i think starbucks has opened in zhudi town because of the people living in that area. many international schools and foreigners, like the caucacians need to go some place near their home for food. and starbucks is quite popular in the states.

    i don’t think the increase of price in the starbucks coffee drink will affect the people’s decision from buying it. if the taste of the coffee is still good and “worth it”, i don’t think people will mind to pay a few cents more.

    yes i do think rendevous can survive in the competition. many people still enojoy it and there’s different types of food in rendevous compared to starbucks. if some people prefer food at a cheaper price, then probably they will choose rendevous instead of starbucks.

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