Starbucks International Expansion

Starbucks International Expansion

International Business Management

I Introduction

In General when international companies consider going into overseas markets they adapt some strategies of entry modes such as licensing franchising joint venture and MA For example Pierre Cardin extended their foreign business through a pure licensing and Mcdonalds was able to become the largest fastfood retailer on earth by taking advantage of its unique franchising strategy Hence the wise mix of entry modes can be regarded as a core factor for multinational enterprises to advance into new outer markets

As you know Starbucks Corporation hereafter Starbucks is the largest coffee retailer in the world It has succeeded in globally by carrying out wise collaborative strategies Therefore in this study Starbucks international performance would be covered at first and it would be followed by further discussions market issues aboutIndian entry and strategic comparison with the competitors The Coffee Bean and Tea Leaf and Hollys Coffee

II Starbucks International Expansion

Since Starbucks established its subsidiaries Starbucks Coffee international in 1995i it has applied to flexible entry strategies licensing and joint venture and whole ownership While it is operating its US stores directly Starbucks is largely running its cafs outside US through joint venture and licensing with local retailers In fiscal year of 2009 it has opened 3439 licensed cafs on earth representing 62 percents of entire stores The main target of international business is Asia and Starbucks has operated 2062 cafsiiRefer to Table1

Besides Starbucks is managing some overseas stores directly by acquiring local coffee retailers In UK Canada and some Asian market such as Thailand and Singapore Starbucks owns 2068 whollyowned cafs which account for 38 percents of entire overseas storesiii

A Why Starbucks prefers direct investment to franchising and licensing

When Starbucks expanded its business outbound Coffee culture has not existed in various countries including Asian nations Therefore it was imperative for Starbucks to spread coffee culture and Starbucks has implemented a marketing strategy called Cultduct1 Hence Starbucks thought that it was more appropriate for Starbucks to have taken advantage of direct investments joint venture and whollyowned companies rather than licensing and franchising so as not only to offer tangible products coffee and cookies but also to deliver a fine coffee culture represented by urban and elegant image Through this strategy Starbucks effectively has managed to control its core competencies such as the high quality coffee the quarterly employee training concerning customer service and store management knowhow

B Motivation of Joint Venture

As mentioned above the main target of Starbucks international is Asia and Starbucks has adapted joint venture as a main method for Asian market although it has entered with licensing in several Asian regions including Middle East and Philippines Refer to table 2

Above all Starbucks could minimize risk of Asian operation by running businesses through joint venture with local retailers At the beginning since Starbucks did not hold both experience and expertise for Asian market it is required for Starbucks to share local companies knowhow and wide domestic networks to stably perform its Asian operation

Moreover Starbucks has properly overcome the cultural gap with Asian nations and carried out the splendid market research To demonstrate local companies were involved in local staffing and analysis of regional customers taste and preference whereas Starbucks took responsibilities for employee training coffee roasting and quality control

Besides Starbucks could release localized products For example it is selling Korean traditional beverages such as Sikhye and Sujungghwa in Insadong caf and offering sorts of Chinese traditional teas like Oriental Beauty Tea and Fancy Black tea in Taiwan

C Motivation of Direct Operat

* If you are the original writer of this essay and no longer wish to have the essay published on the WetPapers website then please email us at wet papers 1 @ gmail dot com for removal request.

© 2018 WetPapers. All rights reserved. Privacy Policy Terms of Service Disclaimer Copyright