Franchising vs Joint Venture: Entry Mode Strategy for Dutch Bros in Australia

Running head: INTERNATIONAL MARKETING
International marketing
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1INTERNATIONAL MARKETING
Franchising over joint venture
It is recommended that Dutch Bros should follow the franchising entry mode strategy
over joint venture due to the reason that Dutch Bros is not having enough brand value and
identity in the Australian region. On the other hand, Dutch Bros is having presence in the
American market but they are no near to other established global brands. Thus, it will be more
effective for them if they go defensive in their international business strategy. One of the major
challenges for Dutch Bros in their international business strategy is not having enough financial
resources (Nijmeijer, Fabbricotti & Huijsman, 2014). In this case, joint venture strategy will not
be fruitful due to the reason that a good amount of investment is required along with the
partnered firm in doing business in Australia. However, on the other hand, in the case of
franchising, major cost will be borne by the franchisee and not by the franchisor (Lee et al.,
2015). Thus, Dutch Bros will incur less cost in doing business in Australia.
It should also be noted that with the help of franchising, Dutch Bros will be able to tap
the local market trend and needs effectively. This is due to the reason that in the case of
franchising, franchisee will be from the local market and they will be more knowledgeable
towards the taste and preference pattern of the local customers (Dant & Grunhagen, 2014). Thus,
the service can be delivered accordingly and customer satisfaction will be at a higher level. It can
be concluded that the major shortcomings of Dutch Bros including their financial shortage and
shortage of global business experience can be mitigated with the help of franchising entry mode.
Another major reason for not opting for joint venture strategy is the failure of Starbucks in the
Australian market by going big. It is reported that in 2000, Starbucks invested huge capital in the
Australian market and opened a good number of stores across the country. However, not
determining the local taste and preference pattern such as offering sweeter coffee than the