Global Expansion Strategies for Businesses

This assignment examines the advantages and disadvantages of international business expansion for organizations. It delves into the strategies used by prominent businesses such as Virgin Australia, Gloria Jeans, Starbucks, and Qatar Airways to successfully navigate global markets. The analysis encompasses factors like market selection, product adaptation, operational excellence, and cultural considerations. Additionally, it explores the impact of innovation on sustaining a competitive edge in the global arena.

Running head: COMPETITIVE STRATEGY
COMPETITIVE STRATEGY
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Executive Summary
In this report the global strategies of four business organizations are analyzed. Two of the
organizations are from airline industry and the other two are from food and beverage industry.
The companies that are chosen for analysis of Target Markets and Mode of Entry are one from
the food and beverage industry which is Starbucks and the other one Qatar Airways is an airline
industry whose target market and mode of entry is analyzed. The global value proposition is
developed for Gloria Jean’s Coffee from the food and beverage industry and for Virgin airlines
of the airline industry.

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Contents
Introduction......................................................................................................................................4
Discussion........................................................................................................................................4
Target markets and Mode of Entry..............................................................................................4
Starbucks (Food and Beverage industry).....................................................................................4
Target markets of Starbucks.....................................................................................................4
Mode of Entry of Starbucks.....................................................................................................5
Qatar Airways (Airline Industry).................................................................................................5
Target Market of Qatar Airways..............................................................................................5
Mode of Entry of Qatar Airways..............................................................................................6
Globalization of Value Proposition..............................................................................................6
Gloria Jean’s Coffees (Food and Beverage industry)..............................................................6
Globalizing the Value Proposition...............................................................................................7
Virgin Airways (Airline Industry)............................................................................................7
Conclusion.......................................................................................................................................7
Bibliography....................................................................................................................................8

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Introduction
The components of a business model are value proposition, market participation, value
chain infrastructure and management model. In today’s era of globalization, business
organizations must in international market. Expanding globally can help business reduce cost,
improve revenue and profitability, gain a huge customer base and take leverage of the modern
technology that makes the world a global village. The Companies which are highly successful
on global markets might have to bear substantial loss initially. Therefore it is of paramount
importance for business to innovate the components of its business model. The strategies of
global market which can be good for one organization might not be good enough for another
organization .Business organizations should focus on innovation, global branding, and
management model and on its supply chain management to succeed in the global market
(Gamble and Thompson 2014).
Discussion
Target markets and Mode of Entry
While selecting the target markets, business organizations should measure the
attractiveness of the market. There are four prime factors which a business organization must
consider for target market selection. These factors are i) Size of the market and rate of growth of
the market ii) Institutional Context of a particular country iii) Competitive environment of a
region and iv) A markets cultural, administrative, economic and geographic (CAGE) distance
from the other markets an organization serves. There are three stages of modes of entry which
are passive response, initial overt entry and established international operation. The entry

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strategies adopted by a country can be exporting, licensing, joint venture, franchising and foreign
direct investment (McGrath 2013).
The Companies chosen for analysis of Target markets and mode of entry are from the
food and beverage industry and airline industry. Starbucks and Virgin Airlines will be analyzed
in this section of the report.
Starbucks (Food and Beverage industry)
Target markets of Starbucks
Starbucks is an American global leading coffee chain which has its headquarters in
Seattle, Washington. The organization is a very successful brand globally and has presence in
around sixty two countries with more than 20,000 stores. Global expansion drives the growth
rate of the leading café chain and the organization had plans to open 500 new stores in China.
Though Starbucks faced huge losses in Australia in the year 2008 and the coffee chain faced stiff
competition from local cafes like Gloria Jeans and Coffee Club in Australia, still the country has
been highly successful and widely accepted by customers in China and Australia. The market
share of Starbucks in home country the United States is around 33 percent. Starbucks opened its
first international store of coffee in Tokyo in the year 1996. While selecting the target markets,
Starbucks earn the respect and trust of global customers and the culture and tradition of the host
country is valued widely while selecting target market (Teeratansirikool et al 2013).
The target market of Starbucks is well defined. Majority of customers of Starbucks are
located in upscale suburban areas and cities. In Australia, Starbucks target tourists visiting
Australia more than local customers and are located inside shopping malls and major tourist
spots in cities like Sydney and Melbourne. In 1995, Starbucks entered in Japan with a Joint

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Venture between Starbucks International and Sazaby League. Seattle Coffee Company was also
acquired by Starbucks in the United Kingdom, Starbucks operate in the Middle East with a
licensing agreement with M.H. Alshaya Co. In China and Taiwan Starbucks has partnered with
H&Q Asia (Rothaermel 2015).
The adults in the age group of 25 to 40 are the major target audience of Starbucks and
this adult population is responsible for around 49 percent of business of Starbucks. The growth
rate of this target market has been demonstrated to be around 3 percent and the target markets of
Starbucks globally are customers with high disposable income and who have focus on the social
welfare. In the global markets Starbucks also target young adults in the age bracket of 18 to 24
years who account for around 40 percentage of the population. This young group of population
in different countries is an attractive target market segment for Starbucks because young adults
are can meet in the café, have fun, write term papers. This target market segment has a growth
rate of 4. 6 percent and Starbucks can gain a huge customer base in this target market through
digital platforms like Facebook, Twitter and Instagram which enable the café to stay connected
with the youth. The target audience of Starbucks also includes teenagers and kids. These
customers in the age bracket of 13 to 17 years also account for 2 percent of the sales of
Starbucks. Starbucks also target consumers who like to experience drinking delicious coffee at
home by selling whole bean coffees and merchandise (Madsen and Walker 2015).
Mode of Entry of Starbucks
Starbucks Café had joint venture with Dreyer’s Grand Ice Cream in 1995, had a strategic
alliance with United Airlines in the year 1995, Starbucks has also given license to Aramark to
operate in industrial sites, universities and colleges in the United States, Starbucks had a
licensing agreement with Kraft Food. Licensing and partnership is the main mode of entry for

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Starbucks and the Company licenses with local company of the host country who has technical
knowledge, Starbucks also entered in Joint Venture with some stores, for example, in South
Korea Starbucks café have a joint venture with Korea Co. , Ltd. Switzerland AG has a joint
venture with Starbucks in Switzerland. In India Starbucks has partnership with Future Group and
PVR cinemas (starbucks.in/ 2017).
Qatar Airways (Airline Industry)
Target Market of Qatar Airways
Qatar Airways is headquartered in Doha and operates via hub and spoke model in 150
international countries in North and South America, Europe, Central and South Asia and Africa.
In the year 2009, Qatar Airways started its operation in Australia and Melbourne. In the year
2016, the Qatar Airways had plan for expansion in China and developed a new European hub at
Luxembourg Airport. Qatar Airways has expansion plan in South America. The target market of
Qatar airways are global customers across the globe with high income who would like to enjoy
premium quality services like good food and comfortable seats and are willing to pay hundreds
of dollars for a flight ticket. These customers generally book business class tickets with the
airline. Qatar Airways also offer economy class tickets for customers who want an affordable
flying experience. The major competitor of Qatar Airways is Emirates and the Company targets
customers who find Emirates expensive. The target market expansion of the airlines in 2017 will
be 26 new destinations across the globe like Brazil, Thailand, San Francisco and many more. The
cargo carrier of the airline delivers freight across 150 key business destinations across the globe
(qatarairways.com/us/en, 2017).

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Mode of Entry of Qatar Airways
Qatar Airways mode of entry in international markets is Joint Venture and partnership.
For instance, India with more than 1.2 billion population is an important international market for
Qatar Airways and the airline has entered into a partnership with Vistara which is a joint venture
of Tata Sons Ltd and Singapore Airlines. Qatar Airways has membership with oneworld global
alliance which was named the best by transport rating organization Skytrax (Johnson et al 2013).
Globalization of Value Proposition
The components of value proposition are product leadership, customer intimacy and
Operational excellence.
Gloria Jean’s Coffees (Food and Beverage industry)
The Gloria Jean’s Coffees is headquartered in New South Wales, Australia. The café
operates in 39 countries across the globe with more than 1000 coffee houses. The Australian
premium brand of café has build global value proposition for customers by offering a wide range
of coffee and hand-crafted snacks for its global customers. The global coffee chain achieves
operational excellence by operating in a franchise mode in most of the global countries across
the globe. The value proposition for product leadership is achieved by the café beans and
capsules, hot drinks, cold drinks and different merchandise like grinders; coffee mugs are
available for customers in the coffee stores. The global value proposition is achieved by Gloria
Jean’s café as the leading coffee chain has collaborated with Rainforest Alliance and certification
by Rainforest Alliance has helped Gloria Jean’s coffees to achieve operational excellence by
developing a supply chain for procurement of best cocoa and coffee. The global value
proposition of Gloria Jean’s Coffees focuses on creating value for its stakeholders by investing in
sustainability efforts and corporate social responsibility for the members of the community. The

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Café continuously innovate its business process to serve global customers delightfully. The
tagline of Gloria Jean’s Changing Life One Sip at a time and With Heart campaigns focus on
CSR responsibilities of the café and thus indirectly the Company enhances Customer Perceived
Value. The coffee stores of Gloria Jean’s are a perfect place for relaxation and rejuvenation for
customers who can enjoy an amazing ambience with a sip of gourmet coffee (gloriajeans.com
2017).
Globalizing the Value Proposition
Virgin Airways (Airline Industry)
Virgin airways operate as Virgin Atlantic, Virgin Australia and Virgin America. The
Virgin airways develop a global value proposition by innovation of its business process
continuously to provide excellent in-flight experience and delightful experience for its customers
at the airport. The value proposition for global customers include delightful experience offered
by members of cabin crew like ground staffs of the airlines helps customers to check-in using
self-check in kiosks. The airlines provide comfortable lounge services for customers at the
airport. A special menu is offered to business class customers of Virgin Airways. There are
tangible components like comfortable seats with extra leg space, in-flight entertainment system.
The airlines achieve operational excellence by ensuring safety to customers and maintaining
punctuality during flight operation. Virgin Australia serve 52 destinations across the globe,
Virgin Atlantic serves 29 destinations and Virgin America serves around 24 destinations. The
product leadership is obtained by the brand under the visionary leadership of co-founder Richard
Branson with youngest fleets in the sky from Boeing and Airbus aircrafts which have huge
capacity and are equipped with modern technology. The values of the culture of a country are

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incorporated and feedbacks from customers are taken regularly to achieve operational excellence
and develop a global value proposition (virginaustralia.com/au/en/ 2017).
Conclusion
It can be concluded that global expansion can be beneficial for business in multiple ways.
However there are potential risks of entering in a global market. The target market should be
carefully selected by a business organization in the global market and organizations should focus
on innovation of its business model to sustain in the global market. Few business organizations
can enter all markets open to them. However business organizations must measure the
attractiveness of the target market before entering the market. Time and substantial resources are
required for organizations to develop into a reputed global organization.

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Bibliography
Gamble, J.E. and Thompson Jr, A.A., 2014. Essentials of strategic management. Irwin Mcgraw-
Hill.
gloriajeans.com/. 2017. Food and Beverage Industry. [online] Available at:
https://www.gloriajeans.com/ [Accessed 4 Oct. 2017].
Johnson, G., Whittington, R., Scholes, K., Angwin, D. and Regnér, P., 2013. Exploring strategy
text & cases (Vol. 10). Pearson.
Madsen, T.L. and Walker, G., 2015. Modern competitive strategy. McGraw Hill.
McGrath, R.G., 2013. The end of competitive advantage: How to keep your strategy moving as
fast as your business. Harvard Business Review Press.
qatarairways.com/us/en. 2017. Airline Industry. [online] Available at:
http://www.qatarairways.com/us/en/homepage.page [Accessed 4 Oct. 2017].
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
starbucks.in/. 2017. Food and Beverage Industry. [online] Available at: http://www.starbucks.in/
[Accessed 4 Oct. 2017].
Teeratansirikool, L., Siengthai, S., Badir, Y. and Charoenngam, C., 2013. Competitive strategies
and firm performance: the mediating role of performance measurement. International Journal of
Productivity and Performance Management, 62(2), pp.168-184.

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virginaustralia.com/au/en/. 2017. Airline Industry. [online] Available at:
https://www.virginaustralia.com/au/en/ [Accessed 4 Oct. 2017].