International Marketing: A Case Study of Starbucks

This report focuses on the important aspect of International marketing. It provides an opportunity to upgrade the knowledge based on the given title. Additionally, it offers a chance to enhance the learning by practically applying the international marketing concept on a real life company.

RUNNING HEAD: STARBUCKS
INTERNATIONAL MARKETING

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Contents
Introduction................................................................................................................................2
PESTLE Analysis.......................................................................................................................2
Contribution in world economy.................................................................................................3
Product life cycle theory............................................................................................................5
Entry mode.................................................................................................................................5
Benefits......................................................................................................................................6
Challenges..................................................................................................................................6
Use of theory and data to identify future research direction......................................................6
Global local branding.................................................................................................................7
Case of Pacific Asia...................................................................................................................7
Conclusion..................................................................................................................................8
Bibliography...............................................................................................................................9
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Introduction
The research report is prepared on the title ‘International marketing’.
The International Marketing is the application of marketing principles to satisfy the varied
needs and wants of different people residing across the national borders (Czinkota, 2013).
The task one of the report focuses on the variances based on business environment with
respect to Starbucks. It involves the use of PESTLE analysis for analysing the differences
between USA and New Zealand. It includes the role of international marketing and Starbucks
to the world economy. The task two emphasizes on the implementation of foreign direct
investment theory to Starbucks. It also comprise of challenges and benefits of mode of entry
chosen by Starbucks in the internal environment. The third task involves critical analysis of
international marketing trends based on given article. The last task of report is also based on a
given article. It comprises of evaluation of two emerging marketing opportunities in Asia
Pacific region befitting Starbucks.
The key purpose of the report is to focus on the important aspect of International
marketing. It provides an opportunity to upgrade the knowledge based on the given title.
Additionally, it offers a chance to enhance the learning by practically applying the
international marketing concept on a real life company.
Task 1
PESTLE Analysis
Political factor: It includes elements such as tax rate, labour laws, and government
policies. As per the research, the ‘Corporate Tax Rate’ in USA and New Zealand counts to
21% and 28% (Heritage , 2019). Thus, it suggests that USA offer less tax burden on
Starbucks. Hence, USA offers healthier political environment to Starbucks.
Economic factor: It focuses on monetary aspect of a country. It includes elements
such as GDP rate, Per capita income, Unemployment rate, and Inflation rate. In USA, the per
capita income is marked at $59,501. The unemployment and inflation rate is 4.4% and 2.1%.
Its GDP counts to $19.4 trillion with a growth rate of 2.3% (Heritage , 2019). In the case of
New Zealand, the per capita income is $38,943. Its unemployment rate is 4.9%. Additionally,
its GDP and inflation rate is marked at $188.6 billion and 1.9% (Heritage , 2019). Thus, it
states that both the countries offer fine economic environment to Starbucks.
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Social factor: It relies on aspect such as economic status, religious belief, and
customs. After considering economic status of the population of US and New Zealand, it is
analysed that American attains higher economic status than New Zealanders. As mentioned
above, the average income (Per capita income) earned by an American is higher than that
earned by a New Zealander.
Technological factor: As per the global technology index, USA attains the third rank
for attaining leading technological and innovation capabilities (Florida , 2019). It is assessed
that that New Zealand attains fine technology (Strang , 2017). Thus, it clearly states that USA
offers better technological environment to Starbucks.
Legal factor: It includes elements such as ‘health and safety, product safety and trade
freedom’. The government of USA safeguards the property rights but its protection is uneven.
USA counts to ’86.6’ whereas New Zealand’s government offers a trade freedom of ‘92.4’.
The latter lay prior attention in protecting the property rights of the business. Thus, it states
that New Zealand offers secure and fine legal environment in contrast to USA (Heritage ,
2019).
Environmental factor: It includes factors that affect the natural environment of a
country. Based on natural resources, USA offers more natural resources than New Zealand
(Nationmaster , 2019).
Contribution in world economy
It is examined that International marketing has highly contributed towards the
betterment of global economy.
1. More employment opportunities: The international marketing of products/services has
attracted the customers towards the foreign brand. It has developed subsequent
demand among them. In order to fulfil the customer demand, it develops the need of
availability of product in the international country market. It assists the international
brand to make an entry in the international business environment. To render the
product/service to the customers, it directly generates the availability of more jobs. To
fulfil these job positions, human resource of a country is hired. Thus, it ultimately
gave rise to more employment within the country. Hence, better employment status
contributes to country’s overall income. Thus, fine economy of a country contributes
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the betterment of world economy (Jorgenson, Fukao, & Timmer, 2016). This can be
understood from the example given below:
Example: Starbucks has around 22 coffee outlets in New Zealand (Dobush , 2018).
Similarly, it has 3684 outlets in China, 1542 coffee shops in Canada and in many
other countries (Lellen , 2019). Thus, it has around thousands of coffee shops in
international market. Hence, to develop more profit, Starbucks has contributed in
developing employment opportunities. Thus, it has indirectly benefitted the global
economy.
2. Better flow of finance: Through international business, both the countries benefit each
other with some form or the other. International marketing gave rise to international
business transactions. It results in healthy flow of finance from one country to
another. It benefits the global economy by improving national income of a country
(Jorgenson, Fukao, & Timmer, 2016).
Example: Starbucks also renders its coffee services in New Zealand. Thus, it will
benefit in improving the national income of USA and New Zealand. USA will be
befitted as Starbucks is its domestic company and it is generating financial returns
from New Zealand market. Similarly, New Zealand will also be befitted, as it will
gain tax from Starbucks on its earnings.
3. Integrity: World economy is formed by various countries. Thus, international
marketing has resulted in more international business transactions. Thus, it has
improved the political relation between the countries. Hence, healthy relation among
the countries has contributed to the global economy. Thus, international business has
developed integrity among the countries that forms an active part of world economy
(Jorgenson, Fukao, & Timmer, 2016). This can be understood from the example given
below:
Example: As mentioned above, Starbucks has its stores in 78 countries. Through its
international trade practices, it has developed positive business relation between USA
and these 78 countries (Lellen , 2019). Thus, it sets a fine example of developing
integrity among the countries.
Task 2
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Product life cycle theory
It is an economic concept that focuses on various stages that a product passes through.
Similarly, Starbucks coffee has also experienced the product life cycle theory. It has passed
the two initial stages of introduction and growth. At presents, it attains a position in the roots
of maturity stage . This can also be explained from the points mentioned below:
1. Introduction: It is the initial stage when the product is launched in the market. At this
stage, Starbucks has launched few products like Frozen Yogurt and Coffee. It has
stores only in few international countries including China and Singapore. At this
stage, it has acknowledged low sales due to less familiarity of individuals with the
Starbucks (Stark, 2011).
2. Growth: At this stage, Starbucks has experienced high sales from the local as well as
the international market. Its growth stage has initiated from 2015 to 2018 (Whitten ,
2019). During this period, Starbucks has focused to enhance its market share by
developing coffee outlets in more countries. It has opened its stores in countries like
Mexico, Malaysia, and Dubai (Lellen , 2019). Despite opening stores in newer
market, it has also enhanced its number of outlets in existing market as well.
However, it has also faced high competition from its rivals including Cafe Coffee Day
and Dunkin Donuts (Owler, 2019). Additionally, it has also opted for diversification
in its products. It has started offering specific fast food products like cakes and
brownies.
3. Maturity: Starbucks has enhanced the use of promotion techniques to foster the
demand for its products. However, it is experiencing maturity stage in USA and China
(Bowman , 2019).
4. Decline: It has faced decline stage in Australia. Therefore, it hardly has any coffee
store in Australia (Turner, 2018).
Entry mode
In order to make an international entry, Starbucks has opted for partnership. It has
developed a set of criteria to choose its partners in international market. It focuses on
business organizations that attain similar ideas and value about corporate sector. It
emphasizes on experienced companies in the field of multi restaurant business. It has looked
for partners that can provide assistance in financial resources, knowledge in retail sector and
has availability of high workers (Austin, 2012).
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Benefits
A partnership provides high number of benefits while making an entry in international
market. It partnership provide the advantage of ‘Low start-up cost’. It also offers availability
of higher capital. This is because both the partners invest in business that ultimately reduces
the start-up cost by each partner (Forbes, 2016). Besides financial assistance, it also offers
high degree of assistance and reliance that is needed while conducting business overseas.
Further, it reduces the high risk of failure, as it is divided among the partner. It also gave rise
to ‘High borrowing capacity’. Thus, its high benefits have influenced the Starbucks to opt for
Partnership while making entry in international market (Bester, 2010).
Challenges
One of the major challenges of partnership is the risk of disparity and disagreement.
This can effect and disturb the whole business process. Thus, lack of harmony can result in
mismanagement and dishonest dealings. Any action or wrong move performed by other
partners will be bear by each other (Akalp, 2016). This is because; each partner is liable for
the actions performed by their partners. Moreover, one cannot transfer his/her interest as per
the will. Therefore, it develops the challenge of convincing each partner for sharing interest
to the third party. Hence, despite having benefits, partnership also lacks with some points
(Bester, 2010).
Task 3
It focuses on various international marketing trends that can influence the Starbucks
and its business performance. As per the knowledge, these are mentioned below:
Use of theory and data to identify future research direction
In order to gain essential information about the business and its marketing, required
data of theory is used to gain knowledge about the future direction. Various methods and
tools provide key information about the customer, possible sale, market demand, and
potential risk. Almost every business organization avail the use of its past data to achieve a
specific response. Similarly, Demand forecasting is a marketing concept that involves the use
of historic data to gain effective information about the future possible demand. Its usage
guide the organization as in which quantity, it should produce goods to meet the future
possible demand. This provides multiple benefits to Starbucks Its right implementation will
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assist the brand in reducing the waste. Further, it will help in meeting all the possible
demand. Thus, theory and data can be used for diverse business purposes, it will provide
essential guide to Starbucks in the competitive world (Suganthi, 2012).
Global local branding
It has become a trend to develop effective branding both locally and globally. It
involves creation of name, symbol, and design by the business organization. The main
purpose of developing branding is to be easily identifiable. It is one of the marketing
practices that is highly adopted by reputed companies to gain customers engagement.
However, it should be developed by considering the key theme of the business as the
branding must relate to the business practice. A high preference is given to branding because
it has a major effect on the mind of the customers. It is a powerful concept as it can discover
a lot about the person economic status and psychological thinking. It is examined that
Starbucks has also adopted the use of branding to attract its customers. It has used its
branding over its carry bags, coffee mugs and in packaging materials. It has developed the
use of branding to provide an identity to the brand (Dinnie, 2015).
It is analyzed that Starbucks is perceived as a part of lifestyle. Thus, any customer
perceived to have any product with Starbucks branding, he/she is perceived as attaining a
high lifestyle. Thus, it has a fine influence on the Starbucks sales. Its benefits have compelled
the Starbucks to alter its branding over four times. It has introduced new colours and design
in its branding. It is identified that Starbucks branding has a major role in contributing to its
overall success. Thus, it is evaluated that strong branding are self-explanatory. It is analyzed
that Starbucks should lay prior attention in as it depicts a high lifestyle of the customers
(Hossain, 2015).
Task 4
Case of Pacific Asia
As per the given case, it is analyzed that Asia pacific provides two possible marketing
opportunities for Starbucks. These are as mentioned below:
Expansion: As per the survey by APEC CEO, it is analyzed that business in ‘Pacific
Asia’ shows the high possibility of revenue growth. Thus, it will be best suitable for
Starbucks to initiate its business in Asia Pacific. However, due to high trade restrictions, it
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will not be easier for Starbucks to establish its coffee outlets. However, it can adopt the use of
partnership to initiate its business practices in the concern region. Thus, it will aid Starbucks
in getting essential knowledge about expanding business Asia Pacific.
Gaining competitive advantage: Starbucks should avail the use of 3D printing,
machine learning, AI and robotics. However, it could be done by availing these technologies
through export procedure. Availability of these can provide high assistance to Starbucks.
However, availability of these cannot provide a competitive advantage to Starbucks. It should
also develop its usage and implement the same in its work process. It can develop the use of
robots for servicing its premium customers. It should also develop the use machine learning,
as it will reduce the requirement of recruiting a skilled and experienced individual. Thus, it
will indirectly help the Starbucks in gaining advantage against its competitors.
Conclusion
The report summarizes the title ‘International Marketing’. From the PESTEL
Analysis, it is analysed that domestic business environment of Starbucks is better than its
international environment. From the Product Life cycle theory, it is assessed that Starbucks
has experienced a introduction and growth stage. However, at present, it has entered the
maturity stage in countries like China. From the section of entry mode, it is examined that
Starbucks has adopted the use of partnership to enter in the international market.
Additionally, it is assessed that Partnership form of business organization has various benefits
but it also lacks at some aspects. The thirds states that Global local branding and the use of
theory and data to identify future research direction are the marketing trends that can
influence the Starbucks. The last task states that business expansion and developing
competitive advantage against its customers can benefit the Starbucks.
Thus, the above discussion concludes that success of Starbucks can be understood by
attaining efficient knowledge of marketing concepts.
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