International Business Information 2022

Running Head: INTERNATIONAL BUSINESS
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International
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INTERNATIONAL BUSINESS 1
In today’s competitive business world, organisations are expanding their operations in
the international marketplace in order to reach out to a wider customer base which provides
them a competitive advantage over their competitors. While expanding their operations in the
international market, companies have to select and evaluate proper market enter strategies
which smoothen their entry in the market and allow them to establish their operations without
any obstacles (Gupta, Nagpal, & Malik, 2018). Some of the common market strategies
include joint ventures, ownership, licensing, contract manufacture, and participation in free
trade zones or export processing zones. Each of these market entry strategies provide
different advantages and disadvantages to the company which must be assess by them in
order to ensure their effectiveness (Smyth, 2019). The objective of this essay is to analyse the
case of Starbucks in order to critically evaluate the market entry strategies adopted by the
organisation. This essay will evaluate the success and failure of these market entry strategies
and analyse the key drivers that impact these decisions while using resource-based view
theory. Lastly, recommendations will be given which can assist Starbucks in determining
where, how and when to enter in a new market.
Starbucks is an America-based coffee house chain and it is headquartered is situated
in Seattle, Washington; the company was founded in 1971 and it operates in more than
30,000 locations across the globe. The products offered by the company include coffee-
based beverages, tea, smoothies, baked products, and others. The company is known for its
unique brand reputation since it emphasises on offering sustainable products through its
customers while ensuring that it has a positive impact on the development of local
community and its employees (BusinessInsider, 2019). The company uses social media
platform in order to spread awareness regarding its products, services and initiatives which
are taken by the organisation in order to fulfil the needs of its stakeholders. Customers of
Starbucks are loyal towards its company since it offers them unique beverages such as
Pumpkin Spice Latte, Frappuccino, Café Latte, and others. The operations and supply chain
of the company focuses on complying with sustainability principles in order to make sure that
the company reduces its carbon emissions, for example, the company uses recyclable
packaging, renewable energy resources and 100 per cent of its coffee beans are ethically
sourced. The company has introduced “C.A.F.E. (Coffee and Farmer Equity)” program in
order to offer financial support and education facilities to farmers and their children
respectively (Velde, 2018). While entering in the international market, the company evaluates

INTERNATIONAL BUSINESS 2
the impact of particular market entry strategies in order to make sure that they have a positive
impact on its operations and it is able to reach out to the large customer base.
While expanding in the international market, the management of Starbucks has to
choose between different market-entry strategies in order to select the most suitable strategy
for the organisation. The company has to select between joint ventures, ownership, licensing,
contract manufacture, and participation in free trade zones or export processing zones
strategies. The management of Starbucks has adopted different market entry strategies while
entering into different international markets based on a wide range of factors
(Lakshminarayanan, Maggio, & Best, 2017). There were different factors that affected the
entry modes decisions of Starbucks while entering in foreign markets due to the difference in
cultural, political, consumer behaviour, economic, technological, legal, and other factors.
While entering in different countries, the management of Starbucks has selected different
entry mode strategies based on the factors that affected the operations of the company. The
entry mode strategies selected by the company consists of licensing, acquisition, wholly-
owned subsidiary and joint ventures (Ali & Ahamat, 2018). Different strategies are selected
by the company by taking into consideration both internal and external factors to ensure their
effectiveness.
Licensing is the most common market entry strategy that is used by Starbucks while
entering into foreign market. This strategy is preferred by the management since it is cost
effective and it allows the organisation to maintain the consistency in its offerings that is
desired by its customers. In this strategy, companies in one country agrees to gives permit to
a foreign company in order to use their trademark, manufacturing, technical know-how,
processing and other skills which are given by the licensor (Walz, 2018). The company
usually selects this strategy when it only wants to disrupt the market without incurring initial
investment in its entry process. For example, while entering in Saudi Arabia, United Arab
Emirates, Egypt, and other Middle Eastern countries. The company partnered with MH
Alshaya WLL, a private business owned by Kuwait family, in order to offer them licensing
agreement which allows them to open around 3,500 stores in these countries (Michaels,
2017). The advantages of this strategy are that it requires low-risk manufacturing
relationships, no capital tie-up, lack of monitoring, and other benefits to the licensor. These
benefits are also received by Starbucks while expanding its operations since the company is
able to open large number of stores without incurring huge costs.