Foreign Market Analysis of Starbucks: Corporate Strategy and Expansion

This report provides a comprehensive foreign market analysis of Starbucks, examining both controllable and uncontrollable factors influencing its global expansion. It delves into the major sources of risks faced by the company in international markets and proposes potential solutions to mitigate these challenges. The report critically evaluates Starbucks' overall corporate strategy, assessing its effectiveness in various markets and identifying areas for improvement. Furthermore, it explores strategies to enhance the company's profitability, considering factors such as pricing, product offerings, and cultural adaptation. The analysis draws upon academic research and real-world examples to provide a well-rounded understanding of Starbucks' global operations and strategic decision-making. The report also includes an examination of the company's expansion from 17 stores to around 28,218 stores worldwide, and its impact on the market.

FOREIGN MARKET
ANALYSIS

TABLE OF CONTENTS
QUESTIONS...................................................................................................................................1
1 Uncontrollable and controllable elements encountered by the Starbucks for entering into
global markets. ............................................................................................................................1
2 Major sources of risks faced by the company and potential solutions ....................................1
3 Critique Starbucks overall corporate strategy...........................................................................2
4 How the profitability of the company could be increased .......................................................2
REFERENCES................................................................................................................................3

QUESTIONS
1 Uncontrollable and controllable elements encountered by the Starbucks for entering into global
markets.
Controllable Factors refers to those factors that are within the control of the organisation
and uncontrollable factors are those that are not within the control of organisation. This is
essential for the business enterprise to identify the factors that are within the control and those
which are uncontrollable for taking effective steps to reduce the factors affecting the entrance to
foreign markets.
Controllable Factors
Company is facing the issue of tastes in the coffee provided by it. It also planned to start
non coffee products. It is analysed that all the countries are having their different tastes and
preferences. It is having decline in the revenues growth that is affecting the growth plans of the
entity. It has established number of new stores in the countries for expanding the foreign market
(Andreu, Quer and Rienda, 2020). The openings of new stores in the foreign countries is easier
but it reduces profit shares. It is costly as compared with other regional competitors.
Uncontrollable Factors
There are various factors that are not controllable by company. However company is
required to identify them and take measures for reducing them. Increased competitions, demand
and preferences of the customers. Every country is associated with their culture and it affects the
sales of company. Cultural challenges could affect the business severely. Legal compliance
barriers and market conditions of the company are not within the control.
2 Major sources of risks faced by the company and potential solutions
The staggering returns of the Starbucks has led export the concepts at rapid phase. Chain
has around 7000 outlets in between Beijing to Bristol. New stores will be increasing the foreign
bas of the company around 35%. Global expansion of company would be posing significant risks
to company. It is making less money from the foreign markets as they are operated with the local
partners. It reduced net profit of company to 20 % from 50 %. Challenges will also be faced in
attaining stability in the US market. It has also faced hostile reception from the future consumers.
It is facing financial issues but as having no debt will enable the company to revive the position
fuel the challenges of external cash flows (LEE and MIGLIORI, 2016). The old designs of the
cafes could be changed for making them more attractive and providing the consumers with good
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ambience. Moving to other non coffee and food products with less choices could affect the
business which are required to be affixed. It is becoming big risk for company to make the place
better for employees, it could affect the sales and image of Starbucks. It has to provide additional
perks to the employees for making them relaxed and comfortable within the entity.
3 Critique Starbucks overall corporate strategy
The overall corporate strategy is enabling company to maintain a profitable stage in all
the countries it is operating. The corporate strategy could not be stated as weak as it has
expended from just 17 stores to around 28,218 stores. It is big expansion of company worldwide
winning the hearts of people. Over the recent years it is facing critical financial issues due to the
decline in sales. Many of the stores are being closed in US and other countries for reducing costs
which reflects that present corporate strategy is not highly effective and not providing company
with measures to control the market share. However, this is also seen that despite of string
competition in several markets such as Japan, US and also receiving high demand in French
market. It is successfully into various new markets and strongly facing the competition by giving
new products and coffee flavours (Crowley, Meng and Song, 2018). Despite of reducing the
market share company is not reducing the prices of coffee. It could be said that corporate
strategy of company is string over some of the points but requires changes for surviving in the
market successfully.
4 How the profitability of the company could be increased
It could be seen that despite of increasing number of stores in various countries
profitability of company is decreasing every year. It is essential for the business to have adequate
revenues for meeting costs. Profitability of company could be reduced by reducing slightly the
prices which will attract new customers of competitors. It could increase the revenues by
promoting the cafe products as it spends very low over advertising and providing new products
required by the staff. It should also provide products connected with culture of the countries
served by them that will help in increasing the revenues.
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REFERENCES
Books and Journals
Andreu, R., Quer, D. and Rienda, L., 2020. The influence of family character on the choice of
foreign market entry mode: An analysis of Spanish hotel chains. European Research on
Management and Business Economics. 26(1). pp.40-44.
LEE, S. and MIGLIORI, L., 2016. Foreign Market Analysis: Development and Application of a
new framework on the US New Construction Housing Market.
Crowley, M., Meng, N. and Song, H., 2018. Tariff scares: Trade policy uncertainty and foreign
market entry by Chinese firms. Journal of International Economics.114. pp.96-115.
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