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Starbucks and Their Internationalization Process

Starbucks used three strategies - joint ventures, licensing, and wholly owned subsidiaries - to internationalize. It studied each foreign market before deciding on a local partner to open the first few stores in trendy locations to test the market. Internationalization provided opportunities for new markets and brand recognition but also increased costs due to foreign regulations, lower profits in overseas stores run by partners, and paying above-market rents. Starbucks faced challenges including cross-border collaboration, local commodity prices, trademark issues, differing political and legal systems, and some hostility from consumers and employees.

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Aishath Nashwa
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105 views

Starbucks and Their Internationalization Process

Starbucks used three strategies - joint ventures, licensing, and wholly owned subsidiaries - to internationalize. It studied each foreign market before deciding on a local partner to open the first few stores in trendy locations to test the market. Internationalization provided opportunities for new markets and brand recognition but also increased costs due to foreign regulations, lower profits in overseas stores run by partners, and paying above-market rents. Starbucks faced challenges including cross-border collaboration, local commodity prices, trademark issues, differing political and legal systems, and some hostility from consumers and employees.

Uploaded by

Aishath Nashwa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as ODP, PDF, TXT or read online on Scribd
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How did Starbucks Internationalize?

Using three pronged strategy - joint


ventures, licensing and wholly owned
subsidiaries.
studied the market conditions for its
products in the country.
decide on the local partner for its
business.
tested market with a few stores that
were opened in trendy places

Merrill Lynch and Starbucks Homepage

Pros and cons to


Internationalization
Pros

New market opportunities

Enhanced brand recognition

Competitive advantage

Diversification
Cons
Increase costs
Foreign regulations and standards
Makes less money in overseas stores ( most
operated with local partners)
Paying more than market-rate rents to
keep competitors out of location
( Consumers may grow annoyed over having
fewer choices).

Challenges and Hurdles


Economics
Cross border collaboration- operated by partners
Local price range of commodities
Political/ Legal
Rival coffee shop start copying business practices,
name and logo ( China)
Trademark problems ( China came out with a Chinese
Starbucks trademark)
Free-market capitalism (WTO Nov 1999)
Hostile reception from future consumers of 20-30 do
not feel wanted in a place selling a cup of coffee for $3.
Store managers from over 470 stores in California sued
Starbucks in 2001 for allegedly refusing to pay legally
mandated overtime.

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