INTERNATIONAL BUSINESS

INTERNATIONAL
BUSINESS

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International Business

SUMMARY
Millions of people around the world visit Starbucks every day for
a cup of coffee, but it is more than the pricey coffee that keeps
customers coming back day after day. Starbucks provides a
cheerful environment as well as courteous and helpful personnel
to assist customers with any questions or problems they may have
about the coffee or service. People buy Starbucks because of
what it represents and the status symbol it represents. Despite the
fact that numerous business models exist, Starbucks' values and
structure are a suitable example to follow due to its national and
global success. In this report I have chosen an international
organization. This report discusses about introduction to
international business in Starbucks and introduction to domestic
business. Also, it says about business environment analysis and
the business strategies discusses about the international and
domestic business strategy of Starbucks. The final topic to be
considered is Starbucks' strategy recommendations and how to
apply those ideas.

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Contents

........................................................................................................................... 2
SUMMARY ............................................................................................................................................................................ 2
Introduction ......................................................................................................................................................................... 4
What is stretegy? ............................................................................................................................................................. 4
types of stretgy ................................................................................................................................................................ 4
about starbucks................................................................................................................................................................ 5
Introduction to starbucks as an international business ............................................................................................................. 5
Introduction to domestic business .......................................................................................................................................... 7
international business pestle analysis on Starbucks................................................................................................................. 7
recommendation based on pestle analysis of starbucks ......................................................................................................... 10
Starbucks business stretegy ................................................................................................................................................. 11
findings .............................................................................................................................................................................. 12
Recommendation................................................................................................................................................................ 12
conclusion .......................................................................................................................................................................... 12
References.......................................................................................................................................................................... 13

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International Business

INTRODUCTION
WHAT IS STRETEGY?

A strategy is a set of tactics that guide a company from its current

position to its desired destination. It can be customized based on the
business model and the goals of the organization. Some of the strategies
that are commonly used include marketing, internal goal-setting, and
human resource development.

TYPES OF STRETGY

There are two types of strategies that are implemented in the business
model: international and domestic. International strategies are focused
on the large and wide range of market variables that can affect the
operations of a company. On the other hand, domestic strategies are
focused on the small and medium-sized enterprises.

In terms of growth, strategies adopted in international markets are

different from those utilized in domestic markets. For instance, in
domestic markets, companies aim to increase their market share or
create new opportunities by developing new business concepts. Small-
scale businesses can expand their operations within their geographical
area, but they must first focus on implementing the concepts that they
already serve. International companies' growth strategies are focused on
penetrating new markets. They aim to establish strong relationships with
existing customers and develop new markets.

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ABOUT STARBUCKS

Starbucks is a coffee company that was formed in 1971 in Settle, United

Kingdom. The company is well-known for its high-quality coffee and excellent
customer service. Starbucks, with the purpose of inspiring one person, one cup,
and one neighborhood at a time, not only altered the way coffee is drunk in the
United States, but also gradually introduced Western coffee culture to different
parts of the world. As of 2020, there are 33,833 Starbucks locations
worldwide, servicing over 100 million consumers. 1

Starbucks' international approach and ability to adapt to each area has

contributed to its massive success. We'll discover more about Starbucks'
internationalization process in this post, covering the overall worldwide
penetration method and the sort of market entry in addition to pricing strategy

INTRODUCTION TO
STARBUCKS AS AN
INTERNATIONAL BUSINESS

When businesses establish an international mindset, they encounter numerous

challenges. They must shift their thinking from a simple domestic market to a
sophisticated and intricate global market. Starbucks has recently expanded into
many other markets and has had remarkable success doing so. Starbucks'
strategic imperatives enable it to succeed as an international corporation.
Starbucks has experienced and will face several organizational obstacles, but
thankfully, it has already solved many of them and will continue to do so one
at a time. Starbucks faces a variety of managerial implications as it expands
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into new worldwide regions, but executives are working hard to identify the
causes and sources of the challenges they face. Starbucks is growing into a
major worldwide corporation, but the company still has work to do in order to
have a stronger presence in many international marketplaces.
Companies generally go worldwide to grow or expand their operations. The
advantages of accessing overseas markets include increased revenue,
competition for new sales, investment opportunities, diversification, cost
reduction, and recruitment of fresh talent. Going global is a strategy that is
influenced by a number of elements and is normally done gradually. In order
to build their economies, governments would sometimes incentivize
corporations to enter their country's market.

Figure 1

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International Business

INTRODUCTION TO DOMESTIC BUSINESS

Domestic business refers to commercial transactions that take place within a country's geographical boundaries. In this
type of transaction, both the buyer and seller are from the same country. Domestic business is often referred to as "internal
business" or "home trade." When compared to foreign companies, it is considerably easier to perform business research in
domestic companies, and the level of risk is also significantly lower. The selling method, currency, customer type,
taxation rules, and other restrictions are all more or less consistent, which can greatly help any organization.
Domestic marketing has no language hurdles, and getting and evaluating data on local marketing trends and consumer
wants is easier and faster. Marketing inside the company's home nation aids in decision-making and the development of
successful and efficient marketing strategies. Companies demand fewer financial resources, and the risk elements are also
lower in comparison. Local markets are smaller than worldwide markets in terms of geographical borders and available
market platforms, despite the fact that most organizations aim for global business.

INTERNATIONAL BUSINESS PESTLE

ANALYSIS ON STARBUCKS

PESTEL analysis helps to understand the external factors in the strategic business environment. PESTLE is a tool for
strategic analysis. It is frequently regarded as one of the most efficient analytical methods for analyzing the effects of
external events. It is a more detailed version of PEST analysis. This tool is also known as PESTEL, STEEP, and
STEEPLE. PESTLE is an acronym that stands for six business-related elements. The elements are as follows:

political Factors:

The key political issue is getting raw materials. Politicians in the West and the source countries have paid close attention
to this. As a result, the corporation wishes to follow social and environmental rules. It is eager to implement the sourcing

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tactics. It emphasizes ethical business operations. Another effect is the have to adhere to the laws and regulations of the
countries from were Starbucks purchases raw materials. In underdeveloped countries, activism and increased political
awareness have made him indispensable. Regulatory restrictions in the domestic market in the United States are also a
role. Multinational corporations headquartered in the United States are now subject to increased examination of their
business practices. The corporation must also keep an eye on the country's political stability. Other aspects to consider
include:

✓ Tax policy
✓ Employment laws

Economic Factors:

Starbucks' primary external economic driver is the ongoing global economic slowdown. As previously stated, this element
harmed Starbucks' profitability. This has persuaded purchasers to switch to less expensive alternatives. Starbucks should
look for an opportunity here because they did not stop buying coffee. Rising labor and operational expenditures must be
addressed by the company. The inflationary environment, along with declining profitability, is producing a great deal of
anxiety. Other economic issues that may have an impact on Starbucks include:

✓ Local currency exchange rates

✓ Local economic environment in different markets
✓ Taxation level

Social Factors:

Starbucks, as previously noted, can offer cheaper items but may have to sacrifice quality. This is the primary sociocultural
obstacle that the company faces. It will broaden the consumer base to accommodate buyers from lower and middle-
income brackets. Concerns have also been raised about "green" and "ethical chic" buyers. They are concerned about the

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brands' social and environmental costs. Starbucks must be aware of this development. Other socio-cultural elements to
consider include:

✓ Changing family patterns in USA and Europe

✓ Consumer preferences
✓ Changing work patterns
✓ Changes in lifestyles of population
✓ The level of education of the population in local markets
✓ Changing values among population

Technological Factors:

Starbucks is well positioned to gain from the rising mobile wave. Its collaboration with Apple to deliver app-based
discount coupons is allowing it to simply ride the mobile wave. Wi-Fi is already available in the company's retail
locations. The internet is very crucial to customers. They can now browse the internet and work while sipping Starbucks
coffee. This adds value to the brand. It improves the whole customer experience. Starbucks also accepts smartphone
payments. This is being tested in trial locations around the United States. Other technological considerations to bear in
mind are:

✓ Emergence of innovative technology

✓ Biotechnological developments
✓ Developments in agriculture

Legal Factors:
Many Starbucks corporate practices are of concern to activists and international advocacy organizations. Consumers have
also expressed concerns. As a result, the corporation should consider these factors in order to maintain consumer trust.
Starbucks should be concerned about the following environmental factors:

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International Business

✓ Environmental rules and regulations

✓ Environmental disasters in countries which produce coffee beans
✓ Global warming and other environmental issues in a global level

Environmental Factors:
Starbucks must guarantee that it does not breach any laws or regulations in its home market or the countries from where it
purchases raw materials. It should also be on the lookout for the adoption of caffeine manufacturing and consumption
norms and regulations by health authorities. Other elements that could have an impact on the company include:

✓ Introduction of stricter customs and trade regulations

✓ Licensing regulations related to the industry.

Starbucks has a somewhat stable external environment, according to the PESTLE analysis. The primary explanation for
this could be that it operates in the Food and Beverage industry. This indicates that consumers will limit their
consumption but will not stop buying entirely.

As a result, because the recession is the most essential element, Starbucks must reduce costs while increasing value. This
allows it to keep its customer base while also increasing customer loyalty.

RECOMMENDATION BASED ON PESTLE

ANALYSIS OF STARBUCKS
According to this PESTEL/PESTLE analysis, the majority of the external elements in Starbucks Corporation's remote or
macro-environment create opportunities. The corporation must, however, seek to overcome the highlighted challenges,
such as the threat of substitution caused by the rising availability of home-use specialty coffee machines. Improving
operations and business processes to capitalize on identified possibilities can also help Starbucks meet its corporate
purpose and vision statements. Based on these opportunities and dangers, a comprehensive strategic plan can secure the
company's long-term leadership in the coffeehouse business. Overall, the PESTEL/PESTLE analytical paradigm reveals
that Starbucks Coffee has a lot of space for worldwide expansion and development.

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International Business

STARBUCKS BUSINESS STRETEGY

Different businesses have different goals and take different routes to fulfil those goals. These routes constitute
the business strategies of these businesses. A business strategy is the sum of all the decisions made and actions
done by the company in order to achieve business objectives and maintain a competitive position in the
market. It is the business's backbone because it is the plan that leads to the intended goals. Any flaw in this path
could lead to the company becoming lost in a sea of overpowering competition. Starbucks business strategy is based
on the following four pillars:

1. Offering ‘third-place’ experience: -

Starbucks locations are effectively positioned as a "third place" apart from home and work, where individuals may spend time
relaxing and socializing with friends or alone. Customers are also welcome to work in a Starbucks location. All company-
owned stores in the United States and the majority of company-owned locations worldwide provide free wi-fi. "Starbucks
locations are precisely constructed to entice customers to linger longer, buy more, and return.

2. Selling coffee of the highest quality: -

Starbucks' business approach is one of product differentiation. As a result, the coffee chain behemoth places a premium on
product quality, and customers are willing to pay a premium for it. Excellent customer service, as one of Starbucks' stable
sources of competitive advantage, improves the coffee retailer's attractiveness even further.

3. International market expansion with the focus on emerging economies: -

is one of the most important aspects of Starbucks' long-term business plan. The company's sales share from the
China/Asia Pacific (CAP) global market segment climbed to 14% in 2016 from 7% the previous year.[2] In total, 2719
new Starbucks locations opened in the last two years.

4. Integrating technology into various business processes: -

Starbucks is adamant that the purpose of new technology is not just to improve its website or to process payments faster
for people waiting in line. The coffee chain achieves technology-related value addition by integrating technology into a
wide range of business processes and procedures such as new product development, marketing message communication,
sales completion, and customer satisfaction monitoring. Starbucks' most notable examples of value creation through
technological integration include the introduction of the Mobile Order & Pay feature, which allows customers to buy
without having to wait in line, the introduction of a voice ordering app, and "sending text message notifications to
customers in the Seattle area when their mobile orders are ready.

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FINDINGS
According to the study, Starbucks meets the audio-visual ceremony sense, environmental ritual sense, interactive ritual
sense, and corporate culture ritual sense through their unique forms of expression, and jointly builds their brand sense of
ritual, thereby promoting consumer trust in it and achieving the ultimate goal.

RECOMMENDATION
Starbucks has expanded significantly into overseas countries in recent years. Despite its recent expansion and success in
foreign areas, the majority of its outlets and sales remain in the United States. Starbucks' store count has more than
doubled since 2004, but it has consistently maintained a 30% international market share.
✓ Starbucks needs to put more effort into expanding its business empire into more countries or regions. It
can also add more stores in the countries it is already doing business in.

✓ Starbucks needs to invest more in foreign countries, it still has to be careful to watch out for social
norms and cultural differences in and throughout countries.

✓ Starbucks needs to broaden its market scope, it must take time and put in the proper amount of research
when going into different communities and countries. By balancing out its income between several
different markets, Starbucks will not have to worry as much about the crash of one particular market.

✓ diversifying its product base and offering more economical pricing for customers.

CONCLUSION
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Starbucks is a large firm in a booming industry. Starbucks, according to the analyst, is adopting a firm stance in the coffee
sector and launching promising strategic and environmental aims. Starbucks is a growing and powerful international
company. It is clear that the firm has a stable niche in the coffee market as well as attractive environmental and strategic
aims. The company has the potential to expand into foreign markets. Despite the fact that more than half of its stores are
still local, the number of foreign stores may increase. Starbucks implemented a global business approach, allowing
customers to experience a universal product across all outlets.

REFERENCES

https://books.google.com/books/about/The_Starbucks_Story.html?id=Uf6IAAAAQBAJ

https://panmore.com/starbucks-coffee-pestel-pestle-analysis-recommendations

2022. [online] Available at: <https://www.business-to-you.com/international-business-strategy/> [Accessed 27

January 2017].
https://pestleanalysis.com/pestle-analysis-of-starbucks/
UKEssays. (November 2018). International Business Environment. Retrieved from
https://www.ukessays.com/essays/international-business/international-business-environment.php?vref=1

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