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.