Prospects of starting an

International Business
(Starbucks)

The Steps to Develop

International Commitment

Become aware of international

business opportunities.

Determine the degree of the

firms internationalization.

Decide the timing of when to

start the internationalization
process and how quickly it
should progress.

Motivations for Going

International
Reactive Motivations

Proactive Motivations

Competitive pressures

Profit advantage

Overproduction

Unique products

Declining domestic sales

Technological advantage

Excess capacity

Tax benefit

Saturated domestic
markets

Economies of scale

Proximity to customers
and ports

Psychological Distance

Sometimes cultural variables, legal

factors, and other societal norms make a
foreign market that is geographically
close seem psychologically distant.

The two major issues of psychological

distance are:

Some of the distance seen by firms is based

on perception rather than reality.
Closer psychological proximity makes it
easier for firms to enter markets.

Profit Risk During Early

Internationalization
In the short term, firms may experience
increased risk and decreasing profits when
going international.
Market
Gap

Before
Going
International

Profit

Risk
International Experience

The Keys to Successful

International Performance
Effectiveness
Efficiency

Competitive
Strength

International Entry
Strategies
Exporting

Importing

Licensing

Franchising

Foreign Direct
Investment

Interfirm
Cooperation

Key Reasons for Franchising

Market Potential

Financial Gain

Saturated Domestic
Markets

Interfirm Cooperation
A strategic alliance is an arrangement between
two or more companies with a common business
objective.
To better compete, many companies form
strategic alliances with suppliers, customers,
competitors, and companies in other industries
to achieve goals.
Reasons for interfirm cooperation include:
Market development
To share risk or resources
To block and co-opt competitors

Types of Interfirm Competition

Number of Partners
Equity
None
None

More than 2

Informal Cooperation
(no binding agreement)
Contractual
Agreement
Consortia

New

Joint Venture

Some

Equity
Participation

STARBUCKS

Starbucks Corporation is an American global

coffee company and coffeehouse-chain based
in Seattle, Washington.

Starbucks grew from 17 coffee shops in Seattle

15 years ago to over 20,891 outlets in 62
countries.

Including 13,279 in the United States, 1,324 in

Canada, 989 in Japan, 851 in China, 806 in the
United Kingdom, 556 in South Korea, 377 in
Mexico, 291 in Taiwan, 206 in the Philippines,
171 in Thailand and 59 in India.

Some challenges faced by

the company
Global expansion poses huge risks

for Starbucks, it makes less money

on each overseas store because
most of them are operated with local
partners.
Starbucks faces cultural challenges.
Starbucks faces steep competition in

Japan.

Starbucks Around the

World

controllable and uncontrollable elements that Starbucks has encountered

in entering global markets

Controllable
Product
-Hot and Cold beverages, pastries, snacks, etc

Price
- Starbucks charges a premium prices for their products

Promotion
-The Company has controlled its promotional strategy and has
saved a lot of marketing cost by mainly relying on worth of mouth
and the company has good brand name in national market as
well as in overseas market.

Channel of distribution
- Starbucks have 20,891 outlets in 62 countries which shows that
the company has good controlled over the channel of

Uncontrollable

Economic Forces.
-Economic conditions.
-local price range of commodities

Competitive Force.

-Local competitors.
-Imitators Coming in to grab the market
share.
-Coffee is a beverage that has a worldwide appeal.
Starbucks entering the
global market might face stiff competition from local
coffee brands in
different countries. While Starbucks may hold an
advantage in terms of
brand recognition worldwide, local brands can hold an
advantage in terms

Uncontrollable

Cultural Force.
-Different cultures.

-Capturing the local cultural appeal of different countries may

prove to be
challenging especially to a brand going global. There has to
be a certain amount of
standardization while applying the right localization.

-The solution is to overcome cultural challenges by

studying
And researching on coffee consumptions habits of
locals.

Political/legal Force.
-Different laws and regulations in different countries.
-Starbucks had a lot of issues regarding overworked
but underpaid employees as it continues its growth
globally and dealing with local rules and regulations.

External Factor Analysis Summary

Comments

Opportunities

There is a growing curiosity and interest in

Western Brands in India
Coffee is popular in urban areas, where
Starbucks usually targets first
Immense, rapidly growing, highly condensed,
young population

Indian Interest in Western Brands

Geographic Popularity of Coffee
Indian Population
Market for Product

Well-defined in India and growing

Threats
Obesity and Obesity Related Diseases in
India

Increasing rate, and which Starbucks is

already a critic of aiding the growth of in
other cultures

Beverage Habits in India

Coffee is a secondary drink next to tea

Barriers to Entry
Global Policy Conflicts
Established Competition

High in India, Starbucks must acquire

joint ventures
Starbucks has strong policies that often do
not work in other areas (non-smoking,
lack of enough food products)
Large competition already established in
same market in India

Internal Factor Analysis Summary

Strengths
Starbucks has a consistent global policy in
terms of how it operates
Brand Awareness
High globally
Starbucks has already expanded into
Experience Expanding into Global Markets several global markets including China and
Japan
Starbucks can afford to be specific about
High Buying Power
who it does joint ventures with
Starbucks products are considered of
High quality products
higher quality than other big brand coffee
houses
Strong Company Mission, Vision, Values

Weaknesses
Premium Priced Products
Small Product Breadth
Corporate Structure

Starbucks is recognized for its high prices

Starbucks offers few things of interests
besides coffee
Large, has hindered the expansion into
India for several years already

Strategic Factor Analysis Summary

Experience Expanding into Global
Markets

Starbucks has already expanded into

several global markets including
China and Japan

Strong Company Mission, Vision,

Values

Starbucks has a consistent global

policy in terms of how it operates

Small Product Breadth

Starbucks offers few things of

interests besides coffee

Premium Priced Products

Starbucks is recognized for its high

prices

Indian Population

Immense, rapidly growing, highly

condensed, young population

Geographic Popularity of Coffee

Coffee is popular in urban areas,

where Starbucks usually targets first

Established Competition

Large competition already

established in same market in India

Beverage Habits in India

Coffee is a secondary drink next to

tea

Recommendation
Advertising and Promotion:
Market there brand more aggressively in order to
convince people serves coffee that is superior to
other coffee and beverages.
Product Differentiation:
They should work on differentiating its coffee. Should
invest in extensive research and development efforts
to develop new flavors, blend.
Coffee variety and Quality Control:
Should ensure that coffee is of the highest quality.

Thank you

Group 1
Jay Sarda
Nipun Dalmia
Mahesh Jain