International Business
Content
Prospects of starting an
International Business
(Starbucks)
1
The Steps to Develop
International Commitment
•
Become aware of international
business opportunities.
•
Determine the degree of the
firm’s 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
2
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
International Business
(Starbucks)
1
The Steps to Develop
International Commitment
•
Become aware of international
business opportunities.
•
Determine the degree of the
firm’s 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
2
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
