BUSINESS ANALYSIS INTERNATIONAL AT INDUSTRY FASHION IN
ERIGO COMPANY
ARIZONA STATE UNIVERSITY
OMT 440 - INTERNATIONAL BUSINESS
WEEK 5
Abstract:
International business is a business transaction carried out by a company in a company in one
country with other companies or individuals in other countries. So in running a business, of
course the business will run smoothly with a long period of time or a short period of time by
developing nationally or internationally. Erigo is a fashion product that is developing in
Indonesia where this product prioritizes high quality with product designs that can support in
all trips and daily needs, in Indonesia Erigo is one of the best clothes, has high product
quality. And in this study, the group of writers used descriptive analysis methods to analyze
the data and problems that occurred by collecting the data collected for research. The reason
the group of writers conducted this research is expected to provide benefits to the production
of marketing actors in the Erigo company through the influence of activities, interactivity in
international business on customer satisfaction and consumer intention to buy the product
again.
INTRODUCTION:
The development of the clothing business in Indonesia is quite increasing. All groups
of people ranging from children to adults use brands that they think suit them and according
to their tastes, currently technology can be seen as very large, especially in information
technology which requires companies to make a new movement to innovate. A company
needs to have a differentiation such as the characteristics of the company itself which is able
to become the image of the company itself which in the future will be a differentiator from
competitors. Therefore, the brand image of the company is one of the important things that
will negotiate the company's products to consumers.
Brand (brand) is one of the tangible assets and the company becomes the most
important asset, because it is the basis of competitive advantage. Brand will be able to lure
every enthusiast to buy products owned by the company. the high level of competition creates
a lot of competition In this situation, the brand on a company product will be a concern and a
consideration for consumers to purchase goods from the brand. Which of each product has
different qualities even though the goods being promoted have similar functions. Every
consumer has a decision in purchasing the goods they want, therefore the product needs to
have its own brand image that is in accordance with the wants and needs of consumers which
will definitely be attached to consumers as a product that has the quality and quality to
compete. One of the clothing product companies engaged in fashion is Erigo.
Erigo is a fashion product that is developing in Indonesia where this product
prioritizes high baha material with unique models and can support in all walks and needs and
fashion, in Indonesia Erigo is one of the clothes that have high quality products. Erigo was
established on November 20, 2010 under the brand "selected and co" and changed to Erigo.
Erigo company targets traveling needs with comfortable designs and according to the needs of
buyers. It is known that in 2015 the Erigo company achieved sales of their products up to
twenty billion rupiah. In the process of Erigo's achievement in turnover, the company uses
marketing and branding strategies and promotes their brand very vigorously, which is shown
in order to attract consumer attention, now Erigo also conducts "wondering souls" activities,
which are manifestations of brand spirit aimed at encouraging the younger generation to have
a high sense of exploration. This activity provides an appreciation of various cultures, as well
as ideas that are expected to bring inspiration in enriching the thoughts, works and culture of
the local young generation, especially in the field of fashion.
Before buyers want to buy a product, they will usually find out information from people
who have used the product. Product quality is a priority for buyers in buying these products
because they can assess what benefits they can get. According to Chi et al (2017) the quality
of their purchasing experience, brand effects, loyalty, and brand preference will increase
purchase intentions.
Research Objectives:
1. Analyzing the influence of consumer activity on the Erigo brand
2. Analyzing international business within the Erigo brand.
Reasons for Conducting Research:
The reason for this research is expected to provide benefits to the production of marketing
actors in the Erigo company through the influence of activities, interactivity in international
business on customer satisfaction and consumer intention to buy the product again.
RESEARCH METHODS:
Independent variables are variables that can influence, cause a change in other
variables. So that this independent variable stands alone in a study and is not affected by the
value of the dependent variable. The dependent variable is this variable to examine how
influential the variable is. This dependent variable is influenced or bound to the independent
variable or the dependent variable cannot exist without the independent variable but the
dependent variable cannot be manipulated. In a study, a research object is needed to be
researched. Where the object of research must investigate the problem at hand to find a
solution to the problem faced by the object of research. The object of research is a research
variable to find information and data to find out about the object of research to be studied.
The purpose of this research object is to find out or investigate new or existing cases. The
case faced by the research object to be studied by the research group is the effect of
international business on the erigo company.
RESULTS AND DISCUSSION
Erigo is an original unisex fashion brand from Indonesia that was built by Muhammad
Sadad in 2010 with a brand called Selected And Co then changed to Erigo in 2013 in June
which is now a well-known brand in Indonesia and Erigo has also reached the peak of its
career internationally. Erigo's own products produce wear such as t-shirts, shirts, jackets,
pants, bags with quality materials and unique designs. by carrying out youth fashion, the erigo
brand wants to encourage young people to have a high desire for exploration. (iprice.co.id)
This method is used by the author to examine and understand the subject of satisfaction and
attraction to celebrity endorsement on erigo products which causes comfort using the product.
1. Personal branding:
Erigo is one of the popular brands in Indonesia where their brand has entered the international
market, the Erigo brand is also featured in New York Square, United States (US). For
information Time square is a commercial center, such as entertainment, a must-visit
destination when coming to the country. In running the Erigo business for eight years,
Muhammad Sadad and his friend who started this business in 2010 under the name selected
and co then changed its name to Erigo Apparel in 2013. When the age of the Erigo business is
still as old as corn, it has experienced ups and downs in running this business such as what
should be profitable instead of profitable when they market their products. As an entrepreneur
Muhammad Sadad realizes that it is important to build personal branding to be able to show
his identity to the general public (Arifin, 2021). Researchers analyzed Erigo's personal brand
based on online searches through Muhammad Sadad's Instagram social media, he has a
personal brand that includes having determination and perseverance in oneself, to be able to
do something in energy and passion. In Erigo's good performance with a wide range of quite a
lot of products and achievements from cooperating and participating in New York, Times
Square events are international and work with influencers, markets, and celebrity
endorsement partners, one of which is Enzy Storia in Erigo products. The value formed by
Muhammad Sadad as the owner of Erigo Apparel is that the entrepreneurial person has earned
the name of Indonesia where the Erigo brand is the only one in Indonesia.
followers of one of the most prestigious fashion trends in the world, namely Times Square
New York @erigostore. According to (Prihatini, 2021), building a personal brand requires
analysis. SWOT analysis to find out what your strengths, weaknesses, opportunities and
threats are in building a personal brand image. To ensure that Erigo provides a long-term
competitive advantage, Erigo must consider many things.
2. Brand Awareness:
The findings of Supriatna et al. (2017) explained that brand awareness does not influence
purchasing decisions. The results of this are different from research by Cahyani &
Sutrasmawati (2016) which states that there is a big influence between the two. Decide
whether your product or brand is famous buy more expensive. At the time of Erigo's
appearance at New York Fashion week 2022 this brand became the biggest highlight in terms
of brand awewness. But actually the peak of the Erigo brand was recognized through a large
e- commerce, namely shoppe in 2017, the brand which initially only moved in the Depok area
slowly rose and began to be known throughout Indonesia through e- commerce. Recorded
throughout 2020 up to 10 times the previous year Erigo received many awards at many
shopee events as Top Local fashion brand. Coupled with the export program from Shopee,
neighboring countries, namely Singapore, Malaysia, etc. are also a market for Erigo. New
York Fashion Week is also on display to support Erigo's brand awareness in the Americas
and Europe.
3. Segmenting:
Market segmentation is a process that divides consumers in the form of the same grouping,
geographic segmentation carried out by Erigo company targets all regions in Indonesia. And
currently the Erigo company is trying to compete internationally abroad, therefore the Erigo
company made their website by adding overseas shipping, Erigo's demographic segmentation
is a teenage boy, especially casual models. Erigo's psychographic segmentation is done by
identifying people with a casual lifestyle and those who are not more adventurous than the
middle class to the upper class the price is also quite steep so it is expensive. For behavioral
segmentation.Ergo's target group is teenagers who always follow trends. Erigo is here. Fulfill
your fashion needs and express yourself with more confidence wearing casually and
attractively while wearing the product.
Respondent Characteristics:
In the data collection technique for the independent variable, the sample in this study uses
purposive sampling technique, with this technique the desired target is in the age range of 19-
24 years and has made purchases on Erigo products. from the picture above, the following
respondents were obtained
1. Age 19 - 21 years range 63
2. Age 22 - 24 years range 62
1. > 25 years range 5
CONCLUSION:
Erigo is a fashion product that is developing in Indonesia where this product
prioritizes high quality with product designs that can support in all trips and daily needs, in
Indonesia Erigo is one of the best clothes, has high product quality. In the process of Erigo's
achievement in turnover, the company uses marketing and branding strategies and promotes
their brand very aggressively, which is shown in order to attract the attention of consumers,
now Erigo also carries the "wondering souls" campaign, which is a manifestation of the brand
spirit aimed at encouraging and encouraging the younger generation to have a high curiosity
to explore. Every consumer has a decision in purchasing the goods they want, therefore the
product needs to have its own brand image that suits the wants and needs of consumers which
will definitely be attached to consumers as a product that has the quality and quality to
compete. Erigo is one of the well-known brands in Indonesia where their brand has entered
the international market, the Erigo brand also appeared in New York Square, United States
(US). In running the Erigo business for eight years, Muhammad Sadad and his friend who
started this business in 2010 under the name selected and co then changed its name to Erigo
Apparel in 2013. And currently the Erigo company is trying to compete internationally
abroad, therefore the Erigo company made their website by adding pengngirinamnke abroad,
Erigo's demographic segmentation is a teenage boy, especially casual models.
THE IMPACT OF GLOBALIZATION ON INTERNATIONAL BUSINESS:
INTRODUCTION:
Globalization has fundamentally changed the way business is visualized and
conducted. The impact of globalization on business operations is therefore pervasive and
extensive, requiring a review of existing business approaches and historic rules of thumb (e.g.
standard operating procedures) used in business. For example, global business means that
business planning at all levels will now require both local and global knowledge.
Understanding local regulatory requirements is as important as global considerations of
economic activity when setting a company's strategic objectives. In addition, local cultural
practices and customs must be recognized when establishing business operations and
procedures. Failure to modify business operations strategies can result in significant impacts
on performance. Furthermore, definitions and explanations of globalization include economic,
political, and sociological perspectives. Similarly, there is debate about whether globalization
is occurring and the extent to which it impacts individuals and societies (Albrow, 1997;
Giddens, 1990, 2000; Guillen, 2001; Held et al., 2001), 1999; Hirst and Thompson, 1996
(Krugman, 1994). However, regardless of how globalization is defined and whether it is or is
not happening, recent socio-economic and technological phenomena have a significant impact
on individuals and society at large.
All these changes are partly because globalization impacts international business
operations and hence strategies must be designed to help multinational companies to survive
and thrive in the global market. According to Thompson and Strickland (2003), strategy is
management's game plan to strengthen the organization's position, delight customers and
achieve performance targets. According to Johnson and Scholes (1993), strategy is the
direction and scope of the organization in the long term that achieves benefits for the
organization through the configuration of resources in a changing environment to meet market
needs and to meet stakeholder expectations. Strategy is a well-defined roadmap of the
organization. It defines the overall mission, vision and direction of the organization. The
objectives of strategy are maximizing the strengths of the organization and minimizing the
strengths of competitors. Strategy is a management game plan aimed at creating a fit between
the organization and its environment. Globalization fit creation is important for an
organization to remain relevant.
THEORETICAL STUDIES:
A. Global Strategy Literature Review:
In academia, interest in global strategy and organization has been strong in the past
two decades. Many perspectives have been proposed to examine these issues, and so have
many prescriptions for businesses facing global competition. On the one hand, these
perspectives have enriched our understanding of the complexities of competing globally. On
the other hand, the diversity of perspectives creates a great deal of ambiguity and confusion
about how to compete worldwide, about the definition of global strategy, about why
businesses choose a global strategy, and about the implications of such choices. Without a
unified framework to integrate these diverse perspectives, ambiguity and confusion tend to
persist, leading to conflicting theories and discouraging practical applications of knowledge.
In an influential article, Levitt (1983) argued strongly that advances in communication and
transportation technologies and increased world travel have homogenized the world market.
More and more consumers in different parts of the world tend to demand the same products
and have similar preferences. In this new era, the strategic imperative for businesses
competing globally is to achieve the economies of scale afforded by the global marketplace.
Thus, multinational companies that treat each country's market separately are likely to
disappear and be replaced by global companies that sell standardized products in the same
way anywhere in the world. The main source of competitive advantage has become the ability
to produce high-quality products at the lowest cost, as global consumers will sacrifice their
idiosyncratic preferences for high-quality but low-priced products. According to Levitt
(1983), the optimal global strategy is to produce one standard product and sell it through a
standardized marketing program.
Houtet al. (1982) disagree, however, arguing that an effective global strategy does not
require a single approach as product standardization, but many tricks. These include
exploiting economies of scale through global volumes, taking a pre- emptive position through
rapid and large capital investment, and managing interdependencies to achieve synergies
across multiple activities. According to them, the global strategic imperative is to utilize
competitive advantages in interdependent country markets to change the scale and scope of
competition. In contrast to Levitt's single standardized product, a broad product portfolio is
recommended by Hamel and Prahalad (1985). They believe a global strategy requires several
product variations, so that investments in technology, brand names, and distribution channels
can be shared. The global strategic imperative is to seek cross-subsidization across product
lines and markets, world brand dominance, and a strong worldwide distribution system. The
strategic logic behind Hamel and Prahalad's (1983; 1985) prescription is that firms can attack
rivals and maintain their market share by utilizing proprietary technology through proprietary
distribution channels.
Kogut (1985) emphasizes strategic flexibility in his perspective on global strategy; that
is, it must create options to turn the uncertainty of an increasingly volatile world economy
into business advantage. The strategic imperative is to exploit multiple sources, shift
production to profit from changes in factor costs and exchange rates, and arbitrage to
capitalize on imperfections in financial and information markets and economic imbalances.
Kogut (1985), believes that businesses must give up strategic fit for strategic flexibility to
gain comparative advantage. Porter (1986) recognizes the interdependence among various
country markets and argues that global strategy has two basic dimensions: configuration of
value-adding activities and coordination of activities across markets. He argues that the
strategic imperative in global markets is to concentrate value-added activities to exploit factor
cost differences and expand competitive advantage by coordinating interdependencies among
markets. Therefore, success demands achieving integration of a firm's competitive position
across markets. In contrast, Quelch and Hoff (1986) emphasize the importance of
responsiveness to local market conditions. They see the strategic imperative as the efficient
global use of good marketing ideas rather than standardization, and organizational structures
that encourage information transfer. They believe global operations should be tailored to
maximize efficiency in concept development and effectiveness in local market delivery. That
is, a business should "think global" but "act local".
Ghoshal, (1987) developed an organizing framework for global strategy that maps
means and ends. He argues that the key to successful global strategy is managing the
interaction between different goals and means. He classified the objectives of a business
organization into three categories: achieving efficiency in its current activities; managing the
risks it incurs in carrying out those activities; and developing internal learning capabilities to
support innovation and adaptation to future changes. He also classified the strategic tools to
achieve these goals into three categories: exploiting differences in input and output markets;
achieving economies of scale in various activities; and exploiting synergies or economies of
scope. The strategic task of managing globally is to use these strategic tools simultaneously to
achieve strategic objectives.
Bartlett and Ghoshal (1988; 1991) argue that the forces of globalization and
localization work together to transform many industries, and success depends on whether a
business can achieve global efficiency and national flexibility simultaneously. They use the
term "transnational capability" to describe the ability to manage across national borders,
maintaining local flexibility while achieving global integration. They claim this is an essential
requirement to compete globally. Thus, the optimal global strategy is to develop national
competencies but at the same time maintain a worldview.
2. Theoretical Approach to Global Strategy
a. Industrial organization-based theory
Similar to mainstream economics writings on strategy, the literature on global strategy
in the past has been dominated by the industrial organization perspective (Bartlett and
Ghoshal, 1991). In particular, the structure-conductperformance (SCP) paradigm of Bain
(1951; 1956) has been the most popular theoretical framework. According to this paradigm,
external industry structure determines the strategy (behavior) of firms, which in turn
determines their economic performance (Scherer and Ross, 1990). IO-based strategy theory is
best captured in the "coupling principle" (or contingency or consistency), which states that the
"fit" between a business's strategy and its environment has significant implications for
performance (Venkatraman and Prescott, 1990). . General requirements of unification The
relationship between environment and strategy is understood implicitly rather than explicitly
in the literature, however, as it is a direct consequence of the dominant SCP paradigm
(Scherer and Ross, 1990; Venkatraman and Prescott, 1990).
Barney (1991) identified two fundamental assumptions in IO-based strategy theory.
First, firms within an industry or strategic group are identical in terms of the strategic
resources they control (Porter, 1981; Rumelt, 1984). Second, if resource heterogeneity
develops within an industry or strategic group, perhaps through new entrants, this
heterogeneity will be short-lived because the resources that firms use to implement their
strategies are highly mobile (Barney, 1986; 1991). Both assumptions apply treating firms as
abstract economic entities and often as black boxes, rather than as social institutions with
economic goals (Bartlett and Ghoshal, 1991). Thus, the external environment imposes
requirements to which businesses must adapt (Hannan and Freeman, 1976).
In the IO-based model, competitive advantage is seen as a superior performance
position that a business achieves through offering a non-differentiated product at a low price
or offering a differentiated product for which customers are willing to pay a premium price
(see Porter, 1980; 1985). Strategy is understood as a deliberate response by firms to
industry/market imperatives, while competitive advantage can be maintained by business
strategies, such as building barriers to entry; seeking advantages from economies of scale,
experience or learning curve effects, product differentiation, and capital investment; and
raising buyer switching costs (Porter, 1980). Businesses that successfully adapt to these
pressures through strategy formulation and implementation will survive and prosper, whereas
businesses that fail to adapt are destined to fail (Collis, 1991).
b. Resource-Based Theory:
IO-based theories are under increasing challenge from both market realities and the
emerging resource-based view of strategy and competitive advantage. Empirical evidence
repeatedly suggests that industry structure is not the sole determinant of competitive strategy
and performance. The search for other factors led a group identified as "resource-based
theorists" to conclude that the differential endowment of strategic resources among firms is
the primary determinant of strategy and performance. Ideas Different internal resource
portfolios are gaining rapid acceptance in academia (e.g., Barney, 1989, 1991; Collis, 1991;
Conner, 1991; Grant, 1991); Mahoney and Pandian, 1992; Prahalad and Hamel, 1990;
Wernerfelt, 1984; 1989). This view promises to be the richest theory of competitive advantage
and strategy (Barney, 1991; Conner, 1991), particularly in the context of global strategy
(Bartlett and Ghoshal, 1991; Collis, 1991; Prahalad and Hamel, 1990). The term "resources"
is used in a very broad sense by theorists. Following Daft (1983), Barney (1991), defines an
organization's internal resources as all assets, capabilities, organizational processes, business
attributes, information, knowledge, and so on, which are controlled by the firm and enable it
to devise and implement strategies that improve its efficiency and effectiveness.
As Barney (1986) points out, some may prevent the business from devising and
implementing valuable strategies, others may lead to strategies that reduce its performance,
and still others may have no effect on the firm's strategic choices. The most critical resources
are those that are superior in use, difficult to imitate, difficult to replace, and more valuable
inside the business than outside (Porter, 1991). According to Porter (1991), such resources
can arise either from performing activities over time that create internal skills and routines or
from acquiring them outside the firm at less than their intrinsic value due to imperfect market
factors, or a combination of both. The most appropriate types of resources to examine in
strategy research are the organizational skills and routines that drive business activities. As
Porter (1991) argues, underlying a company's ability to link activities or divide them across
units is the following skills and organizational routines.
According to Barney (1991), resource-based theory is based on two fundamental
assumptions in analyzing sources of competitive advantage and business strategy. First, firms
within an industry or strategic group may be heterogeneous with respect to the strategic
resources they control. Second, because these resources may not move perfectly across firms,
heterogeneity may persist. In the resource-based model, competitive advantage is said to
reside in the inherent heterogeneity of the immobile strategic resources controlled by the
business. Strategy is viewed as a conscious move by the firm to capitalize on the special
endowment of strategic resources (Barney, 1991; Ladoet al. 1992; Wernerfelt, 1984).
Following this logic, the key drivers of strategy and competitive performance are internal to
the business, a view that contrasts sharply with IO-based theory. While resource-based theory
recognizes the physical resources of the firm as important drivers of strategy and
performance, it places particular emphasis on skills and intangible business resources as key
drivers of competitive choice (Barney, 1986; Collis, 1991).
2. Globalization:
Globalization, as a concept, means different things to different people. Despite the
widespread use of the concept, despite the common agreement on the tendency of economic
activity to expand beyond national borders, there is to date neither a consistent theoretical
construct nor a clear definition of globalization. There is a very interesting debate between
pro- and anti-globalization scholars and activists. While these debates are interesting, they
largely fail due to terminological confusion over the closely related but distinct concepts of
globalization, internationalization and liberalization, which are often used interchangeably
and hastily. The confusion occurs due to a lack of precise definitions. One can read this vast
literature and often remain confused. The debate largely fails to address globalization as a
fundamental structural transformation of modern capitalism from a historical perspective and
tends to reduce it to a re-articulation of the old state versus market debate. Globalization has
been defined in a number of alternative ways but there are two broad-based approaches that
are commonly used. Early approaches regarded globalization as the spread of market relations
in terms of increased trade and FDI. A broader definition of globalization is the integration of
production, distribution, and use of goods and services among world economies' (Otsubo,
1996: 1). In this sense globalization is synonymous with internationalization. Why do two
terms exist to describe the same phenomenon? Two reasons emerge. First, this kind of
definition proposes an 'original condition', a starting point for the process' in which structural
change, a radical increase in internationalization is expected to occur (Radice, 1998: 3).1
Second, globalization is considered a 'deepening' of international economic relations as
opposed to their broadening in terms of the range of states and other agents involved
(Thompson, 1995: 199). Furthermore, globalization is usually associated with liberalization
firstly because of the pressures of capital mobility, technical change and increased market
competition. It is assumed to have significantly reduced the role of the nation state; and
secondly, liberalization is seen as the most effective way to bring about globalization. From
this perspective 'a truly global economy is dominated by transnational corporations and
financial institutions, which operate in world markets independently of national borders,
national political objectives and domestic economic constraints' (Bairock & Wright, 1996: 3).
This interpretation of globalization has been criticized and challenged by skeptics.
None of these authors deny the importance of increased international trade and FDI. They,
however, challenge the implications of these trends. They argue that there is no clear evidence
of globalization and therefore it is a myth because:
1. The existence of a highly internationalized economy is unprecedented (which implies that it
should be unprecedented). 2. Genuine trans-national corporations (TNCs) appear to be
relatively rare (which implies that they should be more common) 3. Foreign direct investment
is highly concentrated among advanced industrial economies (which implies that it should be
more evenly distributed and include LDCs). 4. Trade, investment, and financial flows are
concentrated in the Triad of Europe, Japan, and North America (which implies regionalization
but not globalization). 5. Major economic powers have the capacity to exert strong
governance pressure over financial markets and other economic trends (which implies that
global markets are not beyond regulation and control) (Hirst & Thompson, 1996: 2).
RESEARCH METHODS:
This research is a library survey, intended to analyze the available literature on the
implications of globalization on international business strategy. The suitability of this method
to the research is the ability to review a wide range of secondary literature relevant to the
research area. The research population consisted of four empirical cases: ICT manufacturers'
strategies to cope with globalization, strategies used by Brazilian companies to survive
China's challenges due to globalization, Globalization strategies and corporate real estate.
This method allows researchers to select cases that have the desired information or required
characteristics that are useful in achieving the research objectives.
This research only uses secondary data taken from various published sources as well as
the internet. These include books, journals or magazines among others. The content analysis
method was used given the qualitative nature of most of the data collected. This method is
quite appropriate in content analysis of documentary materials such as books, journals and
internet sources.
DISCUSSION:
1. The Impact of Globalization on International Business Strategies of ICT Factories:
In a study titled ''International globalization: product strategies of ICT producers'' by
Peter Gabrielsson (2006), the researcher sought to relate how international Information and
Communication Technology (ICT) producers from small and open economies (SMOPECs)
can meet the enormous challenges of globalization in developing products and managing
them during global expansion. Like IO-based theory, resource-based theory sees above-
normal returns as the ultimate goal of the firm (Wernerfelt, 1984). Obtaining such returns
requires either that the firm's products are differentiated in the eyes of buyers compared to
competitors' products or that the firm sells products identical to those of competitors at a
lower cost (Porter, 1985). Thus, the critical issue is how to maintain product distinctiveness or
low costs without making excessive investments. In contrast to IO-based theory, which argues
that competitive advantage can be maintained by firm behavior in response to industry
structure, resource-based theory argues that product distinctiveness or low cost is directly
related to distinctiveness in the inputs (resources) used to make the product (Conner, 1991). In
fact, it is resources that are difficult to copy rather than monopoly power or market position
that bring continuous and above-normal profits to the firm. Moreover, such resource
distinctiveness results from the firm's intelligence or luck in acquiring, combining, and
deploying them, rather than from forces related to industry structure, such as the number of
sellers, entry barriers, product differentiation, or market growth. Specifically, how does
product strategy change when this company moves from international to global and why?
Based on McGrath's (1995) categorization of product strategies, and Takeuchi and Porter's
(1986), the following alternative product strategies can be developed for international
globalization:
a. Localized product strategy. Companies may decide to develop products for only one country
or a limited area. This is inefficient, as it does not capitalize on the often high development
costs in high-tech fields. However, it allows customization to market needs.
b. Modified product strategy. Companies may develop a common product platform that is used
worldwide, but allows for product adaptation based on regional or country-specific
requirements. The cost advantages and leverage of worldwide R&D investments can bring a
significant competitive advantage over the competition.
c. Standardized product strategy. Companies can pursue a strategy to develop products that are
fully standardized worldwide. This provides the highest leverage in development and
manufacturing. It is feasible when the product requires relatively little or no modification.
There are two basic approaches to developing standardized products according to Takeuchi
and Porter (1986). The first option is to develop a product that represents the largest common
denominator, including as many feature requirements as possible in the same product. The
second option is to develop a product with an optimal set of functions and features that
balances market needs and costs.
2. Cross-Case Analysis of Product Strategy Evolution:
Analysis of the evolution of product strategy dimensions across all case companies
investigated in this study revealed four main patterns related to product platforms, product
lines, and individual products during globalization.
a. From local to global product platforms. The product platforms of casing companies have
evolved from local to global platforms with increased modularity in all cases. In the early
1990s, NMP began to look at how the same components, design and user interface could be
used across different units and mobile phones designed for different technology standards
around the world. This new thinking platform was first used in analog products followed by
the DCT digital platform capable of supporting GSM, TDMA and PDC standards. NET
infrastructure products are also increasingly using cross-country global product platforms as
the basis for deriving individual products. A particularly successful platform was the DX 200,
which has evolved into the basis for mobile network switches and Nokia fixed and base
station controllers were followed by ATM and IP-based platforms. In the late 1980s, Salcomp
products were built to customer specifications. When mobile charger products were
introduced, the development of the first product platforms began. The nature of the product
platform has evolved to become global in the sense that the same product platform is currently
used for products shipped worldwide. Finally, Tecnomen systems are increasingly platform-
based. Messaging solution products are built on the Tecnomen eZoner service platform,
which consists of software and hardware designed by Tecnomen and third-party equipment.
b. Expanding the product range during globalization. Several international product lines and
products in each line are selected for global entry in all cases. As globalization progresses, the
number of product lines and products in each line is increasing. New product lines are closely
related. NMP has a number of separate terminal product lines targeted at different
telecommunication standards in the world and also produces other products. In the late 1980s,
NMP focused entirely on terminal manufacturing. As the company became more globalized,
the number of product lines grew and the scope expanded, first from business users to
consumers and then in the late 1990s from voice-centered telephony to new areas such as
gaming, music, and imaging. NET's global entry was made by focusing on the GSM standard
in the early 1990s and providing core elements for these systems such as switches, base
stations, and transmission equipment. As the company globalized, it gradually expanded from
conventional network infrastructure product lines to providing, for example, packet data
networks, multimedia platforms, and equipment supporting services. Salcomp had a large
number of product lines in the late 1980s, ranging from power supplies to various types of
subcontracting. It focused on switch-mode mobile phone chargers and entered the global
market with this. Later in the process of globalization, it first expanded to linear chargers and
then also to other personal handheld device chargers. Finally, Tecnomen had a number of
product lines by the late 1980s in the fields of telecommunications, industrial automation and
data collection systems. It decided to focus on telecommunications in the early 1990s and then
gradually expanded the number of product lines to five as globalization intensified.
c. Evolution towards more advanced product categories during globalization. As companies
globalize, they initially choose product categories from which they have experience and then
expand to more advanced product categories during globalization. NMP sold a wide variety of
different cellular phones, so the individual products were mostly physical goods. However,
since the late 1990s, the company also developed services and offered them through Nokia's
WWW pages to consumers. Nokia also started selling licenses (know-how) for their Series 60
software platform to their competitors. NET products have evolved from single network
components towards the provision of complete network systems, and a number of new types
of maintenance services and knowledge management. Salcomp's products are essentially
physical goods. The company does not offer services, knowledge, or systems for sale. Its
focus is on managing the rapid growth in the cell phone charger business. However, the
company continues to develop chargers further by frequently introducing new charger models
for cell phones and recently also chargers for other wireless devices. Tecnomen supplies its
customers with a total system package that includes equipment (goods), software licenses
(knowhow), installation and training services, and maintenance and support. Since the early
1990s, their scope has expanded from single solutions such as voicemail to larger entities such
as ordering. Therefore, it can be said that the nature of the product has evolved towards a
more demanding and larger delivery on the global stage.
d. Improving product strategy standardization in the era of globalization. The standardization of
case company product strategies evolved from localized to modified (Salcomp, Tecnomen) or
standardized (NMP, NET) during globalization. It was found that NMP evolved from region-
specific platforms and products first to global product platforms and then to standardized
product strategies during the 1990s. NET entered and penetrated Europe in the 1980s with the
NMT standard. The company's focus on GSM, and more recently on 3G standards, allowed it
to harmonize its worldwide strategy since the early 1990s. Salcomp entered the international
market with a highly customized product strategy by manufacturing fully localized electronic
modules for its customers. In the late 1980s and early 1990s, it developed cell phone chargers
and evolved towards standardized product platform. Products are still customized to some
extent for enclosures as well as parts of electronics. Tecnomen entered and penetrated the
international market in the late 1980s and early 1990s. It used a local product strategy where
industrial automation systems were customized for its customers. During the 1990s, it was
realized that a more standardized approach was beneficial and as a result a modified product
strategy was implemented that used global standard product platforms and modularity to a
large extent.
3. The Effect of Globalization on Corporate Real Estate Strategy:
International business is a term used to describe all commercial transactions, in
general, (private and government, sales, investment, logistics and transportation) that take
place between two or more regions, countries and nations beyond their political borders
(Radebaugh & Sullivan, 2007). International business refers to business activities that include
cross-border transactions of goods, services or resources between two or more countries.
Economic resource transactions include capital, skills, people for the international production
of physical goods or services, such as finance, banking, insurance, construction (Joshi, 2009).
According to Rugman and Collinson, international business analyzes transactions that occur
across national borders to meet the needs of individuals and organizations. These economic
transactions consist of trade (import and export) and foreign direct investment (Rugman,
Collinson, & Hodgetts, 2006).
Companies that are active in international business are called multinational companies.
Multinational companies are companies or corporations that have large resources and carry
out various business activities through a network of branches located in various countries and
each branch shapes its business strategy, based on different market characteristics (Cavusgil,
Knight, & Riesenberger, 2008). Multinational companies are based in one country but have
business activities in several countries. There is an opinion that multinational companies are
highly structured companies that run businesses or properties owned in many countries or
companies organized into global production sections.
As to why a company becomes multinational, Ansoff separates two categories (Ansoff,
1984):
a. Operational needs: providing materials, equipment, technology and releasing surplus
production;
b. Strategic needs: ensuring the inviolability of future changes in the external environment,
stable growth (maintaining historical growth patterns, avoiding stagnation caused by
saturation, increasing business volume, increasing growth rate) and better profitability.
The development of international business activities coincides with the widespread
phenomenon of market globalization (Cavusgil, Knight, & Riesenberger, 2008). Market
globalization refers to the growing economic integration and growing interdependence of
countries around the world. Internationalization of firms refers to the tendency of firms to
systematically increase the international scope of their business activities, while globalization
refers to the macrotrend intensive economic relations between countries in the world.
Globalization encourages firms to internationalize and substantially increase the volume and
type of cross-border transactions in goods, services, and capital. Also, globalization leads to
the rapid spread and diffusion of products, technologies, and knowledge in the world, The
process of globalization is a natural process that is the result of the growth and acceleration of
the process of generalization of character and production processes. If globalization is
understood as a process leading to greater economic integration of national economies, as a
process of fragmentation of the world economy and the international economy, than
globalization is the process of opening up national economies through the elimination of
economic and financial boundaries of national economies and thus their transformation into
international economies and financial markets (Jovanovski, 2007).
Globalization is a worldwide trend, in which the world's economies lose their borders
and connect with each other. Companies are no longer confined to their borders and can carry
out various business activities around the world. Many companies are present in markets
around the world, buy their raw products or conduct research and development around the
world. Trade barriers are falling and global trade between countries in goods and services is
growing faster than domestic production. As a result, companies cannot afford the luxury of
assuming that domestic market success will lead to long-term profitability (Cullen &
Parboteeah, 2010). The flow of money across national borders is freer, and companies seek
better financing rates in the world and investors everywhere seek more favorable returns on
their investments. Globalization developed from an economic aspect has two main
components: market globalization and production globalization. The globalization of markets
refers to the merging of historically distinct and separate national markets into one large
global market. In recent years, it has been constantly discussed that the tastes and preferences
of consumers in different countries and nations are beginning to resemble at a global level and
the way they help create a global market. The most common global market is not a market for
mass consumer products, as there are still differences between countries in terms of tastes and
preferences, which still have great significance and are a kind of brake on globalization, but it
is a market for industrial goods and materials that have universal worldwide needs. The
globalization of production refers to the tendency of enterprises to find suppliers of goods and
services from locations all over the world, so as to realize the advantages of national
differences in the price and quality of production factors. Companies do this to reduce overall
costs and thereby improve the quality or enhance the functionality of their product offerings
to compete more effectively (Hill, 2008).
In economics, internationalization is seen as the process of increasing firm
involvement in international markets (Susman, 2007). The process of globalization, the
struggle for survival, constant pressure and the need to maintain and strengthen market
positions, force companies to want to continue to innovate and look for opportunities to
achieve competitive advantage and expand business activities outside the domestic market.
The entry of companies into the global market is inevitable not only because of the limitations
of the domestic market but also because of globalization; domestic market share is threatened
by foreign competition (Bartels, Buckley, & Mariano, 2009). There are several specific
factors that promote globalization and guide firms to strive for business development and
growth through international and global operations and include: political changes,
technological developments, international business climate, market development, costs and
competition (Ball, McCulloch, Geringer, Small, & McNett, 2001).
a. Political change. The trend of globalization is uniting and socializing global societies, as well
as, forming preferential trade agreements and groupings such as NAFTA and the European
Union, which bring together more countries in a single market, enabling significant market
opportunities for companies. Two aspects of this trend, which contribute to the globalization
of business operations are: the progressive reduction of trade and foreign investment barriers
by most governments, leading to the intensive opening of new markets by international
companies, which also export them and establish production facilities in them, and the
privatization of most of them. the privatization of most industries in the former communist
countries, as well as the opening of their economies to global competition.
b. Developments in computing and communications technology have enabled the increased flow
of ideas and information across national borders, providing an introduction to goods to
consumers around the world. The Internet and networking have enabled small companies to
compete globally, as a result of the rapid flow of information, regardless of the physical
location of the seller or buyer. Also, it allows international companies to hold corporate
meetings among managers from headquarters and branches, without wasting unnecessary time
traveling.
c. The development of communication and information technology has contributed to the
process of globalization, but it has also provided instruments that facilitate the process of
globalization. Emerging markets also recognize the economic benefits, technological
developments, and growth opportunities that globalization provides them.
d. Market development. Information and communication technologies, the rapid development of
international tourism, widespread cultural exchanges and improved living standards, in many
developing countries have contributed to the emergence of a group of consumers in different
countries and regions of the world with similar profiles of education, lifestyle, purchasing
power and for good products, as well as, aspirations for high quality. This scenario, combined
with the liberalization of international trade and the availability of global distribution
channels, opens up huge opportunities for companies wishing to offer their products to the
global market. Huge market potential exists beyond domestic market, which is why
companies go out in foreign markets, generate sales and have the opportunity to earn profits
that cannot be achieved domestically.
e. Expenditure. The liberalization of trade and investment flows that emerged in the 80s of the
last century, which is inevitably moving forward, is a stimulus for business globalization.
Trade liberalization, global consumer habits, rising development costs and the need for
economies of scale, pressure from foreign competitors in the domestic market as well as the
development of information and communication technologies, are considered as drivers of
globalization. Due to the need to introduce new products and invest in research, development
and innovation, achieve economies of scale, reduce costs and access to cheaper raw materials;
companies are forced to plan activities, taking into account the global market. Economies of
scale and cost reduction are the main objectives of management. That is why companies
decide to locate production in countries where development and production costs are smaller.
f. Competition. One of the reasons why companies join a global strategy is the need to maintain
or gain a competitive advantage in foreign markets and avoid competition in domestic
markets. Competition in international markets is huge and growing, with more multinational
competitors winning markets around the world. Companies improve their competitive
position by opposing competitors in international markets or prematurely intruding into
competitors' domestic markets to destabilize or suppress their development.
As globalization increases in speed and prevalence, and for companies more
opportunities open up easily, to perform in international markets. Managers develop and adapt
internationalization strategies to transform their organizations into globally competitive firms.
Managers seek to coordinate supply, production, marketing, and other activities based on
international activities. The organization of firms globally is challenging and requires
strategic positioning, organizational skills, a high degree of coordination and integration,
attention to individual market needs and the application of common processes. Strategy, in an
international context, is an organization's plan to position itself positively, compared to its
competitors with competitors. This plan directs the company to selected customers, markets,
products, and services in the global market, not just specific international markets. Strategy in
the international context should help managers to formulate a strong international vision,
allocation of scarce resources in the World, key market participation, implementation of
global partnerships, and engagement in competitive activities in response to global rivals and
establish activities that add value at the global level (Cavusgil, Yeniyurt, & Townsend, 2004).
When companies compete outside their country, they face a number of challenges and
pressures. These pressures and challenges to maintain competitiveness, require companies to
cut costs, so that consumers do not rate their products or services as too expensive. This has
led to the need to locate production facilities in places where production costs are lower, and
the development of high-standard products in most countries. In the context of pressure to
reduce costs, managers should strive to be ready to respond to local pressures to adapt
products to the needs of the local market, where the company is active. This requires
differentiation of their offerings and strategies in different countries, in order to maintain
consumer tastes and preferences, but also differentiation of distribution channels, human
resource management, and government regulations. Since strategies and tactics for product
and service differentiation in local markets incur additional costs, it can also lead to increased
costs for the company. These two pressures that companies face, result in four basic strategies
that companies use to compete in the global market. These strategies are: international, global,
multi-domestic and transnational strategies (Dess, Lumpkin, & Taylor, 2004). The strategy to
be chosen by a company depends on the pressures faced by cost-cutting and the importance of
adapting to local markets.
In another study titled Globalization and corporate real estate strategy (Linda Too,
2010), the researchers sought to examine the impact of globalization on corporate real estate
strategy. Specifically, the study sought to identify the capabilities of realestate firms that are
essential in the highly competitive business climate brought about by globalization.
a. Real Estate CapabilityCompanies:
1) Flexibility Capability
As many organizations strive to compete in the time-sensitive global marketplace, one re-
emerging issue seems to be a key decision of their global business strategy
increasing/maintaining the company's strategic flexibility. pace of globalization and the
emergence of fierce competition requiremanagers to develop amore flexible organizational
platform to cope with the accelerating pace of change.
2) Network organization capabilities
Following the forces of globalization, organizations have changed the focus of their strategic
game plans to include the concept of economic scope, i.e. how to compete effectively and
efficiently in a large number of geographically diverse countries with significant differences
in economic, cultural and legal environments (Garten, 1996, 1997). To achieve/gain economic
scope, many global organizations utilize the perspective of strategic real estate networks to
enable their rapid expansion into a large number of diverse markets simultaneously. The
dynamic power of global networks is evidenced by the pace of mergers and acquisitions
taking place in the market and at the same time the increasing number of global strategic
alliances being formed. The formation of relational organizational structures such as joint
ventures, strategic alliances and formalized cooperative real estate relationships can have a
dramatic impact on the type of real estate demand/needs of multinational corporations
(MNCs; Khanna et al., 1998; Gulati et al., 2000). This strategic cooperation orientation allows
organizations to expand rapidly in geographically dispersed locations while saving capital
spent on real estate and at the same time, maintaining the greatest degree of strategic stability
and flexibility (Lippman and Rumelt, 1982; Dyer and Singh, 1998; Hitt et al., 1998; Ahuja,
2000).
3) Managerial learning ability:
Globalization, deregulation and advances in information technology and telecommunications
have intensified pressure on multinational corporations to change their standard ways of
organizing and managing corporate real estate activities (Hitt et al., 1998). One of the most
critical issues is the development of managerial capabilities that are unique and can be used to
differentiate the strategic thrust of the organization (Collins and Montgomery, 1995). It is
widely agreed that, in a highly competitive environment, a corporate real estate strategy needs
to be developed that provides organizational agility (i.e. flexibility and responsiveness to
changing strategic issues). The flow of internal and external strategic issues (i.e. strengths,
weaknesses, threats and opportunities) and competitive conditions. To cope with rapid
change, real estate managers over time develop familiarity with the features of these intervals
and competitions by studying not only their occurrence and relevance but also their reciprocal
(individual project-level) characteristics (Thomas and D'Aveni, 2004a, b). In other words,
they learn the contingency of the decision whether to respond and when to respond. An
important capability to support organizational agility is learning about the contingencies
between different levels of problem emergence and some underlying circumstances in highly
competitive environments (Bogner and Barr, 2000).
Rapid changes in the business environment have created a gap between the rapidly
changing market environment and the slow changes in the business education curriculum.
Some requirements of the global market have nothing to do with business education at the
university level. For example, acquiring communication skills, computer skills, being
multilingual are inputs for the university stage. Therefore, any shortage of these skills should
be a strategic issue for the pre- university school system. The higher the quality of high school
graduates, the higher the quality input to the university level. At university level, analytical,
critical thinking, financial information analysis can be acquired. To close the gap between
acquired and required skills, some market-based strategies should be applied to curriculum,
pedagogy, skills development, use of technology, faculty development, and use of strategic
planning for business programs. Educators should adapt strategies that develop skills such as
analytical/critical thinking, written communication, oral communication, computer
technology, decision-making, interpersonal skills, continuous learning, teamwork, leadership,
risk analysis, and negotiation. The use of technology in teaching is important for business
graduates due to ongoing and rapid technological advances. These advances are making
business models and transactions more complex, shortening product life cycles, and driving
dynamic change in the business community.
CONCLUSIONS:
Today, the word international company is a fairly common phenomenon, reflecting
actual business transactions and major expansions between a number of people from different
cultures and with different approaches. What unites them in a complex network of
relationships is the need for development, rapid exchange of resources and tools and
integrated cooperation, which should contribute to ensuring cooperation and ensuring capital
transfer. It can be concluded that the current decision to cross domestic borders and
internationalize business is a prerequisite for serious growth and development of a business
entity.
Global Expansion Strategy of Starbucks Company in International Business
BACKGROUND
Everyone wants their business to expand globally. In the business world, expansion is
an effort to expand or enlarge the business network of a company both in terms of production
and distribution. By entering the world of international business, companies will get many
positive impacts, such as being able to expand sales of a product, realize human resources
who are proficient, skilled and follow technological developments, and strengthen relations
between countries. However, in addition to having a positive impact on international business
activities, there are also business risks that must be anticipated and managed.
Every company that runs an international business will face many problems, where
companies have to change their way of thinking from a simple domestic market to a
complicated or complex world market. Therefore, in conducting global expansion, companies
must certainly be able to plan and set strategies so that they can run as expected.
Starbucks is one of the companies that has expanded globally. Starbucks was founded
by Jerry Baldwin, Gordon Bowker, and Zev Siegel, and opened its first store in 1971 in
Seattle, United States. In March 1987, Baldwin and Bowker decided to sell Starbucks, and it
was successfully bought by Schultz. Schultz combined all of his business operations under the
Starbucks brand and committed to making the cafe concept a business, with additional sales
such as nuts, tools, and other items in Starbucks stores. In 1992, Starbucks successfully went
public and then entered a period of great expansion. By the beginning of the 21st century,
Starbucks was present in dozens of countries around the world and operated more than 20,000
stores.
THEORETICAL STUDY:
Definition of Strategy
Strategy comes from the Greek word strategos, which means general. Hence the word
strategy literally means "Art and General". This word refers to what is the primary concern of
the top management of the organization. Specifically, strategy is the placement of the
company's mission, the setting of organizational goals by tying external and internal forces,
the formulation of specific policies and strategies to achieve goals and objectives. Ensure its
proper implementation, so that the main goals and objectives of the organization will be
achieved.
Strategy is an overall approach related to the idea, planning, and execution of an
activity within a certain period of time. In a good strategy there is coordination of work teams,
has a theme of identifying supporting factors in accordance with the principles of rational
implementation of ideas, efficiency in funding and has tactics to achieve goals effectively.
Strategy shows the general direction that the organization intends to take to achieve its goals.
This strategy is a big plan and an important plan. Every organization to achieve its goals. The
strategy is the big plan and the important plan. Every well-managed organization has a
strategy, even if it is not explicitly stated. Regarding the definition of strategy, the following
definitions will be mentioned: According to Alfred Chandler (2017: 89) strategy is the setting
of goals and the direction of action and allocation of resources needed to achieve goals.
According to Kenneth Andrew (2015: 65) strategy is a pattern of goals, objectives or policy
objectives and plans. The plan is important to achieve that goal which is expressed in ways
such as setting the business adopted and the type or what type of organization it will be.
According to Buzzel and Gale (2013: 778) strategies are key policies and decisions
used for management, which have a major impact on financial performance. These policies
and decisions usually involve important resources and cannot be replaced easily. According to
Konichi Ohinea (2014: 9) business strategy is the sole competitive advantage of planning to
obtain, as efficiently as possible, the most final position that can be maintained in the face of
its competitors. So, corporate strategy is an effort to change the strength of the company that
is comparable to the strength of its competitors, in the most efficient way.
According to Griffin (2016: 52) strategy is a comprehensive plan for achieving
organizational goals. (Strategy is a comprehensive plan for accomplishing an organization's
goals). Strategy is a comprehensive plan in order to achieve organizational goals. For
companies, strategy is needed not only to obtain social and managerial processes by which
individuals and groups get what they need and want by creating and exchanging products and
values with other parties. Strategy is the most important factor in achieving company goals,
the success of a business depends on the ability of foam leaders to formulate the strategies
used. The company's strategy is highly dependent on the company's goals, circumstances and
existing environment. Strategy is the overall effort, in order to achieve goals and lead to the
development of detailed marketing plans.
Expansion:
Enny Pudjiastuti and Suad Husnan in (Nadya M.M, et al, 2023) define expansion as a
type of business growth activity carried out by increasing capital and production capacity, by
adding units for diverse production needs and the acquisition process (merger) with several
other businesses. Efforts to boost economic activity and expand the corporate sector are
known as expansion. An increase in the cost of products and services, an increase in the
amount of money in circulation, an increase in production, and an increase in consumer
spending usually characterize this economic development. According to Alex S. Nitisemito in
(Nadya M.M, et al, 2023), expansion is a strategy used by a business to increase both its
production capacity and market reach. Alex claims that the capabilities of the company's
goods and services are what drive this situation. Global expansion is also the process by
which a company expands its operations into new markets outside of its home country. This
can be done through various methods, such as opening new sales offices, manufacturing
facilities, or distribution centers abroad. Global expansion can be a risky proposition, but it
can also be a very rewarding one. By expanding into new markets, companies can tap into
new sources of revenue, increase brand awareness, and gain competitive advantage. This can
be done through various means, such as opening new sales offices, manufacturing facilities,
or distribution centers overseas.
International or Global Marketing:
International marketing (in Dhea Nita S.R, et al, 2021) is defined as marketing that
reaches one or more countries. Globalization is the marketing activities of multinational
companies that do business around the world in several countries by utilizing global
marketing tactics, global markets, and global products and standards. International trade is the
exchange of goods and services between residents of one country and residents of another on
the basis of mutual agreement. The population in question may be between people (people
and individuals) or between individuals and the government of one country and the
government of another. In principle, international marketing is a marketing activity that seeks
to penetrate across national borders in a geographical, political, legal, social and cultural
sense. James E Keegan states that global marketing: 'A series of marketing activities carried
out by companies that emphasize the efficiency of costs and efforts that penetrate national and
regional boundaries, the opportunity to transfer products, brands, and other ideas that
transcend countries, meet the needs of global customers and develop coordination between
national marketing infrastructure into global marketing infrastructure' (in Muslimatul, et al,
2022). Global marketing, as defined by Warren J. Keegan and Mark C. Green (2017:585), is
the commitment of organizational resources to pursue global market opportunities and
respond to environmental threats in the global marketplace. This is equivalent to the
commitment of organizational resources to pursue opportunities in the global market and
respond to threats in the global market environment.
The Complexity of International Marketing (in Dhea Nita S.R, et al 2021):
1. Buyers and sellers are separated by a boundary.
2. Goods must be shipped and transported from one country to another according to different
rules, such as restrictions imposed by each government.
3. Countries have differences in language, currency, rank and scale, and trade laws.
Like every business in this world, it definitely requires good technical marketing
planning to advance the development of the company. Now in this case there are several
stages to become international marketing, namely as follows:
a. No foreign marketing.
The corporation has maintained contact with communities around the world, but not for lack
of initiative or lack of business to advertise abroad. The company's goods circulate in the
international market as a result of orders from overseas, foreign clients visiting the company,
or on behalf of exporters.
b. Infrequent foreign marketing.
i.e. Infrequent international marketing Companies start marketing to overseas markets, but
only when they have excess production. If the domestic market can still take it, this activity
will be stopped. At this point, neither the organization nor its goods are adapted to the world
market.
c. Regular foreign marketing.
I.e. Manufacturers have planned to sell their products in international markets. Marketed
either directly or through domestic and international distributors. The goal is to begin to
understand the demands and desires of foreign markets in order to improve the domestic
market.
d. Global Marketing Operations
In this section, producers are required to participate in the international world around the
world. The activities are not limited to marketing, but there are also planned production
operations and organizations that can compete in the global market.
Globalization and market competition require all managers to be aware of the global
environment. International marketing is described as the performance of commercial
operations, including pricing, promotion, and distribution of goods (items and services) to
customers/consumers in more than one country for profit. The industry is a major contributor
to GDP or gross domestic product in developed countries and a major source of employment
in both developed and developing countries. The main forms of services in developed and
developing countries often differ. In developing countries, for example, the dominant service
sector includes low-skilled activities such as wholesale and retail, tourism, and customized
services.
Starbucks Profile:
Starbucks is a well-known coffee franchise company based in the United States. The
company was founded in 1971 in Seattle, Washington by three founders: Jerry Baldwin, Zev
Siegl, and Gordon Bowker. Starbucks is known for serving various types of coffee, tea, cold
drinks, and snacks around the world. The name Starbucks was inspired by Moby Dick, which
evokes the seafaring traditions of the coffee traders of old.
Starbucks has grown into the world's largest coffee franchise chain with thousands of
stores in various countries. They offer various types of coffee drinks such as espresso,
cappuccino, latte, frappuccino, and many more. Apart from coffee drinks, they also provide
tea, juice, and other flavored drinks. In addition, Starbucks also sells snacks such as breads,
cakes, sandwiches, and salads and offers a comfortable environment for its customers. In
recent years, Starbucks has also been active in conducting sustainability-related initiatives and
paying attention to the resources used in its operations. They are committed to reducing their
carbon footprint, supporting sustainable coffee farmers, and reducing the use of single-use
materials.
Starbucks Vision:
Starbucks' vision is to "Build a unique third neighborhood that becomes the place of
choice for people to relax outside of their homes and workplaces." This concept of "third
neighborhood" refers to a place where people can relax apart from home (first neighborhood)
and workplace (second neighborhood).
Starbucks Mission:
Starbucks' mission is "To build a coffee brand and be the world's leading coffee service
provider, while considering positive social impact or inspiring and nurturing the soul of every
human being, one person, one cup of coffee, and one neighborhood at a time". Starbucks is
committed to serving high-quality coffee and providing a superior customer experience, while
also being sustainable and empowering the communities in which they operate.
International Business:
Sattar (2017:386) describes international business as "any business activity that takes
place between two or more countries." International business is a business activity that takes
place beyond national borders. International business is defined by Griffin (2020) as any
business that engages in cross-border commercial transactions between individuals, private
companies, or public sector organizations; it also includes cross-border transactions. There are
three very important factors for companies that want to compete successfully in the global
market according to Griffin (2020), namely:
1. Global efficiencies, this refers to the company's ability to produce goods or services at a lower
cost than its competitors.
2. Multinational flexibility, refers to a company's capacity to modify its products and services to
meet diverse market demands.
3. Worldwide learning, this refers to the company's capacity to learn from its experiences in
other regions.
The impact of international business on global expansion can be significant. By
expanding into new markets, businesses can reach new customers, increase sales and boost
profits. In addition, global expansion can help businesses to diversify revenue streams, reduce
risks, and improve their competitive position. Effective management is essential to maximize
the benefits and reduce the risks of international enterprise. The following are some specific
impacts of international business:
1. Increased trade and investment: Increases economic growth and job creation, enabling people
to move out of poverty.
2. Dissemination of technology and ideas: Increase production and living standards while
reducing hunger and malnutrition.
3. Promotion of peace and understanding: Bringing together individuals from different cultures,
breaking down prejudices and promoting cross-cultural understanding.
Overall, international business plays an important role in the global economy. Through
expansion into international markets, companies can expand their reach, increase growth, and
create new opportunities. However, international business also requires a deep understanding
of the unique aspects of each global market, as well as the ability to navigate the associated
challenges and risks.
RESEARCH METHODS:
Overall, this systematic review uses data from primary studies in the area of interest.
The systematic approach to desk research aims to obtain a systematic overview of
research/publications. Such an approach prioritizes empirical studies relevant to a particular
question. In general, This systematic review used data from primary studies in the area of
interest rather than direct studies. Electronic and online database searches, viz: Google
Scholar, Connected papers, Scopus, Mendeley according to the keywords of interest to the
authors. In addition, internet and manual media searches were also conducted to identify other
publications and secondary references by authors identified in previous searches. The search
strategy used search terms, such as "market expansion"; "global marketing"; "international
business" and "Starbucks". The words "expansion strategy" and "global expansion" made the
focus searched by the author to determine the choice of research that matches what the author
refers to in order to avoid expanding the research and limiting this research.
A publication search was conducted between 2015 and 2023 to find relevant studies on
the global expansion theory of international trade as a whole as a basis for further research.
For the purpose of writing, global expansion literature was found and classified into four
types of research. These include the main purpose of the study, the type of research identified
through the systematic review process, such as whether qualitative or quantitative, the data
collection method, the sample and the results. The findings of the systematic review,
empirical studies were selected for review, then the results and discussion of the systematic
review were analyzed based on emerging themes and followed by suggestions.
The researcher categorized the articles and then examined their structural explanations
in relation to their relationship to the research topic. The author then compared to see if there
were any related journals. The discussion of the research findings was strengthened and made
more focused by including other journal articles and textbooks for clarity of the research
findings discussed by taking sections or summaries from each of the journals. After
summarizing the 15 journals, the author was able to conclude by combining all the results of
the previous research.
RESULTS AND DISCUSSION:
Some previous studies include research by Ezra Randalinggi Parrangan, Srikandi
Kumadji, Edy Yulianto (2015) in a journal entitled "Analysis of Corporate Strategy in
Foreign Market Expansion (Case Study on Pt. Semen Indonesia (Persero) Tbk in the
acquisition of Thang Long Cement Company in Vietnam)". The results obtained in this study
are that PT Semen Indonesia has succeeded in becoming the first state-owned company to
expand abroad with a strong vision and desire to grow. The company also succeeded in
expanding its overseas market with the right strategy. In-depth analysis and always following
market developments are required by the company.
Meanwhile, according to the results of Robby's research (2019) in a journal entitled
"Starbuck Expansion In Developing Coffee Business In Indonesia In 2013-2017", based on
the results of this study, the development of Starbucks in Indonesia has changed in various
dimensions such as profit, revenue, sales, and number of outlets between 2013 and 2017. In
addition, it was found that Starbucks Corporation used the canvas business model in
Indonesia during this period.
The next research is Zhelun Wu et al (2021) with the title "The strategy of
international brand expansion of it enterprises: a case study based on Huawei". This journal
concludes that IT companies can learn from Huawei's brand expansion strategy to
successfully expand their brands in the international market. By making effective innovations
in product positioning, market segmentation, location selection mode, marketing methods,
and global public relations system construction, IT companies can achieve success in
expanding their brands internationally.
The next research is from Guoliang Frank Jiang a and Guy L.F. Holburn (2018) with
the title "Organizational performance feedback effects and international expansion". The
results show that companies that perform closer to their managerial aspirations are more likely
to enter foreign countries than companies that perform poorly or perform well.
Based on research by Nadya Maulidya M et al (2023) in a journal entitled "Analysis of
Global Marketing Expansion Strategies in Product Policy" it can be concluded that
companies can use several strategies to market their products their products in international
markets by adapting to local needs and preferences while minimizing costs.
Next is the research of Sahat Aditua Fandhitya Silalahi (2016) in a journal entitled
"International Expansion Strategy of State-Owned Enterprises in the Telecommunications
Sector". The results showed that the telecommunications sector is a potential international
expansion area for State-Owned Enterprises (SOEs). Licensing strategies, such as license
alliances and license joint ventures, can be effective for international expansion, but must be
combined with other approaches.
Further research by Fijria Putri Hadane (2015) in a journal entitled "Starbucks
Corporations Strategy in Bringing the Influence of Waves Of Coffee Culture in Japan in
2005". The results of the study explain that Starbucks chose Japan as its first expansion
location because of the similarities between Japanese and American culture. Starbucks is
looking for partners who share the same values, experience in multinational franchise
business, financial resources, and knowledge of retail locations and real estate.
Next is research from Yandi Suprapto, Melvin, Richmond and Adi Wilyanto (2023) in
a journal entitled "Analysis of Strategy and Risk in International Business Expansion at
A&W". The results showed that A&W has successfully implemented a transnational strategy
by adapting its products and marketing strategies to meet local market needs.
Furthermore, research by Nanda Pradhana Suprapto (2020) in a journal entitled "The
Strategies Of Coca-Cola's Expansion In The Globalization Era". The results of the study
show that Coca-Cola uses several strategies to develop their products, including brand
strengthening, distribution networks, improving human resources, and paying attention to
local culture in each country where they operate.
Further research conducted by Suprapto, Yandi (2023) in his journal entitled "Analysis
of International Business Risks at Starbucks Company in Global Business Expansion". Based
on the results of the previous analysis and discussion, it can be concluded that Starbucks faces
four risks. Starbucks is faced with country risk, cross-cultural risk, financial risk, and
commercial risk that can occur in international business.
Further research conducted by Citra, Made (2019) in his journal entitled "Expansion
Strategy of PT Garuda Indonesia Tbk through International Collaboration with SkyTeam
Airline Alliance". The researcher draws the conclusion that Garuda Indonesia's joining the
SkyTeam global aviation strategic alliance is an expansion strategy of PT Garuda Indonesia
Tbk. to the global market. Garuda Indonesia's decision to engage in the SkyTeam global
aviation alliance internal factors behind Garuda Indonesia's actions the main external factors
affecting Garuda Indonesia are various restrictive international air law restrictions.
Furthermore, Rizaldi, Ruri (2015) in his research entitled "Mnc Starbucks Coffee
Expansion in Asia (Case Study: China). concluded that its success in becoming one of the
most used brands as an example of the best MNC is the target of all mentioned by Michael E
Porter in the theory he introduced, namely Diamond theory.
The next research was conducted by Muhammad Azriuddin et al (2020) in the title
"Becoming an International Brand: A Case Study of Starbucks". The results showed that
Starbucks has become a successful international brand by focusing on its mission to inspire
and nurture the human spirit, offering a variety of drinks and food, and providing high-quality
services. Starbucks promotes its products through mass media and adjusts itself to meet
customer satisfaction.
Furthermore, research conducted by Hartanto (2018) in the title "Multinational
Company Strategy in the Era of Globalization (Glocalization Case Study in the Expansion of
"Indomie" to the Middle East and African Markets)" has the results that is, the company has
implemented a strategy to export Indomie to more than 80 countries around the world, by
ensuring quality control and adapting to local culture and values.
The last research was conducted by Michael Setiawan et al (2023) in a journal entitled
"Analysis of Starbucks in Entering the Global Market". This study found that Starbucks has
conducted a very detailed analysis in terms of its target market, market risk, promotional
tactics, and competitor environment. The methodology used is qualitative research using
internet search methods.
CONCLUSIONS AND SUGGESTIONS:
Conclusion
Based on the findings of the literature mentioned above, many conclusions can be
drawn regarding Starbucks' worldwide expansion strategy in international business.
According to previous research, Starbucks has successfully grown worldwide with strong
goals and ambitions to expand. They effectively adopt proper methods to enter the worldwide
market, such as thorough market study and constant market monitoring. Starbucks adopted
the business model canvas as an expansion strategy in Indonesia, which resulted in an
increase in profit, revenue, sales, and the number of company locations.
According to research, organizations that achieve their managerial goals are more
likely to penetrate foreign markets. In addition, businesses must adapt to local demands and
tastes while minimizing the costs associated with promoting their products in foreign markets.
Joining a global aviation alliance, for example, can be a successful collaboration and strategic
alliance strategy. To expand worldwide, companies must strengthen their brands, distribution
networks and human resources, and pay attention to the local culture in each region where
they operate.
The company should also conduct an international business risk analysis to identify
and address risks that may occur. With these strategies, Starbucks has managed to become a
successful international brand and face the challenges in their international business.
Advice:
Based on the results of the research that has been conducted, there are several
suggestions for Starbucks' expansion plans around the world. First, Starbucks should conduct
an in-depth market study to understand the local demand and preferences in each country
where Starbucks plans to expand. In addition, forming strong alliances with partners who
have relevant knowledge and resources can help speed up the expansion process. Starbucks
must also adapt to the local culture and innovate products and marketing to meet changing
market expectations. Finally, effective risk management will assist Starbucks in mitigating the
unfavorable impact of the development of foreign companies. Starbucks can improve its
position as a successful brand worldwide by implementing these recommendations.
