Business Policy and Strategy-Capstone project part 4 see attachments previews project 1-2-3

Starbucks, today’s global coffeehouse, has one of the best coffee chains and providers in the world. It was started in 1971 by 3 friends (Jerry, Zev and Gordon), they were passionate about the idea of selling fresh coffee beans. Things started to change when Schultz wanted to develop this business into coffee serving with friendly sitting environment. The idea of serving coffee along with sitting culture made a hit and started its own development in fast-paced way.

According to the statics showed, Starbucks are operating 17,706 stores in more than 50 countries across the world, with 8950 company operated and 7956 licensed stores. People are used to have a cup of coffee in Starbucks while they demand a place to sit and relax. For these young generations, they prefer sitting, drinking coffee with Wi-Fi internet, and that is what Starbucks is trying to create these facility in near future.

2. ENTRY MODES OF STARBUCKS

Globalization in recent years enabled big organizations to develop and expand their business outside their home country i.e. Asia, European Nations or Latin America. At certain point of time many firm realize a limited growth in its current market and this leads a firm to think about going global market. Starbucks felt the same in North America and they started expanding their business in overseas market. However, a good entry mode strategy can decide how good business can go in overseas. An entry `How to enter or expand into foreign markets it is one of the most important strategic decisions international firms have to make. There are many factors influencing the entry modes.

Major factors influence the decisions of entry modes. One factor in the entry mode strategy and why it influences Starbucks entry mode strategy in Costa Rica is the location. Finding a place big enough for about 200 square meters, will be used in the least of 25 people and will have the same features as the other three stores in Costa Rica. Starbucks launched in Liberia, Costa Rica, north about 4 h 51 min (164.4 miles) across Route 1 from the capital. Even further north to the Nicaragua border, Costa Rica has seen an increase in international franchising. Other foreign chains include recently opened Spanish Saboreate and Espresso Americano.

A. Internal Factors

The size of a firm decides its entry modes. The bigger the firm is, the ability to control business is higher. Starbucks is a comparatively large firm with its enriched assets and years of international experience. Starbucks have the ability to expand resources and absorb high risks with full control on the profit and responsibility. Product and service characteristics have decided what type of entry mode is suitable for companies. As Starbucks is selling soft drinks in coffee industry and then it’s belongs to a soft industry. The right way to enter a foreign market is licensing or contract manufacturing.

B. External Factors

Sociocultural difference can influence the operation of the company. Due to distant location, local government policies, and cultural issues, Starbucks in Costa Rica prefers partnership on the global expansion. Starbucks' believe this can help them to understand better of local people and their culture.

"Starbucks' have faced country risk, demand uncertainty, and a community rollback; this made its decision of opening a store to be withdrawn. They have to consider and balance properly the culture of Costa Rica. Starbucks acquire majority joint-ventures or company owned operations due to foreign market size and potential growth in Costa Rica.

C. Desired Mode Factors

Starbucks in the process of global presence is mainly in favour of joint venture and company-owned franchises. Some reason, they are sharing risk with each other, have a control of the market with resource commitment, and its adaptation and standardization strategy to the local market.

D. Transaction Specific Factors

Starbucks looks for the partnership in the foreign market of Costa Rica, and they also care for the other party sharing the same value and vision. This will keep them trustworthy to the company and each other, and there is no need to monitor other sides tightly. This makes Starbucks show preference towards licensing agreement.

CONCLUSION

Entry mode is not the only element to be considered when entering another country. There is another challenging task in international marketing; it will be same or different from domestic market. This is important as it determines how firm operates in the market and how it competes with other firms.

Starbucks has built its global image through various expansion scheme year by year. Global market experience has already led them into the combination of standardization and adaption. To sustain the success of coffee business, it has to consider the research and innovation into the account. In expansion of Starbucks global market, the common strategy revolves around standardization whereas it has blended its products with localization. It is believed at Starbucks that the core product must be genuine and comply with the standardization whereas the other elements can change its shape according to the local environment. Going to Starbucks in Asia, France, Greece, Kuwait or European Nations and you will drink the same espresso, but food will have a local flavor. But where adaption is needed to fit cultures, also Starbucks believe in keeping the local staff and managers as they can build a good relationship with other customers.

REFERENCES

Anonymous. (September 9, 2002). Starbucks Corporation: Competing in a Global

Market. Business Week , p. 100-110.d

B, C. L. (2007). The choice of entry mode strategies and decisions for international

market expansion. Journal of American of Business , p. 322.

COLLINS, ALLISON. Mergers & Acquisitions Report. 12/3/2012, Vol. 25 Issue 49, p4-4.

1p. Retrieved from Grantham University

Congcong Zheng. Journal of International Business Research. Jun2012, Vol. 11 Issue 2,

p129-141. 13p. Retrieved from Grantham University

Marketing Week. 7/14/2011, Vol. 34 Issue 28, p4-4. 1/4p.Retrieved from Grantham

University

 Fridell, Gavin. Journalof Business Ethics. May 2009 Supplement1, Vol. 86, p81-95.

15p. DOI: 10.1007/s10551-008-9759-3. Retrieved from Grantham University

Starbucks Corporation SWOT Analysis. Jan2014, p1-12. 12p. Retrieved from Grantham

University