Internationalisation of Starbucks
[pic 1]MASTER OF SCIENCE INTERNATIONAL BUSINESSUNDERSTANDING INTERNATIONAL BUSINESS – 16/173,000 WORD ESSAYSTARBUCKSRYAN DINGLEY DIN12450949MAHFUZUR RAHMAN20/12/2017WORDS – 3295Abstract This report will analyse the ways in which Starbucks can internationalise their business in different markets. By using relevant international business theory and carefully selected entry modes of specific markets, the reader of this report should gain an in-depth knowledge of the pros and cons when expanding the Starbucks brand globally. The main findings in this report show that the Uppsala model is highly applicable to the work of Starbucks’ international expansion. The two markets of China and Canada are explored with the use of a PESTLE analysis, which analyses the pros and cons which could affect direct investment. Specific entry modes are chosen for each country, that being a joint-venture for China and the use of franchising for Canada. The reasoning for this is of a greater scale, but the reader must be aware that they are carefully picked in order to reduce the amount of risk involved, whilst allowing for the greatest business opportunities.
Table of Contents1.0 Introduction 12.0 International Business Theory 13.0 Market 1 33.1 Selection of Market – 33.2 Suitability 33.2.1 Political and Legal 33.2.2 Economic and Financial 43.2.3 Social and Cultural 43.2.4 Technological and Infrastructure 5 3.2.5 Environmental…………………………………………………………………………………………………………………63.3 Entry Mode 63.3.1 Selection 63.3.2 Discussion and Application 64.0 Market 2 74.1 Selection of Market 74.2 Suitability 74.2.1 Political and Legal 74.2.2 Economic and Financial 74.2.3 Social and Cultural 84.2.4 Technological and Infrastructure 8 4.2.5 Environmental…………………………………………………………………………………………………………………84.3 Entry Mode 94.3.1 Selection 94.3.2 Discussion and Application 95.0 Conclusion 9References 11Appendixes 141.0 IntroductionIn the current integrated world, it is extremely common for companies to enhance their profitability and brand awareness through internationalisation. Internationalisation is the process of increasing the involvement of international operations (Buckley and Ghauri). Starbucks are an American based company who now operate globally to millions of customers via internationalisation. Their high-quality products and leading innovation have helped the brand to increase in size over the last 20 years, with their logo being one of the most recognised worldwide. Many argue that a weakness of Starbucks is that they are highly reliant on their market within the U.S., however Starbucks argue that they use this to their advantage, whilst still having the opportunity to work on globalisation in strong and emerging markets (Forbes, 2016). Although operating on an extensive international scale, Starbucks have had a failure in attempted globalisation over the last 20 years. Between 2001-2003, Starbucks began operations in the middle-eastern country, Israel. Although the reasons behind this failure were never fully disclosed, it is argued that many reasons such as a weak economy, and the Israeli tastes and needs for coffee led to the international coffee brand pulling their efforts from the country in 2003 (Marino, 2003).