Starbucks Foreign Direct Investment

Topics: Subsidiary, License, Corporation Pages: 2 (444 words) Published: June 23, 2011
1.The reason Starbucks became disenchanted with its previous strategy of licensing its format strategy to foreign operators because the pure licensing agreement would not give Starbucks the full control that they wanted, so Starbucks did joint ventures with japan and every other country. With the joint venture, this gave local retailers just as much stake in the operation as the actual company. But also giving them the control they wanted. After the joint venture was established then the Starbucks format was licensed, this included the employee training, and how they operate on a day to day basis. 2.The reason I believe that Starbucks has now elected to expand internationally primarily though local joint ventures to whom it license its format to because its puts the group on the other end of the joint venture just as responsible for the store as the actual company Starbucks. With joining local venture this makes sure that the other country follows the Starbucks Format with employee training, and like the article said it gives the employees stake in the company which a lot of companies in other countries did not do so. I believe that Starbucks felt that if it didn’t have control of how these stores were going to be run they would have failed. 3.The advantage of a joint venture entry mode for Starbucks over entering through wholly owned subsidiaries is with the local partner Starbucks can learn the different cultures, language, and how there competition is. Also Starbucks is at a very low risk of Government interference. This is a big advantage because knowing how people act and shop on a day to day basis can determine the make and break for your company this is where Wal-Mart first failed when entering into china because they didn’t understand the Chinese culture. Starbucks on occasion has chosen a wholly owned subsidiary to control its foreign expansion because firm reduces the risk of losing control over that competence , this also gives the company tight...
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