BUAD 420 Homework 2
April 20th 2011
A. Initially Starbucks expanded internationally by licensing its format to foreign operators. It soon became disenchanted with this strategy. Why? It did expand internationally by licensing format to foreign operators because this strategy did not give Starbucks the control needed to ensure that the licensees closely followed Starbucks’ successful formula. This lead starbucks to believe that a clear agreement would not give the company the power to guarantee the international license they were looking forward to get.
B. Why do you think Starbucks has now elected to expand internationally primarily through local joint ventures to whom it licenses its format, as opposed to a pure licensing strategy? Starbucks has now selected to expand internationally primarily through local joint ventures rather than using the licensing format because it definitely gives starbucks the control of its success principle they keep following and includes that both owners having the responsibility of increasing the business they created. It is clear that Starbucks strategies had been innovated, in the way that it doesn’t want to upset directly new companies coming up in other countries, Starbucks has been operating in foreign markets by sharing the costs of being international, working on the advantages the foreign joint owner may provide, and also preparing the foreign working party by some trainings given by American employees. Example: In Japan, Starbucks decided to train the foreign working party by transferring some employees from the USA, so they could teach them the way to deal with customers and to follow the “Starbucks essence” in their behavior.
C. What are the advantages of a joint-venture entry mode for Starbucks over entering through wholly owned subsidiaries? Some of the advantages of a joint-venture entry mode for starbucks is the lower risk associated with...
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