Starbucks Entry Mode

Q1. The reason Starbucks has now elected to expand internationally through local joint ventures, to whom it licenses, as opposed to using a pure licensing strategy is that Starbucks is eager to let the partners follow Starbucks’ successful formula. When Starbucks enter Japanese market, they established a local joint venture with Sazaby Inc (Hill. 2009). To make sure that Japanese operations replicated the “Starbucks experience” in North America, Starbucks transferred some employees to the Japanese operation. From this point, it is assumed that Starbucks is confident about their business and believe that tight control is necessary. Second example is Thailand’s case. As Starbucks did in Japan, they requested a local partner tight control of operation. In Thailand, Starbucks requested local operator to open at least 20 stores within five years (Hill. 2009). However, the partner found it difficult to achieve the goal because of financial problem. In Asia, pure licensing strategy was very common. However, it was very difficult to control the operations without intervention. International business is very impressionable. It is affected by many factors, business system, political system, business condition, economic condition and so on. International companies as Starbucks need tight control to deal with each case.

Q2. Joint venture is a cooperative undertaking between two or more firms (Hill. 2009). Joint-venture entry mode for Starbucks has three main advantages, local company’s cooperation, low risk and better image for local consumers. First, when a company enters a foreign market, local company’s cooperation is necessary. For example, in a stage of building joint venture in China, Chinese company can negotiate with government agency (Chinese Business Law. 2009). Other than this example, local company can support Starbucks in a term of gathering of information, relationship with employees, local partner companies and political systems. Second, Starbucks can lower

References: Hill, Charles. (2009) . International Business Seventh Edition. McGraw-Hill Higher Education Chinese Business Law Retrieved November14th 2010 from http://www.kuroda-law.gr.jp/pdf/china/ils_056.pdf Mitsui and Daiwa Retrieved November 14th 2010 from http://job.yomiuri.co.jp/news/ne_09090408.htm Caterersearch 2006, ‘Starbucks Coffee Company Ltd’, in caterersearch, Retrieved November 14th April 2008 from http://www.caterersearch.com