Starbucks International - Foreign Market Entry Strategy

Starbucks International - Foreign Market Entry Strategy

Starbucks International has gone beyond the normal philosophy of Starbucks, to create a re-birth of their product line in foreign countries. Typically in the United States, Starbucks owns its entire line of coffee-bar stores outright with no franchise investments or partnerships. However, their international operations are quite the opposite. Starbucks International has adopted a strategy of partnerships to create its line of international coffee-bar stores. These joint ventures create an increased ease of entry into the foreign market.

Starbucks International choose to be involved with partnerships for the benefits these relationships offered over their typical wholly owned subsidiary philosophy. However, choosing the right partner, poses a potential problem for the company. Although Starbucks uses multiple lines of distribution to saturate to US coffee market, its international operations consist only of coffee-bar restaurants. Therefore, they only have one channel of distribution internationally. Through this, Starbucks had to choose a partner that would facilitate their creation and expansion of coffee bars in the international arena, specifically Asia and Japan their primary target. Starbucks developed a series of criteria to which they evaluated different potential partnerships in Japan and other foreign countries. First, they sought to implement the idea of ?partnership first, county second,? as a means of developing partnerships that focuses on the companies goals, and not the countries goals. Second Starbucks noted six additional criteria they used to narrow and conclude their partnership search. (1) They looked for companies with similar ideas a...

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...common ground. With a more casual atmosphere, Starbucks offer patrons ample seating areas and dine in or carry out services. However, there was originally some worry about the profitability and future growth of the Italian-style coffees in Japan. Japanese had never been exposed to this type of coffee before, so the taste of espresso drinks was as foreign to them as the name Starbucks. However, Starbucks? managers were confident that Japan was ready to indulge in the fine taste of Italian espresso. All in all, the partnership between Sazaby and Starbucks provided a moderately high benefit for local adaptation.

Starbucks plan of a partnership is the best choice for an entry strategy into the international market. Their increased insight into the market, and the other benefits provided by this relationship, will propel Starbucks International into the future.