Grad Paper MKT 560

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Central Michigan University *

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Marketing

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Jan 9, 2024

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1 Running head: STARBUCKS AROUND THE WORLD: BREWING SUCCESS Starbucks Around the World: Brewing Success through Global Strategies Caitlin Bowens Central Michigan University – MKT560 23 September 2023
Starbucks Around the World 2 Introduction Starbucks has established themselves as the largest coffee chain in the world. One way that Starbucks successfully expanded globally was by moving into emerging markets and educating that market about coffee. Starbucks also relied on local partnerships in those markets to comprehend the local environment. Their adaptability to each country and each market has been the key piece to their expansion efforts. Starbucks has been successful in many countries such as Japan, Europe, China, South Korea, and Canada. Most of their success is due to their global awareness. According to Cateora et al., (2023), “to be globally aware is to have (1) tolerance of and a willingness to learn about cultural differences and (2) knowledge of cultures, history, world market potential, and global economic, social, and political trends.” Another word for global awareness is cultural intelligence. Cultural intelligence is the ability to recognize, adapt to, and work successfully with people from different cultural backgrounds. The key components that it takes to achieve cultural intelligence is cultural awareness, cultural adaptability, and cultural communication. Starbucks has three main approaches when it comes to market entry: joint ventures, wholly owned subsidiaries, and licensing. Starbucks’ joint ventures have been with locals which will limit financial exposure for the company. This method is used when companies look to each other’s strengths and access new markets. Licensing may be the least profitable way to enter the market, but it also has a small amount of risk ( Cateora, 2023). This strategy is where a company will grant another company permission to use its intellectual property for a fee. Wholly owned subsidiaries are companies who are entirely owned and controlled by another company. The owning company also holds all the shares in the subsidiary. This method is generally used by multinational corporations who expand into foreign markets. Due to these methods and
Starbucks Around the World 3 strategies, Starbucks’ decisions are closely aligned with their consideration of local partners in each market. This allows Starbucks to adapt to local cultures, tastes, and consumers behaviors. History of Starbucks Starbucks, the world’s largest global chain of coffeehouses, is headquartered in Seattle. In 1971, the first Starbucks opened and sold only coffee beans. In 1982, in their fifth store opened, they started selling brewed coffee. This year is when Howard Schultz was brought in and made additions that would change the future for Starbucks, making them one of the greatest coffeehouses. Mr. Schultz, after visiting Italy, returned to the states, and decided he would make Starbucks a place where people could socialize in the coffee shop. By 1996, Starbucks had begun its global expansion into Japan, followed by Europe and China by the year 2000. By 2010, Starbucks had expanded to more than 42 countries, and by 2021, 80 countries (Birch, 2021). Approach in Canada Starbucks opened its first location outside of the U.S. in Vancouver Canada in 1987. Starbucks in Canada wasn’t much different from those in the United States. They entered Canada after focusing exclusively on the North American market. Starbucks has adapted their menu to the preferences of Canadians. This is a feature they have deployed in all foreign markets that make them culturally intelligent. They aim to adapt to regional tastes but also maintain brand identity. Altogether, there is little difference between stores in the US and stores in Canada. Starbucks is successful in both markets. Approach in Japan In 1996, Starbucks’ first international venture was the Japan market. One of the key influences behind Starbucks’ decision to choose Japan for its initial major international expansion was that it ranked as the world’s third-largest consumer of coffee. Another reason that
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