Entry Modes

International Business Methods

1. Analysts feel that MNCs can mitigate some of the risks in international markets by deciding on a suitable mode of entry into these markets. Analyze the entry strategies adopted by Starbucks for its international expansion.

For the MNCs, right decisions on the suitable entry modes are essential to get into any markets, which help to reduce the risks in international markets. Each entry method consists of both advantages and disadvantage, also depending on the own capacity of the company in technology, capital, resources and environments of business in abroad markets. Well studies on markets, customer habits, consumption, potential demands for sales and business environment so as to choose the right entry methods which can mitigate the risks as well as maximize benefit in launching the product or service.

The entry strategies which were adopted by Starbucks in the case are wholly-owned subsidiary, licensing and joint-venture. Generally 12 entries out of 20 were used joint-venture whereas 7 abroad cases were launched in licensing and only one wholly-owned subsidiary was carried out. Joint-venture strategy was used mostly by cooperation with the local company which helped a lot on customer habits and building alternative to fit the coffee to customers’ tastes at the best in case of entering into Japanese markets. In many cases Starbucks studied the market first (in cooperation of its partners) then it introduce some stores for test marketing.

2. Careful analysis and management of risks not only mitigate losses but also provide superior returns. In the light of this statement do you think Starbucks did not analyze and manage the risks involved in the different markets it entered?

Starbucks did analyze and manage the risks involved in the different markets it entered, for example the right decision executed when Starbucks kept their “No Smoking” principle and huge floor area used. Those were against the analysises, but...