Starbucks Case

Alethia Sada Saide

14349096095

CASE

“Starbucks’ Foreign Direct Investment”

The essence of Starbucks is to purchase and roast high-quality whole bean coffee. The first Starbucks opened in 1971 as single store in Seattle’s historic Pike Place Market. At fist the store offered some of the world’s finest fresh/roasted whole bean coffees. Now days it is a global roaster and retailer of coffee with some 13,000 stores, more than 3,750 stores are found in 38 foreign countries. The globalization of this company started when Howard Schultz, president and chief executive, traveled to Italy and became attracted to Italian coffee bars and incredible experience. He had a vision to bring the Italian coffeehouse tradition to the United States. Since the beginning, Starbucks set out to be a different kind of company. One that not only celebrated coffee, but that also brought a feeling of connection. For a better understanding of this case, foreign direct investment occurs when a firm invests directly in new facilities to produce and market in a foreign country. Initially Starbucks expanded internationally by licensing its format to foreign operators. It soon became disenchanted with this strategy because the pure licensing agreement would not give Starbucks the full control to ensure that foreign countries licenses closely followed the companies successful formula, so Starbucks converted several into joint-venture arrangements with Japan and every other country. With the joint- venture, local retailers obtain just as much involvement as the existent company. Later on Starbucks format was licensed, this incorporated the employee training and how they operate every day. The reason I think that Starbucks has now elected to expand internationally primarily through local joint ventures, to whom it licenses its format, as opposed to using to a pure licensing strategy is because its puts the groups who accepted the joint-venture just as responsible for the store as the actual...