Starbucks Case Study

Question 1 Going global to the international markets has so many ways. When entering the overseas markets, entry strategies include export/import, wholly owned subsidiary, mergers/acquisitions, alliances and joint ventures, licensing, franchising, foreign direct investment, and , greenfield investment. These are all becoming part of the extended enterprise, but each of these methods involves the different risks (Howard & Donald, 2010). According to the Starbucks’s case study, Starbucks is the product-oriented firm, assumes that Starbucks knows best its products because it based on the product innovation and expects customers to buy them (Bruce, 2000). Their main market segment of the Asia region is the young people as youngsters are eager to imitate American cultures and Western lifestyles. When Starbucks expended to foreign markets, its managers decided to use joint ventures, licensing and wholly-owned subsidiaries. Before entering the overseas markets, Starbucks focused on the market conditions in that country with internal resource analysis because of its product innovation and quality of its capacity to successfully meet that country and market challenges. However, Starbucks used different entry strategies for different countries depending on the countries’ policy, risks and cultural differences. Joint Ventures Starbucks joint venture with Japan, Hong Kong, Macau, Shanghai region and Israel since these countries increased leverage will not necessarily lead to increased financial risks because of the close relationship between the local banks and corporations (Shapiro, 2010). Thus, it makes sense to push for as large an equity base as possible; the weaker partner’s share of the borrowings is then supported by its larger equity investment. Moreover, Starbucks would be able to gain an intimate knowledge of the local conditions and government where the facility is located. It provides the opportunity to obtain new capacity and expertise. Another benefit is that...