When a company seeks international expansion, the choice of entry mode into any foreign market is a very critical decision. This choice would have a long term implication on the growth of the company both in its soil and its new market. This infers that the entry mode is completely irreversible and it is a massive decision taken which influences the performance, sustainability and growth of the company in the new market. The international entry mode can be done by six entry modes, licensing, franchising, joint ventures, wholly owned subsidiaries, turn-key project and exporting. The choice is influenced by many factors. All the factors are very important in making decisions. But the degree of influence would vary in each of the cases and this
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The company had a wholly owned subsidiary in these two markets and was able to control the operations and have a complete access to these markets. But in the case of Japan, there were more number of differences including culture, customer requirements, working culture and the format of operations and hence the company need to understand the local market which is not possible without the help of the local partner.
2.1. SWOT Analysis
Performing a SWOT analysis of the markets finding why Starbucks had employed different strategies in different markets reveals
The strength of the company is its reputation, international brand with good working environment.
The strength of the Thailand and Britain markets was they had a similar environment to that of the American market and it was convenient for the company to adapt the new outlets to its own format. In all these markets, Starbucks was able to achieve their target of quick expansion within a short span.
The weakness in the Thailand and the Britain market is these markets had a very high competitive intensity, whereas the Japanese market provided very less adaption but it had less competition compared to the other …show more content…
It used licensing, wholly owned subsidiary and joint ventures as its entry modes. Starbucks used different modes in different countries depending on their internal and external environmental factors. The internal factors score a higher percentage for choosing this mode on entry into foreign markets while the external factors are quite less significant. The first and the foremost reason could be the business working mode of the market may be unknown. In this case, the Asian market where the Starbucks lacked knowledge of the market owing to various reasons. From this case study, the chosen entry mode to Japan is licensing. With the initial licensing agreements it developed joint ventures with the companies so it can share the profit and loss of the international expansion. Similarly in other Asian countries, it went ahead with licensing to the local firms operating in similar formats as in North America, charging the local partners just the licensing fees along with royalties on the revenues of the store. With the first Asian expansion, it adopted the pure licensing mode which the company felt was not the appropriate mode for this type of Asian markets. Many customers who have visited Starbucks in North America were not happy with the services provided in the Japanese environment. Also the company lacked
The company had a wholly owned subsidiary in these two markets and was able to control the operations and have a complete access to these markets. But in the case of Japan, there were more number of differences including culture, customer requirements, working culture and the format of operations and hence the company need to understand the local market which is not possible without the help of the local partner.
2.1. SWOT Analysis
Performing a SWOT analysis of the markets finding why Starbucks had employed different strategies in different markets reveals
The strength of the company is its reputation, international brand with good working environment.
The strength of the Thailand and Britain markets was they had a similar environment to that of the American market and it was convenient for the company to adapt the new outlets to its own format. In all these markets, Starbucks was able to achieve their target of quick expansion within a short span.
The weakness in the Thailand and the Britain market is these markets had a very high competitive intensity, whereas the Japanese market provided very less adaption but it had less competition compared to the other …show more content…
It used licensing, wholly owned subsidiary and joint ventures as its entry modes. Starbucks used different modes in different countries depending on their internal and external environmental factors. The internal factors score a higher percentage for choosing this mode on entry into foreign markets while the external factors are quite less significant. The first and the foremost reason could be the business working mode of the market may be unknown. In this case, the Asian market where the Starbucks lacked knowledge of the market owing to various reasons. From this case study, the chosen entry mode to Japan is licensing. With the initial licensing agreements it developed joint ventures with the companies so it can share the profit and loss of the international expansion. Similarly in other Asian countries, it went ahead with licensing to the local firms operating in similar formats as in North America, charging the local partners just the licensing fees along with royalties on the revenues of the store. With the first Asian expansion, it adopted the pure licensing mode which the company felt was not the appropriate mode for this type of Asian markets. Many customers who have visited Starbucks in North America were not happy with the services provided in the Japanese environment. Also the company lacked