Investigating Starbucks market entry strategies Essay
With the continuous impact of globalization in the economy, it also creates a very competitive environment for both new and established companies. One of the main reasons to this development was the availability of information, through technological advancement and modern business approach. That is why for companies to be progressive and sustained its competitiveness in the market, it does not only needs to look at the customers needs but also how to really strengthen the entire process of the company, which starts from its people, resources and then technology.
People are still the most important resource in the company; it has been proven many times that with this focus on people management to run all the required business processes, it still the main key to success. That is why in this study, focusing on the market entry strategy of one of the most well respected company that offers only the finest coffee in the world, Starbucks, it will provide some of the key areas on how they have sustained their operation and still going strong to the global market. The specific areas to be studied are:
Corporate Profile Market Entry Strategies Applied by the Company (Exporting, Alliances, Acquisitions, Direct Investments and Franchising)
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It is very common these days that are companies changing their strategies and the main reason for that is due to customers preferences are also changing. This has been the challenge in the 21st century business. With a lot of influences that is coming around us and will continue to come in human lives, business will never be as competitive as it is now and the future to come. That is why for most business, it is really a battle on who can be more anticipative and pro-active in the game of business.
That is also why some of the well known companies in the world, really invest a lot of money in research and development, these has never been the case before about 10 to 20 years ago. Not only with the changing preferences of customers, but it is also about new market movers, these new market movers are the ones that keeping our business competitive these days, most specially the continuing evolvement of globalization where small players and definitely aggressive ones from developing and even underdeveloped countries starting to substantially create some market share of their own.
For most highly developed countries before, and some of top global companies, they have faced the greatest challenge now and more to come in the future. That is why for these top companies, it is not a time to just relax with the lead in market share they have, because slowly but surely small companies which consists of the majority players are starting to give a serious fight that should not take for granted.
That is why in this paper, with the main focus on Starbucks Company on how their foreign market entry strategy is done, will give a good picture on how known companies globally continue to prepare itself for such challenges. With this required study this paper provides all the necessary details and facts just to provide a more quantitative and qualitative approach in the study. Research Methodology The researcher employed a qualitative method of research in conducting the study.
The main function of a qualitative method was to describe and evaluate the current trend in the business and how the company actually performs it. By knowing how the company and what the global industry is doing, it creates a real look at what was really happening in the global business. Data Gathering Instrument Used In gathering data and information, the researcher only employ the used of resource materials from the library, journals, and internet sources which has helped a lot in coming up with a very relevant outcome in the study.
Related Literature and Study Common Factor Affecting Market Choice – The Concepts In order to have a better idea on what really is done in the global scene when companies enters into business to other territories, this section provides some of the common details and concepts that is actually done. To start with, actually there are many factors that need to be considered by companies before they start to decide doing business in other territories, and these are: (1) management control perspective, and (2) Equity perspective.
In terms of management control, this is on how the company can effectively perform in other territories, is it needs to be through shared control entry mode which means that they can be in partnership with some local company in offering the service or selling the product. Or the company itself needs to be the one manage it or called as full control mode. Actually the choice depends on how the source company sees the potential in the territory that they will do business.
This is actually one of the most important decisions that the company should be careful of, because if they decide for example to let other company perform the business in the foreign land, they are also gambling on the quality and standards of the firm. But for most of the cases for companies that really wants to make sure that the business will be perform properly, what they usually choose is full control. In this way they hire their own people and assign them on site. In the second factor regarding equity perspective, there are also some important key areas that need to be done.
Just like management mode, this is exactly more than the management control perspective, because this is now is actually either selling the franchise to the local territory while the other is just exporting only and there are no operations needed, the destination sites will only sell the product. Specifically the two main modes are: (1) equity control mode, and (2) non-equity entry mode. Again in the equity entry mode, it is more of a joint ventures or direct acquisition of the foreign territory while the non-equity entry mode, is simply exporting of goods or franchising.
In most top global companies, they always choose to have non-equity, because it creates better business for them, like franchising which is the most common. Foreign territories do the business with the quality standards needed to be applied for the company and not just management, they need to know the entire business process but even though this is the most common, this is also the most challenging, because company needs to make sure that the company is performing the right standard or else it will affect the global status of the company.