Starbucks International Business Strategy

1. INTRODUCTION

1.1 Background

Internalization has many positive effects on international economy and firm’s growth. The reasons why companies go abroad are different from one firm to another. For one company domestic market is inadequate, while another company pursues internalization because they can benefit from economies of scale and the opportunities which are available on a new international market.

Due to globalization, more and more companies decide to go abroad and start international experience. Consequently, countries prefer reduces trade barriers and open economic borders (for example WTO, European Union Market etc.) and it boosts internalization processes of the companies. During the last decades, internalization of the firms increased

In such way, it becomes harder to decide which entry strategy mode would be the most suitable for a firm. This is the reason why firms choose different entry paths when entering new markets for different reasons. Some companies stick to the idea that step by step integration is better considering one market after another, taking into the consideration their knowledge while avoid gradual approach.

The purpose of my thesis work is to prepare an appropriate marketing mix and entry strategy for global multinational coffee companies that operate its coffeehouses internationally in order to successfully enter new foreign market. Strategy comparison of Dunkin Donuts and Starbucks will show differences between two entry modes on UK market.

The goal of my research is to understand what international strategies applied Starbucks and Dunkin Donuts on UK market and what factors were drivers which influenced their decisions on entry strategy. This will give me the opportunity to answer of following questions:

How internationalization processes of the enterprises look like in UK market?

What is Starbucks entry mode in UK

Anderson created internalization mode from the prospective of entrepreneur in 2000. Firstly, he did a research and analyzed on what kind of relationships exists between entrepreneur and international processes. He makes analysis about how entrepreneur can influence international processes. He introduced 3 types of entrepreneurs: structure, marketing and technical entrepreneur.

Figure 1: technical entrepreneur and international pull strategy Technical entrepreneur usually focuses on technology. For him, the most important part is product development. Technical entrepreneur does not consider internalization as the main focus. However, if they create a new product, customers from abroad might get interested in the product and consequently they can start exporting or licensing activities. That kind of International activities usually does not require fully owned subsidiaries

Figure 2: the marketing entrepreneur and international push strategy Marketing entrepreneur has a need of the market and has an idea how to fill this demand. In their opinion, market brands and channels are much more significant that its product. They are actively participating in internalization and have the ideas how to develop new international ventures and create establishment models (for example Greenfield establishment which requires big resources). Marketing choose is relied on personal desires and network is