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Starbucks: International Retail Strategy Essay

952 words - 4 pages

Starbucks’ retail entry model in the United States does not have the same strategy as their international model. In the states Starbucks holds great control as a corporation, but in international territory, country partnerships, cultural, government laws and politics play a very important role in Starbucks’ entry strategy. Starbucks has set it sights globally since the coffee market has come close to saturation in the U.S. which will give them the opportunity to continue to expand without fierce competition. Starbucks has looked to countries like India and other emerging markets with great growth potential to set down new roots. Starbucks recognizes India as a great choice to expand ...view middle of the document...

They also tried to enter with Jubilant Group an alliance to a company who owned a franchisee for Domino’s pizza but the business negotiations did not work out. Starbucks finally struck a 50/50 joint venture with TATA Coffee that the (FIPB) accepted. (Rahman, S., 2011)
Effective Entry Strategy
Starbucks’ strong brand name, financial stability and even a market dominance in the U.S. didn’t account for India’s the foreign market obstacles they encountered and their strategy didn’t translate into the Indian market. Aggressive market domination tactics, strong brand strength and liquid assets wasn’t enough for Starbuck to navigate and enter the Indian market. They needed someone who knew the business, and better yet know how to navigate their way through the Indian governments rules and regulations to enter the market (Cateora, Gilly& Graham, 2013). Starbuck’s first needed to rethink their own foreign strategy plan, and seek out a partner who had strong Indian business ties and understood the coffee business as well.
TATA Coffee (middleman to connect to the people)
Tactical planning and a strategic alliance with TATA coffee turned a difficult start trying to enter the country into a beneficial joint venture for both Starbuck’s and TATA coffee. TATA coffee, a native business in India, knows how to navigate the business channels and has developed distribution channels in place to provide seamless integration for Starbuck’s stores into India. TATA coffee also provides the local expertise to help Starbucks gain insight into the tastes and preferences of local Indian people. What Starbucks bring to the partnership is their strong brand image, exceptional coffee house experience and Western novelty. A joint venture between Starbuck’s and TATA coffee, an agreed 50/50 partnership, is a symbiotic business relationship bringing forth both companies strengths to succeed in India. Where Starbucks foreign entry plans failed, TATA coffee excelled, accounting for culture,...

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