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Using Bartlett & Ghoshal’s typology in Starbucks international strategy
Harzing’s (2000) study offers an experimental test and Bartlett and Ghosal’s typology pattern in lessening the MNCs complexity by dividing them into smaller information pieces. Bartlett and Ghoshal's further study fills the MNCs absence attributes in any precise and observational way (Harzing, 2000). MNCs have risen at a quickened rate because of Globalization. The new working environment has been established by MNCs and plays a critical role in methods of conducting business (Bartlett and Ghoshal, 1988). The product scope of MNCs varies, as well as business locations and processes. A critical role is played by global integration and local responsiveness in MNCs categorizations and topologies. The emergence of MNCs has increased the interdependence between economic units and political entities. Bartlett & Ghoshal Matrix (1989) is a model used in distinguishing MNCs multiple forms. Bartlett and Ghoshal categorized these MNCs on two criteria: global integration and local assimilation. Highly worldwide responsive businesses objective is cost reduction by the creation of economies of scale by offering a globally standardized product. Highly local responsive businesses intention is adopting products and services to a particular local needs, and these strategic choices appear reciprocally exclusive. However, some companies adopt both global integration and local responsiveness. Four strategies types are generated by these two factors that MNCs can adopt: Multidomestic, Worldwide, and Transnational and Global techniques.
Starbucks was established in 1971 in Seattle, and it's a global company which distinguishes itself by its client encounter, quality, taste, and its famous darkly roasted espresso (Starbucks Company, 2016). Starbucks internationalization strategy began in 1996 by opening a coffee shop in Tokyo, Singapore, and the Philippines. Starbucks in early 2000 expanded in Asian, Latin-American market, and Australian market. In 2011 the organization had 16,635 stores in 50 nations, wholly-owned stores were 8,832 and licensed stores at 7,803 (Starbucks, 2017). By partnering with key retailers and manufacturers of coffee and acquisition of emerging competitors to consolidate its market share.
Using Bartlett & Ghoshal’s typology in Starbucks international strategy
Multidomestic: Low Integration and High Responsiveness
Starbucks has adopted a multi-domestic company approach in its internationalization strategy. Multidomestic companies are characterized as having essential ties with local communities. This MNC type is an independent sub-unit from the headquarters and other subsidiaries (Harzing, 2000). The local responsiveness level is high in multi-domestic companies implying their corporate strategy caters to the local community demands or needs. Multi-domestic organizations adopt low assimilation with high responsiveness methodology (Harzing, 2000). Starbucks marketing and sales strategies are unique in each market it operates in. Besides, it embraces products as to local preferences and tastes by providing products in various markets (Gaspar et al., 2015).
The internationalization strategy of Starbucks involves using three approaches which wholly owned subsidiaries, joint ventures, and licensing. The licensing procedure is used when Starbucks wants quick expansion in a particular country. Starbucks uses a joint venture strategy in order to initiate its business practices to the local market. Wholly owned subsidiaries technique is used when Starbucks has the market knowledge of the market it’s operating in, for example, the U.S and Canada market.
The Asia Pacific nation’s consumerism and the young generation eagerness to copy the western lifestyle made these markets appealing to Starbucks. Starbucks does market research before entering a foreign market. Starbucks first does test marketing with a few stores, and local baristas are trained in Seattle. Partnering with Sazaby Inc. was the Starbucks strategy for entering the Japan market. Starbucks maintained its business practices like no smoking tenets which appealed to young Japanese ladies and Starbucks became successful in Japan (Schouten, 2018). The advantage Starbucks had with this partnership was that Sazaby was well vast with Japanese espresso drinking propensities and cultural practices, for example, Green Tea Frappuccino, which wound up prevalent. Starbucks listened to Sazaby’s advice on market penetration and acceptance. Starbucks was fruitful in pulling in a young group in the entirety of its Asian markets, as youngsters in these business sectors were anxious to mirror the American culture. Starbucks products adopted local cultural practices to gain market acknowledgment. For example, Asian markets drink espresso with accompaniment, and so Starbucks offered curry puffs and meat buns to suit this cultural practice. In Vietnam, Starbucks stays faithful to its system of transforming Starbucks into the "third family" of customers, after office and home, yet needs to conform to adjust the high-setting Vietnam culture. The Vietnamese not just appreciate espresso, they likewise spending time while chatting, and enjoying the ambiance. So when Starbucks entered Vietnam, it needed to change quickly following the Vietnamese culture. For instance, the Starbucks stores are furnished with electrical plugs, WI-FI, and comfy space.
In the internationalization strategy, Starbucks learned to become culturally mindful and aware of the global markets and their principles (Trefis, 2016). For example in the Chinese market, Starbucks faced a language barrier, cultural, religious, and lifestyles differences. American espresso culture was weird in China. In America, Starbuck is well known for its takeaway espresso which incorporates on the third spot for interfacing. The stores are structured comparably with different stores in America. In China, individuals drink tea with conventional deserts. Then again, the Chinese would seldom go to a bistro alone. Statistical surveying demonstrated that they lay going in groups of ten individuals, and this would strain western espresso stores structured to suit single consumers and two-person gatherings. How Starbucks Espresso functions in China is different from the U.S.
The Chinese market's complexity prompted regional partnership in helping Starbucks with China's expansion. These partnerships provided consumer knowledge into the tastes and preferences of Chinese consumers that aided Starbucks in localizing to the diverse markets. Beijing Mei Da partnered with Starbucks to penetrate the northern China market. Partnership with Uni-President helped Starbucks in market penetration in eastern China. Partnering with Maxim Caterers aided Starbucks to learn and adapt its products to the cultural setting of southern China. Starbucks strives to maintain its brand integrity since it's a global brand and brand marketing is crucial in internationalization methodology. China baristas were Starbucks brand ambassadors in helping Starbucks entrench its brand in the Chinese market and ensure high client service standards and product quality are adhered to in each store that was established.
Constant market research practices have helped Starbucks in tackling changing markets. Global brand establishment for Starbucks meant that products had to be diversified and customized to suit the local market. The marketing technique in China was customization in responding to the diverse Chinese clients' target market. A broad client taste profile was created by Starbucks that were adequately responsive in enabling them to adapt to the market and creating an appealing product mix of east meets west. The localization efforts were flexible enough in permitting every store to have the adaptability of choosing a variety of expression portfolio.
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- Christine Nyandat (Author), 2019, Starbucks International Strategy, Munich, GRIN Verlag, https://www.grin.com/document/502243