International Trade and Starbucks Essay
International Trade and Starbucks
The original idea for Starbucks came from Howard Schultz after he took a trip to Italy. He was inspired by the coffee house experience and wanted to bring it to America. The lesson that can be drawn from this situation is that business formats in other countries can be translated successfully in other parts of the world. New opportunities can be taken advantage of internationally wherever there is a need for it. 2) What drove Starbucks to start expanding internationally? How is the company creating value for its shareholders by pursuing an international expansion strategy?
The success that Starbucks was having in America drove the company to expand to other countries. In 1995 Starbucks had over 700 profitable stores across the U. S. and began exploring the international market in Japan. By entering the international market Starbucks is becoming a part of the global market. This brings value to shareholders because the world is moving towards globalization and it is necessary for companies to change their market strategy to meet the conditions of the global market. An international expansion strategy allows Starbucks to compete in the market more effectively and create more value for shareholders.
3) Why do you think Starbucks decided to enter the Japanese market via a joint venture with a Japanese company? What lesson can you draw from this? I believe Starbucks did a Japanese joint venture to help reduce the risk. Since the Japanese company Sazaby Inc. also had a 50% stake in the company it benefits Starbucks to have a partner who knows that Japanese market and who also has economical interest in seeing the company succeed. This shows that entering into joint ventures in international territories can help facilitate growth and lessen the financial burden if international ventures happen to fail.
4) Is Starbucks a force for globalization? Explain your answer. Yes, I believe Starbucks is a force for globalization. Starbucks is a multinational enterprise that has operations in countries all over the world like Canada, Japan, Britain, Thailand, and New Zealand. Starbucks empowers workers and farmers around the world and contributes to the economic growth of the global economy. 5) When it comes to purchasing coffee beans, Starbucks adheres to a “fair trade” program. What do you think is the difference between fair trade and free trade?
How might a fair trade policy benefit Starbucks? Fair trade is a system that ensures that workers and exporters get a fair profit from the goods that the sell. Free trade is strictly based on the markets supply and demand for goods and services without regulation or moral implications. The fair trade policy that Starbucks adheres too will make consumers feel better about purchasing goods from their store. Many people are conscious about unfair wages and treatment of workers around the world and are more attracted to companies that do not follow the cheap labour trend.