Global Strategy: Starbucks

Running head: GLOBAL STRATEGY: STARBUCKS

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Hannah Warwar

BUSMHR 4490, Recitation Section 4390

Individual Paper

October 17th, 2016

GLOBAL STRATEGY: STARBUCKS

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EXECUTIVE SUMMARY

In order to integrate a global strategy into a firm’s corporate strategy, a firm

must first assess if the economic value created by expanding beyond their domestic

borders would outweigh the cost. This being the case for Starbucks, the corporation

went to work on putting a strategy in place to expand its international operations,

and by doing so, enhance its competitive advantage in the market. After conducting

extensive research using focus groups and quantitative analysis to evaluate local

cultural sensitivities and preferences, Starbucks was able to reduce its distance in

foreign markets (Geereddy, 2013). The company currently has over 20,000 stores

in 63 countries (Trefis, 2014). Specifically in Asia, where many thought the

coffeehouse concept would fail to stick due to the cultural importance of tea

drinking, the company believes that China represents its most important and

exciting opportunity with the potential of becoming its largest market (Trefis,

2016). Global expansion seems to be one of the key growth drivers for Starbucks,

and with a goal to open 500 new stores in China in 2016, it appears to be on track to

meet its international expansion targets (Trefis, 2016).

Global Strategy Analysis: CAGE Distance Framework

I. Cultural distance is distance that results from differences in national cultural

attributes such as language, ethnicity, religion, and social norms. Seeing as all of these