Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Understanding Starbuck’s International Business Culture
Definitions:
International Business:
The commercial activities that encourage transferring products, services, labor, resources,
technologies, and ideas around the world is known as international business. It occurs in a diverse
form for instance, exporting and importing which consists of the movement of a product or a
service. Add to that, Franchising and licensing are contractual agreements for foreign traders to
have the right to use intellectual properties, brand name, trademarks, and operating system of a
local firm. (What is International Business, 2022). In addition, international investments which
come in the forms of FDI and FPI. FDI stands for foreign direct investment when a cooperation
invests in another country’s productive assets. Meanwhile, FPI refers to foreign portfolio
investment whereby an investment made by a firm in a foreign firm’s financial assets and
securities. (Picardo, 2021).
Starbucks:
Starbucks is an international corporation and coffee house chain that specializes in coffee. It was
first opened in Seattle, Washington, U.S as a small single store by Gordon Browker, Jerry Baldwin
and Zev Siegl until it became an enormous specialized coffeeshop. (History and background of
Starbucks, 2018).
Starbucks and International Business:
The beginning of Starbucks was obvious that it will have great growth. After it spread widely in
the U.S Starbucks penetrated the foreign markets powerfully. As a result, it became an
international firm. Since the establishment of Starbucks’s subsidiaries “Starbucks coffee
international” it started implementing an entry strategy which is joint venture, licensing and whole
ownership. It is operating a large number of cafés outside the United States through licensing and
joint ventures with local retailers. In 2009, the fiscal year of Starbucks Showed that it had licensed
3439 cafes. The major segment of international business is the Asian continent which Starbucks
has operated around 2,062 stores. Coffee culture didn’t exist outside the US when Starbucks
enlarged its business. As a result, it had to widen the culture of coffee internationally. Starbucks
took advantage of foreign direct investment, whole ownership and joint ventures instead of
franchising and licensing. Starbucks does not only offer visible products it also serves a specialized
urban coffee. (Ltd, 2021).
Starbucks uses licensing when they want to expand rapidly into a certain country or a market.
Meanwhile, joint ventures are applied initially for trade activities to the domestic market,
contradictory, when it has experience with the market it uses the wholly owned subsidiary strategy
like in Canada and United States (Starbucks International Strategy, n.d).
The History and Evolution of Starbucks:
Early Years of Starbucks:
The foundation of Starbucks cooperation was in 1971 by 3 entrepreneurs: Baldwin, Bowker and
Siegl. Their first store took place in Seattle’s. The name Starbucks was inspired by a classical
novel named Moby Dick. (Petruzzello, 2022). In the first few months of Starbucks launching, it
obtained coffee beans from Peet's Coffee and by that Peet became Starbucks’s first supplier of
green coffee beans (History and Background of Starbucks, 2018), (Petruzzello, 2022). In the early
1980s, Starbucks had opened four coffee shops in Seattle that distinguished themselves from the
competition with their finest fresh-roasted coffee, and in 1980 Siegl departed the company, which
left the remaining two founders with Baldwin as the president (Petruzzello, 2022).
The Howard Schultz era:
Howard Schultz decided to join Starbucks and have a career there as the head of marketing,
because he was so delighted when he tasted Starbucks’s coffee in 1982. During his trip to Milan
in 1983, he joined an event for international housewares. This event triggered his mind to came up
with a fascinating idea that will shine Starbucks’ future. However Jerry Baldwin and Gordon
Bowker, to the contrary, were not pleased with Howard’s idea because they wanted to maintain
Starbucks main business strategy (Petruzzello, 2022).
Schultz quit Starbucks in 1985 to launch his own coffee company, Il Giornale, which became an
instant success, and when Baldwin and Bowker offered the company for sale in 1987, Schultz
hesitantly acquired the company through Il Giornale finance. In four years, the number of
coffeehouse’s locations has increased from 20 to more than 100 due to the good leadership of
Schultz. It became popular in 1992 and it started having shops beyond North America as of 1996,
which instantly became the society's wide-ranging coffee shop firm. By the end of the 90s,
Starbucks had opened more than 2,500 coffee shops around the globe (Petruzzello, 2022).
By 2007, the network had expanded to over 15,000 outlets globally. The unfortunate luck of
Starbucks led to witnessing 900 of its stores closing. This did not stop Schultz from going up.
Contrary to that, Schultz worked hard and formulated a strategy to acquire bakery stores, creating
an instant coffee package. Add to that, some modifications on the menu. In 2003, Starbucks began
providing and serving meals within their cafes, because of the successful actions that took place
after the closure of shops, Starbucks' economic situation had gotten better by 2012. In 2017,
Howard Schultz had resigned from the CEO position and Kevin Johnson took over as CEO and as
of 2021 Starbucks had coffee shops in multiple countries around the globe and it managed more
than 32,000 coffee shops (Petruzzello, 2022).
Starbucks international business in China and India:
Starbucks is an essential destination for millions of people around the world to purchase various
types of coffee drinks throughout the day. Because of its strategies, Starbucks has been able to
enter many markets from different countries and cultures. There are currently more than 32,000
Starbucks stores in 80 countries. It did not only open its stores in traditional coffee drinking
countries but opened in nations whose citizens usually favored tea. The United States contains the
