3. Reread the opening case on Starbucks and then answer the following questions:

a. Initially Starbucks expanded internationally by licensing its format to foreign operators. It soon became disenchanted with this strategy. Why?

b. Why do you think Starbucks has now elected to expand internationally primarily through local joint ventures, to whom it licenses its format, as opposed to using a pure licensing strategy?

c. What are the advantages of a joint-venture entry mode for Starbucks over entering through wholly owned subsidiaries? On occasion, Starbucks has chosen a wholly owned subsidiary to control its foreign expansion (e.g., in Britain and Thailand).

Why?

d. Which theory of FDI best explains the international expansion strategy Starbucks adopted?