PLANET STARBUCKS (B) - CAFFEINATING THE WORLD What type of internationalization strategy does Starbucks have? Starbucks has an international strategy that is to say a strategy that involves leveraging home-based core competencies by selling the same product in both domestic (U.S.) market and foreign markets. Why do you think they have chosen this strategy? I think they chose this strategy because at that time all they were seeking was growth. Starbucks thought that the first mover advantage was a critical ingredient in its success. Moreover, Starbucks is really successful in the U.S. and has saturated the market (it is even threatened by cannibalization), it has a strong reputation as well as a brand name. The MNE might have thought that because the coffee and the experience originally offered in the U.S. was so popular, conquering the rest of the world was going to be relatively easy. Is this internationalization strategy sustainable? This strategy cannot be sustainable on the long-term indeed, Starbuck's internationalization strategy cannot guide continued growth. Even though they do have core competencies that allow them to gain a sustainable competitive advantage - brand equity -, they need to adapt themselves to foreign markets (emerging countries, Western Europe). They could do the same thing as they first did in Japan: introducing some variations that appeal to the local market, they could also lower their costs in emerging countries where the purchasing power is way lower. One of its major challenge is to improve its local responsiveness especially in emerging countries and Western Europe. What is Starbucks entry mode strategy (ies)? Starbucks' enters foreign market mainly through strategic alliances, that is to say joint venture with local partners (Japan - Sazaby, Shaghai - Shanghai President Coffee, ...) and licensing agreements (China). It requires the payment of an up-front licensing fee, a royalty in sales after operations began and the purchase of all store furnishings and coffee-based materials from Starbucks itself. Starbucks would train the management teams of all cafes at its Seattle facilities for a full 13 weeks, it is crucial to imprint the values and meaning of the Starbucks experience on new recruits. Starbucks wants its experience to be consistent across location (core competency). Why do you think they have chosen this (these) strategy (ies)? In my opinion, Starbucks chose licensing in China because the risk of loss of intellectual property in this country is greater than in any other. By licensing, Starbucks takes advantage of the situation by commercializing its intellectual property. Moreover, by using joint venture to integrate foreign markets, I think that Starbucks wanted to make a longer commitment to really establish itself in these new markets and to learn more about them.