Foreign market entry and its implication (Starbucks case study) Essay

Foreign market entry and its implication (Starbucks case study) - Essay Example In particular, the paper looks at Joint Ventures as an example of the company’s market entry into Spain, and its marketing implications. Generally, the company applies market entry modes and marketing mix to build its brand appeal as well as create a unique product appeal and customer loyalty. These choices have long-term implications in the success of the company. Introduction/Company Background Starbucks Corporation is an international company that deals with coffee products, with its headquarters based in Seattle Washington, America. During its commencement in 1971, the company was a retailer and a local coffee roaster; but it has since stretched out swiftly. It has Italian-style coffeehouse chain and it is the world’s largest coffeehouse company, with presence in more than 60 countries and more than 20,000 stores (Starbucks Corporation 2011). It deals with coffee beans, salads, hot and cold drinks, hot and cold sandwiches, snacks, mugs and tumblers, and sweet pastri es. In addition, Starbucks distributes some of its brand through grocery stores, including coffee and ice cream. Its other products include markets films, music, and books through the Hear Music and the Starbucks Entertainment division. Scores of the company’s products are either location specific or seasonal. Starbuck’s most remarkable expansion, when it used to open new stores days on end, was in the 1990s till 2000s. The company started establishing oversees stores in 1990s; and currently, roughly third of its stores are oversees (Starbucks 2012). Market entry According to Albaum and Duerr (2011), market strategy comprises of an entry mode and a marketing plan. Numerous entry strategies that an organization can adopt when venturing into new markets and regions are available. Each strategy comes with differing degrees of advantages, disadvantages, risks and legal obligations (Gilligan & Hird 1986). According to Albaum and Duerr (2011), the entry strategy to be adopte d should take into consideration company objectives and expectations in terms of volume of business to be gained. The strategy should also take into consideration resources required to effectively implement the strategy and patterns of involvement in other regions. On the other hand, political infrastructure, degree of competitive rivalry within the target market, as well as nature of product to be introduced into the target market should be factored (Yavas, Verhage & Green 1992). Starbucks uses different approaches to market entry, especially in its internalization process. Its entry approach is aimed at satisfying the needs and requirements of every market, seeking to fulfill its traditions and cultures. Presently, the company uses three differently entry methods, including licenses, joint ventures and wholly-owned subsidiaries (Webster 2005). Starbucks entered Spain by signing joint venture agreements with VIPS and El Moli Vell and in 2001. This strategy allow for quicker penetra tion, risk diversifications and faster entry into new markets. It also helps the business to avoid barriers of entry. Like any other strategy, this strategy has its shortcomings; which include loss of management control and lack of the ability to recover capital invested among other (Yavas, Verhage & Green 1992). Group VIPS is a leading European retail and food service operator, while El Moli Vell is a retail operator of pastry shops and cafes in Barcelona area. In