Starbucks Market Expansion Strategy

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In the United States, about two-thirds of Starbucks outlets are company owned; the remaining one-third are operated by licensees. Outside the United States, the proportions are reversed where about two-thirds are run by licensees or partnerships in which Starbucks has equity stakes. There is explanation for the two different market expansion strategies. The explanation for the market expansion of Starbucks in the United States are that, Starbucks restricts its dealings to corporations, companies or groups of people. It engages primarily in joint venture and licensing agreements with stores where it did not originally have the ability to create its own store outlet. For instance, it first made such an agreement with Marriott Host International,…show more content…
Licensing is an effective strategy given that Starbucks needs to uphold its service and product quality. When entering into licensing arrangements Starbucks can provide the Starbucks Experience in locations including local department stores, hotels, college and university campuses, hospitals, airports and grocery stores. However, Starbucks hasn’t been totally happy with their pure licensing strategies because they do not give Starbucks the control they need in ensuring that the licensees closely follow Starbucks’ successful formula. Due to this, nowadays Starbucks has elected to expand internationally primarily through local joint ventures to whom it licenses its format, as opposed to a pure licensing strategy. Having elements of joint ventures can provide Starbucks with an increased ease of entry into the foreign market. The three main potential benefits of joint ventures are that Starbucks can protect their sustainable competitive advantage, reduce their financial risk and get the benefit of knowing how well the US product will do in the foreign market through local

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