1 Final International Business Paper Makayla Mayforth California Baptist University BUS 334 Minesinger December 22, 2023 2 Introduction Starbucks is a company that everybody knows. Originating in Seattle’s take place market in 1971, Starbucks started bringing coffee to America (Starbucks). This company exploded across the US but did not just stop there. The first international store opened in 1996 in Japan Followed by Europe and China (Starbucks). There are now thousands of Starbucks stores globally in dozens of countries. What started as a small company grew into an international business. Starbucks has adapted to become an international business using numerous international strategies, management expectations, and has even dealt with ethical dilemmas throughout its many years of service. Global Business Environment The global business environment of any company is defined as the challenges and opportunities faced by a business that operates in a global marketplace, in this case the business being Starbucks (Lee). This could include the governments, computers, technology, or external variables imposed by an environment. Today there are over 32,000 stores in 80 different countries in the world (Starbucks). The issue with Starbucks entering countries internationally other than the US, is that it forced other businesses to try to keep up with it. Starbucks continuous emergence into countries with its superior business models that creates a new competitor for other markets that must keep up with the Americans. Starbucks had to adapt globally and work with locals in international markets. For example, in China, there is a different time that is popular, and there are also different foods that are more popular to sell. The company also had to utilize intellectual protection laws to prevent 3 competitors from stealing their names and ways of business. There have been lawsuits abroad in China over are their coffee shops stealing the Starbucks name and trying to profit from it. China is a communist country, so these were new developments for them. The positive in China at least, is that the Chinese government backed up the lawsuit of coffee businesses who tried two coffee Starbucks. This is why when being in the business environment of China, one must secure the trademarks of their names early because then they will be legally backed up by the Chinese government (International IP Policy). International Strategy Expanding overseas, Starbucks utilizes a multi-dimensional strategy. This guy is categorized by low inflation and high responsiveness. When expanding, this company adjusts to the needs and wants of the local customers. This strategy is characterized as having good ties with the local community. For entry strategies internationally, Starbucks utilizes joint ventures and the licensing strategy (Nyandat). In Japan Starbucks made a joint venture with a local diner and retailer of handbags. This company also owned an afternoon tea store and worked together with Starbucks to help them get integrated in Japan. Starbucks made their debut in China with a licensing agreement with Beijing Mei Da Coffee Co. LTD in 1998 (hellovaia). As for the pricing strategy used internationally, Starbucks uses value-based pricing. Value-based pricing is pricing items in a business based on customers perceived value of that item rather than its actual cost to produce. Prices will also vary internationally depending on many factors such as exchange rates, tariffs, local market needs, and competition in different countries. For example, Bern in Switzerland charges the highest for coffee compared to other countries including the US (hellovaia). 4 Amazon markets Starbucks successfully used market penetration to reach young Asians who wanted the American experience from Starbucks but also liked familiar foods. Asian cultures drink espresso with food so Starbucks started selling meetings and Curry puffs to accommodate the culture. In eastern China Starbucks partnered with the Uni-President which helped market penetration as they were more widely accepted (Nyandat). To reach many global markets Starbucks had to diversify and customize their business to cater to local markets. Sucks maintains constant research internationally to modify their strategies and to be the most productive and profitable possible in the global markets. Ethical Dilemma A big ethical dilemma concerning Starbucks internationally was the Oxfam charges of 2006. Oxfam is a global charitable organization that fights injustices around the world and works to end poverty and inequality. In this specific dilemma, the Ethiopian government was working to get the trademark for their coffee beans by filing applications for ownership of its most famous coffee names that they sold to Starbucks and other coffee places in the world. And getting the trademarks for these coffee names, The Ethiopians would have more control their product in the market and would gain more profits. This would allow Ethiopian farmers to receive more money for their coffee beans that they produced (Oxfam). 15 million Ethiopians are dependent on the coffee trade and 80% of Ethiopians live on $2 a day. The hope in trade marking coffee names is that the Ethiopians would be better compensated for their work and to help them earn the money to pay for their livelihoods. Ethical issue began when Starbucks was not supporting the Ethiopians endeavor to trademark their coffee names (Oxfam). Start refused to go through with the deal unless it was made on their own 5 companies’ terms. There were many different accusations between companies, but this is the one that seemed to stick. Oxfam then decided to call out Starbucks on this decision and urge them to go forward with the trademark negotiations. Oxfam wanted Starbucks to stop pushing an alternate agreement and to come open and willing to negotiate. Starbucks denies any sabotage were unfair treatment towards the Ethiopians because they claimed to give us affordable credit too small coffee farmers (Los Angeles Times). Starbucks wanted The Ethiopians to have geographical certification on their beans, but not on the names of the beans themselves (International IP Policy). There will always be speculation in the media, but the fact that a freedom fighting charity got involved is enough to make heads turn. From a biblical perspective, this situation would be unethical. While the Bible may not talk about coffee bean farmers, it does address read and giving to those less fortunate than yourself. “A good name is more desirable than great riches; to be esteemed is better than silver or gold” (NIV). This verse in proverbs explains that a good reputation is better than gaining more money. In this case with Starbucks, the bible is saying that it would be better to be generous to Ethiopia instead of holding on to these trademarks for more money for their own company. In addition, the Bible says, “Whoever oppresses the poor to increase his own wealth, or gives to the rich, will only come to poverty” (NIV). This speaks directly to the issue in Ethiopia since the coffee farmers are poor and Starbucks has a lot of wealth as a company. Management Strategy The Starbucks management strategy stems from its organizational structure. Starbucks uses a matrix organizational structure which is a hybrid mixture of different basic organizational 6 strategies. Starbucks has two major Geographical divisions including the North America division and the International division. Each division has a senior executive and then each store has local managers whose superiors are the geographic head and the functional head. This part of the business structure allows managerial support for business needs based on geography. The division heads are given flexibility to adjust policies and strategies to cater to specific conditions in each coffee market (Meyer). As a company, Starbucks is committed to making a culture where there is respect and value for diversity, inclusion, equity and accessibility. Pageant at Starbucks strives to make teams efficient while still making it a great place to work. Management values include craft, courage, results, belonging, and joy. Management seeks to uphold these values so that the Starbucks company succeeds as a whole and maintains it's stellar reputation both in the US and internationally (Starbucks). In the hierarchy of management there is a shift supervisor, retail manager, and a district manager. Managers are all trained to provide efficiency and to help maintain the basic barista teams that are working with and serving customers every day. Managers are also trained to work with people including their customers and their teams. The coffee industry is a very personable workplace that requires managers to have strong social skills. Conclusion In conclusion, Starbucks has grown abundantly and internationally through the use of productive management training, a multidimensional strategy for global stores, and has even worked through accusations of ethical dilemmas through the years. Starbucks still a very popular and thriving business in today's culture not only in America, but throughout the world itself. 7 Starbucks will continue to expand into more countries and adjust it's strategies and company practices as they strive to make more profit and they better sustainable world that enjoys a good cup of coffee. 8 Works Cited Meyer, P. (2023, October 18). Starbucks’ Organizational Structure & its characteristics. Panmore Institute. https://panmore.com/starbucks-coffee-company-organizationalstructure. Oxfam. (2006, November 3). Oxfam calls on Starbucks to stop bullying the poor. https://www.oxfamamerica.org/press/oxfam-calls-on-starbucks-to-stop-bullying-the-poor/ Los Angeles Times. (2006, November 6). Starbucks ad rebuts Oxfam charge. Los Angeles Times. https://www.latimes.com/archives/la-xpm-2006-nov-06-fi-coffee6-story.html Holy bible: New international version. (2023). . Zondervan. Kyle Lee. (2023, November 11). Global environment | definition, components & importance. (n.d.). https://study.com/learn/lesson/global-environment-importance-components.html Starbucks Coffee Company. (n.d.). https://www.starbucks.com/ The globalization of Starbucks and its effect on the world - to be ... International IP Policy. (n.d.). https://siulaw.typepad.com/international_ip_policy/2011/09/the-globalization-of-starbucksand-its-effect-on-the-world-to-be-presented-ryan-hart.html Starbucks International Strategy. app.hellovaia.com. (n.d.). https://app.hellovaia.com/studyset/5692079/summary/36701865 Nyandat, C. (2019, September 21). Starbucks International Strategy. GRIN. https://www.grin.com/document/502243
