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entry of the business and to make the costumers feel comfortable with
theservice (because it is established in their country and identified
with theirfeelings and customer demands).
3. What are the advantages of a joint-venture entry
mode forStarbucks over entering through wholly owned
subsidiaries?
-The risks associated with learning to do business in a new culture are less
if the firm acquires an established host-country enterprise.-Starbucks benefits
from a local partner’s knowledge of the host country’scompetitive
conditions, culture, language and political systems.-
A joint venture makes a good combination:
i t p r o v i d e s n o t o n l y management know-
h o w , b u t a l s o m a r k e t i n g e x p e r t i s e a n d t h e n e c e s s a r y local
knowledge for competing in the foreign country.-Although Starbucks is a
very rich enterprise, it is always important to savee x p e n s e s , s o t h e
b e s t s t r a t e g y f o r S t a r b u c k s i s t o c r e a t e a j o i n t v e n t u r e where
the other joint owner has the responsibility to share costs, risks
andwork together in the “fight” against the competition.
C. Rivera
both ventures, which goal was to gain righter contr
o l o v e r t h e expansion strategy (in Britain and Thailand).
3.Which theory of FDI best explains the
i n t e r n a t i o n a l expansion strategy adopted by Starbucks?
HORIZONTAL FOREIGN DIRECT INVESTMENT
1
It is known that one of the most important advantages Horizontal FDI
givesto the enterprise that practices it, is the fact that the enterprise
finds
morep r o f i t a b l e t o h a v e a n o t h e r o p e r a t o r t o p r o d u c e a b r o
a d t h a n t o p a y t h e commerce barriers […] it is not really the case
of Starbucks, because theadvantage of its FDI is not to save money of
payments in commerce
barriers( e x p o r t i n g w o u l d n o t b e u s e f u l b e c a u s e t h i s e n t e r p
r i s e d o e s n o t s e l l a product directly, its main direction is to
s e l l t h e s e r v i c e ) , i t i s t o h a v e a n important presence in as many
countries as possible, obviously to earn muchmore money and to create one of
the best value brand.