DaQuan Baker

International Business
Professor
11 July 2017
 FDI is the long-lasting investment by a company with
the knowledge, brand, and physical assets .
FDI is used to generate sales in that country, replacing
exports from the home state (Lynch 26).
 Starbucks Corporation is one of the biggest coffee
retailers globally.
The company has over 7,000 retail stores across the
world.
In 1995, the company ventured to Japan with an
investment of about $10 million.
Their FDI as a mode of entry approach will supply an
adequate culture embodied by urban and stylish image
to the company.
 Starbucks FDI approach was designed to boost its
brand reputation globally.
Starbucks may comply with FDI policy, particularly in
the Asian region by examining many factors.
Workers from varied countries are playing a major
responsibility in the growth and development.
After 1998, Starbucks undertook an aggressive strategy
of FDI following its accomplishment in Japan.
 The internalization theory attempts to describe why
firms frequently approved FDI in their overseas
strategies.
Licensing has some drawbacks, which include inability
to give the company full control, and may eliminate
autonomy (Griffin & Ebert 13).
These limitations has forced Starbucks to embrace FDI
in entering different foreign markets.
 Starbucks started its international development in
Japan, where it has accepted a joint venture fashioned
with a local company (Kenneth 73).
FDI has enabled the company to be in a good position
to have full control over the process.
The internalization theory recommends that when
licensing is complex.
 Starbucks tactic is founded on horizontal (marketing)
where the company joins, creates or purchases firms in
its industry.
This is because joint ventures provide a great way to
transfer firms knowledge.
The theory also offers the reason for fashioning wholly-
owned subsidiaries that eradicate rivalry.
 As for product life-cycle theory the flaw of the model is
that the companys FDI was not assumed at some
phases of life-cycle.
Location plays a part when it comes to FDI, since
coffee can be served, and prepared anywhere.
The market imperfection theory is the premium account
of Starbucks strategy (Kenneth 76).
 FDI is becoming a main strategy in permitting
companies to penetrate new markets due to
interdependent nature in these markets.
FDI will become a part of standard business process
and practice in which companies will invest in foreign
firms.
Starbucks has sustained to embrace FDI since it allows
the company to uphold control over its operations and
strategies.
 Griffin, Ricky. W & Ebert, Ronald J. Business. 6th
Edition, International Edition, Publisher, Prentice
Hall, 2002, print.
Kenneth, Shaw. Foreign Market Entry Strategies.
China-USA Business Review, 4(8): 2015.
Lynch, Richard. Corporate Strategy, 4th Edition,
Publisher, Prentice Hall, 2006 print.
Starbucks Coffee Company. Starbucks: The Best Coffee
Makers and Cold Brew Coffee, 2016, [online] Available
at: https://www.starbucks.com/ .