Case Study on Starbucks
Key Aspects, Country and Company Examples
Traditional companies and markets are obsolete. The economy is changing. Companies are going global and initiating change in their strategy, culture, structure, and technology. U.S. companies are expanding their presence into different nations. Different nations have different political, economic, and cultural institutions. Hill (2000) suggests that there are different strategies when a company pursues international competition. This case study will consider the pros and cons of these strategies and discuss various factors and tactics that affect a company entering a new market. This case study will introduce a country risk analysis for Brazil describing six aspects: (1) history, (2) climate, (3) culture, (4) political risk, (5) economic and financial risk, and (6) legal risk. Next, the case study illustrates Starbucks Coffee as a new player in the Brazilian market. This case study will define four aspects of the SWOT analysis, discuss their importance, and show their impact on the organization. Next, four key aspects will be described: (1) human resources, (2) legal and ethical issues, (3) supply chain, and (4) information technology. Finally, specific company examples will be offered to demonstrate how these aspects are practiced at Starbucks. Country Risk Analysis
In order to fairly assess the risk factor of foreign direct investment, several factors are taken into consideration. One of the most crucial aspects of determining risk when entering a foreign market is gaining a clear understanding of who we are, and what is our product is. We have chosen Starbucks as our company and introduce the all around Starbucks product including atmosphere, customer service, taste, touch, aroma, and feel into the Brazilian marketplace. Collectively, we have considered Brazil a moderate risk in our analysis.
According to Nations of the World (2003), Pedros Alvares Cabral, a Portuguese navigator, was the first European to reach Brazil in 1500. During the next centuries, the Portuguese brought large numbers of slaves to Brazil until slavery was outlawed in 1888. In 1822, Brazil proclaimed its independence from Portugal and was ruled by an emperor until 1889. In 1889, the United States of Brazil became the legal name of the country. This remained the name of the country until 1967 when the country was renamed, the Federative Republic of Brazil. The country’s capital was moved from Rio de Janeiro to Brasilia. Each of the successive governments pursued industrial and agricultural growth, in addition to, development of the Brazil’s interior. This continued exploitation of the country’s natural resources, as well as, a large labor force enabled Brazil to become the leading industrial power of Latin America by 1970. According to Nations of the World (2003), the current population of Brazil is 176,029,560 with 65.9 percent of the population between the ages of fifteen and sixty-five. Ethnic groups comprise 55 percent white (included in this group are Portuguese, German, Italian, Spanish, and Polish), 38 percent are mixed black and white, and 6 percent black. Predominantly Roman Catholic (70 percent), the people of Brazil generally speak Portuguese, the official language of the country. Spanish, English, and French are also languages predominantly spoken in Brazil. There are 53 Brazilians per square mile in South America’s largest country, which covers over 3,265,100 square miles. According to Nations of the World (2003), Brazil is the leading grower of coffee. Starbuck’s decision to enter the Brazilian marketplace is based on this and other factors. The prevalence of coffee farming functions as a positive influence on the decision making process. Other demographics of the Brazilian economy include a large producer of textiles, shoes, crude oil, cattle, and the single largest producer of the mineral iron (Nations of the World, 2003). Climate