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Starbucks; the Italian coffee experience ERASMUS UNIVERSITY ROTTERDAMFaculty of Economics of BusinessMarketing, Entrepreneurship and OrganisationSupervisor: Gerhard HavranekName: Mahrou KharaziExam number: 305477E-mail address: Mahrou.kharazi@gmail.comStudy: International Bachelor Economics and Business Economics (IBEB)Thesis: How can Starbucks launch successfully in Italy?Bachelor (FEB13100)PrefaceIn the first phase of writing this bachelor thesis, I choose to focus on the reason why I feel a passion for marketing. What excites me most in marketing is how something very insignificant can be translated in to a strong need to consumers. Trough marketing the simple products and services people use daily are converted into specific brands and models. Without marketing a car would have just been a vehicle, simple means of transportation, rather than a Porsche or Lexus with which a consumer can identify its personality. It is amazing to look at the Italian economy and realize that 8.5% of National GDP is contributed by the automotive industry, from which 90% of manufacturing is done trough the Fiat Group. The importance of marketing is of great deal for the world economy. You do not just want to drive a car, you want the new Fiat Punto. You do not just need a pair of shoes, you need a pair of Ugg’s. You do not even long for a cup of coffee anymore these days, these days you long for a Frappuccino. Starbucks Coffee Company has been one of my favorite entities since years because of the ideology, with which it has been created, and the wonderful marketing strategies, with which it has grown to be a worldwide known Coffeehouse. I took a 2 hour trip by train to visit Starbucks at Schiphol airport for my first cup of coffee brewed by this enterprise. However, outside of the Netherlands I have been able to walk up to a Starbucks coffeehouse every now and then in whatever country I have been in. What did amaze me though was the fact that the Starbucks Coffee Company concept finds it roots in the Italian coffee drinking culture. In between the New York Pizza restaurant, several Burger King and numerous Mcdonald’s restaurants, one of the favorites missing in the fast food sector in Milan has been the Starbucks Coffeehouse. During my exchange period of six months in Milan (2009) my international friends and I could just not understand why Starbucks was missing in every single city in Italy. How can it be that a concept which is based on the Italian coffee experience is a success worldwide, except for Italy itself? And why is it that the Italian consumers, known for their trendsetting in fashion and life style are missing the worldwide hype created by Starbucks for their coffee?After many speculations and only a limited amount of useful information on topic specific issues I believe that the answer lies within International Marketing. How should one introduce an idea which is taken from one country, adjusted to taste of consumers in another country, implemented and afterwards expanded worldwide, go back to its roots and still be successful? The process of writing this bachelor thesis, for me, has been very long and at certain points very difficult. Especially the multiple available problem solving and reasoning possibilities have made it hard to get a good grip on the situation. Writing a thesis on a multinational company is very difficult since no information is provided from inside the company, and the available information sources are not specific enough. However with great patience, the use of a variety of information sources, thinking, rethinking, writing and rewriting I believe I can be proud of the end results of my research. With great help of professor Havranek, which I would like to thank, during the process of writing this thesis I have learned how to think in boxes and sort available information, and mostly had enormous patience. Where I would have given up, professor Havranek kept on being understanding. Mahrou KharaziAugust 2010Table of contentPrefaceP.21.IntroductionP.51.1 Research ProblemP.51.2 Aim of the ResearchP.61.3 Research QuestionP.61.4 RelevanceP.71.5 Structure of the PaperP.82.Theorethical FrameworkP.82.1 Advantages of going abroadP.82.2 Disadvantages of going abroadP.92.3 ProtectionismP.102.4 Expansion possibilitiesP.112.5 Differences in consumer behaviourP.162.6 The threat of AmericanizationP.202.7 Summary/FrameworkP.203.The Starbucks Coffee CompanyP.233.1 The Starbucks corporation historyP.233.2 The Italian MarketP.274.Starbucks entering ItalyP.294.1 FrameworkP.294.2 ResultsP.335.Discussion and reflectionP.335.1 Discussion of resultsP.335.2 LimitationsP.365.3 RecommendationsP.376.ConclusionP.387.ReferencesP.381. Introduction1.1 Research problemThis research is based upon the concept of international marketing in practice. International marketing is defined as ‘The performance of business activities designed to plan, price, promote, and direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit ’ (Catereo, P., R., & Graham, J., R., International Marketing, 12th ed., 2005, Irwin, McGraw-Hill, p. 9). International marketing is of great importance since borders are vanishing bit by bit, and the rise of an open economy is increasing competition among business’s. Not moving forward for companies means standing still, since other firms within the industry are growing and the new best hit from foreign rivals might be lurking around. For businesses this obviously is a stimulation to expand internationally. However even as a consumer, a citizen of the world, we expect to find our daily consumed global brands and products to be available wherever we go. Not the presence, but rather the nonattendance of the products and services that form our individual lifestyle is remarkable nowadays.A continuous movement towards globalization has triggered businesses to expand internationally. Even though many motives for international marketing operations might exist for a firm, still the question is whether it is wise to expand to a certain nation or not, keeping in mind the difficulties of cultural factors within a country. Adjusting certain facets of business operations and product lines to satisfy regional consumer taste might be a good option. But in some cases it might not be enough to successfully expand to a nation. A great example of this statement is Starbucks Coffee Company, which within 15 years has successfully opened many coffeehouses all over the world. However the absence of Starbucks coffeehouses in Italy has been notable. Especially since the concept of the Starbucks coffee house finds its roots in the Italian coffee drinking experience. This absence has not stayed unnoticed. Many reasons are given for the lack of Starbucks coffeehouses within the country of Italy. Some claim the Italian cultural preference for slow-food rather than fast-food is the reason. But the numerous number of fast-food restaurants in Italy should speak for their own, including the McDonalds restaurants from which many if not all in Italy include a McCafé department offering freshly brewed coffee and tea. Reason enough to reject this statement. To summarize, why and how can one use a cultural tradition and introduce it in another country within a business concept, adjust the concept to local taste, expand the idea worldwide and successfully launch the modified concept within the country of origin? 1.2 Aim of the researchThe aim of this research is to identify the reasons for international expansion, the difficulties and opportunities which lie within the expansion and the possible strategies for international marketing concerning globalization. The aim of obtaining this knowledge is to create a strategic framework which can be applied for the implementation of Starbucks in Italian cities. The results of these applications should lead to a successful implementation proposal.1.3 Research QuestionIn order to reach the aim of the research the following research question should be answered; What international marketing strategy will lead to the best suited introduction of Starbucks in Italy?The following sub questions will help answering the research question; What are the advantages of international marketing?What are the disadvantages of international marketing?In which ways can expansion to foreign markets take place?Which aspects of consumer behaviour are different across countries?What is Americanization?What are the benefits and disadvantages of protectionism?1.4 RelevanceScientific relevanceThis research can be relevant for the scientific community for it will offer a simple framework with which international expansion possibilities can be valued from the point of view of marketing. Since the theoretical framework is based up on a mixture of different information channels and is specifically focused on international expansion issues, rather than the presently available broad subject orientation of international marketing, it could provide as a straight to the point problem solving tool. Since increasing globalization is of great importance when it comes to the cultural aspects of international marketing, the more recent the studies the more relevant the material. For this reason any newly published material in this field of study is of added value. Social relevanceThis research can contribute to the overall decision making process of country specific international expansion. Marketing now a days is of great value to social behaviour, consumption and expression of consumers’ personal characteristics. Marketing is one of the most important driving forces of the current world economy. Trough international marketing activities consumers have a wider range of products among which to choose and with which to identify one selves. The use of more favoured consumption goods and the reflection of income increase by means of national economic growth trough increasing profits (increasing consumption) reflects itself in increasing utility. Increasing utility of inhabitants is in an increase of the social welfare of a country. Trough this research international expansion can take place more efficiently and less time costly as done previously. This will stimulate international expansion of business’s, in this case Starbucks. This will lead to more satisfied consumers.Practical relevance This research provides a solution for the Starbucks corporation on how to enter the Italian market as successfully as possible keeping in mind cultural differences. Not only will this research give a solution on the literally covered material on Starbucks, it will also provide tools which can be used by other firms when deciding to enter the global market with their products.1.5 Structure of the paperThis thesis will first deal with the specifications concerning international expansion and consumer behaviour issues and how to overcome the related arising problems. Based up on the theoretical information provided, a summary will be constructed. Second the Starbucks coffee company and the Italian market will be analyzed. To be continued by entering the results into the previously conducted theoretical framework. Afterwards the results will be discussed and the limitations and recommendations will be considered. Finally the conclusion will bring this thesis to an end. 2. Theoretical frameworkIn this chapter a theoretical base is formed on the topic. The subjects that will be of importance in this research will be analyzed and possible solutions on the problems will be provided. All information will be based up on several information sources, as to make the concepts as trustworthy and complete as possible. 2.1 Advantages of going abroad‘Two hundred giant corporations, most of them larger than many national economies, have sales that in total exceed a quarter of the world’s economic activity. On that basis, Philip Morris is larger than New Zealand and operates in 170 countries. International trade in 2003 accounted for over one-quarter of U.S. GDP, up from 11 percent in 1970’ (Kotler, P., & Keller, K. L., Marketing Management, 12th ed., 2006, Pearson, Prentice-Hall, p. 668).For companies there are several benefits of expanding towards international operations. When discussing international operations trough out this thesis whole products are meant, rather than outsourcing or relocating part of production to foreign countries. Since market size increases production will increases as well enabling the firm to benefit more intensively from economies of scale.Diversification trough market expansion leads to risk reduction for the company. Keeping in mind economic, political and weather conditions for example. A bigger market size results in higher sales and profits, when market expansion is done successfully.Operating in different countries demands a deeper understanding of cultural differences, These knowledge benefits bring more potential to the already operating home country processes. As an example of cultural understanding benefits one can think of Red Bull bringing home the Indian energy drink concept and Starbucks introducing the Italian coffee drinking experience to the USA. Trough globalization the competitive structure of market operations are changing. Competition has increased, wetter one decides to go international or not, it will still have to deal with the competition increase by foreign business’ entering the current market. Globalization also reflects in more international movement of consumers who’s needs can than also be fulfilled abroad. Not only do companies benefit from internationalization, but consumer benefit as well. More diverse and specific products and services are available through internationalization. But foremost the disappearance of borders results in consumer power. Prices cannot be kept artificially high by local and national companies since foreign companies could offer the products and services cheaper. Industries will bit by bit move towards perfect competition. These financial benefits and wider availability of consumer goods result in higher standards of living. The higher standards also account for companies who have cheaper and a wider range of raw materials and services to their reach. 2.2 Disadvantages of going abroad However offering a company’s products abroad also brings some possible difficulties. To name some of the most important;Sufficient investment should be made in order to be able to expand operations internationally. To attract capital for financing international expansion shareholders must be convinced of the benefits from the expansion.Foreign customers preferences might differ from the current customers, one might fail to offer a competitively attractive product.Foreign country’s business culture might differ from the current business atmosphere. One needs to be able to understand the new business culture and still be successful within it.Managers with international experience are required, who might not be present in the currently and should be attracted. Keeping in mind that these managers will most probably be more costly for the firm to hire.Laws might change in the foreign country, currencies might devaluate and political circumstances might occur. Cultural differences could drive the company in to changing current business activities. Using halal meat in Islamitic countries for example, or adjusting slogans to prevent miscommunications.Political, cultural and economic shocks are not easily predicted as done at the home country. To sum up, it is difficult to operate in foreign countries since the knowhow and the experience is lacking. Many adjustments must take place for a product and a concept in order to fulfil the needs of the customers in the foreign country. All results in uncertainty and possible unforeseen costs. This makes the firm fragile, as it does a firm’s profits. Considering the investments that need to be made in order to expand internationally the uncertainty does not contribute positively.2.3 ProtectionismA very important aspect playing a role in the decision of wetter to go international or not is the level of protectionism in the industry in which one plans to operate abroad. Although economist argue the fact that free trade is more efficient in all cases, except in the situation of infant industries, national defence and industrialization of underdeveloped countries, still the consumer is the one bearing the burden. ‘To encourage development of domestic industry and protect existing industry, governments may establish such barriers to trade as tariffs, quotas, boycotts, monetary barriers, nontariff barriers, and market barriers. Barriers are imposed against imports and against foreign businesses. While the inspiration for such barriers may be economic or political, they are encouraged by local industry. Whether or not the barriers are economically logical, the fact is they exist’ (Catereo, P., R., & Graham, J., R., International Marketing, 12th ed., 2005, Irwin, McGraw-Hill, p. 39).Furthermore according to Catereo and Graham (Catereo, P., R., & Graham, J., R., International Marketing, 12th ed., 2005, Irwin, McGraw-Hill, p. 45) approximately 45 percent of U.S. manufactured imports are subject to some sort of nontariff barrier. One of the most often occurring trade barriers however is the currency exchange rate. Even though one still has to deal with protectionism and trade barriers, slowly the world is moving towards a free economy with the help of organizations such as GATT and the WTO. The motives for industry players are still present to make it as difficult as possible for foreign companies to enter competition. However industries play it such that the barriers cannot be considered legal barriers, for example the complex distribution systems in Japan. When questioning the possibility of going international one must keep in mind the possibility of protectionism and the effects of currency exchange rates.2.4 Expansion possibilitiesWhen deciding to offer company’s products and services abroad the firm has to plan how to enter the new market. To give a better understanding of what the aim of the expansion is, first an overview of the Ansoff matrix will be shown.Current productsNew productsCurrent marketsMarket penetration strategiesProduct development strategiesNew marketsMarket development strategiesDiversification strategiesFigure 1 As can be seen from the table representing the Ansoff model by expansion possibilities the focus of this thesis will be on market development strategies. ‘Expansion into new geographic markets, particularly new countries, is a primary growth strategy for many firms’ (Mullins, J., W., & Orville, C., W., Marketing Management, 7th ed., 2010, Irwin, McGraw-Hill, p. 51).The first step when deciding to expand internationally is to evaluate the potential markets to which one could expand. The factors that are of great importance are the nations’ economic environment, the political-legal environment and the cultural environment. An analyses of the economic environment plays a very important goal, since in economic downturn the purchasing power of consumers will be low. Depending on the industry and the target market one can decide if it would be beneficial to expand to a country. It is more logical to offer a low-budget good in economic downturn rather than expanding to a nation in a period of economic depression when the product or service that one is offering are high-end purchases. However investments in economic downturn might be less costly, but only efficient if analyses shows future economic growth.Political-legal environments differ per nation and play a great role in the decision to enter a market. Tax systems, labour laws, rules for advertisement, FDA and many more facets of this environment make it difficult for firms to expand to a nation. If one can adapt to the rules and laws of a country still this might be very costly. To give an example of the incurring costs; In France it is forbidden to show any commercials or advertisements in which the character is actually drinking or has its glass full of alcoholic liquid. For firms selling liquor planning to expand to France this would bring extra advertisement costs, since they will be needing to make new advertisements and commercials that are allowed for publication in French media. Another subject of this broad term is the political stableness of the nation in terms of international politics. Some countries might be more sensitive for future boycotts and more of the like. An analyses of the political-legal environment will help account for the otherwise unforeseen costs that, when accounted for, might make it less beneficial to enter a certain market. The cultural environment is one which cannot be neglected either. By this term the laws, language and culture of the inhabitants of a nation are meant. Even small cultural missteps may result in tremendous negative effects in terms of sales and profit. For example, many marketing communication tools fail to succeed when translated from the language of origin into another language. An example of this being Nescafé, meaning ‘not coffee’ in Spanish. According to professor Roberta de Sanctis,(lectures sales management Universita Bocconi 2009) professor at the SDA Bocconi school of management, who was involved in the sales management team of the Fiat Punto in India, the cultural differences were the reason for this model to fail in India. This very compact car would be perfect for woman to drive, however emancipation of woman in India was not far enough at the time being. Another important reason was the cultural clothing of men, since many men in India were a Turban, head towel, they hardly fit in the car comfortably because of the car’s size.As can be concluded cultural differences are an essential role in the level of success that a firm might face when deciding to introduce its product to a certain country.After evaluating the potential markets the company has to decide to which countries it plans to expand. Kotler and Keller argue that it is better to launch in fewer countries, but with a deeper commitment(Kotler, P., & Keller, K. L., Marketing Management, 12th ed., 2006, Pearson, Prentice-Hall, p. 674). It is indeed more logical to launch to limited number of countries successfully, rather than offering your products in many countries incurring the costs but not reaping the profits.Following the list of (the limited number of) nations to expand to one can proceed with the the preliminary strategy plan. The target market must be evaluated, the factors of significance are the size of the target market, the structure of the target market and the firms’ behaviour or goals in terms of;-planned product positioning-sales-market share-profit goals After the preliminary strategy one can decide if expansion to this geographical area will be beneficial for the firm. Some firms continue with a process of market testing, to see if and what aspects of the marketing communication and the product itself will be needing changes to be more favoured by local consumer taste. However this is not an essential step, and its usefulness depends very much on the industry in which one operates. When it is decided to enter a market the question remains; How do we enter this market? The following picture, based up on a figure in Marketing Management (Kotler, P., & Keller, K. L., Marketing Management, 12th ed., 2006, Pearson, Prentice-Hall, p. 674) will give a clear overview of the various entry possibilities. Commitment, Risk, Control and Profit potentialDirect investmentJoint venturesLicensingDirect exportingIndirect exportingFigure 2From the figure above we can conclude that various levels of intenseness of commitment, risk, control and profit potential require varying business structures. Direct and Indirect exportingIndirect exporting is the process of working with independent intermediaries. Export agents buy the products and sell them abroad. Firms can also sell their products to cooperatives organizations exporting products on behalf of several firms. Direct exporting is a less passive way to export a firm’s products, however more active and more profit potential goes hand in hand with more risk for the firm, thinking of investments in time and goods. Direct exporting can take place using one of the four export strategies;-Domestic-based export department or division-Overseas sales branch or subsidiary-Travelling export sales representatives-Foreign-based distributor or agentsLicensing‘Licensing is a simple way to become involved in international marketing. The licensor issues a license to a foreign company to use a manufacturing process, trademark, patent, trade secret, or other items of value for a fee or royalty. The licensor gains entry at little risk, the licensee gains production expertise or a well- known product or brand name.’ (Kotler, P., & Keller, K. L., Marketing Management, 12th ed., 2006, Pearson, Prentice-Hall, p. 676).Three variations of licensing can be distinguished, namely; Management contracts; management is taken over by the licensing firm.Contract manufacturing; production takes place locally, using inputs of local manufacturers.Franchising; all-round business concept is adapted by the licensee. Joint VenturesA joint venture is a newly set up company created by two or more business’s. When internationalization is the aim to set up a joint venture usually a domestic firm and the international firm set up the joint venture together, with the possibility to share ownership and control. Direct InvestmentWhen expanding to a foreign country through direct investment, the company fully owns, manages and sets up the business departments itself. This is more difficult for small firms than it is for large firms, since larger firms have the advantage to invest greater amounts in business projects. The larger risks and required managerial investment is offset by the greater potential profits that can be reached through direct investment, if the investment is done fruitfully. After deciding to use the market development strategy for growth, the firm has to choose among the most beneficial nations to expand to. A careful analyses of the nation follows. Depending on the size of the firm and the ability to attract monetary means for investment the firm has to decide up to which level it wants to make the trade-off between risk and profit potential.2.5 Differences in consumer behaviourConsumer behaviour is of high importance for marketers, since it teaches why consumers react the way they do. By understanding why consumers react is a certain way, marketers can use this ‘way of thinking’ to make their product more attractive to their target market by influencing the decision-making process.One of the major drivers of consumers’ behaviour is culture. Onkvisit and Shaw in their book called International Marketing summarize the most essential points of culture. ‘Culture prescribes acceptable beliefs, traditions, customs, and values that are then socially shared. Culture is subjective, enduring yet dynamic, and cumulative. It affects people’s behaviour in diverse ways through logic, communication, and consumption. Although some cultural traits are universal, many others are unique and vary from country to country. And in spite of national norms, cultural differences as a rule even exist within each country. While there may be tendency to misunderstand different cultures and subcultures, this temptation should be resisted. Being the force that it is, the culture of one country should not be judged as superior to the culture of another country. Each culture has its own particular values and social practices,......’ (Onkvisit, S., & Shaw, J., International Marketing, 4th ed., 2004, Routledge, p. 181-182).Terpstra and Sarathy Cultural Framework, 2000Figure 3The Terpstra and Sarathy Cultural Framework distinguishes eight factors that together result into an overview of culture. Language. Language is diversified into high context culture and low context culture. What is aimed at is the importance of non-verbal language. In some countries the non-verbal language is of greater meaning than the verbal language. These countries are considered to have high context culture verbal languages.Religion. Products and services that are offered should not be offensive nor distasteful bearing in mind religion. This is not only essential for the product itself, but also for the advertisements and promotions.Values and attitudes. Values and attitudes might be difficult to understand for outsiders, since it is in its broadest sense. Cultural history, habits and so on, might result into dislike of a commercial, a brand or a product. Using a local test group before launching a product, advertisement or commercial would be the safest way to avoid offensive behaviour.Education. The level of education and literacy varies among countries. This might be difficult to understand in the western world. By using different types of media, for example pictures rather than text in countries with lower education levels firms can communicate better.Social organizations. The existence of a caste system or a class system and more of the like is an essential part of culture.Technology and material culture. The extent to which consumers are materialistic, the growth level of innovation and the existence of a good infrastructure are parts of the technology and material culture. Laws and politics. These values differ per nation. They are of significant not only to understand the culture bur especially since one has to deal with these factors when expanding to a nation.Aesthetics. Aesthetics is the appreciation of every single object, colour, nature etc. and differs per nation.Even though culture is of great influence on the liking of a certain type of product, still one should focus on differences in behavioural dimensions rather than assigning these dimension to a culture. The reason behind this is that consumer behaviour is based upon three studies, from which only one addresses to culture. Namely cultural anthropology. Psychology and sociology are equally as important. While cultural anthropology focuses on a culture, a very large group, and social class, psychology is centred around the individual. Factors that play a role in this field of science are individuals’ values, attitude, experience and needs. Sociology is assigned to the study of small groups, that consist of interacting individuals. Here one can think of families. Keeping in mind the relevance of consumer behaviour one should be able to make an international overview of the characteristics of these differences among consumers in terms of an international atmosphere. Nevertheless this has not yet been accomplished to a satisfying degree. Due to the fact that individual behaviour differs to such a large extent that it cannot be reliable if added up to a geographical area. However T. Clark thinks differently about this matter and believes in the so-called National Character.‘People of each nation have a distinctive, enduring pattern of behavior and/or personality characteristics’(Clark, T., International Marketing and National Character: A Review and Proposal for an Integrative Theory” Journal of marketing 54 (October 1990) P.66)Hofstede distinguishes 4 criteria and in the past has assigned these attributes up on 50 countries. The criteria that he has diversified are as follows; Individualism vs. CollectivismLarge vs. Small power distanceStrong vs. Weak uncertainty avoidanceMasculinity vs. FemininityBy individualism vs. collectivism Hofstede means the level of social interaction. While Arabic cultures for example are more collective, European are considered to be more individualistic. Power distance is the approach of social classes and their interaction. By uncertainty avoidance the risk seeking and risk avoiding characteristics of individuals are considered. Masculinity and femininity represent the role of men and women in society, whether female emancipation is developed to a large extent or men are still the dominant players in society.Although his work has been very much criticized it is of value to consider the results of his European outcome. Hofstede considers European citizens as individualistic. The most efficient manner to trigger product purchase for people with this characteristic is by focusing on;-functionality of the product-variety of products-novelty of the products-experiential needs fulfilled by the product.The most surprising but nevertheless most useful outcome of previous research on international consumer behavior has been; Educate Your Customers! Even when a business concept conflicts with the cultural behavior of a nation or geographic area, one can learn its customers to adapt to the new situation. The best way to learn however is to reward. By rewarding the customer for his preparedness to adapt to the new situation one can still be successful with its cultural conflicting business strategy. 2.6 The threat of AmericanizationPizza, a once known as an Italian food consumption now a days is very different than it once has been. Even in Italy the pizza’s have been adjusted to tourists’ taste. Never in history did Italians put so many ingredients in their pizza. Why? To fulfill consumer satisfaction. Many cultures hesitate when it comes to the American way of living, since they do not want to lose their cultural identity. In Italy there is a trade of between the real Italian cuisine and consumer satisfaction in terms of tourism. If the restaurants do not adjust their menu, consumers prefer to go elsewhere, since they do not know the real Italian cuisine and would be disappointed by the limited number of ingredients added on their food.For people who are fond of their cultural background this is a very annoying situation. ‘A US company should understand that foreign consumers are not obligated to take on American values-nor may those consumers desire to do so. In addition it is more important to know what a person thinks than what the person’s language is. Because of the great differences in language and culture around the world, American firms need to adjust their approach to solving marketing problems in different countries. In a foreign cultural environment, the marketing plan that has worked well at home may no longer be effective. As a result, the firm’s marketing mix may have to undergo significant adoption and adjustment. Effective marketing in this environment will thus mandate that the company be culturally responsive’ (Onkvisit, S., & Shaw, J., International Marketing, 4th ed., 2004, Routledge, p. 182).2.7 Summary/FrameworkThe framework that follows is a step by step question list, which needs to be answered by the firm who plans to use the strategy of market development.Phase 1What is the reason for international expansion? Does it make sense to expand at the current state in which the company is proceeding? Is there enough added value created by this expansion in terms of customer service or by monetary means?If the answer is yes, continue to phase 2.Phase 2Which countries would be interesting to expand to?Draw a list of potential markets and continue to phase 3.Phase 3To what extent does protectionism and trade barriers play a role in the nations that are options for expansion?If protectionism and trade barriers are very high it might be a better idea to choose another option, unless the profit probability is extremely high, high enough to cover for difficulties that might occur through trade barriers.Consider the economic environment, the political-legal environment and the cultural environment. Are the countries still attractive expansion possibilities? It is important to keep in mind that usually less markets and deeper commitment results in better outcomes, for this reason choose among the remaining options by selecting the nations with the highest profit potential.Continue to phase 4.Phase 4In phase 4 a preliminary strategy plan is conducted. This is done by evaluating the target market. The factors of significance are the size of the target market, the structure of the target market and the firms’ behaviour or goals in terms of;-planned product positioning-sales-market share-profit goals Phase 5In this phase one must decide to what extent intenseness of commitment, risk and control are traded off against profit potential. Several potential business structures exist. Depending on the expertise, the power to attract capital for investment and the entry difficulties of the nation one plans to expand to, the firm has to decide among the following list of expansion strategies.-Indirect export-Direct export-Licensing-Joint ventures-Direct investmentWhere indirect export is the least committed expansion and direct investment is the most committed investment. If decided to choose for a joint ventures, licensing or direct investment continue to phase 6. In the case of indirect and direct export a deeper understanding of the culture is less required since help is provided by local merchants.Phase 6Phase 6 is the final step of the framework. In this phase we use the Terpstra and Sarathy Cultural Framework to analyze the culture of the nation to which we are expanding. Using the following eight factors;Language ReligionValues and attitudes EducationSocial organizationsTechnology and material culture Laws and politics AestheticsBy using these culture specific factors the firm can decide how it wants to set up its business and which parts of the business concept and the advertisements, commercials and other marketing communication aspects need to be adjusted to local taste and understanding.Essential in phase 6 is to keep in mind that one can teach its consumers to change and learn them to adjust to the business culture, as long as the consumers get rewarded for their adjustments and the firm does not forget to be culturally responsible. 3. The Starbucks Coffee CompanyIn this section information on Starbucks Coffee Company will be provided, followed by information about the Italian business atmosphere and the conflict point. The framework conducted in the previous section will help to develop an introduction method of Starbucks Coffee Company in Italy.3.1 The Starbucks Corporation historyThe Starbucks corporation finds its roots in Seattle, where three entrepreneurs decided, passionate by the Dutch immigrant Alfred Peet who imported fine Arabic coffee beans, to start their own shop in 1971. Jerry Baldwin, Zev Siegl and Gordon Bowker, were selling whole-bean specialty coffee from over the world. By 1981 the firm had expanded to 5 stores. The father of the current Starbucks concept Howard Schultz joined the Starbucks corporation in that same year as manager of retail sales and marketing. During a buying trip to Italy Schultz was very much impressed by the numerous espresso bars in Milan. The atmosphere, the lighting and even the waiters in the local coffee bars draw his attention.Schultz decided to spend more time in Milan and research these bars and their characteristics. Back in Seattle he tried to convince the owners of Starbucks to adjust their whole-beans sales to another business concept, namely offering warm just brewed coffee. As conservative as the owners were they made it difficult for Schultz to follow his ambition. However Schultz did convince the owners to place a bar in the shops were consumers could order freshly brewed coffee. Within days Schultz vision had been proven profitable. The limited square meters that were addressed to the bar resulted in more profit than the whole-bean sales. When doors opened in the mornings people stood in a queue to order their beloved coffee before going to work. Schultz was personally involved, he spent his time sitting in the coffee bar and evaluating consumers’ response. Schultz as a visionary was convinced that in the future in every single corner of an American street there would be a Starbucks coffee bar. This idea did not appeal to the owners of Starbucks corporation because of their conservatism, their idea was to have a shop where they could enjoy their passion. In 1985 Schultz left the Starbucks company to follow his dream. Together with Scot Greenberg who helped companies to raise capital and go public he set up a business plan. Remarkably enough Baldwin was the first investor in Schultz’s business. The first Il Giornale finally opened its doors in 1986, entirely according to the Italian espresso bar concept. Schultz spent lots of time in the bar to evaluate customers’ response. He noticed that although the basic concept was very appealing, the classical background music, which he copied from the Italian local espresso bars, disturbed people, consumers started talking louder rather than enjoying it, the Italian menu’s were not understood and American people did not appreciate drinking their coffee in front of the counter, the way Italians did. For this reason he kept on making adjustments to the concept of the coffee bars. Schultz decided that speedy service was of high importance since customers had little time, this turned out to be the competitive advantage. In 1987 the owners of Starbucks decided to sell their business because of personal reasons. Schultz bought Starbucks for 3.8 million dollars and renamed the joint firm Starbucks Corporation. Schultz did not want to set up franchises, since preferred total control of the firm to be in the hands of the firm itself. Even though investors were lacking confidence due to losses, Schultz managed to open 156 coffee houses within 5 years and the Starbucks Corporation became profitable already in 1990.Schultz continued his visionary and unlike other firms convinced investors of the benefits of covering health care for personnel, even part-time personnel working 20 hours or more. Through this attitude Schultz believed that workers would love their job and feel valued for the work they do. From up 1988 Starbucks Corporation covered healthcare. This was appreciated so much, that Schultz in 1994 was invited to meet the president of the USA to share his ideas on the health system.From up 1995 Starbucks employees could even buy stocks for 80% of the share price, as to get them more passionate for the Starbucks Corporation. Again with great success. Product expansion In 1992 Starbucks Corporation went public. Starbucks kept on growing. With the help of their real estate agents, who were the best in the coffee industry, they expanded successfully, reaching growing profits every year. The companies retail sales mix in 1998 consisted of 61% percent coffee beverages, 15% whole-bean coffee, 16% food items and 8% coffee related products and equipmentIn 1994 Starbucks and PepsiCo started a joint venture, producing cold coffee drinks in cans and bottles. In 1996 Starbucks entered in a joint venture with Dreyer’s as well, creating coffee sensed ice-creamIn recent years Starbucks has set up licensed agreements with Marriott Host International and Aramark food and services to cover university cafeteria and airports, the places where it was difficult for Starbucks to locate on its own. The Starbucks sales team was active in business to business sales, enabling restaurants, bookstores and coffee houses to use Starbucks brewed coffee. International expansionStarbucks created a new subsidiary named Starbucks Coffee International. The strategy of Starbucks outside of the USA was to license domestic retailers with experience and a good reputation who are capable of launching and operating Starbucks stores.Kathy Lindemann, SVP for Starbucks International names the following characteristics that are sought for in an international partner; ‘ Our approach to international expansion is to focus on the partnership first, country second. We rely on the local connection to get everything up and working. The key is finding the right local partners to negotiate local regulations and other issues. We look for partners who share our values, culture, and goals about community development. We are primarily interested in partners who can guide us through the process of starting up in a foreign location. We look for firms with: (1) similar philosophy to ours in terms of shared values, corporate citizenship, and commitment to be in the business for the long haul, (2) multi-unit restaurant experience, (3) financial resources to expand the Starbucks concept rapidly to prevent imitators, (4) strong real-estate experience with knowledge about how to pick prime real estate locations, (5) knowledge of the retail market, and (6) the availability of the people to commit to our project.’ (Online extra: Q&A with Starbucks Howard Schultz. Business Week, Sept. 2002)However sometimes Starbucks expands trough joint ventures. In joint ventures the partner company chooses the store sites and does the preparation of establishment. The objective for the first three years is to build the brand locally. This is done trough the store itself since Starbucks does not use alternative advertisements. For this reason the stores are located in well-trafficked areas. The locations get judged on a scale of A to D, A representing the best location, on demographics, financials and branding potential . 60% to 70% of the stores that are established in the first three years are solely meant for advertisement objectives. After selecting the locations, the partner company sends the information to the head office in Seattle where the prices of the rent is discussed with the landlords and the furniture designs are accomplished. The entire process of setting up a plan takes a maximum of 16 weeks. (according to Cydnie Horwat, US World and News report, Feb. 19, 2001)In 1998 there were stores in Tokyo, Singapore, Hawaii, Taiwan, Korea and the Philippines. Further growth in the number of locations per nation kept on continuing. The options to expand to Europe were being explored, but not yet planned. In 2001 however the first store in Europe was launched in Zurich. At the end of December 2001 Vienna, the home of the traditional European coffee houses had a successful Starbucks store. By 2004 already near 300 outlets were established in the United Kingdom , Germany and Spain were just opening. Today the day (2010) almost every significantly large European country has at least one Starbucks store. Italy excluded. In total 5.500 international coffeehouses are present divided over 50 countries worldwide. Financial information on Starbucks Corporation2009 was the first year in which the net revenues of Starbucks Corporation were declining.Net revenues in 2008 were 10.4 billion dollars whereas in 2009 they declined to 9.8 billion. Remarkable in 2009 was the first decline in the number of stores active. In 2008 16680 stores were operating, in 2009 16635, even more remarkable is the fact that international stores were increasing in that year, meaning that the decline is also offset by international growth. The operating income and operating margin declined between 2007 and 2008 from 11,4% (GAAP) to 4,8%. In 2009 this increased again to 5.7%. Earnings per share declined from 2007 to 2008 from 0,87 to 0,42, whilst increasing in 2009 to 0,52.Overall from the financial data the conclusion can be drawn that after a disappointing year 2008, 2009 is improving steadily, with focus on the growing international market. 3.2 The Italian marketItalian Culture and demographicsIn 2009 Italy had over 60million inhabitants, from which 2.6 million living in Rome, 1.3 million in Milan and 1.1 million in Naples (2004). It has the 5th largest population density of the European countries. The language that is spoken in Italy is Italian. Although Italy does not have a state religion, almost 90% of inhabitants are Roman Catholics. Italy has the largest per capita count of churches worldwide. 66% of inhabitants are within the age group of 15 to 64. Italian people can be viewed in terms of national character as collectivistic, since family is the centre rather than the individual. However Italian people are very self aware when it comes to appearance. The first impression is of great meaning. Appearance in terms of clothing, attributes and gesture represent, according to the national character, the social class, family statement and educational level. Since appearance is a great deal, Italians tend to be trendsetters in fashion and design, being the first wanting to have a newly available goodBusiness Culture Italians prefer to work with people they know. Face to face contact is essential in having business conversations. Not only will the subject be formal business, asking and being asked about personal issues, family life etc. is done usually. Since intuition is the driving force of business decisions, a feel-good conversation is fundamental to convince parties.Italian EconomyNational GDP per capita Italy is higher than the the average EU GDP per capita, resulting in high standards of living. Although GDP did decline in 2009 as compared to its 2008 GDP, still on the world list of large economies Italy ranks 11th . The World Bank claims that Italy has a free business environment and categorizes Italy in the list of open trade and openness for investments. Italian Coffee Italy is well-known for its coffee culture. In Milan alone there are thousands of espresso bars. But the Italian coffee culture differs from the rest of the world since it is very distinctive. Rather than having a coffee on the way in a plastic cup, Italians gather in their local espresso bar and drink an espresso standing next to the counter. Usually people go to the same espresso bars and know the barista, waiter. The Italian coffee drinking culture is very sophisticated. Even the Senseo and the Nespresso machines that are used in households all around western Europe are not integrated in the Italian households as they are elsewhere. Italians prefer to use their metal coffee makers that need to be placed on the stove.Is Entering the Italian Coffee Market critical?As discussed in the introduction of this thesis, it is not critical for business’ to enter the Italian coffee market if one takes McDonalds as an example. In Italy almost all McDonalds restaurants have a McCafé corner where freshly brewed coffee, coffee specials and treats are being served. Even though Italians are fond of their coffee drinking habits, they have shown to be very open for new discoveries. Besides the coffee consumption in Italy accounts for 14 billion cups of coffee per year, that is 3.7 kg per year per person. Catching only a small fraction of the current consumption would be interesting enough to enter the industry.4. Starbucks Entering Italy4.1 FrameworkIn this section the framework that is conducted in section 2 will be used for the information provided in section 3. Phase 1What is the reason for international expansion? Does it make sense to expand at the current state in which the company is proceeding? Is there enough added value created by this expansion in terms of customer service or by monetary means?Launching Starbucks in Italy would have several reasons. First of all, the ideological reasoning that follows. ‘Starbucks currently has over 7.400 stores, 1,460 of which are outside the United States in over 30 countries. Schultz eventually sees having 25,000 stores worldwide; He wants to see a Starbucks in every country of the world. But there is one country that especially has his eye: Italy, where the whole Starbucks concept began’ (Kotler, P., & Keller, K. L., Marketing Management, 12th ed., 2006, Pearson, Prentice-Hall, p. 691)Second, as a coffee company it feels prestigious to have shops in Italy, since consumers worldwide are convinced of the know-how of the Italian coffee drinking culture. The same accounts for shoes, as soon as it says ‘made in Italy’ women find it more interesting. And third, Italians drink lots of coffee, 14 billion cups of coffee per year are consumed. If a small part of the already existing consumption can be covered, the profit potential would be enormous. In the current business situation Starbucks is growing more and more internationally. International growth resulted in better financial data, since domestic markets were shrinking. Launching in Italy for this reason would be a smart step to take.Phase 2Which countries would be interesting to expand to?Draw a list of potential markets and continue to phase 3.This research is focused on Italy. Phase 3To what extent does protectionism and trade barriers play a role in the nations that are options for expansion?According to the world bank Italy is categorised as country with freedom for business opportunities and open for trade. In the sense of the economic environment and political-legal environment it would not be a problem to enter Italy. However evaluating the cultural environment by considering the national character, it will be difficult to find business partners to work with, since Italians prefer to work with people they know. If the right people could function as spokesperson on behalf of Starbucks entering Italy would still be an interesting opportunity for Starbucks, even more when profit potential is taken into accountPhase 4The target market for Starbucks coffee would be women and men in the age group from up 15 years until 65 years, resulting in 65% of Italian population, leaving out tourism. In phase 4 a preliminary strategy plan is conducted. This is done by evaluating the target market. The planned product positioning would be the high end of the fast-food industry offering high quality beverage drinks, local sweets and high quality whole-bean sales. Sales in the first three years are not the focus of the shops. The shops that are launched in the first three years of market development are solely focused on brand advertisement.Giving an overview of the expected sales forecast will be difficult. Italy had thousands of espresso bars, these bars are private property, rather than belonging to a chain. For this reason sales figures are lacking. However two competitors in the current Italian market would be McDonalds and Illy. Even though Illy is present in 134 countries, still it only has 700 employees, this could be due to the fact that Illy mostly provides its product in the form of business-to-business and has only few Illy coffee houses. Based up on the current industry situation no comparison can be made from which sales forecast can be constructed.The profit goal that Starbucks should be aiming at should be evaluated and constructed three years after opening. Phase 5In this phase one must decide to what extent intenseness of commitment, risk and control are traded off against profit potential. Several potential business structures exist. Depending on the expertise, the power to attract capital for investment and the entry difficulties of the nation one plans to expand to, the firm has to decide among the following list of expansion strategies.-Indirect export-Direct export-Licensing-Joint ventures-Direct investmentStarbucks usually works with licensing agreements or in some cases joint ventures. As discussed before, the national character of Italy requires an Italian counterpart to work with. For this reason Starbucks should indeed either work through a joint venture strategy or a licensing agreement. Since Italy is a very important market for Starbucks more ownership would be beneficial. When working in a joint venture, the domestic business partner has an essential role in deciding on location for example. The domestic business partner should be the face of Starbucks in Italy, national characteristic also requires face to face meetings, and should therefore be carefully selected. Phase 6Phase 6 is the final step of the framework. In this phase we use the Terpstra and Sarathy Cultural Framework to analyze the culture of the nation to which we are expanding. Using the following eight factors;Language ReligionValues and attitudes EducationSocial organizationsTechnology and material culture Laws and politics AestheticsThe spoken language in Italy is Italian, larger brands like fast-food chains are teaching Italian consumers to use English terms. Abercrombie & Fitch launched their first European store in Milan in November 2009. They refused to higher personnel that did not have a command of English language, no Italian is allowed to be spoken in the shop. To prevent any missteps they started off by hiring mostly international exchange students. The customers did not seem to be bothered, even if they also had to stay in line for an hour to get in the shop. Using English for menu’s should not be a problem for Starbucks and since no advertisement is done, besides the shop itself, no more adjustments are needed to satisfy language barriers. In Italy 90% of inhabitants are Roman Catholics. But only few go to church, even though it is the country with the most churches per capita. No conflicts will occur in this sense.Italian people are extrovert in non verbal language, and make a very quick first impression. Appearance is of great importance and is considered as a reflection of social class, educational level and family. This, for Starbucks could translate in nice uniforms for personnel. Italian people are collectivists, especially towards their family. The educational level is high in Italy, resulting in a strategic workforce and the need for sophistication.Vatican city is considered very important as a religious organization.Italian people are considered materialistic and extremely technologically developed. A good infrastructure is present, especially in the Northern part of Italy.Although there are some internal conflicts concerning the current president and his personal objectives, the political and legal environment can be considered as stable Italian people enjoy the small things in life, spending time with the family, architecture, history etc.4.2 Results From the framework it can be concluded that international expansion to Italy should not be very difficult for Starbucks. However making forecasts is very difficult due to several factors; -current coffee consumption-current industry players are very different from the Starbucks concept (and size). -profit analyses is difficult to drawIn the process of capital accumulation for international expansion, investors are very interested in the turn over, since they invest money they want to make sure that the project will be profitable. Missing these forecasts will not stimulate investors. Furthermore it can be concluded that the best business strategy to enter the Italian market would be to set up a joint venture with a local party. Since the Italian national characteristic has the aspect of not being fond to work with 3rd parties, it would be better to let the partner be the local face of the joint venture.5. Discussion and Reflection5.1 Discussion of resultsThe aim of this research was to identify the reasons for international expansion, the difficulties and opportunities which lie within the expansion and the possible strategies for international marketing concerning globalization.Theory has shown that international expansion takes place for several reasons. Trough international expansion the benefits of economies of scale can be reaped.Furthermore diversification trough market expansion results in risk reduction in terms of sales and higher sales and profit figures because of market size increase. Not expanding internationally would result in unsatisfied consumers who travel abroad often and gives competitors who do operate internationally an advantage. Due to international expansion, the obtained expertise and understanding of cultures and habits brings know-how which can be beneficial for domestic operations as well. Besides these business oriented reasons for expansion there also exists an economic perspective. Open economies result in better prizes for consumers, which will lead to a higher standard of living for the world economy. Besides these benefits and reasons for expansion there are some difficulties as well. The basis of most of the difficulties are a lack of knowledge of the country to witch one plans to expand. Not understanding consumer needs, the local business atmosphere, the cultural differences and the differences in laws and politics. These factors all bring risk. More to the point sufficient managers are required, who might be lacking in the current firm and are costly to hire and not to forget one most attract capital to invest in the expansion. If however a company decides to go international it must consider the pitfalls of protectionism and trade barriers in an industry. While protectionism seldom benefits anyone from an economic point of view, still a small group of people within an industry, or part of a government might think that creating trade barriers is benefitting the nation’s wellbeing.Trade barriers are not the only pitfalls in international marketing. One cannot imagine how much cultures can differ from each other. Not only in terms of language, religion, education, and laws and politics. But there is also a difference in values and attitudes, the level of technology and material culture. While one nation might be considered individualistic rather than collective, another might have a large power distance, or maybe weak in uncertainty avoidance. Cultures differ a lot from each other when analyzed. And what makes it more difficult is the fact that the cultural environment alone in not de driving force for consumer behavior. Psychology, which differs per person, and sociology, which differs per social class and family, are equally as important. However one can make use of the theory of the national characteristic to make statements based up on the cultural background. The cultural anthropology in consumer behavior also learns us that changes can occur over time. Business specific facets that might conflict with cultural background can be overcome if the consumer is learned to behave differently. As long as the consumer gets rewarded for this change it will be acceptable over time. Important is the fact that as a marketer one must respect the cultural values. Expecting the world to shift towards the American taste and way of living is a threat to cultures. If all these issues are overcome and one still has the ambition to internationalize its business operations the proceeding option is how to enter the international market. Firms have to make a trade-off between increasing risk and commitment on the one side and increasing profit potential and control on the other side. The lowest of all is reached trough indirect exporting, increasing with direct exporting, licensing and much control and profit potential, as well as risk and commitment , is needed for the strategy of a joint venture. The highest profit potential is reaches one a firm decides to enter a market by direct investment. This research also aimed to answer the following question; Why and how can one use a cultural tradition and introduce it in another country within a business concept, adjust the concept to local taste, expand the idea worldwide and successfully launch the modified concept within the country of origin?The reason for this question was that Starbucks, as the business subject of this thesis originates from the Italian life style, but after launching the concept it had to be adjusted to satisfy American consumer taste.The answer has been very simple. One should not see the adjusted concept as a modification of a cultural aspect. The Starbucks corporation although once based up on an Italian concept is a culture on its own, with its own values and attitudes. Since the basic idea of the previous question then becomes; What international marketing strategy will lead to the best suited introduction of Starbucks in Italy?Which is the same as the research question of this thesis. The answer to this question would be entering the market by setting up a joint venture with a local partner. This local partner should be the domestic face of the joint venture, since the national characteristic of the Italians highlight the fact that 3rd parties are less favourable business partners. Italians prefer to work with people they know personally. In terms of launching the Starbucks Corporation shops, Starbucks can proceed as they currently launch in other countries. Meaning; choosing several high-traffic A or B locations. Using these locations as brand advertisement. Offering their usual product line, which consists of beverages, whole-beans and local side food, for example Tiramisu for the Italian market. Profit expectations should not be present in the first three years of the brand launch, since the establishment of the in the first three years launched shops are for 60 to 70% focused on solely advertisement. Furthermore attention must be paid to personnel’s clothing, since appearance is of great importance to the Italian national characteristic.Furthermore results of the Italian demographics and other country specific attributes show that Italy is am extremely developed country, which has a rich economy, with sophisticated inhabitants, who are well educated. Italians are collectivists, however they are self centred when it comes to appearance. Appearance for them shows their social class, educational level and family class.Not to forget the results on the research on Starbucks Corporation, showing the high end growth and expansion of this vertical integrated company in its product line, its market penetration and international as well as national expansion. Based on the passion of a visionary this company has become successful by its deep business philosophy. Still aiming to grow in the future.5.2 LimitationsThis study knows many limitations, one of the major limitations being the lack of purpose for cultural differences. Figures might say that Aesthetics is important for cultural diversification, one might search up the meaning of this term, but it is difficult to find the culture specific Aesthetics. Examining culture as a whole is too broad to be useful. But examining only a single culture is to limited to be informative. For this reason research which is done on culture so far has been informative but only limited in serving usefulness. While one theory informs about how to adjust to a culture, another theory explains that anything can be thought to consumers. Another limitation of this study is the fact that the current coffee industry in Italy consists of thousands of privately held companies. This again limits the usefulness of the information. While overall consumer consumption numbers are available on the internet. Another limitation is the fact that this research is done trough a literature study. Literature is based up on a personal understanding. Misunderstanding these ideas could result in a biased outcome. 5.3 RecommendationsAs I already explained in the section results and discussion, I believe it would be an opportunity for Starbucks Corporation to enter the Italian market. The Italian market is definitely a desired market with high potential for Starbucks. Not only because a cup of Starbucks is not just a cup of coffee but a way of expressing identity. The Italian national characteristic shows that appearance of great deal to Italian. They enjoy living, enjoy looking good. And even judge by the way other appear and live. The above average GDP makes it financially interesting to operate in this market. As not to forget does the Italian passion for coffee. With a consumption of 14 billion cups of coffee per year, and a high density of people per square meter. A single coffee house could book enormous success.Entering the Italian market would be best done by using the market development strategy of creating a joint venture with a local entrepreneur. Since the basic idea of the Starbucks Corporation finds its roots in the Italian coffee drinking experience, and many European countries by know have Starbucks nationwide, except for Italy, the pressure for success is extremely high. If Starbucks fails to succeed in Italy the corporate image might be damaged, for this reason more control would be better than less. So rather than licensing a joint venture should be created. Direct investment does offer more control but since Italians are not open for business interaction with 3rd parties, a local entrepreneur will most probably reach better results. Currently in joint venture partnerships Starbucks leaves the options of the locations to the domestic entrepreneur. For Italy I would recommend the same tactic. Local partners have more domestic experience and know-how.A small footnote would be to pay careful attention to the appearance of the personnel in terms of clothing, since it should be fit for Italian taste. 6. ConclusionThis research tried to answer the following research question; What international marketing strategy will lead to the best suited introduction of Starbucks in Italy?The outcome provided through this research is that a partnership in the form of a joint venture between a domestic firm and Starbucks Corporation will lead to the best possible introduction for both parties. Starbucks Corporation remains control over the process, while interaction with Italian business people is done more efficiently trough the domestic partner. Both can benefit from the joint venture. The other facets of international marketing can be done in the current way of operations done by Starbucks, meaning, several high-traffic locations will be purchased which will fulfil the role of brand awareness in the first three years of operation. The price of the products can remain constant as compared to the other EU Starbucks prizes. The product line can stay the same as well, consisting of hot and cold beverages, whole-beans and local side dishes.Except for the strategy of joint venture rather than licensing pretty much all business operations can go uniformly as done in other European countries. For further research it would be of great importance to obtain a better description of the profit potential and the costs of launching in Italy. If these numbers are not added, investors cannot be convinced. 7. References(Catereo, P., R., & Graham, J., R., International Marketing, 12th ed., 2005, Irwin, McGraw-Hill, p. 8- p. 45)(Clark, T., International Marketing and National Character: A Review and Proposal for an Integrative Theory” Journal of marketing 54 (October 1990) P.66) (Cydnie Horwat, US World and News report, Feb. 19, 2001)(Kotler, P., & Keller, K. L., Marketing Management, 12th ed., 2006, Pearson, Prentice-Hall, p. 646-p.689).(Mullins, J., W., & Orville, C., W., Marketing Management, 7th ed., 2010, Irwin, McGraw-Hill, p. 51).(Mühlbacher, H., & Dahringer, L., &. Helmuth, L., International Marketing, 2nd ed., 1999, International Thomson Business Press, p. 453-p.493).(Onkvisit, S., & Shaw, J., International Marketing, 4th ed., 2004, Routledge, p. 181-182).(Pelsmacker, P., & Geuens, M., &. Berg. vd, J., Marketing Communication, 3rd ed., 2007, Prentice Hall, p. 457-p.580).Website Starbucks.com, financial statement year ending 2009

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