Starbucks and Cultural Distance

892 words 4 pages
Coping with the four dimensions of distance in the international expansion of Starbucks.

Maarten de Graaf, s1861263
Tom Breteler, s2022117
Group 12
13-10-2010
Introduction to International Business
Ms. Wilhelm
1. What are the four dimensions of ‘distance’ in Starbuck’s international expansion?
The four dimensions are culture, administrative, geographic and economic distance.

2. How did Starbucks reduce the ‘distance’ vis à vis host countries?
Starbucks used many tactics to reduce its distance from foreign markets. Firstly, Starbucks conducted extensive research in each country. They used focus groups, and quantitative analysis, to evaluate local cultural sensitivities and preferences. But it also used specific local adaptations. For
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The most important connection between the company-specific features, and the dimensions of distance, is the limits on the transferability, deployability and exploitation of FSAs across borders.
Even though Ghemawat does not discuss the difference between location-bound and non location-bound FSAs explicitly, he does emphasize that the international exploitation potential of FSAs critically depends on the type and level of distance among countries. According to Ghemawat, greater ‘distance’ leads to weaker transferability and exploitation potential of non location-bound FSAs, and to higher investment requirements in location-bound FSAs.

6. Can you provide an update on Starbucks’ international expansion, using materials available on the Web?

The main focus of Starbucks is going to be on China, and Asia in general. According to Chief Executive Howard Schultz; "Asia clearly represents the most significant growth opportunity on a go-forward basis," , and "Over time there will be thousands of stores in China,". Starbucks will, however, plan its growth in China carefully, as Mr. Schultz also says: "But it's a complicated market that requires significant discipline and thoughtfulness."

He also said the Seattle-based chain was eager to crack the potentially lucrative Indian and Vietnamese markets,

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