Activity 3:Case Study - Starbucks Second stage Members of the group: Daniel A. Boh贸rquez S谩nchezLiliana Milena Plazas L贸pez & Natalia Lara Lozano
Activity 3 Project (Second stage): STARBUCKS Link available - First stage: Starbucks through the time, its background. http://www.timerime.com/es/linea_de_tiempo/2436922/STARBUCKS+THROUGH+ THE+TIME/ Link available - Second stage: The strategy or strategies the company used to enter into the foreign market. http://issuu.com/nlaraloz3903/docs/activity_3_project_starbucks_wants_
Members of the group: Daniel A. Boh贸rquez S谩nchez Liliana Milena Plazas L贸pez Natalia Lara Lozano
The importance to choose an appropriate corporate strategy to begin company Companies generally are thinking in how to improve its profits, how to develop new products or services, how to break into overseas, and so on; for that reason, the alliance between companies has long been a major corporate strategies considering that the companies require to increase their business and make known in a global way.
Regarding the issue that we need to address, we are going to explain the two main concepts that we will present along to the topic of Strategic Alliance. The first one is strategic:
1
The way in which a business, government, or other
organization carefully plans its actions over a period of time to improve its position and achieve what it wants. The second concept is alliance as 2an agreement to work with another person, organization, etc. to try to achieve the same thing: a business/economic/marketing.
Now, having the definition of the two above concepts, we are going to move to review some relevant aspects about the join between one or more companies in order to achieve the foreign market, break into new products, diversifying into new businesses, developing technical standards or achieving competitive advantage.
The quality of corporate strategies depends of the path that company designs in the conception of the business alliance keeping in mind the objectives of the other companies and its own. We could present you in this document several
1
Cambridge Dictionaries Online:
http://dictionary.cambridge.org/dictionary/business-
english/strategic?q=strategic 2
Cambridge Dictionaries Online: http://dictionary.cambridge.org/dictionary/business-
english/alliance?q=alliance
steps about the most important tips taking in account to choose a corporate strategy but we will focus on the strategic alliance.
Companies need to 3alignment of objectives is an important and often overlooked step in the process of forming alliances, developing an appropriate set of critical success factors, and framework to classify current and potential industry participants (suppliers customers, competitors and complementors) who are, or might become, alliance partners and linkages.
3
http://www.entrepreneurship.ethz.ch/education/lectures/Alliance_Advantage/Processes_Holmberg_2009.pdf
Starbucks wants to open first coffee shop in Colombia Concerning our topic with the company that we selected, we would like present you the strategy that Starbucks chose in order to break into Colombia, obviously, the country more known for its coffee tradition in the world.
The foreign expansion paths and the selection of marketing strategies are two things that Starbuck kept in mind when it came time to decide what kind of strategy was the best to assume the challenge of the business.
Starbuck made an alliance with two recognized companies, the first one from Colombia and the second from Mexico in order to establish its market looking for the breadth of product offering without loses its corporate goals. The Colombian company is 4Nutresa group, the fourth largest food company in Latin America in terms of market capitalization. With about 100 years of history. They have a portfolio of over 70 brands with more than 15 leading brands in Colombia and neighboring countries.
They have 6 different segments: cold cuts, biscuits,
chocolates, coffee, ice cream and pasta, makes presence in 12 countries in the region, with manufacturing plants in 8 of these. Their products sold in 65 countries, in 5 continents and they are more than 30,000 employees (6,100 outside Colombia).
In the other hand, we have the other alliance company from Mexico, 5Alsea is the leading restaurant operator in Latin America with globally recognized brands in the quick service, coffee shop and casual dining segments. It has a multi-brand portfolio comprised of Domino’s Pizza, Starbucks, Burger King, Chili’s, California Pizza Kitchen, P.F. Chang’s, Pei-Wei, Italianni’s and The Cheesecake Factory. At
4 5
http://www.nutresa.com/ www.alsea.com.mx
the end of June 2013, the company operated 1,768 units in Mexico, Argentina, Chile and Colombia. Alsea's business model includes backing for all of its Business Units through a Shared Services and Support Center that provides aid for all of the Administrative and Development Processes, as well as the Supply Chain. The Company
has
more
than
30,880
employees
in
five
countries.
It has earned the distinction of a “Socially Responsible Company,” and it is one of the top 20 “Best Places to Work” in Mexico.
In the beginning of the year 2013, Starbucks informed that it will open a first Cafe in Colombia, where the popular Juan Valdez chain has a very firm foothold. One of the objectives of Starbucks is be aware of the high main competitors and the substitute coffee shops like Oma, Diletto o McCafé. The Starbuck's idea is consolidate its brand in the Colombian market and offer to the consumer one more option at the moment of talking around a cup of coffee.
The first step of the company is to open cafes across Colombia over the next five years. He expected to have up to 50 stories in Bogota and other main cities by then. The second one is to increase the use of Colombian Coffee worldwide by about 20 per cent over the next three years, thirdly, Starbucks have already become in a customer of the National Federation of Coffee Growers, which comprises 560,000 families dedicated to growing the bean and finally, Starbucks also have a $US3 million ($A3.34 million) partnership with the US Agency for International Development to help Colombian farmers boost coffee yields and economic stability; remember the last protests to demand a renewal of government subsidies secured after previous unrest. For the previous reason, the arrival of this company it seems to be a relief to this great economic group that it moves to the country.
The standardization of marketing strategies across countries, define what companies goes with you in the business process and the search of economic resources for establish new business in order to achieve the goals are topics that majority of the companies should consider at the moment to decide with who they will be working for long time. So, thinking in this, we have summarized the advantages and disadvantages that companies could find in that kind of strategy especially with Starbucks case.
Advantages of the Strategic Alliance
Disadvantages of the Strategic Alliance
Get instant market access, or at least Weaker management involvement or less equity stake. speed your entry into a new market Exploit new opportunities to strengthen your position in a market where you already have a foothold.
Weaker management involvement or less equity stake.
Increase sales.
Fear of market insulation due to local partner's presence.
Gain new skills and technology.
Less efficient communication.
Share fixed costs and resources.
Difficult to keep objectives on target over time. Loss of control over such important issues as product quality, operating costs, employees, etc.
Gain greater knowledge of international customs and culture.
Develop new products at a profit. Enlarge your distribution channels.
REFERENCES
Building Skills for Women Service Exporters. Conrad, D. International Trade Forum. 2003. Issue 4, p18-19. 2p. Black and White Photograph. Retrieved from: EBSCO Data Base. October 2013.
Building successful strategic alliances. Holmberg S. R. & Cummings J. Volume 25, Issue 6, December 1992, Pages 10-17. Retrieve from: EBSCO Data Base. October 2013.