International Business Strategy Essay Example | Topics and Well Written Essays - 1750 words - 1

International Business Strategy - Essay Example Howard Schultz turned out to be the key success factors of the company. Such decision is discussed in this section. Product diversification to customer segment (Explanation Using Ansoff Model) Throughout the 90’s and the 00’s In order to target new customer segments Starbucks decided to go for product diversification. In 1994 Starbucks and PepsiCo entered in to a joint venture, which is now known as the North-American Coffee Partnership to sell product closely related to coffee in cans and bottles. Thus the Starbucks catered to a whole new customer segment. In 1998 the company allowed Kraft foods to become a licensed provider of the Starbucks ground coffees and whole bean across US. In this case Starbucks ensured product quality, while Kraft foods took care of promotion and distribution. In 2008 Starbucks struck a partnership with Apple iTunes and started providing pick of the week music card in the 7000 stores (Henry, 2008, p.131). The diversification strategy can be w ell explained by using the Ansoff Product grid matrix. The four key elements of the product matrix grid are market penetration, Market Development, Product Development and Diversification. Among these Starbucks went for diversification as the company launched new product in a new market. Here it may be added that although Starbucks provided new products, but the core product remained the same. Rather the company went for augmentation. This also meant that the company used concentric diversification instead of conglomerate diversification, because the company added new product s hat was similar in nature keeping the core product i.e. Coffee in mind. Store Expansion Strategy to achieve Market Expansion (Explanation Using Different Market Entry Modes and Strategic Actions) Even before becoming the President and CEO of the company Mr. Schultz had a vision to expand the business of the company. This was one of the key reasons for which Mr. Schultz bought the company. In the early 90†™s the company began the geographic market expansion strategy. The management of the company decided to work on a hub and spoke model to expand the market. In this case the major cities acted as a hub. It had specialist teams of professionals located in the hub. As a number of stores opened in the hub the company decided to open additional stores in the surrounding cities. The stores in the surrounding cities were monitored by the team of professional located in the hub cities. Due to such strategies very soon the company had a blanket of retail stores in the major as well as surrounding cities of the country (Wenderoth, 2009, p. 145). In the mid 90’s as a part of the expansion strategy the company got in to licensing agreements to cover those locations where the company may not able to have own outlets. The company entered into a licensing agreement with Marriot host international hotel operates in airport locations. Once the company had established a strong store network in United States the company decided to venture internationally. There were various options available in front of the company which