2004) Outlines Some of the Cultural Mistakes

¶ … 2004) outlines some of the cultural mistakes that have come up when taking franchises overseas. He highlights that it is important to understand the different aspects of a foreign culture, for example what things are offensive to that culture and what things are not. Offending locals is a great way to fail in an overseas venture. The example of Richard Nixon basically flipping the bird to the Brazilians is just one example, and Wade makes the point that one such act of offense can sometimes scuttle an entire deal.

The Gibson article (2006) echoes these ideas. One example that was cited was Domino's attempted expansion into Italy. For some reason they thought Italians would like the product they pass off as pizza. This type of cultural arrogance, thinking that Domino's was even remotely comparable to proper Italian pizza, can lead companies to fail in foreign markets. It is necessary to appreciate local tastes and ensure that the product meets the needs of the local market, rather than blindly foisting product on that market and assuming it will be well-received.

One of the company's from the Gibson article was Starbucks. Gibson cited where it had problems with its partners in Israel and in Germany, but there are other examples of Starbucks both succeeding in international markets and failing. The company had a situation similar to that of Domino's in Italy when it entered the Australian market. Australians had a coffee culture far more sophisticated than that of Starbucks, so when the American company entered that market it found that Australians were generally unwilling to pay a premium for what they considered to be inferior coffee (Mercer, 2008).

However, Starbucks has had tremendous success in both Japan and China, despite both being predominantly tea-drinking countries. The company focused its marketing around the idea of the Starbucks experience, rather than the coffee products. By providing urban-dwellers who live in small apartments with a comfortable "third place" Starbucks attracted people to its stores (Levenstein, 2012). Eventually, they grew to the coffee products as well as the tea products that Starbucks introduced, and the company has thrived. By working with its local partners to appeal specifically to Japanese and Chinese tastes, Starbucks was able to succeed in those markets. When it assumed that it could go into Australia with basically the same strategy that worked in the U.S., Canada and the UK, it failed because it did not take the time to appreciate the differences in the Australian market.