Globalization and competition within the international markets demands that multinational corporations employ a series of strategies aimed at ensuring that they maintain a competitive advantage over their rivals. Such strategies can never be realized without first being aware of the external environment differences. An external environment analysis is therefore a key factor in the formulation of a successful internationalization strategy (Kennedy,1984).In this paper, we explore the concept of external environmental analysis and its role in the success of Starbucks as a multinational company.
The role of external environmental analysis in the strategic formulation of an internationalization strategy
The work of Babatunde and Adebesi (2012) noted that every organization that operates in a competitive business environment must employ strategic environmental scanning techniques in the evaluation of the external environmental forces (the opportunities and threats) in order to help the organization seize the opportunities and avoid threats and thereby gain profitability. Organizations, especially multinationals ones must strategically, continuously and periodically engage themselves in a strategic environmental scanning exercise and pay attention to the threats and opportunities in their operating environment.
The case
Starbucks sales are increasingly slowing due to the oversaturation of the U.S. coffee market. This reality coupled by the fact that internationalization strategy couple be its way to profitability forced the company to expand its operations to other countries. The very first Starbucks operation outside the United States was initiated in 1995 in Tokyo, Japan. The work of Subhadra (2003) indicates that Starbuck's success can be attributed in part to its profitable domestic operations. The company has a stable North American business but plans to expand extensively abroad. This expansion is part of its risk management plan. Starbucks' internationalization...
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