Page 298 - DMGT545_INTERNATIONAL_BUSINESS

Unit 15: Global Strategic Management and Business Ethics

notes

Notes Large multinational companies affect a variety of stakeholders such as
customers, creditors, investors, employees and the communities in which they operate.

self assessment

Fill in the blanks:
8. Due to favourable ………………., New Zealand may have a ………………. for automobile
assembly operations, but high ……………….. would make it an uneconomical location
from which to serve ………………... .
9. ……………….. stretch around the world and are not bound by a single country.

10. The foundation of ……………….. is selecting the right markets to enter.
11. A good manager is highly strategic in his ……………….. .
12. The simplest way to enter a market is to open a ……………….. .
13. ……………….. is an important part of the global strategic management process.
14. A ……………….. makes some sense when there are high pressures for local responsiveness
and low pressure for cost reductions.
15. Global firms tend not to ……………….. their product offering and marketing strategy to
local conditions because customization raises costs



Case Study the starbucks experience—Going Global

ost analysts who follow Starbucks are bullish on the stock, despite the current
general market woes. After all, a share purchased in 1992 at the IPO is now
Mworth more than sixteen times its original value, taking into account stock splits.
As Schultz points out, a contemplative moment of relaxation over a Starbucks latte is an
affordable luxury even during a recession. ‘I have a strong buy recommendation on the
stock’, says John Glass of Deutsche Bank Alex Brown. ‘This is the best long-term play in the
restaurant/retail field I’ve ever seen.’ As long as the company sticks to its core expertise,
Glass is confident that the firm can continue to expand successfully. Schultz clearly tried to
spread the Starbucks brand image too thin, particularly with forays into various internet
companies that made the share price tumble severely in the summer of 1999. But when the
brand sticks close to its identifiable product—the cold coffee drink Frappuccino, sold in a
venture with Pepsi, or coffee-flavoured ice cream with Breyer’s—it may succeed.
The major unanswered question is how Starbucks will fare in continental Europe over the
next few years, particularly when it goes back to Italy, where Schultz had his epiphany in
1983. It is likely that Star-bucks will do well in Germany, where there are already Starbucks
clones. But what about Scandinavia, which already prides itself on its fine coffee heritage
and the world’s highest per capita coffee consumption? And what about France, which has
a long history of anti-American sentiment and which already hosts a vibrant cafe culture?
Finally, of course, what about Italy, with its 121,000 existing neighbourhood espresso bars?
Peter Maslen, the president of Starbucks Coffee International, is cautiously optimistic. ‘We
know that Europe has a long coffee tradition, so it’s with humility and respect that we
Contd...

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