Starbucks in Morocco - Entering a Foreign Market

Entry Mode

Entering a foreign market is a very challenging process. In fact, when investing in international markets North American firms have to face culture shock, which often implies different buyer’s behavior and tastes, but also the recently rising anti-American movements in many parts of the world such as the recent manifestations and attacks against some McDonald’s restaurants in Northern France or the lobbyist fighting against the presence of Starbucks in Lebanon. Hence, to succeed in international market, making a complete environment analysis is not enough, a company should also come up with a strategic entry mode to jump these obstacles, survive and make profits in the new market and get returns their investment. However, we should note here before going further that Starbucks does not act as an Ambassador of the American Culture, since it offers a variety of “adapted to the country’s culture” products. As a result, in Great Britain the corporation even got an award for its mice apple which is a local British food while Starbucks sells curry puffs and meat buns in Asia. We should also note that “coffee is drank everywhere around the globe” as the website coffeeuniverse.com states it. Consequently, the corporation should not worry about anti-American feelings as much as other North America firms selling products like hamburgers that strictly derives from the American culture.

There are several ways to enter and International market such as exporting, licensing, joint venturing.

As seen in the exploration of the marketing environment analysis of Morocco has a very different culture from our America culture. Hence, the best approach to penetrate its market would need the help of some local experienced business persons in Morocco. As a result, we will use the joint venture mode to enter this foreign market.

In fact, a joint venture is a form of direct investment which consists in the association of a foreign investor and a local business partner who agree to create an entity and then share the revenues, profits and control of the enterprise. As a result, this International approach focuses on partnership first and country second.

This mode of entry has many advantages in terms of strategic goals such the synergies, a fast transfer of technology and a broader diversification. Also, the joint venture makes it easier for foreign investors to deal with country’s regulations and the issue of having a little knowledge about the foreign market and its customers; since local business partners are likely to know the laws, regulations and market of their country. This form of investment spreads the risks of business failure between the local business owners and the foreign investors, and also allows the investing corporation to make economies of scale which implies the fact you produce more with less input (resources such as labor, wages).