20 substantive points; 5 points given “free”.
QUESTION 1: Initially Starbucks expanded internationally by licensing its format to foreign operators. It soon becamedisenchanted with this strategy. Why? (5 points)
ANSWER 1: Award 5 points if the student mentions all of the following:
*With licensing, Starbucks had limited control of their expansion rate.
*Key toStarbuck’s strategy is quick expansion to build consumer habits while Starbuck’s is trendy.
*Their licensees did not have the capability to expand as rapidly as Starbucks wanted.
Award 4 points ifthe student mentions all of the above except “expansion rate”
Award 3 points if the student mentions all of the above except “expansion rate” and “building consumer habits while Starbuck’s is stilltrendy:
Award 2 points if the student only mentions “lack of control over the licensee” as the main issue
QUESTION 2: Why do you think Starbucks has now elected to expand internationallyprimarily through local joint ventures, to whom it licenses its format, as opposed to a pure licensing strategy? (3 points)
ANSWER 2: Award 3 points if the student mentions both:
*Starbucks has alarger measure of control
* and still can access local knowledge through the JV partner.
Award 1 point if the student mentions only one or the other
QUESTION 3: (a) What are the advantages of ajoint venture entry mode for Starbucks over entering through wholly owned subsidiaries? (2 points) (b) On occasion though, Starbucks has chosen a wholly owned subsidiary to control its foreign expansion(e.g. in Britain and Thailand). Why? (4 points)
ANSWER 3(a): Award 2 points if the student mentions both of the following:
*A JV gives Starbucks access to local knowledge and local markets,
*Starbucks can still exercise a large measure of control, even though it may not be to the same degree as a wholly owned subsidiary
Award 1 point if the student mentions only one or the other of...