MODES OF ENTRY

Entry into an International Business:There are some basic decisions that the firm must take before foreign expansion like: Which Foreign Markets Timings of Entry Scale of Entry.

Exporting Joint Venture Mergers & Acquisitions Licensing Franchising

Advantages: Need for limited finance: Minimizes risk and investment Speed for entry Maximizes scale; uses existing facilities. Disadvantages: Trade barriers & tariffs add to cost Transport cost Limited access to local information Company viewed as an outsider

Advantages: Joint venture provide large capital funds suitable for major projects. It spread the risk between or among partners. It provide skills like technical skills, technology, human skills, expertise, marketing skills. It make large projects and turn key projects feasible and possible. It synergy due to combined efforts of varied parties.

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Disadvantages: Conflict may arise Partner delay the decision making once the dispute arises. Then the operations become unresponsive and inefficient. Dilution of control. Scope for collapse of a joint venture is more due to entry of competitors changes in the partners strength. The decision making is slowed down in joint ventures due to the involvement of a number of parties

Advantages: The company immediately gets the ownership and control over the acquired firms factories, employee, technology ,brand name and distribution networks. The company can formulate international strategy and generate more revenues. If the industry already reached the stage of optimum capacity level or over capacity level in the host country. This strategy helps the host country.

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Disadvantages: Acquiring a firm in a foreign country is a complex task involving bankers, lawyers regulation, mergers and acquisition specialists from the two countries. This strategy adds no capacity to the industry. Sometimes host countries imposed restrictions on acquisition of local companies by the foreign companies. Labour problem of the host countrys companies are also transferred to the acquired company.

LICENSING involves a licensor and licensee tied together by certain agreement. The licensor sells Know-How rites to the licensee usually for a period of time. KNOW-HOW rites are the intangible rights like patents, inventions, formulas, processes, design, copyrights, trademarks, etc.

It is a similar entry mode to the licensing. The difference lies where in the franchisee, it needs to follow the certain rules given by the franchiser. Franchising is most commonly used in service sector , whereas licensing is mainly done in manufacturing sector.

Licensing

Lower cost and risk

Franchising

Lower cost and risk

Joint- ventures

Benefit from local partner Share cost and risk

LICENSING

NO tight control Risk of losing knowhow Quality control Hard monitoring Loss control of technology Conflicts and battles

FRANCHISING

JOINT VENTURE

Starbucks Corporation is an international coffee and coffeehouse chain based in Seattle, Washington. Starbucks is the largest coffeehouse company in the world, with 18,887 stores in 55 countries including over 12,500 in the United States, over 1,200 in Canada and over 700 in the United Kingdom. Starbucks sells drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, coffee beans, salads, hot and cold sandwiches and Panini, pastries, snacks, and items such as mugs and tumblers. Through the Starbucks Entertainment division and Hear Music brand, the company also markets books, music, and film.

Starbucks also announced that the company hopes to enter the energy drink market. Pre-ground beans will no longer be used. They are currently test marketing this "fresh-pressed" coffee system at six Starbucks locations; three in Seattle, and three in Boston. In early 2008, Starbucks started a community website, My Starbucks Idea, designed to collect suggestions and feedback from customers. Other users comment and vote on suggestions. In May 2008, a loyalty program was introduced for registered users of the Starbucks Card (previously simply a gift card) offering perks such as free Wi-Fi Internet access & flavored syrups, and free refills on brewed drip coffee.

Beginning in July 2010, Starbucks plans to offer free Wi-Fi in all of its US stores via AT&T and information through a partnership with Yahoo!. This is an effort to be more competitive against local chains, which have long offered free Wi-Fi. On June 30, 2010, Starbucks announced it would begin to offer unlimited and free Internet access via Wi-Fi to customers in all company-owned locations across Canada starting on July 1, 2010.

TATA COFFEE is Asias largest coffee plantation company and 3rd largest exporter of instant coffee in the country. The company produce more than 10000 MT of shade grown ARABICA and ROBUSTA coffees at its 19 estates in South India. It exports coffee to countries in Europe, Asia, Middle East and North America. Other businesses : tea, pepper, timber and hospitality in terms of PLANTATION TRAILS.

STARBUCKS tried to enter in INDIA 3 yrs ago by striking An alliance with Kishore Biyanis Future Group, but these plans were rejected by FIPB.
An year ago STARBUCKS again revived its plan by trying alliance with JubliantGroup, but again that didnt worked out.

India is one of the most dynamic markets in the world with a diverse culture and tremendous potential. The JV will then open outlets in all major metros. Within a year, Starbucks, the American coffee maker will raise its stake up to 51%. The government allows up to 51% foreign direct investment (FDI) in single-brand retail, the newspaper report suggests. Domestic consumption of coffee has risen to an estimated 94,400 metric tons in 2008, up almost 90% since 1998, according to government figures

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In the areas of sourcing and roasting, Tata Coffee and Starbucks will explore procuring green coffee from Tata Coffee estates and roasting in Tata Coffees existing roasting facilities. At a later phase, both Tata Coffee and Starbucks will consider jointly investing in additional facilities and roasting green coffee for export to other markets. Starbucks Coffee Company is the premier roaster and retailer of specialty coffee in the world UK-based coffee chains such as Costa and the American Coffee Bean & Tea Leaf are hoping to expand rapidly in the Indian metropolitan cities.

So keeping in view all these aspects, its safe to declare that a Joint Venture will the most feasible and low risk option that Starbucks can adopt to enter the Indian market. However keeping in view the dynamic nature of the domestic markets and world economy, this may not be considered as the final option.