I found Christian Legazpi’s blog post regarding Starbucks’s entrance to Indian Market as relevant example to show barriers of globalization for expanding companies. The thought of expansion into foreign markets seems like a viable next option for companies who are currently successful in their original market. I believe with thorough in-depth analysis beforehand and executed properly, a benefits of expansion for a company are limitless. However, I feel that some companies struggle in replicating their success from one market to another based on these main reasons:
- Cultural clash: Entering in a foreign market makes a company vulnerable to a “cultural clash”. In Christian’s blog post, he stated that India is “more of tea-drinking” country, which make hurt the profitability of Starbucks coffee. Companies cannot change a countries traditions or values, but instead adapt their products around this. For instance, Starbucks could look into introducing a tea line with a great variety to choose from, making it more feasible in the Indian market.
- General Demographics: Which age category does majority of the population fall under? A company must understand the demographics of the country to evaluate whether there product will be sought after. For example, Starbucks’s offers not only coffee, but also milkshakes and smoothies that would more favourable for younger generation.
- Establishing Brand Loyalty: When entering in a new market, a company will be targeting a whole new audience on a clean slate, meaning that establishing brand loyalty and presence will develop over the course of time. This means companies should let the market naturally respond which will require large quantities of advertising and research resources.
Works Cited:
“Starbucks In India – An Uncertain Future.” Web log post. Christina Legazpi, n.d. Web. 6 Nov. 2012. <https://blogs.ubc.ca/christianlegazpi/2012/09/23/starbucks-in-india-an-uncertain-future/>.