Academic level – Undergraduate 1-2
Type of paper – Analysis
Topic Title – American Companies in Foreign Countries
Please find an American company that has locations in another country besides the United States or locate an international company that has locations in the United States. In a 500-word essay, tell what the product is and how long they have been in business in that location.
Also, let us know what needed to be done to adapt the product and/or business to that country. Did they have to change the product, add things to it, and take things away from it? Did they have to change their brand or message for the particular location they have chosen? Were they successful in that location? Did they fail? How do you know?
Starbucks is one of the world-known American companies spreading its products globally. Although the organization has successfully entered the South African market, it has faced challenges when popularizing its products in this region. Thus, Starbucks’ decision to include local products into its traditional menu, adopt its design and strategy to local needs, and establish adequate prices for its products and services has enabled the company to enter the South African market successfully.
Starbucks is a multinational chain of coffeehouses that has established its locations worldwide, though its entry into the African market has been challenging. The company entered the South African market in 2016 and impressed local citizens ready to stay in lengthy queues to buy American coffee (Basak et al., 2020). Starbucks has realized that including local products in its traditional menu is essential to meet citizens’ needs. The organization has licensed a partnership with South African Taste Holdings, allowing Starbucks to quickly adapt to local tastes and requirements (Nemmaniwar, 2022). In South Africa, customers can buy not only traditional Starbucks products but also Rooibos tea, recognized as one of the most popular drinks in the country. Establishing Starbucks locations in the state has been beneficial since local consumers need access to global brands. Although local Starbucks coffeehouses’ appearance is similar to standard outlets, the organization has implemented South African traditional features in its design. As a result, Starbucks’ entry into the South African market has been successful and promising due to the company’s ability to combine its traditional menu with local products and consumers’ desire to access multinational brands.
Nevertheless, Starbucks has faced numerous obstacles in the South African market, explaining why it has failed to accomplish its initial objectives and plans. Although the company has aimed to accommodate approximately 150 Starbucks stores in the country, the actual number of outlets is significantly lower, while the COVID-19 pandemic and the country’s economic situation have considerably influenced these issues (Nemmaniwar, 2022). The local prices for Starbucks coffee products and snacks are lower than the costs for the same products within the chain in other countries, though they are still higher than those provided by local coffeehouses. Starbucks’ entry into South Africa is beneficial for the country due to the increase in the number of jobs for unemployed citizens. However, Starbucks’ benefits remain controversial because the company has invested enormous money to establish its coffee shops, while its profit remains unsatisfactory. Therefore, Starbucks has successfully introduced its brand in South Africa and enabled local citizens to enjoy delicious coffee and snacks, but the difference in financial opportunities has become the primary challenge for the company in this state.
In conclusion, Starbucks’ current position in South Africa is challenging despite its successful entry into the local market. Citizens have adapted to Starbucks’ menu and traditions, but the pricing for coffee and snacks remains controversial. Thus, the company should continue exploring the South African market to satisfy local customers’ needs and expectations and make this cooperation beneficial for all participants.
Basak, S., P.V., R., Prakash, P. A., Albesis, G., Quttainah, M. A., Shukla, S., & Pandey, R. (2020). Business idea for Starbucks: Organic yerba mate beverages. International Journal of Tourism & Hospitality in Asia Pacific, 3(2), 89–96. https://doi.org/10.32535/ijthap.v3i2.826
Nemmaniwar, P. (2022). Case study on Starbucks. SSRN. https://doi.org/10.2139/ssrn.4301032