With only 20% of the world’s coffee being consumed in North America

By April 19, 2019 Management

With only 20% of the world’s coffee being consumed in North America, Starbucks started to sell its products aggressively in other countries in order to grow and expand internationally (Simmons, 2012). In 1996, Starbucks opened its first store outside of North America in Japan and has been expanding across the globe in the subsequent years. Until 2017, it has opened more than 28,000 stores in 76 different nations worldwide (Annual Report, 2017).

In order to analyse its international strategy, the Integration-Responsiveness framework by Prahalad will be applied. It is one of the most influential frameworks to describe the strategies of multinational enterprises (Rugman, 2004). The basic idea of the framework is that multinational enterprises are confronted with the pressures of globally standardized approaches (“global integration”) and the forces to adapt to the local environment and culture (“local responsiveness”).

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The variable Global Integration refers to “centralized management of geographically dispersed activities in the value chain on a regular basis” (Geppert, 2016, p. 7). This appears to be high when multinational enterprises strive to minimise costs and optimise investments. It refers to the process by which a company combines different activities around the world so that they operate using standardized methods, including product standardization and technology centralization.

The variable Local Responsiveness refers to “a situation in which advantages through global integration are absent, out of reach or the attempt to realize such advantages is even detrimental” (Geppert, 2016, p. 7). In these cases, decision-making is given to subsidiaries, although headquarters might still monitor or coordinate activities. It includes products get adapted to the local market, the local consumer taste and their respective preferences.

Based on these two variables, the Integration-Responsiveness framework suggests that there are four possible strategies that multinational enterprises can pursue, namely international strategy, global strategy, multinational strategy and transnational strategy (Appendix 1).


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