Topic > Critical evaluation of Starbucks' recent entry into South Africa

To select the correct market for a company's success it is important to examine two factors which include environmental and business influences (Lee and Carter, 2009, p220). An analysis of the international market environment is useful as it reduces risks and aids decision making; this can be done through targeting. Targeting can be described as a company "a specific group of customers with a specialized and tailored marketing offering" (Lee and Carter, 2009, p199). Therefore, before choosing a market, it is useful to evaluate environmental factors by considering global micro and macro environments, such as politics and international industrial structures. Meanwhile, the South African currency was collapsing to record lows against the US dollar and the British pound. (BBC News, 2018) This could have posed a potential challenge for Starbucks. (Fleisher & Bensoussan (2002). However, despite the fall of the currency, according to financial analysts such as Celeste Fauconnier, entry into South Africa, during the period, represented an “easy business environment to work in and has better infrastructure than to some countries" (BBC News, 2018). Furthermore, coffee consumption in South Africa has reached all-time highs as consumers, particularly in the upper-middle income market, are moving towards more premium offerings (Holmes, 2018 ) from Statistics SA published in April which showed that restaurant and coffee shop revenues increased by 5.3% year-on-year (Writer et al., 2018). . Say No to Plagiarism - Essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay Market entry is "the most significant international marketing decision [most companies] are likely to make" (Doole). & Lowe, 1999). a "waterfall" or "shower" approach is used when entering the market (Keegan, 1989: 30-1). Starbucks' entry into South Africa resembles the waterfall approach as prior to this entry Starbucks had expanded into many advanced countries including Europe and Asia. Furthermore, there are different methods of enrollment, direct or indirect. Starbucks' first step to enter the South African market was to have a licensed partnership with Taste Holdings of South Africa, founded by entrepreneur Carlo Gonzaga (Endeavour, 2018). “A partnership can be between two or more people/parties” (Sars.gov.za, 2018). This form of participation can be successful if partners share the same goals. This was one of the many reasons why the launch in South Africa was successful as Taste Holding and Starbucks are able to work together effectively due to similar goals and morals (Endeavour, 2018). Although Starbucks has opened more than 22,000 stores in more than 71 countries, the CEO was “stunned by the scene this week at its new store in an affluent Johannesburg suburb, where some customers had driven two hours just to try the brand American coffee” (The Globe and Mail, 2018) . This in turn demonstrated the success of the partnership with Starbucks as an entry mode. This form of market entry was also helpful for Starbucks as partnering with a well-known brand in South Africa helped support the coffee chain's expansion. Research suggests that partnerships can accelerate the market; this, coupled with Taste Holdings' good brand image as a leading licensee of food and retail brands in the region, which had previously helped launch Dominos in South Africa, also provided Starbucks with a smooth entry by reducing risk for Starbucks (Endeavour,.