Challenges Case

Challenges

A primary challenge is to adapt to the taste, preferences, and culture of local population. Starbucks business strategy, products, and market strategies need to be localized to capture market share in Brazil. Starbucks needs to adapt product to the local tastes and preference, and modify the marketing strategies and other tactics to suit local preferences.

Additional challenges can be to adhere to local laws and regulations pertaining to HR, taxation, accounting, environmental laws, etc. Starbucks needs to ensure compliance with such laws and regulations for smooth operations in Brazil.

Aspects for consideration prior to expansion.

There are many aspects that need to be considered before making the business decision to expand globally. First, the organization should be confident and assured about its capability to handle the expansion plan in terms of products, manufacturing, marketing, sales, and customer service capabilities. The company should possess sufficient financial and other resources to support the expansion plan in an effective manner.

Second the organization should conduct an extensive country risk analysis before embarking on an expansion plan in a new foreign market. The country risk analysis will cover a wide range of areas include political, socio-cultural, financial, competitive, and legal risks.. It will provide a strong insight about the relative attractiveness of doing business in the foreign market.

Once the company is convinced about the attractiveness or profitability of venture in the foreign market, companies looking for global expansion will decide on a strategy or appropriate mode of entry to exploit market opportunities in the foreign market. It should decide on a strategy to exploit the market conditions in a positive manner (significant cultural differences among different markets, companies need to adapt to local conditions and modify their product, pricing, promotions, and other strategies to suit local markets). Companies similar to Starbucks looking into foreign expansion will consider export import laws and regulations in Brazil, including exchange rates and taxation.

The company should also analyze the current competitive scenario and make their strategic plans accordingly. Further, another important aspect that needs to be considered involves human resources. The company should develop a plan to recruit human resources in the foreign market for carrying out the operations.

Capabilities of transnational organizations to develop to effectively perform in the multiple environments

To operate in multiple environments, transnational organizations should possess strong human resource and leadership capabilities in the form of experienced expatriate employees and other senior