Starbucks in Costa Rica
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- Date Submitted: 02/22/2015 12:34 PM
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Starbucks in Costa Rica: Business Analysis
Executive Summary
This analysis provides a basis for establishing both best practices and lessons learned for Dunkin’ Donuts to consider when expanding its presence into a country such as Costa Rica. Specifically, Team NUVO has analyzed key elements of Starbucks, an MNE and major Dunkin’ Donuts competitor. Overall, the major risks associated with expansion to Costa Rica are the structural design, employee turnover rate, supply chain management, foreign financial risks, corporate social responsibility, and cultural competence.
Starbucks growth strategy included increasing product offerings through acquisitions and product diversification. Additionally, their chosen entry mode varied by country with licensing being the optimal choice for expansion to Costa Rica. Starbucks’ core competencies are quality, outstanding customer service, product advancement, employee-focused, and being everywhere.
Starbucks initially utilized a divisional structure but later transitioned to a matrix structure. Team NUVO does not recommend a particular structure, leaving the decision to Dunkin’ Donuts’ senior management based on their overall company structure and prior foreign ventures. By being employee-focused, Dunkin’ Donuts could significantly decrease their employee turnover. Team NUVO does recommend that Dunkin’ Donuts continue their current supply chain management process and adjust to accommodate changes as they occur. With respect to finance, the risks are associated with currency translation and income taxes. Team NUVO recommends that Dunkin’ Donuts follow Starbucks’s strategy of utilizing hedging techniques of entering into forward foreign exchange contracts and utilizing net investment derivative instruments to offset the risks associated with currency translation. It is also recommended that Dunkin’ Donuts reinvest foreign income in lieu of distributing dividends to avoid paying U.S. income tax on this income....
Executive Summary
This analysis provides a basis for establishing both best practices and lessons learned for Dunkin’ Donuts to consider when expanding its presence into a country such as Costa Rica. Specifically, Team NUVO has analyzed key elements of Starbucks, an MNE and major Dunkin’ Donuts competitor. Overall, the major risks associated with expansion to Costa Rica are the structural design, employee turnover rate, supply chain management, foreign financial risks, corporate social responsibility, and cultural competence.
Starbucks growth strategy included increasing product offerings through acquisitions and product diversification. Additionally, their chosen entry mode varied by country with licensing being the optimal choice for expansion to Costa Rica. Starbucks’ core competencies are quality, outstanding customer service, product advancement, employee-focused, and being everywhere.
Starbucks initially utilized a divisional structure but later transitioned to a matrix structure. Team NUVO does not recommend a particular structure, leaving the decision to Dunkin’ Donuts’ senior management based on their overall company structure and prior foreign ventures. By being employee-focused, Dunkin’ Donuts could significantly decrease their employee turnover. Team NUVO does recommend that Dunkin’ Donuts continue their current supply chain management process and adjust to accommodate changes as they occur. With respect to finance, the risks are associated with currency translation and income taxes. Team NUVO recommends that Dunkin’ Donuts follow Starbucks’s strategy of utilizing hedging techniques of entering into forward foreign exchange contracts and utilizing net investment derivative instruments to offset the risks associated with currency translation. It is also recommended that Dunkin’ Donuts reinvest foreign income in lieu of distributing dividends to avoid paying U.S. income tax on this income....