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¶ … 2004) outlines some of the cultural mistakes that have come up when taking franchises overseas. He highlights that it is important to understand the different aspects of a foreign culture, for example what things are offensive to that culture and what things are not. Offending locals is a great way to fail in an overseas venture. The example of Richard Nixon basically flipping the bird to the Brazilians is just one example, and Wade makes the point that one such act of offense can sometimes scuttle an entire deal.
The Gibson article (2006) echoes these ideas. One example that was cited was Domino's attempted expansion into Italy. For some reason they thought Italians would like the product they pass off as pizza. This type of cultural arrogance, thinking that Domino's was even remotely comparable to proper Italian pizza, can lead companies to fail in foreign markets. It is necessary to appreciate local tastes and ensure that the product meets the needs of the local market, rather than blindly foisting product on that market and assuming...
Gibson cited where it had problems with its partners in Israel and in Germany, but there are other examples of Starbucks both succeeding in international markets and failing. The company had a situation similar to that of Domino's in Italy when it entered the Australian market. Australians had a coffee culture far more sophisticated than that of Starbucks, so when the American company entered that market it found that Australians were generally unwilling to pay a premium for what they considered to be inferior coffee (Mercer, 2008).
However, Starbucks has had tremendous success in both Japan and China, despite both being predominantly tea-drinking countries. The company focused its marketing around the idea of the Starbucks experience, rather than the coffee products. By providing urban-dwellers who live in small apartments with a comfortable "third place" Starbucks attracted people to its stores (Levenstein, 2012). Eventually, they…
Works Cited:
Gibson, R. (2006), Small Business (A Special Report); Foreign Flavors: When going abroad, you should think of franchising as a cookie-cutter business; Unless, of course, you want to succeed. Wall Street Journal September 25, 2006.
Levenstein, S. (2012). Starbucks Japan grows while American stores close. Investor Spot. Retrieved November 25, 2012 from http://inventorspot.com/articles/starbucks_japan_grows_while_american_stores_close_15672
Mercer, P. (2008). Shunned Starbucks in Aussie exit. BBC. Retrieved November 25, 2012 from http://news.bbc.co.uk/2/hi/business/7540480.stm
Wade, Jared (2004),"The Pitfalls of Cross-Cultural Business," Risk Management, March 2004, v 51, Pages: 38-43.
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