MGNM578

International Business Environment

RAJEEV GUPTA

1
News Article

2
Learning Outcomes

• After this Lecture, you will be able to

• discuss the changing social structure and correlate the
same with globalization.
Factors in International Business Operations

OPERATING OPERATIONS
ENVIRONMENT
PHYSICAL AND OBJECTIVES
SOCIAL FEATURES • Sales Expansion
• Political policies and • Resource acquisition
legal practices • Risk minimization
• Cultural factors
• Geographical
influences STRATEGY

COMPETETIVE MEANS

FACTORS Modes Functions Overlying Alternatives

• Competitive product • Importing and exporting
strategy • Tourism and
transportation
• Company resources • Licensing and franchising
and experience • Turnkey operations
• Management contracts
• Competitions in each • Direct and portfolio
market investment
• Marketing • Choice of countries
• Manufacturing and • Organization and
supply chain control mechanism
management
• Accounting
• Finance
• Human resource
Socio-Cultural Factors Affecting IB Operations
OPERATIONS
• Cultural Awareness
• Identification and OPERATING Objectives
ENVIRONMENT
dynamics of culture
• Behavioural PHYSICAL AND
SOCIAL FEATURES
practices affecting • Political policies and

business legal practices Strategy

• Cultural factors
• Strategies for • Geographical
influences
dealing with cultural
differences
Means
Culture

• The shared values, attitudes, and

beliefs of a group of individuals
constitutes a culture.
Hofstede’s Comparison of National Cultures

National Context
Cultures

Attitudes

Mindsets

Impact
People

Workplace Influence
Starbucks- A Transnational Company
News Article

https://stories.starbucks.com/stories/2012/tata-starbucks-limited-readies-for-india-market-entry-by-end-of-october/
Consumption volume of tea in India from financial year 2015 to 2020

© Statista 2020
Consumption volume of tea in India from financial year 2015 to 2020

• The consumption volume of tea in India was approximately one billion

kilograms during the financial year 2020. Consumption of this hot beverage has
increased consistently throughout the years.

• Growth YoY is approximately 2%.

• India's per capita tea consumption is 0.78 kg per year.
Changing Trends in Consumption of Beverage

• Tea has been a long standing tradition in India—however, coffee is

on the rise in this new millennium.

• In the past decade alone, domestic consumption of coffee has

grown at more than double the rate of tea.
Consumption Volume of Coffee in India

© Statista 2020
Consumption Volume of Coffee in India

• According to the reports of Statista, the coffee segment

amounts to $808m and is expected to grow annually by
8.9% CAGR in 2020-2025.

• In India, the average per capita consumption and revenue

stood at 0.03 kg and $0.6 in 2020.
How Starbucks has changed the coffee culture in India?
Starbucks Initiative in inducing change in consumption of Beverage in India

• Starbucks in India tried to build up what they call as the

‘third place’ experience, where they wanted their
consumers to come for the coffee, stay for the warmth
and return for the human connection.
Starbucks Initiative in inducing change in consumption of Beverage in India

• Starbucks stores across the world have this whole feeling of having values from the
neighborhood and fitting into the culture beautifully.

• Starbucks made the design of the stores very Indian. The main motive behind it was
to make Indians comfortable and have a community feeling inside the outlets.
Starbucks Flagship Store Hyderabad

For instance, their flagship store in Hyderabad is designed

with the elements of Hyderabadi pearls.
Starbucks Flagship Store Pune

The flagship store in Pune has copper elements because the city
has a history with copper.
Starbucks efforts to fit in Indian Culture

Indians have the habit of eating something along with coffee/tea. So, Starbucks
has introduced Indian dishes like Konkani Twist or a Reshmi Kebab Roll to their
menu along with other tried and tested muffins and sandwiches.
Starbucks menu in India
Starbucks efforts to fit in Indian culture

Indians prefer tea more than coffee. Hence, Starbucks have introduced Tata’s
branded tea called Teavana and Himalayan water beverages to add to the
products.
Starbucks menu in India
Starbucks Business Strategy- Localization

The success and acceptance of Starbucks by different cultures stems from its

carefully planned business strategy – localization.
Starbucks Business Strategy- Localization

• In some cases, it requires some changes in the

brand’s colors and appearance as well as adapting the
brand name to fit the local culture.

• Company websites are localized, making them available in

the local language and conforming to local preferences,
traditions, beliefs, laws and regulations.
Example: Starbucks Localization Strategy
Guidelines for Cultural Adjustment

• The extent to which a culture is willing to accept the

introduction of anything foreign.

• Whether key cultural differences are small or great.

• The general management orientation of the company
involved.
Degree of Cultural Differences

When doing business in a similar culture, companies:

• Usually have to make fewer adjustments,

• May overlook subtle differences.
Five Dimensions of Culture

Power Distance

Uncertainty Avoidance

Individualism vs Collectivism

Masculinity and Femininity

Long-term and Short-term Orientation

Company and Management Orientations

• A company and its managers adapt abroad depends not

only on the host, country’s culture but also on their own
attitudes. This includes

– Polycentrism

– Ethnocentrism

– Geocentrism
THANK YOU

RAJEEV GUPTA

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