MMM306 Global Strategy and International Management
The Scenario: Institutional theory suggests that while institutions can influence a firm’s strategic decisions and actions, the entry and strategic behaviour of a firm, such as a well-resourced multinational company (MNC), into an emerging economy can shape and influence the host country's institutional environment.
Drawing on the topics that we have covered in this unit, including your knowledge of Starbucks, the firm that we used as a demo case in this unit, write and present a brief report addressed to the top management of Starbucks as it plans to venture into a new market in a hypothetical, newly formed country, classified as an emerging economy, Republic of Baldokistan. The top management of Starbucks is requesting for your strategic insights and recommendation on the important considerations that the firm needs to address as it ventures into a new, international market given its unique institutional environment.
Starbucks will be the first MNC to do business in Baldokistan since its formation by declaring independence from a larger Asian country in 2005. Baldokistan is an agricultural-based economy and a top producer of premium quality coffee beans in the world (accounting for 5% of the total world coffee production in 2020).
You can assume that:
(a) Starbucks has been planning to gain more control or bargaining power over the supply chain of relevant raw materials essential to its global business operations;
(b) Baldokistan is a fast-growing emerging economy dubbed by Time Magazine in 2021 as the next golden hub of agricultural and food production business opportunities in modern Asia;
(c) the World Bank noted that this new democratic country is a highly adaptable country that is committed to undertaking radical social, political, and economic reforms to align itself with the leading economies in the world and actively engage with and participate in world socio-economic affairs; and
(d) the country is predicted to become one of the top countries in Asia in terms of ease of doing business in the next five years, according to the World Bank Ease of Doing Business Report (a global country ranking report that we discussed in class).
The report that you will write should present your analysis, insights, and recommendations to Starbucks on the following:
• Your analysis and insights on how the strategic decision of Starbucks to enter the host country, the Republic of Baldokistan, via foreign direct investment (FDI)-greenfield investment will enable the firm to influence or shape the local informal institutional environment. Draw on institutional and industry-based considerations of firm strategy in your analysis.
• Your recommendations on how Starbucks can leverage to its advantage the strategy of FDI-greenfield investment to address its ‘liability of foreignness’ as it enters a foreign market in Baldokistan. Draw on the global mindset topic that we have covered in this unit.
Draw on our relevant topics covered in this unit ONLY. You may cite examples to illustrate your arguments. You need not copy this question in your word document answer sheet. The suggested format of your report should include:
• Conclusion and Call to Action