Starbucks case study by applying the Eclectic Theory and Friedman’s Nine Questions

Introduction
Starbucks is the most recognisable brand and well-known coffee shop in the world. Moreover, it started as a small coffee shop in Seattle and grew into the most successful global coffee company.

This report describes international expansion and reasons of Starbucks’ success by applying the Eclectic Theory and Friedman’s Nine Questions.

The Eclectic Theory
The Eclectic Theory was created by John Dunning during the 1980s. The theory explains why companies choose to become multinationals and what advantages support to invest overseas. This model is called “OLI Framework,” and it determines Foreign Direct Investment (FDI).

According to the theory, a company is ready to invest overseas when it has ownership, location and internalisation advantages compared with companies who operate on foreign markets.

Ownership advantages are occurred by possessing tangible and intangible assets which are connected with many factors where knowledge, trademark, production techniques are significant.

Starbucks’ ownership advantages include the following:
- globally recognized trademark
- unique flavours and aromas, and roasted techniques
- reputation focusing on high quality customer service
- flexible and clear corporate vision and goals that are developed by Schultz
- large learning curve as a result of past successes and failures
- highly-motivated training staff members that are results-driven
- strong relationships with partners and suppliers
- strong cash position (used in expansion and renovation of existing stores) (Starbucks, 2013)

Location advantages for company investors are opportunities to be efficient by using resources in the local market rather than in the home market. For instance, low wages, cheap raw materials, special tax system, political or