Merger, Acquisition, and International Strategies - Case Study Example

Running head: merger, acquisition, and international strategies 13th August Introduction As competition in the local and international markets gets stiffer, many firms have not only embarked on extensive marketing campaigns but also they have merged or acquired other companies in order to become stronger. Additionally, the emergence of modern technology including social media has been a major opportunity that companies use to create strong relationship among themselves and the customers. One of the major advantages of merger and acquisition is that they help established companies to improve their marketing strategies, increase the number of customers and expand their market share. This paper seeks to discuss the merger, acquisition as well as international strategies of Starbucks and the strategies that Love & Tea Company adopts. Starbucks acquisition strategies Starbucks Corporation is an American based company whose headquarters are located in Seattle, Washington. The company was founded in 1971 as Seattle coffee bean roaster. Being the largest coffeehouse in the world, Starbucks has 12,973 stores in US and approximately 11,000 others in Japan, China, Canada and United Kingdom. Having been founded by Jerry Baldwin, Zev Siegl and Gordon Bowker, Starbucks produces quality brands that make it to effectively face off its competitors in the international market. Some of the major products that Starbucks produces include SweetN Low, Splenda, Trenta, and tea among others. With approximately 160,000 employees, Starbucks has been able to offer effective services in all its subsidiaries which include Ethos water, Torrefazione, La Boulange, Evolution Fresh, Tazo, and Hear Music among others. Apart from extensive advertising strategies that the company has adopted through the internet and in US, Starbucks competitive position has also been achieved due to the various mergers and acquisitions that it has adopted in US as well as in foreign markets. One of the major companies that Starbucks has acquired is Teavana Holdings Incorporation. Having being acquired in 2012, Teavana is one of the newest companies to be acquired by Starbucks. Teavana, which was established in 1997, embarked on production of wide range of tea products that included Yixing Clay teapots, China teapots, andTetsubin teapots among others. Teavana mission is to become the most noted and respected brand in the tea industry by ensuring that the culture of tea is effectively expanded in the world. By being acquired for approximately $620 million, Teavana has strong value for its customers and through the new tea enthusiasts; it will positively impact of the Starbucks tea brand. The acquisition of Teavana by Starbucks is a wise choice based on the fact that Starbucks will not only benefit from the brand loyalty that tea consumers have for Teavana but also it will utilize the e-marketing that Teavana adopts to reach its market segments. Based on the expertise that Teavana management has as far as tea production is concerned, Starbucks will ultimately benefit from brand enhancement an aspect that will lead to a strong positive customer-brand relationship. As a result, the company market share will expand leading to higher sales and sustainable profits. Love & Tea Company Love & Tea Company is a US based company that was established in 2006 by Jen Lashua, a certified herbalist. With its main office been located in Green Mountains in the state of Vermont, the company engages in production of quality tea and coffee brands that use particular vibrant herbs. The company mission is to produce tea blend that creates enjoyment and promote natural health benefits. Through hand blending and hand packing, the company is able to provide quality brands that meet the needs of its market segment. For example, the company provides woman wellness teas that are focused at nourishing female consumers during the pregnancy stages up to the time they reach menopause. Love & Tea Company also produces Green and Black Teas that it sells to the importers who are selected by the company based on their standard and willingness to conserve the environment. As a way of expanding its operations locally, it is vital for Love & Tea Company to merge with Caribou Coffee Company. Caribou Coffee Company is the second largest coffee company is US. Apart from more than 6,000 employees, Caribou Coffee has well maintained website as well as expansive market segment (John, 2013). Based on the high quality brands that Caribou Coffee Company produces, it has expansive market segment an aspect that makes it to effectively compete with Starbucks. The company has 126 locations globally with operations in 40 states. Additionally, the company has adopted the culture of re-branding in its effort to face off Starbucks locally and globally. For example, in 2010, it undertook corporate re-branding and came up with a coffee bean caribou logo. Based on these strengths by Caribou Coffee Company, it is the best profitable target for Love & Tea Company. Love & Tea would ultimately utilize the Caribou Coffee strong marketing strategies making it to enjoy bigger market share locally and globally. Starbucks strategies International business-level strategies One of the key business strategies that Starbucks has adopted is cost leadership. Through the provision of quality products in efficient production methods, the company is in a position to provide competitive prices. The second strategy is product differentiation. Through the innovation and research that the company has adopted, it is able to produce wide range of products. Additionally, the company focus is to provide quality brands thus increasing the value and customer experiences. The third strategy is focused cost leadership. Despite being the biggest tea company globally, Starbucks prices are low as compared to those of the competitors an aspect that makes it to expand customer base. One of the key points to note for Starbucks is that it emulates the Porters differentiation focus strategy. According to this strategy, an organization provides a product or a service to a particular market niche thus making it to effectively compete with other similar products. International corporate-level strategies Based on the fact that Starbuck is a single business company that provides coffee related products on its retail stores, business strategy and corporate strategy for Starbucks are similar. During its entry into foreign market, the company emulates slow policy growth during when it makes strong market dominance and then it goes global. The company managers emulate the bottom-up process. This implies that Starbucks has a strong consideration of the workforce making it possible for them to provide feedback (Schofield, 2008). As a result, the company is able to create strong connection in all its subsidiaries globally. Apart from the quality brands that the company has put in the international market, it has established significant number of outlets in foreign countries making the distribution of its products effective. Recommendations Starbucks should reverse its status quo and engage in more innovation and research. It is worth to note that Apple and Coca-Cola companies have become successful due to increasing their investment in innovation. Another approach that Starbucks should adopt is adopting other marketing strategies rather than using alliances. For example, the company can use the strategy of sponsoring sporting activities in developing countries where it is not well known (Kotler and Kevin, 2009). In this way, it will capture the coffee market that is still unexploited in the third world countries. Similarly, the company should avoid high-end pricing and come up prices that are affordable even during the times of economic difficulties. Love & Tea Company proposed strategies In order to become competitive in the beverage industry, Love & Tea Company should emulate effective strategies locally and globally. As far as business-strategy is concerned, the company should emulate product diversification. This can be achieved if the company undertakes more innovation in its primary outlet. In this way, Love & Tea will be able to effectively compete with other established companies in US and in foreign markets. As a corporate-level strategy, Love & Tea Company should embark on slow growth policy that entails dominating the local market and then put in measures and focus at the international market. This strategy will make the company to be competitive in the global market in the near future. Conclusion Based on the above discussion it is clear that Starbucks strong position in the market, has not only been achieved based on the quality brands but also due to the acquisition strategy that it has adopted. Having acquired Teavana Holdings Incorporation in 2012, Starbucks has been able to expand its market thus increasing its sales. On its part, Love & Tea Company should seek a merge with Caribou Coffee Company which is a key Starbuck competitor in order to become successful. Despite the efforts made by Starbucks to produce products that meet the needs of its customers, the company should exploit the opportunity of entering developing countries. For example in the African region where there is huge coffee plantations and many individuals farmers but coffee industry is unexploited. References John, V. (2013). Caribou founder: Knowing when to leave the corporate world and go into business for yourself, Minneapolis / St. Paul Business Journal, July 5, 2013, accessed July 8, 2013. Kotler, P and Kevin K. (2009). A Framework for Marketing Management. New York: Pearson Prentice Hall. Schofield, J. (2008). Starbucks lets customers have their say. The Guardian (London). Retrieved August 14, 2014. Read More