International Retailing

As the cost of land and labor continues to rise in the United States, more and more companies are making the decision to expand internationally. International expansion is often the best choice not only for successful companies on the rise but also companies that no longer have room for their profit to grow by only operating nationally. However, while many companies benefit tremendously by making this choice, international expansion can be equally as bad for others.

Since its first restaurant opening in 1955, McDonald's Corporation has continued to grow to an astonishing 30,000 local restaurants in over 100 countries. Though the company was having no problem growing in the United States, it wanted to expand and diversify its market into other countries. In 1967, McDonald's first began to operate internationally just north of the border in British Columbia, Canada. The corporation has always been a franchising company and relies heavily on his franchisees. Their owner and operators are a crucial part of their success.

Starbucks coffee first made its international debut in 1996 with a coffeehouse in Tokyo, Japan. Since the first international location, the company has grown to be a huge success worldwide with coffeehouses in 37 countries. Since only 20% of the world's coffee is consumed in the United States, it was only natural that a giant like Starbucks would tackle the other 80% in foreign markets. A large part of their success is due to the fact that they “remain highly respectful of the culture and traditions of the countries in which we do business,” explains chairman and chief global strategist Howard Schultz. They use three businesses strategies, depending on the different markets they are expanding. Included are a combination of joint ventures, licensing, and company-owned operations.

Subway's international success began when it opened its first international store on the small middle eastern island country of Bahrain. Today the company has grown to a whopping 28,747 restaurants in 86 countries, even more locations than McDonald's! Each and every subway is individually owned and franchised. The company itself does not choose which countries to expand in, local individuals approach the chain when they are interested in opening a restaurant, and the company assists them in doing so. This is helping the chain by giving them the first-mover advantage because locals from places where there is not already a restaurant like it contact the company and they are able to work together. By having local owners in the foreign markets who know the needs and wants of the consumer, along with how well a chain would do business there, Subway has became a huge international success.

Many companies fail in certain foreign markets but are still successful companies in the United States and other markets. One of these companies is Blockbuster Video in Peru. Blockbuster currently has successful franchisees in 23 countries, but the stores in Peru are a different story. Strong companies such as Blockbuster often expand because if they do not, imitators will form and lessen their chances of expansion.