New Trade Theory The new trade theory asserts that economies of scale and specialisation result in gains (Wild, Wild, & Han, 2014). Additionally, the first firms to market their products in a sector create new barriers. According to the theory, the government can help by providing powerful policies to assist home-based corporations. This theory describes Starbucks’ business performance in the United States. To begin with, the company was established in 1971 and soon became a leading player in the country’s coffee shop industry. The firm was the first to present a revolutionary approach to coffee consumption in the US. Starbucks’ business model made it a pacesetter in the industry. The company expanded its product and eventually gained its objectives through specialisation. The concept of economies of scale continues to support the company’s performance in its home nation. Adequate domestic policies and regulations support Starbucks’ local business (Latif, Qurat-ul-ain, Gulzar, & Sameen, 2014). Being a pacesetter in the industry, Starbucks has developed both strategic and economic advantages. This fact explains why Starbucks remains a leading player in the industry. Many companies planning to enter the industry must consider the standards set by Starbucks. The firm offers “superior products at discounted prices” (Latif et al., 2014, p. 312). This scenario has made it impossible for many companies to enter the market. The concept of productivity has been supported by the company. Since coffee is not a locally available raw material, Starbucks has to use powerful business strategies to acquire it and produce superior beverages for its customers. The theory can be used to analyse the experience of Starbucks in Japan. The firm focuses on the best strategies in order to succeed in this host country. Several Japanese firms dominate the coffee industry, such as Streamer Coffee Company (Harrington, 2011). This company has been in the Japanese market for a very long time. Starbucks had to use its resources to penetrate an established sector in the Japanese market. The firm considers the subsidies, taxes, and business policies implemented by the government. Starbucks faces competition from the existing firms in the country’s industry. The government of Japan might not help Starbucks to realise its potentials since it is not a domestic company (Latif et al., 2014). Market entry barriers make it hard for the company to increase its coffee shops in the country. This discussion, therefore, explains why Starbucks has recorded different experiences in these two countries. National Competitive Advantage This theory asserts that “a nation’s competitiveness in a specific industry is something that depends on the industry’s capacity to upgrade and innovate” (Reuvid & Sherlock, 2012, p. 45). The major determinants of the industry’s profitability include demand conditions, the existence of supportive industries, factor conditions, and the nature of strategy used by firms. This model can be used to give a detailed analysis of Starbucks Coffee’s business strategy in the United States and another country such as Japan. According to the theory, Starbucks operates in a competitive and profitable industry. The coffee shop industry is characterised by companies that can innovate and produce superior beverages for