Term Paper on "Starbucks in India"

Term Paper 4 pages (1160 words) Sources: 6 Style: MLA

[EXCERPT] . . . .

Starbucks in India

Identification of foreign market and the reason(s) for its selection.

Provide here a brief and clear summary of your rationale for the selection of this foreign market (details will follow in each subsequent section of your Situation Analysis). In an appendix, detail your market screening procedure.

In conjunction with the broad social trend of the westernization of Indian call center, business process outsourcing and other professional employees, there are two specific trends also contributing to a growth-oriented environment for the global coffee retailer. The first is the rising popularity of specialty coffee shops, and the second is the growing purchasing power and more affluent lifestyles of employees in high growth occupations. For Starbucks', their opportunity is in the on-premise coffee shop and food service business. According to EuroMonitor (Hot Drinks in India Executive Summary) expects growth for overall hot drinks to slow over the next five years, coffee included. The forecasts call for overall hot drinks to grow at a 5-year CAGR of 5%. While the growth of heated beverages is modest in India compared to other emerging markets including China, the purchasing power of Indian consumers is a very significant factor in choosing to expand into this market. Relating just as much to the growth in call centers and business processing outsourcing staff as the migration of highly skilled jobs to Bangalore, Bombay, Mumbai and other high tech centers in the country, in conjunction with westernization, is driving up demand for specialty coffee shops.

Starbucks will find entering India to be a challenge, given the many government regulations pertaining to foreign owned corporations and the necessity of having a Joint Venture in place to be in compliance to the governments' regulations for launching a new business in this country. The requirements of having two Indian-born nationals on the subsidiaries' board of directors are also a critical consideration. To overcome these challenges, the company will need to rely on its global strengths relating to supply chain efficiency and ability to quickly launch stores. Appendix I is a global analysis of Starbucks' Corporation using Porters' Five Forces Model as the foundation for entering a new and unfamiliar foreign market.

3d. Competitor Analysis (1 page)

Identify the major competitors (in-industry rivals as well as substitutes).

How are the competitors positioned?

What are the strengths and weaknesses of the competitors?

Entering into the Indian market is fraught with risk and challenge for Starbucks' given the significant competitive advantage local coffee retailers and food services companies have on sourcing coffee and food in-country while Starbucks would need to import these critical supplies for the operation of their business. This point is made clear when one considers that the owner of the Cafe Coffee Day brand of cafes is Amalgamated Bean Coffee Trading Ltd., and is in addition one of the most pervasive coffee chains in India, is the country's leading coffee importer. In addition to the strengths of Amalgamated Bean Coffee Trading Ltd., in supply chain management, planning and execution, the company is also credited with a significant level of innovation in creating specialist coffee shops culture in India. This is also a core strength of Starbucks', including the innovation of creating new drinks and food products, including the Developing a steady flow of new beverages and other products is a central element of the company's business model (Baird 2).

Unlike its rival Barista owned by Barista Coffee Company, Cafe Coffee Day owns 5,000 acres of coffee plantations (Business Line et.al).… READ MORE

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