STRATEGIC MANAGEMENT

STARBUCK

Hanny Purnama Sari

( 3104816 )

Anastasia A. Santoso

( 3114701 )

Martha

INTERNATIONAL PROGRAM
FACULTY OF BUSINESS AND ECONOMICS
2010/2011

Starbucks Coffee Company: The Indian dilemma

SWOT Analysis
Strengths:

World n1 specialty coffee retailer

Every week: 40 000 000 customers

7600 retail location in the USA

Starbucks is not only coffee: it is an global experience with a

captivating atmosphere

Rapid growth around the world

Serve high-quality coffee

Weaknesses:

Already postponed its intentions to enter India

Problems with Japan (brand image affected and food did not
fit the japan taste).

High-fat products

Opportunities:

Expansion In Asia thanks

company-owned operations

Economic
investment.

reforms

in

India

Indias population is very young

Growing of middle-class

included

joint-venture,
liberalization

of

or

foreign

2006: Government permitted FDI up to 51% in retail trade of

single-brand products with prior government approval

Agreement signed with Tata to source premium coffee beans

Threats:

licensed

India is the fourth largest economy in the world in term of

purchase-power parity

to

Huge competition in India (Coffee caf day)

Hard to find a reliable partner in India

Maturity of the coffee market in Europe

Asia has a tea culture more than a coffee culture (Starbucks

should educate this market about the quality of coffee).

Inadequate infrastructure, bureaucracy, regulatory and foreign

investment controls

Different taste all over India

Coffee is mainly consumed in the urban areas

Indian larger producer of tea

Despite a lot of threats regarding the Indian market, Starbucks

should enter this market. Indeed, the opportunities in the USA and Europe
are very low due to the maturity of the coffee market.
Starbucks does not really have the choice to enter this market if they still
want to expend their market share. Regarding the SWOT matrix, the main
problem that Starbuck will have to face will be to competitive
environment. Indeed, a lot of other companies are implemented in India
such as CCD and Barista. Contrary to USA, Starbucks will not be the first to
offer a high coffee quality experience in the country they enter.
As a result, Indian market is a great opportunity for Starbucks but they
should work with a local partner if they want to make sure that they will fit
the local taste and not reproducing the same mistake as in Japan. Whats
more, because India is not a coffee drinkers country but they likely prefer
tea, Starbucks will have to educate them to coffee and the high quality
coffee. The last problem that Starbuck will have to face is that the country
has an extremely rapid growth but with huge the difference between
middle-class (that can afford Starbucks) and rural population.
IFAS : Internal factors analysis

The main internal strength of Starbucks is undoubtedly his reputation.

Indeed, Starbucks was one of the first coffee retailers to settle in the USA
and to develop all over the world. As a result, if we had to score Starbucks
reputation his impact on his development, we would probably give them a
high score.
The second most important strength of Starbucks is the atmosphere they
managed to create in their shops. Indeed, Starbucks not only sell coffee
but also propose a global experience to the customers. Customers that
come to Starbucks do not only want to drink coffee but they want to see
and to be seen.

The last important strength is that Starbucks only propose high quality
coffee to his customers. To achieve this, Starbucks developed partnerships
and ventures to deal with the best coffee producers in the world (Indonesia
and South America mainly).

EFAS : External factors analysis

The most important external factors for Starbucks (and for his
growth opportunities) is the increase in income for Asian and Indian
middle-class. As a result, Starbucks wants to enter the Indian market
because the middle-class is becoming more and more important and the
population is one of the younger in the world.
The second most important point is the liberalization of the Indian
economy. Before the government decided to liberalize the foreign
investment, a foreign company could hardly settle their business in India.
Thanks to this chainman in economics rules, Starbucks will finally have the
opportunity to enter the Indian market.
Regarding the Indian market, the last important external factor that
Starbucks have to take into account before entering this market, is the
competitive environment. Indeed, contrary to the other countries where
Starbucks was perceived as a pioneer, there are already a lot of shops
such as Starbucks (Coffee caf day) that have a good reputation among
Indian population. To succeed in this market, Starbucks should convince
the potential customers that drinking a coffee at Starbucks is a unique and
global experience.