WAYA, NISREEN AMERAH D.

21 September 2019 - BA210 MBA1

CASE 5 Starbucks Coffee Company:THE INDIAN DILEMMA

Ruchi Mankad and Joel Sarosh Thadamalla

External Factor Analysis Summary (EFAS Table)

Ratin
External Factors Weight Weighted Score Comments
g
1 2 3 4 5

Opportunities
1. Increase in GDP .15 4 .60 Growing income and standards of living
creates demand for goods
2. Growing number of .10 3 .30 Placing coffee-bars in such places is a big
department stores opportunity for achieving high profits
3. Integrating Complimentary .05 3 .15 Streamlined its operations to build a
Firms reliable supply chain
4. Favorable government .05 3 .15 Successful track record of developing new
policies products
5. Continuously growing .15 5 .75 High population and majority are youths
population
Threats
1. India consists of mainly .05 4 .20 Offering similar and sometimes identical
homegrown brands products
2. Unorganized retail .05 3 .15 Dominated by small and individually
environment owned businesses
3. Indian population is heavy .15 4 .60 Presence of substitute goods like tea and
tea drinkers instant coffee
4. Rise in cost of coffee and .10 2 .20 Households bought instant coffee
dairy products
5. Rising real estate cost .10 3 .30 Infrastructure is weakly developed
Total Scores 1.00 3.35

Starbucks Coffee Company was simply a place for consumers to purchase high quality, dark
roasted, whole coffee beans. Its intention to expand in India is quite favorable when looking at the
condition of market. The population is high and majority of the population is youthful. It has become a
place for many companies to outsource production and services, and is simple all around
opportunities. However, there are also constraining factors or threats which gives dilemma in
pursuing the plan.
The EFAS table of Starbucks Coffee Company composes of external factors which includes
opportunities and threats of the company resulted a total weighted average of 3.35. The top three
external factors identified weighted all 0.15 are increased in GDP, continuously growing population,
and being heavy tea drinkers of Indian population, and are faced by the company to enter the market.
There will be a growing demand for Western products. Starbucks can use this trend to
successfully introduce its product. In recent years there has been a growing number of department
stores. Placing coffee-bars in such places is a big opportunity for achieving high profits and is
definitely something that Starbucks has experience with. The company should make use of its strong
brand name and recognition as a Western product.
Also, growing GDP per capita will lead to the ability to pay more for a premium product.
Starbucks should market themselves as a high quality Western brand, growing income and standards
of living creates demand for western goods. They may be able to afford the premium coffee of the
Starbucks but one of the biggest threat faced is being a heavy tea drinkers of Indian which shows a
consumption of tea per person in 2000 was reported to 44 liters in comparison to 1.2 liters of coffee.
Aside from this is the threat of substitute goods that they are more likely buying instant coffee
reported that 65 % of households bought instant coffee and only 18 % bought filter coffee.
But to conclude, there are more opportunities for the company in entering India than the
threats raised. Starbucks stand firm on its Indian ambitions and seemed prepared to meet the
challenges that the Indian market could pose for them.