STARBUCKS IN INDIA

Starbucks started its operation in India by forming a

strategic alliance with Tata Coffee Co. in 2004.
India is the fifth largest producer of coffee in the
world and it accounts for 4% of the total worlds
coffee production with an average consumption of
10 cups per day.
Starbucks has presence in Pune, Banglore, Delhi
and Mumbai while its coffee plantation is location in
Karnatak.
Indian hot drink market is as: 7.4% coffee, 22.7%
tea and 69.9% goes to other hot drinks.

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PESTEL ANALYSIS
POLITICAL:

There are worse corruption practices in India and
according to Transparency International report, India
ranks at number 84.
Presently government of India is going to be changed
due to election. New foreign policy is yet to be decided
so nothing can be predicted about trade policy at the
moment due to government instability however as far as
consumption patterns of people in foods and drinks are
concerned, a growth has been seen which is good for
Starbucks.
As new elections are in process and BJP is expected to
take the lead. It would be a threat for Starbucks as BJP
is totally against westernization and western cultures.
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ECONOMIC:
Indian economy is growing at the fastest pace among asian
countries(excluding China).

Sales contribution of Starbucks in US has decreased by 70%
due to high competition and prices issues due to which
Starbucks is expanding its network immensely in Asian
countries like India and China.

Disposible income has increased due to which increase
purchasing power has shown a good trend in consumption of
tea, coffees, foods and other eatables.

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SOCIAL:
In India, nearly 70% of the hot drink market is dominated
by tea therefore it has been given a title of traditional Tea
drinking nation.
The economy is influenced by westernization due to which
coffee is seen as statement of wealth particularly among
youth due to which nearly 70% of the coffee shops are
occupied by students and young professionals.
The majority of Indian population is rural. Unemployment
rate is high which means labor rates are low.
Urbanization is taking place and that would be a good
opportunity for Starbucks to manage its human resources.

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SOCIAL:
In India, nearly 70% of the hot drink market is dominated
by tea therefore it has been given a title of traditional Tea
drinking nation.
The economy is influenced by westernization due to which
coffee is seen as statement of wealth particularly among
youth due to which nearly 70% of the coffee shops are
occupied by students and young professionals.
The majority of Indian population is rural. Unemployment
rate is high which means labor rates are low.
Urbanization is taking place and that would be a good
opportunity for Starbucks to manage its human resources.

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TECHNOLOGY:
As far as technological advancements are concerned,
there is good acceptability of modern technology in India.
Living habits are largely affected by gadgets, internet and
branding.
Eating habits are influenced with creativity poured into the
products.
People are largely influenced by social media campaigns.
Due to proper use of technology, Starbucks is able to well-
serve their customers in lesser time and has achieved
operational efficiencies.

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ENVIRONMENTAL:

Starbucks is an environment friendly organization.

It has used modern techniques and recyclable materials
to order to avoid any harm to the environment and the
society. It wont be any trouble for socially responsible
organization like Starbucks to protect environment.

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LEGAL:
The government of India has enhanced the ownership
limit of foreign retailers selling a single brand to 100%.
It has increased the trend of foreign investments in
India. Conditions are quite favorable for Starbucks to
expand its operation in the Indian market.
It is quite possible that Tata Coffee and Starbucks may
start working independently, promoting their own chains
in future.

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SWOT ANALYSIS:


Strengths:
It has a strong brand name worldwide. It has an established logo, various copyrights/patents & trademarks.
It has an attractive website.
It has no franchise system due to which quality control is done under direct supervision of Starbucks Corporation.
It is an international chain which is known for delivering high quality products.
It enjoys good strategic relationships with its suppliers.
It has a superb marketing strategy.
It has used effective use of various IT tools in their marketing strategy.
It has sophisticated atmosphere.

Weaknesses:
It has a high turn-over of its employees due to which there is lack of workforce on the floor.
Products are expensive.
Milk, beverages, drinks and baked goods are not free from genetically-modified ingredients.

Opportunities:
It can expand its product lines by introducing new innovative products.
It can enter into ice-cream and soft drinks industries.
It can develop new distribution/delivery channels.
Easy availability of work force.
Low labor cost.
India has a tea based culture so it will still appreciate new innovations coming in coffee sector.

Threats:
It is operating under JV model with Tata. In future Tata may decide to get isolated from Starbucks and start promoting i ts own products.
Consumer trends to stay away from use of caffeine.
Caf Coffee day chain has been operating in India for over 25 years.
Barista, Jamin Java, Costa Coffee and Gloria Jeans are establishing strong networks in India coffee market.

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PORTERS FIVE FORCE MODEL
Bargaining Power of Suppliers:
Starbucks is working in alliance with Tata. Though global trends may show a
threat of high bargaining power of suppliers but presently its low.

Bargaining power of buyers:
Indian market is extremely price sensitive market. Average price of tea is
extremely low. As far as disposable income is concerned, people would prefer
to go for alternatives if price levels are not in range.

Threat of substitutes:
Other substitute in India Coffee markets is herbal tea. It is very less likely to
happen as coffee consumption is increasing. Moreover people cannot
abandon the use of caffeine in their daily routine through coffee.

Threat of new entrants:
Average coffee consumption is increasing. It is quite possible that some new
chain may make an entry. Market has a potential to invite new entrants who
are able to provide good quality coffee in low price.

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COMPETITIVE RIVALRY:
In India coffee market, key players are
Caf Coffee Day(Market share: 75%)
Barista(Market share:20%. They are aggressively
expanding their networks while small players like Jamin
Java, Gloria Jeans, Costa Coffee(Market Share: 5%)
and Coffee Bean are already trying capture small market
share.

Number of stores of CCD, Barista, Coffee Bean and
Starbucks are 1100, 240, 90 and 4 respectively.

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