Starbucks setting-up strategy in India

Abstract

With more than 17,000 stores in 50 countries around the world,Starbucks has been a real success story, since its creation in 1971. TheAmerican coffee stores company, that was a local ground coffee retailer atthe beginning of its history, is now a worldwide provider of pleasure formillions of customers.Constant concerns about the strategy and the business model of thegroup have made such a success possible. On a competitive market wheredomestic habits are specific, Starbucks has considered all possible levers toget a competitive advantage: communication, brand image, pricing policy,suppliers’ network, strategic partnerships, diversification, etc.In the last ten years, the group has intensified its expansion inemerging markets, notably in China, where it had more than 700 retailstores as of end of 2010 (both licensed and own-operated). With stores in allSouth East Asia (Philippines, Malaysia, Indonesia, Thailand, etc.), Starbucksconsiders the area as one of its key growth drivers for the years to come.In this prospect, India looks like the Eldorado to conquer: a huge andfar from mature market, a demanding and growing middle and upper classand, last but not least, an enormous production capacity (India is the 7thgreen coffee producer in the world). This is why the first Starbucks coffeeshop in India is expected for 2012. To that purpose, the company has signeda joint venture agreement with Tata coffee, which underlines the specific andcomplex requirements of Indian market, and thestrategic challenges associated.The study of this strategy brings to light all theconcepts and issues of strategic business development,such as high barriers to entry, high bargaining power of customers, highly competitive environment, CSR issues, etc.Starbucks is now at the early beginning of a huge expansion program that, ifsuccessful, could substantially improve its leadership. We would like to godeeper into it, to show how the “Starbucks in India” story could become atextbook case. It will require us to analyze both Indian market andStarbucks strategy, but also to use all academic tools we own to build asuccessful prospective scenario. Indeed, in spite of its long experience,Starbucks has no guarantee of success here, simply because strategy isalways an uncertain new story.