Starbucks' Foray into Tea-Drinking India

Starbucks' Foray into Tea-Drinking India
Case Code: BSTR435
Case Length: 17 Pages
Period: 2012-2013
Pub Date: 2013
Teaching Note: Not Available		 Price: Rs.400
Organization: Starbucks
Industry: Electronic Retailer
Countries: India
Themes: Internationalization, International Management, Joint Ventures
Starbucks' Foray into Tea-Drinking India
Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

US-based Starbucks Corporation (Starbucks), the largest coffee house company in the world, had a presence in 62 countries around the globe. It had outlets in North America, South America, Australia, and Europe and in Asian countries like Japan and China. Though China was predominantly a tea-drinking nation, Starbucks, with its localization and personalization strategies was able to impress the Chinese consumer. However, till 2006, Starbucks had not touched the Indian market - another tea-drinking nation. In 2006, the company tried to enter into the Indian market.

But, because of the FDI restrictions during that time, the company had to postpone its entry. However, in January 2012, the company entered into a joint venture with Tata and in October 2012, the company set up its first store in India. Though the Starbucks stores received a good initial response, the company faced a few challenges like competition from organized and unorganized coffee (and tea) shops, finding the proper locations and talent pool, pricing, and competitive branding and positioning from its competitors.

Issues

The case is structured to achieve the following teaching objectives:

  • Issues related to the globalization strategy and entry and expansion strategy of a company in a country very different from its home country
  • Changing trends in the Indian coffee market and the potential of this market
  • Competition in the Indian cafĂ© market
  • The reason for Starbucks' delayed entry into India
  • Starbucks' entry strategy for the Indian Market
  • Challenges that Starbucks faced in the Indian market and how these could be overcome

Contents

Keywords

Globalization strategy; Entry and expansion strategy; Emerging market; Competition; First mover advantage; Late entrant; Localization; Joint venture; Retail; Pricing; Branding; Positioning; Indian coffee market; Starbucks; Tata

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