Starbucks' Foray into Tea-Drinking India

            
 
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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Case Details:

Price:

Case Code : BSTR435 For delivery in electronic format: Rs.400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges

Themes

Internationalization/ International Management/ Joint Ventures
Case Length : 17 Pages
Period : 2012-2013
Pub Date : 2013
Teaching Note : Not Available
Organization : Starbucks
Industry : Food and Beverage; Retail
Countries : India

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.

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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:

» 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 café 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:

  Page No.
Introduction 1
About Starbucs 1
Starbucs and Globalization 2
India Coffee Market 4
Starbucks' Foray into India 5
Initial results 7
Competition in the Indian Cafe Market 8
Looking Ahead 9
Exhibits 11

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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