STRATEGIC MANAGEMENT STARBUCK
Hanny Purnama Sari
( 3104816 )
Anastasia A. Santoso
( 3114701 )
Martha
(
)
INTERNATIONAL PROGRAM FACULTY OF BUSINESS AND ECONOMICS 2010/2011
Starbucks Coffee Company: The Indian dilemma SWOT Analysis Strengths:
World n1 specialty coffee retailer
Every week: 40 000 000 customers
7600 retail location in the USA
Starbucks is not only coffee: it is an global experience with a captivating atmosphere
Rapid growth around the world
Serve high-quality coffee
Weaknesses:
Already postponed its intentions to enter India
Problems with Japan (brand image affected and food did not fit the japan taste).
High-fat products
Opportunities:
Expansion In Asia thanks company-owned operations
Economic investment.
reforms
in
India
India’s population is very young
Growing of middle-class
included
joint-venture, liberalization
of
or
foreign
2006: Government permitted FDI up to 51% in retail trade of single-brand products with prior government approval
Agreement signed with Tata to source premium coffee beans
Threats:
licensed
India is the fourth largest economy in the world in term of purchase-power parity
to
Huge competition in India (Coffee café day)
Hard to find a reliable partner in India
Maturity of the coffee market in Europe
Asia has a tea culture more than a coffee culture (Starbucks should educate this market about the quality of coffee).
Inadequate infrastructure, bureaucracy, regulatory and foreign investment controls
Different taste all over India
Coffee is mainly consumed in the urban areas
Indian larger producer of tea
Despite a lot of threats regarding the Indian market, Starbucks should enter this market. Indeed, the opportunities in the USA and Europe are very low due to the maturity of the coffee market. Starbucks does not really have the choice to enter this market if they still want to expend their market share. Regarding the SWOT matrix, the main problem that Starbuck will have to face will be to competitive environment. Indeed, a lot of other companies are implemented in India such as CCD and Barista. Contrary to USA, Starbucks will not be the first to offer a high coffee quality experience in the country they enter. As a result, Indian market is a great opportunity for Starbucks but they should work with a local partner if they want to make sure that they will fit the local taste and not reproducing the same mistake as in Japan. What’s more, because India is not a coffee drinker’s country but they likely prefer tea, Starbucks will have to educate them to coffee and the high quality coffee. The last problem that Starbuck will have to face is that the country has an extremely rapid growth but with huge the difference between middle-class (that can afford Starbucks) and rural population. IFAS : Internal factors analysis
The main internal strength of Starbucks is undoubtedly his reputation. Indeed, Starbucks was one of the first coffee retailers to settle in the USA and to develop all over the world. As a result, if we had to score Starbucks reputation his impact on his development, we would probably give them a high score. The second most important strength of Starbucks is the atmosphere they managed to create in their shops. Indeed, Starbucks not only sell coffee but also propose a global experience to the customers. Customers that come to Starbucks do not only want to drink coffee but they want to see and to be seen.
The last important strength is that Starbucks only propose high quality coffee to his customers. To achieve this, Starbucks developed partnerships and ventures to deal with the best coffee producers in the world (Indonesia and South America mainly).
EFAS : External factors analysis The most important external factors for Starbucks (and for his growth opportunities) is the increase in income for Asian and Indian middle-class. As a result, Starbucks wants to enter the Indian market because the middle-class is becoming more and more important and the population is one of the younger in the world. The second most important point is the liberalization of the Indian economy. Before the government decided to liberalize the foreign investment, a foreign company could hardly settle their business in India. Thanks to this chainman in economics rules, Starbucks will finally have the opportunity to enter the Indian market. Regarding the Indian market, the last important external factor that Starbucks have to take into account before entering this market, is the competitive environment. Indeed, contrary to the other countries where Starbucks was perceived as a pioneer, there are already a lot of shops such as Starbucks (Coffee café day) that have a good reputation among Indian population. To succeed in this market, Starbucks should convince the potential customers that drinking a coffee at Starbucks is a unique and global experience.
