Expansion of Starbucks in India

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Proposal by Ramanathan Ragupathi.

Transmittal Letter
Ramanathan Ragupathi
International Strategy analyst
Seattle 98101

22 November 2010
Howard Schultz
founder, chairman, president and chief executive officer
Seattle 98101
Dear Mr. Schultz
Enclosed is a copy of the proposed report “Starbucks India”. This report is a summary of expansion of Starbucks outlets in India. The proposal covers the current strategies, target market, financial planning and a feasibility study to successfully operate in the Indian market. This report also outlines recommendations which would further benefit the company to move forward regarding the proposed market. If you have any questions regarding the interpretation of this report please feel free to contact me at the address above. Thank you for your funding of this project and I look forward to working with you again soon. Sincerely,

Ramanathan Ragupathi
Table of Contents

Executive Summary
Starbucks is the world’s largest coffeehouse corporation with over 16000 outlets, operating in more than 50 countries. The company has constantly been on an expansion move and focuses on entering many new markets with its growth potential. In line with this expansion strategy this report advocates and focuses on entering a new market in India. One of the prominent countries in Asia , India has become one of the most important and exciting business hub to the world with a massive increase in foreign investments especially from the United States and with consumers who are just willing to spend more and more. Regarding the legislative side, India has also reformed its export policy with the United States which was quite stringent few years ago. There couldn’t be a more appropriate time for Starbucks to open its outlets in this land of opportunities where most of the international franchises have earned outstanding profits and growth. The proposal is to open outlets in Mumbai, an important cosmopolitan business city and New Delhi which is the capital of India. These two strategic locations will be the most suitable place to test the initial success of the business. Starbucks will be customizing their standard menu to adapt to the local tastes of the market. This includes addition of more tea flavors as Indians are known to be a more “Tea drinking population” and certain local coffee flavors as well. The Major competitor for Starbucks would be the Italian based coffee company Barista. Starbucks is expected to outwit Barista and capture the market share with its superb marketing and reasonable pricing schemes in addition to its excellent quality. In line with this strategy Starbucks will be able to gain the brand loyalty of the much anticipated Indian customers.

Starbucks is the world’s largest coffee corporation employing more than 128,800 employees. First started in Seattle’s Pike Place Market, the company has grown tremendously with over 16000 outlets worldwide. The next step is focusing on the Indian market. The likelihood of Starbucks succeeding in India is relatively high for many reasons. India’s consumer society is not only radically developing but also adapting to the western culture. ”India’s young are becoming world-class consumers and multinational are taking note” reads the article published by TIME magazine in their August 2003 issue “Hey Big Spenders!”. India opened up its economy to the world through its liberalization policy in 1991 which resulted in the flooding of foreign investment and trade. The custom duties were lowered which resulted in the devaluation of the currency. This virtually eliminated the permit controls on private investments and broke public sector monopolies. Many multinational corporations such as McDonalds and Barista have been taking advantages of these new policies and started expanding their business throughout India. The reason why these multinational were becoming more and...
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