Starbucks: Entry Prospects in India

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4th May 2009

An OLI-PESTLE Analysis
The paper analyses the entry prospects of Starbucks Coffee into India. The analysis is based on the framework provided by the Eclectic Paradigm and the PESTLE analytical structure and shows that in spite of previous setbacks the current conditions in India are highly conducive for the likes of Starbucks to set up shop and be successful.

Bhooshan Parikh Copenhagen Business School Full Time MBA 2008-09

INTRODUCTION India has a population of nearly 1.2 billion people and a majority of this falls into the age bracket of 15-60 years of age, making it one of the youngest countries in the world with a median age of just above 25 years ( Compared to this, the median age in the US and China is 37 years and in Japan it is 45 years. The per capita GDP in India has seen a constant rise and with the booming IT/ Software services industry, India’s average economic growth over the last decade has been an impressive 7% ( With almost 29% of the population living in urban areas (and an annual urbanisation rate of 2.4%) (, the Indian consumer market holds immense potential for most businesses. Improved political and legal reforms since the beginning of the 1990s have made it increasingly attractive for Foreign Direct Investments (FDI) inflows into India and equally easier for foreign companies to set up shop in India. Starbucks Corporation (Starbucks), the owners and makers of the world famous Starbucks Coffee opened its first shop in Pike Place, Seattle, US in 1971 and since then has become the fastest growing coffee chain in the world with over 16000 retail outlets in more than 40 countries worldwide (Starbucks Corporation, Annual Report 2008). It was only a matter of time that India would see its first Starbucks, especially when the coffee consumption in India was also rising along with the economical growth. However, in 1999 (
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