Starbucks India Dilemma

Topics: Starbucks, Coffee, Management occupations Pages: 11 (2799 words) Published: November 13, 2012
Starbucks Coffee Co.|
Indian Dilemma|
This paper evaluates the Strategic Audit of Starbucks Co. and its attempt to enter the India coffee market. | |
Malinda |

Introduction and Background

“In 2006, the world’s No. 1 specialty coffee retailer, Starbucks Coffee Company, had over 11,000 stores in 36 countries of the world and employed over 10,000 people. The company had over 7,000 retail locations in its home country and largest market, the United States. “

Starbucks opened in Seattle, Washington in 1971 with three partners, Gordon Bowker, Jerry Baldwin, and Zev Siegel. Their store offered 30 different varieties of whole-bean coffee, bulk tea, spices and other supplies. The store grew within 10 years, employing 85 people with five retail stores. It’s logo of a mermaid became a very popular and respected symbol. The company did not sell coffee by the cup however, Howard Schultz, after visiting Italy and seeing the personal relationship that they had to coffee, he tried to convince Starbucks otherwise. They turned him down and he left to start up his own coffee shops in 1985. By 1987, each store’s sales had reached around $500,000 a year. In 1987, Starbucks decided to sell its assets and name and Howard Schultz decided to buy Starbucks. Over time, Starbucks developed a sophisticated store-development process based on a six-moth opening schedule. In 1996 alone, it opened 330 outlets. Starbucks then moved on to entering alliances. Starbucks entered new markets outside the United States either through joint ventures, licenses or by company-owned operations. Its main concentration was Asia due to its developmental stage. After making Japan and China two of its largest markets, it planned to enter India. Both in 2002 and 2003 Starbucks announced their plan, but did not follow through. In 2006, India was ranked as the fourth-largest economy in the world in terms of purchasing power parity. India emerged as a key destination for BPO companies. However, India’s economic growth was constrained by inadequate infrastructure, bureaucracy, regulatory and foreign investment controls, the reservation of key products for small-scale industries, and high fiscal deficits. In 2006, the Indian retail market was estimated US$350 billion. Also, the food habits of Indians varied across diverse regions. According to market research, coffee was mainly consumed in the urban areas (71%). Although India was known as a tea culture, the coffee culture was emerging, especially among young adults. In 2006, Starbucks spoke again about entering India, but still have not at this time.

I. Current Situation

A. Current Performance

Starbucks Co.
YEAR| Profit Margin| ROI| ROE| EPS|
2007| 7.52%| 11%| 42%| $0.87|
2008| 2.46%| 4%| 44%| $0.43|
2009| 8.87%| 5%| 35%| $0.52|
2010| 11.75%| 13%| 32%| $1.24|
2011| 11.12%| 15%| 29%| $1.62|

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B. Strategic Posture

Mission Statement: “to inspire and nurture the human spirit-one person, one cup and one neighborhood at a time.”

Objectives: To establish Starbucks as the most recognized and respected brand in the world. Strategies: To achieve this goal, the Company plans to continue to rapidly expand its retail operations, grow its specialty sales and other operations, and selectively pursue opportunities to leverage the Starbucks brand through the introduction of new products and the development of new distribution channels. Policies: Below is a variety of issues that support not only the health of Starbucks, but also their partners (employees) and communities that they are a part of: * Global Human Rights

* C.A.F.E. Practices
* Supplier Code of Conduct Overview
* California Transparency in Supply Chains Act
* Starbucks Social Responsibility Standards for Manufactured Goods and Services * Health Care Positions
* Menu...
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