Are Circumstances Right for Starbucks to Enter India?

Topics: Coffee, Starbucks, Howard Schultz Pages: 2 (738 words) Published: October 30, 2012
Are circumstances right for Starbucks to enter India?

Starbucks Coffee Company, which is the world’s No.1 coffee retailer, had over 15,000 stores in over 50 countries. In 1990s, it started business in Asia. Starbucks had intention to start business and plan to enter India since 2002. However, it finally opened the first Starbucks in a joint venture with Tata Global Beverages in India ten years later on 19 October 2012. According to Starbucks CEO Howard Schultz, he said that this was a very complex market to do business and we needed to find the right partner in India. Therefore, why do Starbucks still choose to enter this complex market? I will analyze this matter with five theories and model and prove that, Starbucks enter Indian market is a good choice. Firstly, to determine whether it is suitable to enter this market, the first step is to do industry analysis. To carefully scan the industry, Porter’s 5 forces can help the company to assess the entrance. The five elements are Threat of New Entrants, Rivalry among Existing Firms, Threat of Substitute Product or Services, Bargaining Power of Buyers, Bargaining Power of Suppliers and Relative Power of Other Stakeholders. Threat of New Entrants

Starbucks in this case is a new entrant. A new entrant may face entry barrier. For Starbucks, the main obstruction is capital requirement. Starbucks not only provide coffee and drinks, but also provide cakes and sandwiches such kinds of fresh food. Although the coffee bean can be global sourcing, the perishable cannot export outside India. Therefore, Starbuck may need to build a factory to supply the food. However, building a factory needs capital and time. This is what Starbucks face when it plans to enter Indian market. Rivalry among Existing Firms

Rivalry among existing firms is the vital problem for Starbucks. In India, it Cafe Coffee Day, Qwiky’s, Barista and other coffee shops are launched by local company. They have experience in operating coffee shop, they...
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