XLRI

Strategic
Management

Abhimanyu Kr Singh (MP15002)

Abhinandan Singh (MP15003)
Kumar Gopal (MP15017)
Shipra (MP15041)
Subrata Basak (MP15043)

Professor: Dr Saurabh Pandya

Date: 22nd January, 2017

[COFFEE WARS IN
INDIA- STARBUCKS
2012]

Strategic Management

PGDM 2015-18

Coffee Wars in India: Starbucks 2012

Introduction
Starbucks Corporation, generally known as Starbucks Coffee, is an American global
coffee company and coffeehouse chain based in Seattle, Washington. After its start
in 1971, Starbucks became the largest coffee house company in the world with
18000 outlets in 62 countries and with annual net revenues of $13.3 billion in 2012.
The earlier strategy of Starbucks was to get a foothold in each market & create a
strong presence there before moving to another city. Its initial day philosophy was
to become the third place, where customer could go to relax, meet friends, and
enjoy a special cup of coffee outside of their homes or work. Since 1996, it started
its global expansion with opening of its 1 st international store in Japan, followed by
many stores in China, UK, France, and Switzerland, other European, Latin American
and Asian countries in few years. Starbucks CEO targeted Asian market first
anticipating it as developing market as compared to matured coffee market of
Europe. In most of the international ventures, Starbucks chose a local business
partner for better Supplier relationship management, for talent recruitment and for
understanding local market conditions.

Key Issues:

Educate the customer about coffee, Starbucks brand and the experience
Generating repeat and loyal customers.
Finding store location in high visibility area. The pace of opening new stores
in India
Tailoring its offerings with countrys local preferences
Competition from local and global players
Opting out realistic pricing in country like India for giving an affordable
luxury
Hiring and training of talents

SWOT Analysis

Strength
Largest coffee chain company with
strong financial position & widely
recognized brand
Loyal Customer & Supply chain
partners
Great Ambience &
experience in
stores
Appropriate focus on talent Hiring &
training
Customizing its offerings as per point
of sales

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Weakness
Prices of products in the premium to
the middle tiers
Low product basket compared to
competitors
Acutely dependent on the price of
coffee beans as a determinant of its
profitability.
Imitable products

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PGDM 2015-18

Opportunities
Threats
Emerging market of instant coffee Rising prices of coffee beans
chain
risks
related
to
and breakfast in China , India ,Middle Supply
fluctuations
east
Product offerings to take on the full Tough challenges from local stores
spectrum food and beverage retailers Staff poaching by Retail sectors
Competition from low-cost coffee
like McDonalds and Burger King
Expanding its supplier network and
sellers

Imitation
the range of suppliers to make it
Independent coffeehouse movements
resilient against supply chain risks.
Threat
We have our main consumer base in the age of
of New
Entrant
16-55 years.
s
(Modera
Target: Middle class, upper middle class, Higher
te)
class youth, Stylists and Coffee Experts,
Students,
House
wives,
executives
and
Indust
Threat
Buyer's
ry
of
youngsters
People
who
value
a
great
cup
of
Power
Rivalr
Substitu
y
tes
(HIGH)
coffee. We target not just the youth but anyone
(HIGH)
(HIGH)
who is young at heart.
Third Place" away from the home and college or
Supplier
's
workplace for the young and the young at heart.
Power
Coffee Bar |Fun Place | Offices |Campuses
(LOW)
Co-Creation and Self Services, Wi-Fi Zones,
Kiosks,
Starbucks
Cards
with
variants,
Gamification, On Spot Contests, Expert talk,
community creation, Loyalty program,

Linking Mission and Environment to Theory of Business

Mission of Starbucks was to create a strong foothold in each country before they
make its next move with the finest coffee experience. So, every time they chose a
country to expand its business, Starbucks entered through joint venture so that they
can understand the needs of local country better. It analyzed the environment and
adopted a strategy which is fit for market. To create coffee experience and make
Starbucks to be third place, it was not only the coffee but ambience, staff, service
is equally important. So they invested in training and hiring the staff and treated
them as partners. As Starbucks entered into China, it conducted family forum to
leverage its strength of training the staff. As it entered into India, it invested in
training. Ambience and menu was locally tailored to fit the real needs. Mission and
environment was reviewed every time they expanded its business to leverage its
core competence.
Coffee Wars in India Starbucks
Category
Strategy
What experience, We offer to
my customer when they are
visiting Starbucks.

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Starbucks has to be concentrating on the quality of its

products at the same time offering excellent level of
customer services by positioning Starbucks stores as

Strategic Management

PGDM 2015-18
third place.

What Pricing strategy should we

adopt

How should
Outlets

we

Place

our

What Promotion strategies to

adopt to target all set of
segments.
How to connect more with our
customers through our People
Programs and Processes we
should adopt to reach our goal

Recommendation

Starbucks is positioning itself as a Premium Quality

Coffee Provider, but it will also be realistic in pricing like
Rs 99/cup in country like India for giving an affordable
luxury to all its customer.
We will offer most of its products through strategically
located Starbucks cafs along with online stores,
Starbucks App also.
There is a need for deeper emotional appeal with events
& experiences during festive and non-festive seasons
Superior customer service, personal greetings, Just say
yes policy to any complaints will be our USP
Brand Loyalty program & Customer Retention. Special
program
like
devoting
Saturday
evenings
as
Entrepreneur Saturdays, that aims at bringing
together the busy Stylists and Coffee Experts
working in the corporate sector by organizing expert
talks on varied subjects can be considered.

We recommend Starbucks to maintain the competitive advantage in the market

through a set of core competencies that include exceptional customer services
achieved through a high level of employee motivation, focus on product quality and
price to give its customer affordable luxury.

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