History of starbucks in India and chinese markets, future potential and growth factors.

1. STARBUCKS IN INDIAN & CHINESE MARKET
Presented by:-
• MALIKA SINGH 92
• VISHAKHA KULKARNI 40
• WINNIE SINGH 94
• KARANKESH SINGH 91
• SHEHZAAD SHAIKH 82
• SONUVARMA 112
• PANKAJYADAV 117

2. OVERVIEW
• Starbucks Corporation- an American global coffee based in Seattle,
Washington, United States.
• It was founded in the year 1971----- 44 years ago
• Largest coffee-house company in the world with 20,891 stores in 62
countries.
• President and CEO- Howard Schultz.
• Place High Value on ethical behavior and Company wide diversity.

3. OVERVIEW
• Offers espresso blend of coffee, refreshments and pastries, merchandise,
brewing accessories, ready made drinks and Starbucks ice cream.
• It markets all of its products under the flagship Starbucks brand.
• It also market some products under the brands such as Tazo Tea, Seattle’s
Best Coffee, Italia Coffee and Evolution Fresh.

4. HISTORY
• 1971-The first Starbucks store opened in Seattle’s Pike Place Market and
was founded by Jerry Baldwin, Zev Siegal and Gordon Bowker.
• 1980- The Company grew to be the largest roaster in Washington with
multiple locations.
• 1982- Howard Schultz join the Starbucks team.
• 1983- While travelling Italy, Schultz experiences Italian Coffee Bars and
Inspire Jerry Baldwin.

5. HISTORY
• 1987- Schultz purchase Starbucks from the founder and begins to expand
throughout the US.
• 1992- The company experienced rapid growth by going public, and
growing tenfold by 1997, with locations around United States, Japan and
Singapore.
• 2016- Starbucks announced that it will enter Italy, its 24th market in
Europe. The first location will open in Milan by 2017 and the company
celeberated its 45th Anniversary.

6. PRODUCT LINE

7. BEVERAGES

8. FOOD

9. MERCHANDISE

10. STARBUCKS IN INDIA
• In January, 2012, Starbucks announced a 50:50 joint venture with Tata
Global Beverages, called Tata Starbucks Ltd.
• On 19 October, 2012, Starbucks opened its first store in India, measuring
4500 sq ft in Elphinstone Building, Horniman Circle, Mumbai.
Today, Starbucks has millions of customers in about 19,000 locations in
over 62 countries which have employed approximately 1,82,000 partners
worldwide.

11. PEST ANALYSIS
POLITICAL Environment
• The Indian economy went through a massive liberalization under the new
minority government of P.V. Narasimha Rao in 1991.
• Starbucks needs to vary about the possible opposition from existing
competitors-CCD/ Barista/ Costa Coffee etc.) through the use of political
influence and delaying tactics.
• The Indian economy has been subject to series of positive economic
reforms since 1991 which had created a better working environment for
foreign companies and has made it possible for foreign investors to
operate in the country more easily.
• The reforms have also resulted in higher growth rates, lower inflation
and increase and ease of the foreign investments.

12. PEST ANALYSIS
ECONOMIC Environment
• The liberalization measures taken in 1991 opened the economy
to foreign investment and trade.
• Favorable environment for Starbuck's entry are provided by
the big cities in the country as Mumbai is regarded as the
country's financial center and accommodates many foreign
financial organizations.
• Furthermore, the government strives to reduce its fiscal deficit
to 3.9% of GDP from 6.8% in previous years.

13. PEST ANALYSIS
SOCIO-CULTURAL Environment.
 The ethical approach towards internal and external stakeholders is almost
a trademark for Starbucks. The company is widely known for its humane
approach towards sourcing its coffee and related products and towards
converting its employees to skilled baristas and dedicated brand
ambassadors.
 According to market research studies, coffee was mainly consumed in the
urban areas (71%) and to a much lesser extent in the rural areas (29%).
 The people in southern states of India largely consumed coffee. The people
in the northern states were generally not coffee drinkers, but drank coffee
and experimented with various flavors as a fashion statement.

14. PEST ANALYSIS
TECHNOLOGICAL Environment
• The coffee beans and tea need be bought from local Indian farmers in order
to support the local agricultural economy, save money in transportation and
tariffs, and gain tax benefits.
• In 2004 Starbucks entered into a strategic alliance with Tata Coffee LTD.,
the largest coffee producer in India. With signing this agreement, Starbucks
finally found the partner it needed.
• A company which met all the conditions and standards followed by
Starbucks. Tata proofed its quality standard by winning a gold medal for
the best Robusta coffee in the world.

15. PORTER’s 5 FORCES ANALYSIS
INDUSTRY RIVALRY:HIGH
• Major competition for Starbucks in India comes from that of Café coffee
day.
• The abbreviation CCD is known to most of the people in urban parts of
India. Their positioning is same as what Starbucks have in US.
• The other competitors include Barista Lavazza, Quicky's, Barista and Costa
Coffee, which are also the multinational brands, and widely recognized.
• Apart from them, secondary competitors include the Georgia Coffee,
served in fast food joints like that of Mc Donald’s and KFC, etc.

16. PORTER’s 5 FORCES ANALYSIS
POTENTIAL FOR NEW ENTRANTS:LOW
• The entry barriers in the coffee retail industry are relatively low in
India, particularly for the foreign players. This is possible owing to the
fact that 51% FDI is allowed in India in retail sector.
• Any large or well-funded company having the thorough understanding
of the market can enter into retail sector in India.
• Customer or Supplier Loyalty:
• Indian market is already being captured by the long established
brands like Café coffee day, Barista, Barista Lavazza and Costa
Coffee.
• It is going to be pretty much difficult for any of the new entrant to
establish its brand name in the Indian market.
• As Starbucks being the international brand will definitely help in
attracting the educated Indian crowd.

17. PORTER’s 5 FORCES ANALYSIS
THREAT OF SUBSTITUTE:SUBSTANTIAL
• Product substitutes, will include Teas, other beverages, for example, soda,
fruit juices, water, beer or other liquid and/or carbonated beverages.
• Since Starbucks also sells fast foods, other fast food beverages like burgers,
etc.
• The lower end local coffee houses or other snack shops which are less
luxurious will also act as substitutes to Starbucks.

18. PORTER’s 5 FORCES ANALYSIS
BARGAINING POWER OF SUPPLIERS:LOW
• In the case of coffee retail, the suppliers, supplying the retailer with
the coffee beans are not having much of the bargaining power.
• Coffee retailers like Starbucks is a very big buyers for any of the
supplier, so suppliers cannot afford to loose them.
• Similarly, suppliers of other resources like that of paper products
etc. will not be having much of the bargaining power as there are
many sources from which the company can source them.
• However, this is not valid in the case of the suppliers supplying the
technological machinery and equipments as there are not many
suppliers here.

19. PORTER’s 5 FORCES ANALYSIS
BARGAINING POWER OF BUYERS:HIGH
• In the past, buyers in India were not having much of the bargaining power.
• With the advent of multinational food retail giants in India, like that of Mc
Donalds, Barista Lavazza, Café Coffee Day and Costa Coffee, consumer is
faced with lots of choices.
• It will be difficult for Starbucks to influence the Indian buyers to pay
premium for their products.

20. MARKETING STRATEGY-4p’s
PRODUCT
• Features : Brewed Coffee
• Variety : Cappuccino, Caramel cappuccino, tea
• Quality : Fresh Product
• Design : Attractive, Descent, Convenient
• Packaging: Attractive, easy to handle
• Services : Just in Time, Ready to drink, Fair trade policy

21. MARKETING STRATEGY-4p’s
PRICE
• List of Price: Rs. 95 - Rs.250
• Premium price for premium product
• Goods are sold at high prices so that fewer sales are needed to break even.
• Price varies according to quantity demanded.
• Payment Mode:Cash, Card Payment System

22. MARKETING STRATEGY-4p’s
PROMOTION
– Social media campaign
– Starbucks iPhone app
– QR code Scanner and start connecting the physical world to your
mobile device
– Gift card to start a relationship

23. MARKETING STRATEGY-4p’s
PLACE
• Higher income group location place
• Airport, malls, well known areas
• Highly visiting areas
• Location of Seattle’s Best or placement of the brand within 30 miles,
rebrand some locations as a local shop
• Location Selection

24. HUMAN RESOURCE STRATEGY
• Their recruitment motto is “To have the right people hiring the
right people.”
• They hires people for qualities like adaptability, dependability and
the ability to work in a team.
• They invest in training employees in the skills they would require to
perform their jobs efficiently.
• Black aprons displaying the title “Coffee Master” are worn by
employees who have completed the coffee master course, which
educates employees in coffee tasting, growing regions, roasting, and
purchasing.
• Employees were rigorously trained, completing at least 25 hours of
coursework on topics.

25. STARBUCKS IN CHINA
 Entered through Joint Venture in 1999
 Joint venture for each part of China:-
• Northern China - joint venture with Beijing Mei Da coffee company.
• Eastern China - partnered with Taiwan-based Uni-President.
• Southern China - worked with Maxim's Caterers in Hong Kong.
 Opened first store in Beijing World Trade Center
 Number of Starbucks in China
361 406 496
646
1700
0
500
1000
1500
2000

26. PORTER’s 5 FORCES ANALYSIS
INDUSTRY RIVALRY: HIGH
• Major competition for Starbucks in China comes from Multinational
companies such as
Nespresso,Pacific coffee company, Costa Coffee,Nespresso,McCafe.
• According to Euromonitor, coffee cups consumption will increase by
18%per year from today until 2019.
• DIO coffee has an edge over Starbucks as it serves a variety of traditional
Chinese cuisines

27. PORTER’s 5 FORCES ANALYSIS
POTENTIAL FOR NEW ENTRANTS: Low-Moderate
• China is now believed to be the 17th largest coffee market worldwide (17%
Growth Annually) {2016}
• The entry barriers in the international fast food retail industry are low in
China, particularly for the foreign players. This is possible owing to the fact
that China attracts many international players due to cheap labor, liberal
government policies & huge potential in the country.
• A company with well establish International image can act as a threat to
Starbucks in China but a domestic player will have low impact on
Starbucks.

28. PORTER’s 5 FORCES ANALYSIS
THREAT OF SUBSTITUTE:SUBSTANTIAL
• Substitutes such as Tea (1.1 Billion KG) can be considered as a major
threat because China is a tea consuming country, other beverages, for
example, soda, fruit juices, water, beer or other liquid and/or carbonated
beverages can also be considered.
• Local chinese café.s offering authentic chinese cuisines along with coffee is
also a major threat.
• Local coffee houses or other snack shops which are less expensive will also
act as substitutes to Starbucks.
• Why do Chinese not drink coffee ?
Harmful to health (20.2%), Sleeping problem (17.4%), Strange flavor
(17.4%), Expensive price (10.9%)

29. PORTER’s 5 FORCES ANALYSIS
BARGAINING POWER OF SUPPLIERS:LOW
• Suppliers of raw material such as cup & paper have less power
because of vast availability of low cost supply sources in
china.
• Technological suppliers don’t have much power as there are
various suppliers of cheap and effective technology in China.

30. PORTER’s 5 FORCES ANALYSIS
BARGAINING POWER OF BUYERS:HIGH
• Buyers bargaining power have increased over the years after the entry of
multinational food retail giants in china like Mc Donald's(McCafe),KFC
Costa coffee,Subway Pizza hut,Burger king,Domino’s etc.
• Increase in competitively priced offerings from local coffee shops in china
give the buyers more power.
• It is a challenge for Starbucks to influence the chinese buyers to pay more
for their products.

31. PEST Analysis
POLITICAL Environment
• Communist party of China provides a stable environment for
business.
• Low level of corruption & quick decision making.
• Pro-Business policies have attracted foreign investments.
• Moderate corporate Tax rates
• Around 3,000 websites were blocked in mainland
China (excluding Hong Kong and Macau) under the country's policy
of Internet censorship.
• Ban on websites such as
Google,Facebook,Youtube,Twitter,Instagram etc. impacts digital
marketing.

32. PEST Analysis
ECONOMICAL Environment
• Fastest developing economy.
• Worlds second largest economy with a GDP of $11.2 trillion.
• Domestic retail market is worth $3.2 trillion growing 12%
annually.
• Inflation rates move in the range of 2 to 5%
• Exports are more than Imports.

33. PEST Analysis
SOCIO-CULTURAL Environment
• Population in age group of 15-24 years: 14.7%,25-54 years: 47.2%
• The urban population consist of 50.6% of total population growing
@ 2.85% annually.
• Considerable rise in standard of living
• Most of the chinese consume tea and demand less coffee.
• Young population is highly influenced by western culture.
• Rise in expenditure on International fast food chains such as KFC,
McDonalds, Subway, Pizza Hut, Burger King, Dominos.

34. PEST Analysis
TECHNOLOGICAL Environment
• Over 500 million internet users
• Rapid development in science and technology.
• Availability of cheaper and efficient technology.
• Rise in the number of Airports, Train stations, Educational institutions,
Shopping Malls, Business hubs have generated opportunity.

35. MARKETING STRATEGY
• Instead of trying to force onto the market the same products that work in
the U.S., such as whip cream-covered frozen coffee concoctions, Starbucks
developed flavors, such as green tea-flavored coffee drinks, that appeal to
local tastes of Chinese people.
• Introduced traditional Chinese items, such as festival moon cakes, curry
puffs, and sausage rolls.
• Rather than pushing take-out orders, which account for the majority of
American sales, Starbucks adapted to local consumer wants and promoted
dine-in services in China.
• Contrary to its usual trend of maintaining strict standardization techniques,
Starbucks's strategy in China involved adapting the business to the local
culture and market conditions.

36. HUMAN RESOURCE STRATEGY
• Starbucks Corporation utilizes its human resources practices and policies as
a strategy to gain competitive advantage in countries like china and drive
the overall success of the company and its globalization efforts.
• To work at Starbucks is much like working with friends, its website claims;
the company understands appreciates, respects, and includes different kinds
of people. It is a company that also embraces diversity.
• Starbucks has offered a variety of training programs to provide employees
sufficient knowledge of the company’s values and how to foster it amongst
its customers of China

37. CONCLUSION
STARBUCKS IN INDIA
• Tata Starbucks Limited, the 50/50 joint venture between Starbucks Coffee
Company and Tata Global Beverages Limited is bringing an unparalleled
experience to Indian customers.
• Both companies have a history of delivering product innovation and the
highest quality experience to customers around the globe.
• They are delighted to come together today and transform the coffee
experience for consumers across India, while providing a community
gathering place to connect with family and friends.

38. CONCLUSION
STARBUCKS IN CHINA
• Starbucks is planning a massive expansion in China over the next couple of
years that will double its stores in the country.
• Companies stores sales grew 7% in the region recently.
• It is planning to open in 500 new location in China that would make China
Starbuck’s 2nd largest market outside USA.
• China remains as an in important investment market for starbucks due to
various factors of the country favouring the company.

39. RECOMMENDATION
IN INDIA
• Starbucks in India needs to concetrate on maintaining & improving their
product offerings & Pricing as it faces competiton from well established
brands like Café Coffee Day and many others.
• People in India expect more from an international brand by paying a
premium.
IN CHINA
• Starbucks charges 20% more in China for their coffee as compared to other
locations so the company have to maintain its consistensy of quality
products and services.
• China is a favourite market for all the international brands which is a threat
to the company and thus Starbucks should maintain its position in the
chinese market and grow strategically.