Coffee Wars in India: Starbucks 2012 case study explores the globalization strategy of Starbucks as it entered the Indian market in 2012.
David B. Yoffie and Rachna Tahilyani
Harvard Business Review (715452-PDF-ENG)
March 04, 2015
Case questions answered:
- Using the case facts, determine the strategy of globalization that was utilized by Starbucks India.
- Critically evaluate if Starbuck’s strategy to enter India and its aspirations to grow in India can succeed. Why or why not?
- Discuss another global brand that entered the Indian market and is running there successfully. What do you think has propelled its success?
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Coffee Wars in India: Starbucks 2012 Case Answers
1. Using the case facts, determine the strategy of globalization that was utilized by Starbucks India.
Starbucks used the joint venture method of entry to enter India. Starbucks partnered with Tata Global Beverages to announce a 50-50 venture. It is the most preferred method of entry, especially in emerging markets.
A joint venture allowed Starbucks to take advantage of the infrastructure, local knowledge, and reputation of Tata. It leads to closer control allowing for rapid expansion. The strategic goals of both partners were in alignment.
By entering into a joint venture, both partners can share the risks and costs – as well as the rewards – of the business.
The talent was hired and trained to create a unique experience for the consumer so that the staff can build a personal connection with customers. Starbucks stores are elegant in terms of style and size to attract upwardly 20-50-year-old demographic.
After entering into Joint Venture, the company set up a roasting plant and worked with Taj SATS to create offerings for Indian consumers. The company tweaked the menu to suit Indian tastes, such as a tandoori chicken sandwich. The goal was to ensure that people feel a sense of belonging. A partnership with Tata could help Starbucks achieve this goal.
Firstly, the company opened flagship stores and then expanded by building stores in locations where it was certain of consumer demand. Thus, choosing joint ventures as a mode of entry was suitable for globalization as it is very important to understand local consumer tastes in the beverage industry.
Partnership with a local partner helps Starbucks gain local knowledge and then acquire the partner’s share if the venture turns out to be profitable. This allows sharing of risks and rewards (Yoffie and Tanya, 2013).
2. Critically evaluate if Starbuck’s strategy to enter India and its aspirations to grow in India can succeed- Why or why not?
There are several factors that can lead to the success of Starbucks in India, including…
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