Starbucks franchise cost in indian rupees

Business

Global Business Opportunities Project:

Starbuck’s in India

You are responsible in finding how these 2 modules are added to the topic of a Global Business Opportunity Project: Starbucks in India.

2 Modules:

Module 3: Assessing the Economic/Geographic Environment

This is where you start to really get to the “meat” of your investigation. By now you should have a country in mind AND a product or service in mind. As you evaluate the economy and natural resources, do so with your product or service in mind. Do you need waterways and shipping docks? Do you need telecommunications? How stable is the economy? Is your product/service purchased with discretionary income or disposable income? What is the GDP/capita in US dollars? Compare it to the US GDP/per capita.

Module 4: Assessing the Souci-Cultural Environment
Using the 4 categories in this module, paint the cultural picture. You may want to look at future trends and predictions. In the US for example, we have the aging babyboomers. The largest segment of the US population was born between 1946-1964. Beginning on Jan. 1, 1996, the first of the baby boomers started turning 50. This segment will have 2500 people turn 50 every day (365 days) every year for the next 10 years. Starting in 2006, those same people will start turning 60. By 2014, the largest segment of the US population will be 50 – 70 years of age. The same thing is happening in Japan. What are the implications of that kind of cultural influence? Look at those kinds of statistics as well.

You need to add all the information regarding the 3 and 4 module to the attached Doc. They are highlighted in Yellow. I need 6 references and 2-3 pages APA Format.

Global Business Opportunities Project:
Starbuck’s in India
Prepared by: Team B
Table of Contents Global Business Opportunities Project: 1 Starbuck’s in India 1 EXECUTIVE SUMMARY 3 Module 1: IDENTIFYING GLOBAL BUSINESS OPPORTUNITIES 3 Module 2: ANALYZING INTERNATIONAL COMPETITORS 7 Module 3: ASSESSING THE ECONOMIC-GEOGRAPHIC ENVIRONMENT 9 Module 4: ASSESSING THE SOCIAL – CULTURAL ENVIRONMENT 9 Module 5: ASSESSING THE POLITICAL-LEGAL ENVIRONMENT 9 Module 6: SELECTING A GLOBAL COMPANY STRUCTURE 11 Module 7: FINANCING SOURCES FOR GLOBAL BUSINESS OPERATIONS 13 Module 8: A GLOBAL MANAGEMENT INFORMATION SYSTEM 14 Module 9: HUMAN RESOURCES for GLOBAL BUSINESS ACTIVITIES 15 Staffing 15 Module 10: MANAGING INTERNATIONAL FINANCIAL AND BUSINESS RISKS 18 Module 11: PRODUCT AND TARGET MARKET PLANNING 20 Module 13: PLANNING A GLOBAL PROMOTION STRATEGY 22 Module 14: SELECTING AN INTERNATIONAL PRICING STRATEGY 24 Module 15: DETERMINING ORGANIZATIONAL FINANCIAL RESULTS 24 Module 16: MEASURING INTERNATIONAL BUSINESS SUCCESS 24 References 25 25

EXECUTIVE SUMMARY
Starbucks’s was established in 1971. From the first inception in Seattle’s famous Pike’s Place Market to its expansion across the United States Starbuck’s has looked to the global market to share the Starbuck’s way of experiencing coffee. Starbuck’s offers a variety of coffees and teas. In addition to drinks Starbuck’s offers pastries, salads, and sandwiches. Currently Starbuck’s has over 19,000 retail stores in over 60 countries. Starbucks is looking to expand is global business presence in the Southern Asia region. In this plan we will explore business opportunities, discuss potential competition, and risks involved in expanding the Starbuck’s franchises to India.

Module 1: IDENTIFYING GLOBAL BUSINESS OPPORTUNITIES
Global Business Opportunities

Starbuck’s seeks the opportunity to expand its franchises to India. India is a demographic with a population of just over 1 billion. India is an emerging market with high economic growth. Investment in India’s food and drink industry has the opportunity for high returns. The population is predominately a tea drinking nation. A small coffee consuming culture already exists in the southern hemisphere of the country. With a virtually untapped coffee market from foreign direct investment, Starbucks has the opportunity to be the first corporate company to develop the market. With a population of over 1 billion people there are opportunities to bring coffee diversity and new coffee experiences shared by the Starbuck’s culture enthusiasts.

Market Potential

India is part of the small list of economies that are growing year after year. With a growth rate of 8% annually and a middle class of over 350 million people India represents a market with increasing purchasing power (Pathak, 2013). India’s market is driven by its large consumer base. India’s main culture base is still influenced by its ancient values but, today the younger generations are opening up to western culture ways. Western ways are becoming more acceptable. The internet has allowed for people all over the world to be exposed to many different cultures. The opportunity exists for Starbucks to penetrate this market. India’s population will continue to growth with more people migrating from the rural areas to the more urban surrounding. Starbucks will focus to allocate coffee houses in all of the major cities like Mumbai.

Absolute and Comparative Advantages

One of India’s agriculture products includes the cultivation of teas and coffee beans. Coffee beans are grown in the Karnataka, Kerala, and Tamilnadu regions. Currently India is the 6th largest producer of coffee beans. Their main coffee bean crop is Arabica beans. With the local production of coffee Starbucks will be able to utilize these resources to their advantage. This will allow Starbucks to develop a local market for the coffee production. Currently the overall production of coffee is 300 tons where domestic consumption of coffee is only at 100 tons. Coffee is not the main staple drink in India. Due to the lack of domestic coffee houses Starbucks holds the absolute advantage in creating and broadening the coffee consumption market.

Business Opportunity Analysis

India represents an opportunity for Starbucks to streamline and enable ease of access for coffee to the Indian population. As being the first international coffee franchise to enter the Indian market Starbucks can establish a more efficient system of conducting coffee transactions. From grower to end user Starbucks will have the comparative advantage of establishing a large end user market for the local coffee business. Collaboration with the domestic economy will enable Starbucks to prevent any hostility towards being a foreign company. Introducing new concepts and ideas will allow Starbucks to build on a communal relationship. Local coffee will be offered with the introduction of different coffee flavors from around the world. Job opportunities will be created for local people and franchise opportunities will exist for local entrepreneurs.

Market Strategy Risks Analysis

The table 1 below represents a standardize risk assessment strategy tool. Based on this market strategy risk assessment entering a new market generally possess a medium risk. A new market can have its risks due to the inability to connect with the end users. With Starbucks already having established franchises in over 60 countries we can rely on our existing strategy plans. Diversification in a new market is considered a high risk. Starbucks strategy in developing a new market will need to develop a relationship with an established domestic company. Starbucks looks to establish a partnership with Tata Global Beverage of India. This partnership will allow for ease of product integration.

Table 1

(http://afsbloggen.blogspot.com/2012/03/ansoff_01.html)

SWOT ANALYSIS

Starbucks core strength is their success at being able to penetrate different markets and bring to the local people the Starbucks experience to life for every customer through every cup (www.starbucks.com). Starbucks has been able to expand to all parts of the world thru commitment of excellence and integration to the local community. Currently Starbucks is the largest coffeehouse franchise in the world.

The fluctuation in coffee bean prices could contribute to loss in profits. Public perception and acceptance in India could lead to a weakness. Negative publicity would need to be avoided at all costs.

The opportunity to expand into the Indian market could lead to an extended growth into Southern Asia. India alone represents over 1 billion potential customers. Starbucks will have the opportunity to cooperate with local coffee growers. This will enhance the ability to expand the supplier coffee chain and introduce Indian coffee with it global businesses.

Threats will always exist with a food and beverage distribution company. The potential for the partnership with TATA Global Beverage could go sour. Delays in construction and poorly managed stores could lead to loss in profits. The ability to expand further into India could be delayed. Local competition could pose a small threat if the locals look to support domestic businesses versus a foreign business.

Action Plan

Starbucks will look to deploy its integration team to help support the startup franchises. Store penetration will be kept to a minimal until the market can be tested. Once Starbucks is able to establish is brand it will look to expand to other major urban communities.

Module 2: ANALYZING INTERNATIONAL COMPETITORS
Potential Competitors

Currently McDonald franchises are a direct competitor in the coffee business worldwide. Currently McDonalds has established restaurants in the major urban areas of India. McDonalds has been a major competitive threat by providing coffee alternatives on their menu selection. With India favoring to drink tea Starbucks collaboration with TATA Global Beverage Company will help introduce the Starbuck brand to the current tea drinking enthusiast. It will be apparent that McDonalds will look to establish their own coffee products to compete with Starbucks.

Local coffee houses will pose as a potential competitor. The Indian Coffee House is an established business that has locations in the southern India region. It offers its customers both tea and coffee. With the southern region known to be a coffee enthusiast region the Indian Coffee House only supplies to a small population. Starbucks has the opportunity to directly compete with this company. With corporate backing Starbucks will be able to expand to all regions of India. This will help increase company exposure and reduce Indian Coffee House footprint the coffee business.

International Strategies

Starbucks will look to utilize is current international strategy of establishing businesses worldwide. A team of experts will be dispatched to support the integration of Starbucks into the Indian market.

The Action Plan

Collaboration with TATA Global Beverage Company will help Starbucks gain quick exposure of its brand. Distribution routes and transportation will already be established. Moving forward this partnership will support market penetration and fall in line with Starbucks expansion strategy.

Module 3: ASSESSING THE ECONOMIC-GEOGRAPHIC ENVIRONMENT
Module 4: ASSESSING THE SOCIAL – CULTURAL ENVIRONMENT
Module 5: ASSESSING THE POLITICAL-LEGAL ENVIRONMENT
Government and Politics
India is a Union of 28 states and 7 union territories. It is a Sovereign Socialist Secular Democratic Republic with a parliamentary system of government. India is governed in terms of the Constitution of India. The Constitution provides a parliamentary form of government which is federal in structure with unitary features. Head Executive of the Union is the President. The President and the House of States and the House of the People make up the council of the Parliament of the Union. The Parliament is the supreme legislative body of India. A council of ministers with the prime minister as the head will aid and advise the President. Most of the executive power is with the Council of Ministers with the Prime Minister as its head. India has two recognized political parties. One is the National party and the other is the State Party. If a political party is recognized in four or more states it’s considered a National Party if it’s less it’s considered a state party.
Formal Trade Barriers
India has a few formal trade barriers. One of the trade barriers is import licensing. Although import licensing has been eliminated from most consumer goods some items remained taxed. Import Licenses are only given to those who permanently reside in India, working in India for foreign firms that hold greater than 30 percent equity or to foreign nations working at embassies and foreign missions. Standards, testing, labeling & certifications must be done on our product due to the Bureau of Indian Standards (BIS). This BIS is to ensure quality of goods seeking access into the market and for protectionist measures. The Tariff rate on Coffee is also extremely high with it being 100%. Many companies also face difficulties when passing through customs due to excessive search and seizures. Extensive documentation is required or lengthy processing delays will ensue.
Promoting Global Business
India is a popular place for joint ventures and is the most preferred form of corporate entities for doing business in India. When joint ventures start in India they have no separate laws in India. Meaning even with up to 100% foreign equity that company will be treated the same as domestic companies. Opening office branches though will attract a higher rate of tax than a subsidiary or a joint venture company. The average approval time is two weeks.
Intellectual Property
India complies with the intellectual property right (IPR) protection laws as demanded by developed countries. India is required to implement WTO-standard IPR protection laws. The IPR protection laws encourage innovation and creative output by ensuring their innovations are protected. This can take the form of patents, trade secrets, copyrights, trademarks, or geographical indications.
Module 6: SELECTING A GLOBAL COMPANY STRUCTURE
Strategic Planning
Starbucks coffee houses are known to be welcoming, and placing a coffee house in a tea drinking nation will not be a challenge as lost as we use our stores to reflect the unique character of the neighborhoods they serve. Starbucks will be placing unique stores with a touch of individuality in each of them. We will be applying Starbucks a theme with a touch of Indian Culture. Starbucks will be familiarizing the tea drinking nation of India with the Starbucks coffee brand.

Entry modes
Starbucks will be using a Joint Venture entry mode which will cause Starbucks to have a benefit from local partners and share the cost and risk. With Starbucks entering a new country markets having a partner will help with any apprehensions and tensions the country might have of the foreign business. The new market will also be more familiar when finding finance, distribution channels, or technology due to the joint venture of a domestic insight.
Organizational structure
The organizational structure that will be followed will be a three regional organizational structure. The Joint Venture in India will be falling under that China and Asia Pacific Market. Every region will have a president who will oversee company related business and will work closely with licensed and join venture business partners in the market.
Strategic Alliance:
Action Plan:
Module 7: FINANCING SOURCES FOR GLOBAL BUSINESS OPERATIONS
Global Information Needs

Start – up costs will include the following items:

· Land and Facility for store front coffee house locations

· Coffee bean plantations

· Transportation/delivery from the coffee bean plants to the packaging factory

· Packaging of the coffee beans and other products

· Establish a coffee drinking population

· Collaboration with India’s well known tea company, Tata Global Beverage Company

· Relocation of core management personnel

· Hiring and training new happy employees

· Promotions and advertising of new business opening

· Overcome coffee bean tariffs

· Licensing Fees

· Administrative Costs

· Insurance

· Unforeseen Costs

Global Information Sources

All contract payments will be negotiated in US dollars, and paid out in US dollars. Local personnel wages and supplier payments will be paid at a fixed negotiated rate in local currency per contracted forward exchange rates. The current exchange rate for the Indian Rupee to US dollars is 1 to 0.017. The issuance of this currency is controlled by the Reserve Bank of India. In 1966, the Rupee was devalued and pegged to the U.S. Dollar because of deficits in trade.

Financing Sources

Starbucks in India will finance its own global expansion through capital reinvestment funding. Starbucks is such a prominent corporation, it has enough of its own funds to finance this expansion to include shareholders. Should additional financing be required, domestic US sources will be tapped from partners such as Oprah Winfrey and her tea line, India’s Tata Global Beverage and America’s Teavana.

Module 8: A GLOBAL MANAGEMENT INFORMATION SYSTEM
Communications in India are very good and easily accessible to everyone. India’s telecommunication network is the second largest in the world based on the total number of telephone users to include both land lines and mobile phones. India also has the third largest internet user base. India’s current population is 1.2 billion people. These are very helpful things for Starbucks to start their expansion in India.

The current Starbucks company logo, products, design, planning, and accounting software will be transferred with the core management staff to each of the individual coffeehouses. There will be a lot of advertising on the internet, since it is a big part of India’s communication. Also, the Starbucks rewards program with the bar codes usage from the smart phones will help increase popularity of coffee since most Indians drink tea. This is because most people have mobile phones there anyways and it is a sure trend. We will have managers and executives from America relocate to India to hire and train new and happy employees. This is to ensure the famous “Starbucks Experience” will remain the same, even in India. The same company policies and procedures will also remain the same. If we do this, the addiction of the Starbucks coffee will infect the entire country of India and soon everyone there will start to drink their coffee instead of tea.

Module 9: HUMAN RESOURCES for GLOBAL BUSINESS ACTIVITIES
Staffing
The methods for recruitment are different for each position, the applicants can apply using many different methods for example, the applicants can use the internet via the Starbucks webpage, or by walking in and filling out a paper application. The hiring process includes the following steps, face-to-face interviews with the applicant, a background check once the applicant gets through the interview, and personality tests for the final process of the hiring of employees. Starbucks needs the managers, assistant managers, and store clerks to operate their business on a day to day basis. The following are requirements for these positions, "Manager position: He or she must have 2 years managing retail stores operations, at least 1 year of retail or restaurant experience, supervise and direct the work of others, is able to speak multiple languages, communicate effectively, have team management skills, work well in fast paced setting, and has excellent customer services skills." (www.Starbucks.com May 29, 2014) Assistant Manager position "Assist the store manager in everyday operations, create superior experiences for partners and current and future customers, follow Starbucks guidelines and policies." (www.Starbuck.com May 29, 2014) Store Clerk position: "he or she must have customer service skills, this person will also be responsible for taking the customer orders, making coffees, is able to operate coffee and tea machines, is able operate cash registers, clean and sanitize utensils and equipment used for making beverages and food preparation" (www.Starbucks.com May 29, 2014)

Training & Development

When employees are hired they will need two weeks of training; training should be completed five weeks prior to the grand opening of the store. All employees will have the two weeks of training which will break up into many different parts. This will include the following: History of Starbucks, lists of coffees, the menus, customer services, retail operations, how to operate a cash register, the end of day reports, opening and closing the store, and hands on training on how to make items on the menu. The training process will involve a combination of lectures and on the job training. The people that are conducting the training will include the following people, the human resources department, the Manager, and the Assistant Manager. There will be guidance and people to go to with any questions that an employee may have. (www.Strabucks.com May 29, 2014)

Performance Appraisal

The method that will be used for this is the self-assessment evaluation. These will be conducting with a manager in the following increments: 90 days after hiring, and 1 year after the hire date and every year thereafter. The self-evaluations allows the employee to rate themselves on their performance, managers will provide feedback during this time as well. Employees will be able to point out their strengths and weaknesses during this evaluation as well as their career goals. (www.Starbucks.com May 29, 2010)

Compensation

The company will make sure that the wages paid to the employees will be competitive with the pay compared to the other businesses of the same type. The company will provide benefits such as health insurance, offer bonuses, and vacation pay. The employees will be eligible for raises based on their performance. (www.Stabucks.com May 29, 2014)

Action Plan

Starbuck's will stay competitive within the market pay scales, and offer the employees many different benefits to its employees and become one of the best employers when it is compared to other employers in the same field. The company plan will be to expand Starbucks into outlet stores, into airports, malls, train stations, and grocery stores. As the business grows the Indian economy will grow with it and this will bring more jobs to the people of India.

Module 10: MANAGING INTERNATIONAL FINANCIAL AND BUSINESS RISKS
Economical and Financial Risks

Most of the supplies for Starbuck's such as coffee beans, sugar, and milk will be affected because they are imported goods, thus incurring a higher cost due to a weaker dollar. This will raise the following question as to will the company pass the extra costs on to the customer which will make the coffee even more expensive or will the company just find another way around this.

Social and Cultural Risks

In America a poll recently held that people are consuming more of the specialty coffees which Starbucks specializes in. (www.Starbucks.com) this influences Starbucks because it will provide the opportunity to exploit thus gain a higher market share in America. However in countries like India or China tea is still the main staple and widely preferred over coffee so Starbucks will have to change the strategy in these countries. This won't be too difficult when you take into account that Americanization is growing in these countries. Health conciseness is at an all-time high with governments around the world, especially in the western countries where obesity is at an all-time high, Starbuck's is altering their menu to reflect this changing marketplace. Starbuck's has introduced new lines of healthy alternatives which will be sold with their coffee lines. This is and of itself is a huge opportunity for Starbuck's capitalize upon.

Political and Legal Risks

India's red tape is the worst in all of Asia, (http://www.doingbusiness.org/data/exploreeconomies/india/starting-a-business) this website describes in detail what kind of information you need to start a business in India. Civil Service has frustrated Indians and foreign business alike. Starbuck's will need to be prepared to face a lengthy process when applying for a business license. However Starbuck's is a member of the UN Global Compact in which members have to abide by 10 universal principles, including working against corruption in all of its forms, corruption, and bribery.

Action Plan

There is no entry mode that is perfect and they all have their own downfalls, but perhaps the most likely would be the joint venture this seems like the most suitable for Starbuck's. A final precaution for Starbuck's would be that all controversial details during negotiation in the contract with its partner, to avoid any petty or unnecessary conflicts in the future. In conclusion having assessed the evidence concerning Starbucks plans to internationalize, the external and internal environment and its impact on the company, it is fair to conclude that Starbuck's is in a strong position to expand especially after successfully scaling through the effects of the financial crisis while learning to be lean and efficient in the process. As such I feel that India should be the logical choice for the expansion in which to take place. India provides a very high potential for better than average profits, increased market share, and strategic placement.

Module 11: PRODUCT AND TARGET MARKET PLANNING
Product Concept
The product concept is to primarily provide specialized café beverages such as tea and coffee to the Indian market where tea drinking is more popular in culture in the country India.
Product Life Cycle
The product life cycle is of high importance especially because they are new to the country and provide new product. While introducing Starbucks to the market, it will be very important to promote as much as possible.
Branding & Packaging
Branding and packaging are very important to ensure the best quality of product; coffee beans are received as well as packaging to help maintain product quality.
Target Market
The primary market would be tea drinkers in a dominating tea drinking country. However, Starbucks will also offer free Wi-Fi and a variety of menu items which are customary for India to gain attention of the locals providing Western tastes, and menu items like Elaichi Mawa croissants – that are made with cardamom and milk solids as well as tandoori paneer rolls.
Action Plan
Module 12 - DESIGNING A GLOBAL DISTRIBUTION STRATEGY
Infrastructure Analysis
Distribution will not be difficult since the opening of a new plant as of February 2013. The plant was opened to handle roasting and packaging their coffee. This plant is located in Kushalnagar in Karnataka, India. The plant will secure, roast and package green coffee beans that will be distributed to Starbucks' stores all across India.

Distribution Barriers
Distribution barriers include sociocultural differences. Business may not be well acknowledged in India as it is in other countries.
International Intermediaries
International intermediaries such as the many competitors locally who still contain the popularity of the consumers will be something to consider when entering the country with a new market.
Distribution Channel
Distribution channels will not be disrupted as Starbucks has been successful and are accountable for over 70,000 deliveries going out per week to other Starbucks retail stores worldwide. Product has continuous movement from merchants to consumers.

Action Plan
Module 13: PLANNING A GLOBAL PROMOTION STRATEGY
Promotional Goals

Based on Starbuck’s global name brand recognition, our presence in this region would be more substantial to our growth and expansion based on different marketing and advertising tools and techniques. Additionally, our demographic analysis will be based on age, income and education of its citizens. Thru various social media and internet marketing plans, like Facebook, e-mails, in-house promotions, mailers, and etc., our initial presence will certainly grow and be able to provide its own mark within the Indian community.

Business Environment

Although there are various coffee house franchises in India, this may present a competitive market for Starbuck. However, with Starbuck’s name recognition, it may prove to be an advantage and the fact that some of the coffee cafes already set a foothold in India, the average Indian consumer will be happy to “upgrade” to a Starbucks environment. With India’s growing economy such as the technology sector, it increases job growth resulting in income surplus for Indians to choose the number one coffee café, Starbucks.

Media Plan

Based on the presence of other coffee house cafes, there will be plans to promote Starbucks thru various inexpensive media exposure such as social network medias like Facebook, Instagram, and Twitter, which is a good way to leverage brand presence, especially in the young generation age groups.

can provide the lower to middle income to its elitists class plenty of advantages and needs in Starbuck’s coffee houses featuring

Promotional Strategy

The proposed strategy to promote and grow Starbucks is to open more coffee houses in the major metro cities and middle to high income tier towns offering premium coffee experience to the primary targeted group of students and working white collar type professionals. This will ensure success of the business venture and will serve as test locations. If the new stores are highly profitable, Starbucks can expand more store locations for promotional growth as well as company profits.

Module 14: SELECTING AN INTERNATIONAL PRICING STRATEGY
Module 15: DETERMINING ORGANIZATIONAL FINANCIAL RESULTS
Module 16: MEASURING INTERNATIONAL BUSINESS SUCCESS
REFERENCES
A

http://afsbloggen.blogspot.com/2012/03/ansoff_01.html

http://articles.economictimes.indiatimes.com/2013-09-13/news/42041703_1_tata-starbucks-unique-starbucks-experience-starbucks-plans

http://www.asianinfo.org/asianinfo/india/politics.htm

B

http://blog.euromonitor.com/2011/11/starbucks-to-enter-india-product-line-up-provides-competitive-advantage-.html
C

https://www.cia.gov/library/publications/the-world-factbook/geos/in.html

D

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E

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F

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http://fpc.state.gov/documents/organization/112470.pdfAction Plan
G

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H

http://www.huffingtonpost.com/2012/10/19/starbucks-india-opens-first-store_n_1985824.html
I

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M

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S

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R

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