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    Business Plan

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    INTRODUCTION :

    In 1971, the Starbucks coffee company opened its first location

    inSeattle's Pike

    Place Market: Inspired by the espresso bars in Milan,Italy, Howard Schultz wanted to introduce the coffee bar culture toAmerica. Now Starbucks has over 7, 500 locations inover 30 different countries.

    Starbucks Corporation is an internationalcoffee and

    coffeehouse chain based in Seattle, Washington.Starbucks is thelargestcoffeehouse company in the world, with over 17,817 stores in49 countries, including over 11,000 in the United States, almost 800in the UK, and nearly 1000 in Canada.

    Starbucks sells drip brewed coffee, espresso-based hot drinks,other hot and cold drinks, coffee beans, salads, hot and coldsandwiches and panini, pastries, snacks, and items such as mugsand tumblers.

    Through the Starbucks Entertainment division andHearMusic brand, the company also markets books, music, and film.Many of the company's products are seasonal or specific to thelocality of the store. Starbucks-brandice cream and coffee are alsooffered at grocery stores.

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    From Starbucks' founding in later forms in Seattle as a localcoffee bean roaster and retailer, the company has expanded rapidly.

    In the 1990s, Starbucks was opening a new store every workday, a

    pace that continued into the 2000s. The first store outside the UnitedStates or Canada opened in the mid-'90s, and overseas stores nowconstitute almost one third of Starbucks' stores. The company

    planned to open a net of 900 new stores outside of the United Statesin 2009, but has announced 900 store closures in the United Statessince 2008.

    Starbucks has been a target of protests on issues such asfair-trade policies, labor relations, environmental impact, politicalviews, and anti-competitive practices.

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    In 2009, Starbucks released an annualCorporate socialresponsibility report.

    Grounds for your GardenEnvironmental impact

    In 1999, Starbucks started "Grounds for your Garden" to maketheir business more environmentally-friendly. This gives leftovercoffee grounds to anyone requesting it for composting. Although notall stores and regions participate, customers can request and lobbytheir local store to begin the practice.

    In 2004, Starbucks began reducing the size of their papernapkins and store garbage bags, and lightening their solid waste

    production by 816.5 metric tons (1.8 million pounds). In 2008,Starbucks was ranked #15 on the U.S. Environmental ProtectionAgency's list of Top 25 Green Power Partners for purchases ofrenewable energy.

    In October 2008, The Sun newspaper reported that Starbuckswas wasting 23.4 million litres of water a day by leaving a tapconstantly running for rinsing utensils in a 'dipper well'in each ofits stores, but this is often required by governmentalpublic healthcode.

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    In June 2009, in response to concerns over its excessive waterconsumption, Starbucks re-evaluated its use of the dipper wellsystem. In September 2009, company-operated Starbucks stores in

    Canada & the United States successfully implemented a new watersaving solution that meets government health standards. Differenttypes of milk are given a dedicated spoon that remains in the pitcherand the dipper wells were replaced with push button metered

    faucets for rinsing. This will reportedly save up to 150 gallons ofwater per day in every store.

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    A bin overflowing with Starbucks cupsRecycling

    The U.S. Food and Drug Administration granted the first-everapproval to use recycled content in food packagingfor Starbuckscoffee cups. In 2005 Starbucks received the National RecyclingCoalition Recycling Works Award.

    Starbucks bought 2.5 billion cups for stores in North Americain 2007. The 10% recycled paper cups used by Starbucks are not

    recyclable, because the plastic coating that prevents the cup fromleaking also prevents it from being recycled. The plastic cups used

    for cold drinks are also non-recyclable in most regions. Starbuckscups were originally made using plastic #1 (polyethyleneterephthalate, PETE) but were changed to plastic #5 (polypropylene,

    PP). The former type of plastic can be recycled in most regions of theU.S. whereas the latter cannot. Starbucks is considering usingbiodegradable material instead of plastic to line the cups, and istesting composting of the existing cups. The exception to this is storesin Winnipeg, Manitoba, Canada, where paper cups are recycled to alocal company called "Wriggler's Wranch", where they arecomposted. The majority of Starbucks stores do not have recyclingbins; only 1/3 of company-owned stores recycled any materials in2007,[95]however improvements have since been made andrecycling bins are popping up in more stores (the only thing

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    hindering Starbucks' ability to have bins in every store is the lack offacilities for storage and collection of recycling in certainareas.)Allen Hershkowitz of the Natural Resources Defense Council

    says that Starbucks claimed they were using only 10% recycledmaterial partly because the recycled material costs more.Starbucks gives customers a 10-cent discount when they bring theirown reusable cup, and it now uses corrugated cup sleeves made

    from 60 percent post-consumer recycled fiber.

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    Fair trade

    Starbucks coffee beans

    In 2000, the company introduced a line offair tradeproducts.

    Of the approximately 136,000 metric tons (300 million pounds) ofcoffee Starbucks purchased in 2006, only about 6 percent wascertified as fair trade.

    According to Starbucks, they purchased 2,180 metric tons (4.8million pounds) of Certified Fair Trade coffee in fiscal year 2004and 5,220 metric tons (11.5 million pounds) in 2005. They havebecome the largest buyer of Certified Fair Trade coffee in North

    America (10% of the global market). Transfair USA, the onlythird-party certifier of Fair Trade Certified coffee in the United

    States, has noted the impact Starbucks has made in the area of FairTrade and coffee farmer's lives:

    Since launching {its} FTC coffee line in 2000, Starbucks hasundeniably made a significant contribution to family farmersthrough their rapidly growing FTC coffee volume. By offering FTCcoffee in thousands of stores, Starbucks has also given the FTC labelgreater visibility, helping to raise consumer awareness in the

    process.

    All espresso roast sold in the UK and Ireland is 100%Fairtrade. This means that the coffee in all cappuccinos and lattesare brewed with 100% Fairtrade Espresso.

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    Groups such as Global Exchange are calling for Starbucks tofurther increase its sales of fair trade coffees.

    Beyond Fair Trade Certification, Starbucks argues that it paysabove market prices for all of its coffee. According to the company,in 2004 it paid on average $1.42 per pound ($2.64 kg) forhigh-quality coffee beans. This is in comparison to commodity priceswhich were as low as $0.50$0.60 in 200304.

    After a long-running dispute between Starbucks and Ethiopia,Starbucks agreed to support and promote Ethiopian coffees. Anarticle in BBC NEWS, states that Ethiopian ownership of popularcoffee designations such as Harrar and Sidamo is acknowledged

    even if they are not registered. The main reason Ethiopia fought sohard for this acknowledgement was to allow its poverty-stricken

    farmers a chance to make more money. Unfortunately, this has notbeen the case. In 2006 Starbucks says it paid $1.42 per pound for itscoffee. At, the coffee Starbucks bought for $1.42 per pound had aselling price of $10.99 per pound. As of August 2010, Starbucks sellsonly one Ethiopian coffee on its website and it is proclaimed by thewebsite to be new.

    Staff training

    Black aprons displaying the title "Coffee Master" are worn byemployees who have completed the Coffee Master course, whicheducates employees in coffeetasting, growing regions, roasting, and

    purchasing.

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    Whats the next step?

    Starbucks India! The probability of Starbucks successfully

    introducing its coffee bar culture in India is relatively high for manyreasons.

    There is a new consumer culture emerging in India. Indiasyoung are becoming world-class consumers, and multinationals aretaking note, reads the sub header for an article titled Hey, BigSpenders! in the August 2003 issue of TIME Magazine. Thischange can be attributed to many factors. For one, the Indianeconomy went through a massive liberalization under the new

    minority government of P.V. Narasimha Rao in 1991. Thisrevolution opened the economy to foreign investment and trade: itdismantled important controls, lowered customs duties, anddevalued the currency: it virtually abolished licensing controls on

    private investment, dropped tax rates, and broke publicsector monopolies. This was good news for both foreign and localentrepreneurs (Das 3).

    Multinational companies such as Citibank, McDonaldsandMotorola have been taking advantage of these new policiesand finding a new home in India. These companies owe their successto the rising young elite due to the mass outsourcing by foreigncompanies especially from the US. Jyoti Thottam in her Time5

    Magazine entitled Where The Good Jobs are Going, writes

    U.S. companies are expected to send 3.3 million jobs overseas in thenext 12 years, primarily to India according to a study by Forrester

    Research. This trend of offshore outsourcing is expected to

    accelerate in the upcoming years. Thottam continues in her article:

    Those relatively low-skilled jobs were the first to go,starting in 1997. But more and more of the jobs that are movingabroad today are highly skilled and highly paideducated Indian

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    workers are quickly adjusting to their new status as the worldsmost sought-after employees. They have never been more confidentand optimisticFive years ago, computer-science graduates had one

    career option in India: routine, mind-numbing computerprogramming. Anything more rewarding required emigrating.Until three years ago, the first preference was to go overseas.

    Nowadays [these educated Indians] are interested only in businesstrips to the U.S. People are pretty comfortable with the jobs and pay

    [in India]. (Jyoti Thottam, Time Magazine)

    As job opportunities increase in India, money stays in thepalms of the Indian consumers enabling them to reinvest in the

    Indian economy. Time Magazine journalist, Michael Schumann,asserts that with the changing Indian economy, Attitudes towardsmoney are also changing. The mantra for the average Indian

    family, as in most of Asia, has always been save, save, save, butyoung Indians today, inspired by job opportunities, haveswitched to spend, spend, spend. Pramod Saxena, president for

    Motorola in India, backs him up stating, The attitude of the younggeneration is to enjoy life and spend money. Were looking at Indiaas a major growth market.

    In addition, Indias pop culture shows a heavy desire tofollow western trend. As put simply by Indian entrepreneur RaviDeol, Indian consumers want to do what the rest of the world isdoing. The young Indians buyers want everything from

    McDonalds, to Levis Jeans, and Brittney Spears CDs, but whatsmore is that they are willing to pay for it. Indian consumers willdefinitely welcome the internationally popular StarbucksCoffee Company to its country, as thirty-nine other countries have.

    The two new proposed locations for Starbucks Coffee shops arestrategically picked to ensure their success. Both Mumbai and New

    Dehli are home to many call centers where these younger spenderswork, and many colleges and Universities are also located here. Thiswill allow Starbucks to target the younger consumer generation

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    with the advertisement campaign. These two cities are also majorhot spots for tourists, who recognize a multinational brand such as

    Starbucks. The new Starbucks menu must cater to the India taste,

    mixing traditional menu items with those that a customized for theIndian tastes.

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    PROPOSED PRODUCT /SERVICE :The Producttarbucks Coffee shops sells a variety of coffeeand tea beverages along with different types of pastries, confections,

    and baked goods, coffee-related accessories and equipment. Thecoffee shops provide customers with a pleasant place to come andrelax, study, work, or have business meetings. Both locations will

    provided wireless Internet access in the stores so that customers canbring their laptop and continue their work if they wish. The

    Starbucks Coffee Company must customize their menu to fit thetastes of the Indians. A new menu will be formulated after severalmonths of research and development. There are some commontastes preferences of the Indians known already. For example,

    Indians tend to take more cream in their coffee. Also, the skim milkoption will not be offered in India because dieting is not a commonlyaccepted practice in the country. Indians will feel that they are beingcheated out of their money if skim milk is put in their beverages.

    Indians also like spices in their tea and coffee, especiallyginger and black clove. One of Indias favorite fruit flavors inmango, and in fact the mango is Indias national fruit. The coffeebeans and tea will be bought from local Indian farmers in order to

    support the local agricultural economy, save money intransportation and tariffs, and gain tax benefits. Throughinspections of the crops will ensure the high quality and standsbehind the Starbucks brand name. These goods will then betransported to the Starbucks 14 roasting plant located near the New

    Delhi location and then transported to Mumbai making use of Indiavast and efficient railway system. Equipment and other necessarysupplies will be shipped from the United States keeping in mindthere is a tariff on all these items. The inventory policy is to keep the

    stores stocked but not overstocked to ensure freshness of products.Better gauges of the numerical figures in the inventory policies canbe made after observing consumer trends. To begin with policies canbe formulated assuming an average of five hundred consumers perday.

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    TARGET MARKET :Age break-down

    Primary Target Market:

    The Primary target market for Starbucks Coffee Co. in India isthe young both male and female from the ages of 16-38. This marketis well educated and comes from middle class to upper middle class

    population. Since our locations are close the newly opened callcenters where well educated and highly paid consumers work,special marketing strategies will be used to gain their brand loyalty

    to Starbucks. The geographics of thetarget market are mainly consumers who live or work in the vicinityof the two proposed locations for the Starbucks Coffee shops.

    The Secondary Target Market:

    The secondary target markets are the tourists in the areas.Tourists will recognize Starbucks, as it is a multinationalcompany, as most tourists in India come from the countries ofU.S., England, Germany, and Japan. This market will also fall inthe middle to upper middle class population and will find the

    Starbucks India prices relatively cheap.

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    PLANNED FINANCING :COSTS AND EXPENSES

    Costs are for one year of operation

    Natural Resources- coffee beans,tea, spices, etc. (some imported,so considering tariffs)Rs. 22,670, 000

    Land- store rental, utilities costsRs. 68,01, 000

    Labor-Starbucks India employeesex. Managers, marketingspecialists, human resourcesgeneralists, etc. (approximately 50 employees)Rs. 90,68, 000

    Marketing- billboard and printadvertising. Costs listed in previoussections.

    Rs. 3,75,000

    Licensing and Legal Work-Rs. 4,55,000

    Miscellaneous Costs- repair , emergency costsRs. 2,30,000

    Total: Rs. 4,40,00, 000

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    REVENUE:

    The predicted amount of customers per day for theStarbucks Coffee Co is 3,000. If Rs 55 is amount of money onaverage spent by each customer then the projected revenue per dayis Rs 1,28,000. If Starbucks closes for only 3 days in the year for

    Diwali (Indian holiday) and Christmas, then the per annum revenuewould be Rs. 60,00,00, 000.

    PROFIT :Subtracting the predicted costs from the predicted

    revenue, we get a per annum untaxed profit of Rs. 1,98,00, 000.Taxes are 33% for foreign businesses in India. This would give us thenew amount of profit to beRs. 1,31,00, 000.

    Keep in mind that the costs for the following years willreduce and revenues will increase, giving higher amounts of profit.

    After the end of the first fiscal year, the company will determine

    whether or not it should expand in the country of India. If the firstyear proves to be a success, Starbucks Coffee can open over 200location in the subcontinent of India, taking advantage of theirinternational partnerships with Sheraton (Starwood) Inn, and

    Hyatt Inn. Starbucks will also try to win accounts with local airlinescompanies, so that they may serve Starbucks drink on flight. Inthree years profits are expected to exceed one million dollars

    per annum.

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    SELLING AND DISTRIBUTION :Transportation of goods:

    The raw goods (coffee beans and tea) will then be transportedto the Starbucks roasting plant located near the New Delhi locationand then transported to Mumbai making use of Indias vast andefficient railway system, and supply trucks. Equipment and othernecessary supplies will be shipped from the United States keeping inmind there is a tariff on all these items.

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    PROPOSED STRATEGIES :1. Pricing

    Competitive pricing is necessary for the success ofthe venture, but we must take our costs into consideration. Becauseof the costs involved in startup, transportation and imported goods,the price will be set at about Rs. 45 per drink using the concept of

    zone pricing to make the coffee affordable to the target audience.Exchanges will be done in rupees so that would be about 55 rupees.The prices for all good will be relative to the others. With the use ofthis pricing policy, Starbucks prices will be 20% lower than those ofthe Barista Company. This use of penetration pricing will ease thecompanys slide into the market place. Though it is possible to get acup of coffee for merely 5 rupees in small stalls on the street, thesuccess of the Barista Coffee Company show that the customers arewilling to pay for better quality, service, and environment.

    2. Promotion

    Types of available media for marketing purposes arein India are very similar to those of the United States, which includeeverything from newspaper advertising to television ads. Since thisis a test venture and there are only two locations of Starbucks beingopened, the promotion for the store has to be very focused on ourtarget markets. Billboard advertising on the roads leading to thestore locations is a good way to increase awareness of the locations.

    Direct mail advertising with promotional coupons will be used toreach the homes of the target market. Sales brochures offeringdelivery services will be sent to the local call centers and big

    companies.

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    COSTS :

    Billboards:1500 rupees (USD 27.27) per 10ft by 15 ft billboard ad.

    Direct Mail:3000 rupees (USD 55.55) per 2500 prints plus stamps costs to maildirectly to the homes.

    Sales Brochures:3500 rupees (USD 63.63) per 2500 prints.

    Starbucks, in partnership with Jump StartCo., is committed to giving back to the communities of its locations.Starbucks India will sponsor scholarship contests for the localstudents and make an annual large donation of 275, 000 (USD

    5000) to the local public school systems. This environmentalcampaigning will give Starbucks positive

    publicity.

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    SWOT ANALYSISStrengths

    Starbucks is the market leader in the coffee Market. It has 16,635 stores in different countries including 11068 in United

    States.

    Customers are satisfied with the quality and taste of Coffee.

    High brand equity.

    Operating in 40 countries worldwide. Huge number of employees approx 13 thousand. Financial conditions of the company are good Company is expanding with speedy pace; it has opened 900 in US

    during the year 2009.

    Starbucks coffee shops locations are at convenient places like library,shopping malls and etc.

    Customer service is excellent. Starbucks making their business more environmental friendly.

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    Weakness

    People are not aware about starbucks. Internationalism creates suspicion. Price variation in different countries. Taste may not gel with local taste.

    Opportunity

    Entry into Asian market like Pakistan, India and Bangladesh. Product diversification Market penetration in International countries. Co-branding with other food manufactures.

    Whole bean sales in supermarkets.

    Threats

    Entry barrier in the international market Numbers of competitors are increasing. Variation in coffee prices in developing countries Starbucks facing huge resistance in international countries over

    cultural and political issues.

    People started to become more health conscious

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    Competitors are trying to minimize the differentiation by imitating. Labor Unions issues in US and international countries. Security risk at crowded places. Current recession may impact the sales.

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    FEASIBILITY REPORT

    Prestigious

    Getting into a high end shop like starbucks increases your reputation

    per se because of its brand image. Even in a developed country like USA

    starbucks is a matter of snob appeal. The ambience of starbucks make you

    feel special and noticed because its aura is so charismatic that it is implied

    that you will have a strong effect on a person watching you.

    Economy

    Starbucks has got a policy of getting its raw material from the

    country in which it is operating.therefore starbucks entering India would

    apparently increase its foreign exchange as the purchase will be mostly

    done in US dollars.Therefore it will be beneficial for people as it will

    increase their standard of living.

    International Level Atmosphere.

    Starbucks will actually expose the Indian crowd to the west rather

    than just being loud,which is usually misunderstood as being westernized.

    The crowd gets to know euphonic western music which is really

    appreciable.

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    Recycling..

    Starbucks is considering using biodegradable material insteadof plastic to line the cups, and is testing composting of the existingcups. Starbucks gives customers a 10-cent discount when they bringtheir own reusable cup, and it now uses corrugated cup sleevesmade from 60 percent post-consumer recycled fibre.

    Convenient LocationStarbucks will be coming in iris mall which will be one of the biggest

    mall in the city in the coming year and next year seeing the pace of peoplemigrating fron the town side to piplod area starbucks will become a point

    of attention.

    Cost.Although its an international brand its costs are comparatively

    cheap and affordable. Hence, it gives value of money.

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    Presented By:

    Meeta LalwaniAmit KhemkaAbhishek Toshniwal Sapna Premjani Hiral Gupta

    Students Of

    Sir K.P. College Of Commerce

    S.Y.B.Com (HONOURS)