Country Risk and Strategic Planning Analysis Paper - Assignment Example

Country Risk and Strategic Planning Analysis Starbucks Caf in India: Introduction: According to Starbucks annual CSR of 2006, Starbucks has planned to enter the Indian market through a joint venture with an Indian partner RPG Enterprises so as to expand its business. Although many foreign companies see huge potential in Indian market due to huge middle class population, entering into it may not be that lucrative at time due to strict governmental economic policies. Therefore, certain risks are involved.

Country Risk Analysis:1. Market Risks (4 P's):Product: Since a Coffee Caf shares some of the characteristics of a bar, and some of the characteristics of a restaurant, Starbucks will have to differentiate its product from its other competitors. Its product must have different flavors with different offerings. Nice blend of coffee serving in presence of amusing environment should be accompanied by the highest serving quality. Price: Since Indian coffee market has a good history, its market is supposed to have few fearsome competitors for Starbucks.

Pricing becomes very important in this respect. General attitude of locals towards pricing is very strict; thus lower the price, greater the market share.Place: Starbucks' most vulnerable market comprises of middle class Indians who live in high streets of posh and developing areas of large cities. Therefore, it is of immense value to target the market of Mumbai, New Delhi, Pune, Chennai, Bangalore, and Jaipur etc specially those places which are near colleges, bus stops, cinema theaters, railway stations etc.

Promotion: Music through FM radio stations is very popular among locals. Therefore, promotion in large cities should be accomplished through Radio advertising.2. Distribution/supply chain risks: Distribution and Supply Chain Risks may be termed as the major risk factors for Starbucks in India. Effective resource planning becomes very crucial since distribution through independent sources may become highly cost effective. Abundance of highly educated manpower in this regard can be the key for solution. 3. Social/cultural risks: India is a mixture of various different societies comprising of thousands of ethnic, cultural, religious and social groups.

Thus, social and cultural risks are very high due to immense differences in these groups. However, general attitude of educated young people is very encouraging for such type of businesses in India which can be termed as the need of concurrent time.4. Cyber/technology Known for its quality I.T facilities, Indian market can be termed as a bonus for Starbucks, since coffee cafs of contemporary time need to provide quality cyber space access to its customers. However, fluctuating prices of broadband bandwidth for High speed internet may be classified as a distinct risk for Starbucks India.5. Physical environment India usually can be divided into three regions for its physical environment, and these are hot and dry regions, cool and average wet regions, and extremely cold areas.

Majority of Indian large cities lie in cool and average wet regions. Thus, coffee business can be a real success in these areas. However, doubts over availability of electricity round the clock can hamper air conditioning factor which is a must for a coffee caf. Conclusion: Though India is conventionally a tea drinking nation, there is a lot of coffee spending and other malt-based drinks. Coffee culture in India has been getting bigger. Customers at existing retail coffee shops are students and professionals between 18 and 35 years old.

Big coffee retail players in India like Barista (with Tata and an Italian partner), Costa Coffee (based in UK), Cafe Coffee Day (funded by Sequoia) and Barnie's (based in US) have aggressive expansion plans and are adding new drinks apart from coffee. (2006, Vrushali Paunikar) Although Starbucks does not have a first mover advantage, it is entering an already tried, tested and proven market along with a local player with strong retail expertise giving Starbucks an advantage along with its strong brand.

This move will provide strong long-term growth opportunities for Starbucks.References:(2006)Vrushali Paunikar. Starbucks India - International Business Plan (pg. 6-17) Retrieved from http://www.cbe.csueastbay.edu/sbesc/1bp04.pdf on March 1, 2007