Starbucks Coffee Company - Essay Example

?Starbucks Coffee Company THESIS MENT The study aims to reveal different pertinent facts associated with Starbucks Coffee Company in accordance with its expansion in the Indian retail market. A detailed study of the team of Board of Directors and the top management has been evaluated. The complete scenario related to their expansion process and the challenges faced during the course of internationalization have been determined. Conclusively, a few of the useful strategies have been recommended to the company which it could have implemented in their expansion process. II. STRATEGIC MANAGERS Board of Directors. Starbucks Coffee Company was actually established by three of the partners in the year 1971 but at present there are in total ten members in the Starbucks’ Board of Directors (Starbucks Corporation, “Starbucks Corporation Board of Directors”). All the members of the Board of Directors possess a distinct background. The present Chief Executive Officer (CEO) Howard Schultz was the Chairman, Chief Executive Officer and President of Il Giornale Coffee Company. William Bradley was the managing director of an investment banking firm. The other director Mellody Hobson was also the president of an investment management firm. Apart from these three directors, the other seven directors also acquired respectable positions in the various management firms or other industries. Most of the board of directors is serving the coffee company since 1990 till the present day (Morningstar, “Starbucks Corporation”). The members of the board of directors have been ascertained to be reputed individuals in the country. In the strategic management process, Howard Schultz occupies the key responsibility as a leader to direct different activities. It has been determined that the different members in board of directors were selected based on their merit and immense experience in the corporate world (Wheelen and Hunger 471-475). Top Management. The board of directors was mainly hired from the other firms except the three founders of the company who were also acting as the directors. The three of the founders also the directors were the top management in the company and possessed immense knowledge and experience in the related field as they have long been serving the coffee company (Starbucks Corporation, “Starbucks Corporation Board of Directors”). The Chief Executive Officer of Starbucks, Howard Schultz is an American, born in the year 1953. Initially, he was serving as a sales trainee at Xerox. After three years, he had joined a Swedish company which sold coffee maker to the retailers in the market. In the meantime, he had visited Starbucks for selling the machine. After the visit, he was attracted to the company and wished to be a part of their long-term ventures. Thus, in 1982, he joined Starbucks as a director of retail operations and marketing (Wheelen and Hunger 471-475). VII. IMPLEMENTATION Starbucks Coffee Company had opted for international expansion and thus in 1994 Starbucks International was formed. Initially, it had expanded its business in the Asian countries of the world such as Japan and China. The aim of their expansion was to create a desire to prefer the western brands among the consumers, to make certain strategies to compete effectively with their competitors and to gain the position of the highest coffee seller. In the past few years, it has also been viewed that the company is trying to expand its business in India. Initially, when the concerned officials had visited India they were unable to find the appropriate partner for entering the Indian market. During this period of time, India was going through a number of economic changes such as the reduction of the tariffs, along with dealing with the government policies as well as the liberalization of the foreign investment. These changes had also discouraged the officials of the Starbucks and the other facet that was noticed that the consumption of coffee was stable up to 50,000 tons since 1996. There were other renowned coffee sellers existing in the Indian market that had grown their business with huge profit and captured the attention of the customers (Wheelen and Hunger 471-475). The period when Starbucks was planning to set up its operations in India, the retail market of the country was unorganized and mostly led by the small business organizations. The market was occupied by only 3% by the organized retail organizations. A few of the retail coffee sellers namely Barista and Cafe Coffee Day had already set up their business successfully in the retail Indian market (Wharton University of Pennsylvania, “Capturing India’s Percolating Coffee Market”). They were the renowned chain of restaurants which had acquired a significant position among the consumers and in the Indian business context. In such scenario, Starbucks was quite disappointed regarding the expansion of their business in India and were struggling hard to find a right way out of the problem (Wheelen and Hunger 471-475). Starbucks had conducted a thorough study of the Indian market and analyzed the major areas where the consumption of coffee was the highest. It was found that the consumption of coffee was popular in the urban areas (Economic & Market Intelligence Unit, “Coffee Consumption of India- 2008”). The people of the southern part of India were the largest coffee consumer than that of the northern part. The existing coffee seller in India was offering their consumers with variety of items such as the cold coffee, Italian coffee, Indian coffee, Espresso and the other popular brands. Due to the various problems arising in the set up of business in India, it decided to postpone their plan at the last moment. The company had rather expanded their business to China and did not move to India. The reason behind postponing their plan emanated from a few of the problems observed in Japan. The problems that had occurred in the Japanese market include high costs of labor and huge amount of rent for the land. The brand image of the company was largely affected as they constructed their restaurants very close to each other. These problems were solved to a great extent during the year 2006 and also constructed more restaurants all over the country. Nevertheless, the effect of all these factors influenced the expansion process in India and the concerned authorities had to change their plan. Finally in the year 2004, Starbucks changed their plan of setting up in India and the reason for this as quoted by them was that they were unable to find the appropriate partners to enter the new market (Wheelen and Hunger 471-475). Starbucks could have employed a team to make the detailed study of the Indian retail market and to set up its business successfully. The team of officials could have stayed there and analyzed the potential market for running their business. The company could have taken the effective measures to find out their appropriate partners for entering the market and also provided their consumers with different brands of coffee along with their premium brand of fresh coffee beans. It can be recommended that Starbucks must engage different teams of experts possessing global business knowledge and experience in the related field of business expansion so that they can effectively grow the business in the global context. One of the effective ways to expand their business in India would have been that they could have entered the market with the assistance of any huge coffee seller existing in the market and introduced their premium brands of coffee to the local consumers there. The company could have improved its research and development department in order to organize their management activities in a better and productive manner. The proper organizing of their management would enhance the productivity of their business and also the employees. Starbucks must also emphasize the diverse food habits of the Indian and develop their food menu accordingly in order to earn a large volume of profits and create a unique brand name in the Indian food market context. Thus, from the study of the problems faced by Starbucks during their expansion in India, it has been observed that the company had implemented the non-effective strategies in their process which led them to move out of the plan of expansion. Works Cited “Coffee Consumption of India – 2008.” Economic & Market Intelligence Unit, 2008. Web. 15 Nov. 2013. “Starbucks Corporation.” Morningstar. 2013. Web. 15 Nov. 2013. “Starbucks Corporation Board of Directors”. Starbucks Corporation. 2013. Web. 15 Nov. 2013. Wheelen, Thomas L, and Hunger, J. David. Strategic Management and Business Policy. New Jersey: Pearson Education, 2012. Print. “Capturing India’s Percolating Coffee Market.” Wharton University of Pennsylvania. 2011. Web. 15 Nov. 2013. Read More