Analysis of Starbucks Operations Strategy: US and India Markets

This report provides a comprehensive analysis of Starbucks' operations strategy, comparing its performance in the US and Indian markets. It begins with a brief introduction to Starbucks, its founding, and global presence. The report then delves into a strategic and marketing analysis, examining Starbucks' strategic positioning and business model. A significant portion is dedicated to analyzing the major markets of the US and India, including customer needs, competitor analysis (Café Coffee Day, Costa Coffee, Dunkin’ Donuts, McDonald’s), company policies, and the impact of technology. The report also explores order winners, operational areas, and the impact of increasing market share. Finally, the report offers recommendations for Starbucks' growth, particularly within the Indian market. The analysis includes financial data, market trends, and the influence of factors like consumer preferences and technological advancements on Starbucks' business operations. The report's findings highlight the key differences and similarities in Starbucks' approach to these two important markets, offering valuable insights into its overall operational strategy.

Running Head: OPERATIONS STRATEGY OF STARBUCKS
OPERATION STRATEGY OF STARBUCKS
Name of the Student
Name of the University
Author Note:

1OPERATIONS STRATEGY OF STARBUCKS
ACKNOWLEDGEMENT
I would like to exhibit special thanks and gratitude to my professor …………………… and the
principal …………………….. of …………………… university for providing me the
opportunity to do the assignment. It helped me to enhance my research skills and develop
enormous amount of knowledge covering different new areas.

2OPERATIONS STRATEGY OF STARBUCKS
EXECUTIVE SUMMARY
The aim of this paper to analyze the marketing strategy of Starbucks belonging to the food and
beverage industry. The paper is built through a competitive analysis of US market and Indian
market considering Starbucks. It will describe the business model of the organization. The study
will help to understand the customer needs, competitive level, policies, and impact of technology
on the organization. It will demonstrate further the main operational areas of Starbucks. Finally,
the paper will demonstrate the structure and key performance areas of Starbucks. Additionally,
the study will provide some recommendation to grow in the Indian marketplace.

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TABLE OF CONTENTS
Brief Introduction................................................................................................................4
Strategic and marketing analysis.........................................................................................5
Strategic positioning and business model........................................................................5
Major markets (India)......................................................................................................6
Customer needs (US VS India)........................................................................................7
Competitors (US VS India).............................................................................................8
Policy (US VS India).......................................................................................................9
Technology (US VS India)..............................................................................................9
Order Winners...............................................................................................................10
Operations analysis............................................................................................................11
Impact of increasing major market share.......................................................................11
Operation areas..............................................................................................................12
Recommendation...............................................................................................................16
References..........................................................................................................................18
Appendix............................................................................................................................22

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Brief Introduction
Started the journey from 1971, Starbucks has now become a brand in the food and
beverage industry. Initial information of the company can be started by considering it as an
American coffee company and coffeehouse chain. The company was founded in Seattle,
Washington. According to the researches, the company is now operating in more than thirty
thousand locations covering the entire world. The company was influenced by the ‘second wave
coffee’ movement that was becoming famous for roasted dark coffee beans (Wu, 2017). The
company started the journey with the generous motto of creating an atmosphere of friendship
with coffee. Their journey began with a single store at Pike Place Market. The first outside
location of Starbucks was in Tokyo, Japan in the year 1996. In Australia, the first Starbucks store
launched in the year 2000 in Sydney. Gradually, the company spread its friendship with more
than forty countries covering the entire world.
Apart from coffee, the company offers everything else that is related to the coffeehouse
chain. It includes premium tea, pastries, and other delicacies to soothe the taste buds (Elliott,
2014). The company possesses a lens of humanity to serve their consumers. The company is now
dwelling in more than five thousand stores in the United States. Starbuck offers custom services
that mean; customers can specify the ingredients to be used in their beverages. The organization
exhibits a friendly atmosphere that is perfectly suitable for the notorious consumers of America.
All the staff is trained to acknowledge them as a part of every consumer’s life.

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Strategic and marketing analysis
Starbucks adopted a unique marketing strategy that is depended solely on its products.
The company differentiated its strategy by providing premium quality of coffee to its consumers.
Their unique strategy of marketing situated the organization as one of the coffee retailers in the
entire industry.
Strategic positioning and business model
Starbucks strategically targets the right category of consumers to freeze their position in
the marketplace. The strategies Starbucks adopted for the successful positioning are mentioned
as follows.
Focus - Starbucks adopted the basic rule of focusing on the target market. Keeping the market in
smaller segments makes it easier to understand the niche of the consumers. They understood that
the cheaper Robusta beans were providing a negative experience to the consumers. Robusta
beans cannot withstand the pleasing taste of Arabica beans. Apart from this, the tin packing of
coffee beans was also affecting the taste of the coffee. As the final focus, they acknowledged the
growing concern about health by the regular consumers of coffee.
Reminiscent of basic accounts – It helps the company to understand the morale of the
consumers. In this way, Starbucks is posing its positioning strategy by regular customer
orientation. The organization has expanded the destructive profit from customer gratification and
employee requirements.
Business model – the company follows a unique business model in accordance with the
calculated different quarters. According to the researches, the operating cost of the company was
going through a tough phase during 2008. The annual income was decreased by almost up to

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21%. The business model of Starbucks exhibit that the company invests a huge amount of money
for new stores. As an innovative positioning idea, the company generated a new community.
This strategy helped them to business for diversified consumers.
Figure 1. Starbucks Business model
Major markets (India)
The largest market place for Starbucks in India is Mumbai. It is rightly serving for
company’s motto to make it the largest coffee retailer business in the world. During the last
fiscal year, the Indian market is exhibiting slow growth. The group president of Starbucks John
Culver believes that India will become one of the topmost markets doing business around the
world. Starbucks in India deals in partnership with the Tata Group. The net growth of sales Rs
272 crore indicates almost 14% sales growth as per the report of March 2017. It has narrowed
down the loss up to Rs. 32 crore. However, the sales performance has declined from 40% growth

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in terms of business as observed during the year 2016. According to Global consideration, the
annual revenue of Starbucks grew by up to 8% during the beginning of July. According to the
report of last year, Starbucks expanded the partnership with Himalayan mineral water,
Singapore, alongside the Tata Group. Culver also mentioned that the Joint venture with Tata
Group is considered as one of the topmost partnership done by Starbucks. The researcher also
found that Starbucks will not be able to draw much profit from the urban and towns of the
suburbs where the customers are not willing to prefer the expenses. Moreover, starting the
business from October 2012, Starbucks is observed with rapid growth within the Indian market.
Customer needs (US VS India)
The differentiation strategy of Starbucks selling coffee at the premium price and modified
menus for different people working very well in the Indian market as well as in the US market.
In India different governing rules set different regulations for ownership and trading of foreign
countries. The reason behind this change in regulation is the observed alteration in
demographics. The Indian coffee industry is considered an intriguing proposition. According to
researches, India was the sixth largest coffee producer in the year 2013. According to historical
evidence, Indian consumers preferred tea over coffee. The consumer market is observed by
consuming 85 grams of coffee per capita. On the other hand, the consumers of the US market
consume 6 kilograms per capita.
It was always a different way the customers of the Indian market consume coffee in
comparison to the western countries. In the US market, 80% of the coffee was purchased for
mobile consumption. On the other hand, the same purpose is fulfilled by only 20% of Indian
coffee consumers. Researchers found that 70% of the coffee in the Indian market are sold in the
small stores knows as kiranas. In the US market consumer demands extreme transparency with

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the supply chain. They are willing to extreme prices for the premium quality services provided
by the business owners. Hence, the consumers’ needs and expectancy is higher in the US market
in comparison to the Indian marketplace.
Competitors (US VS India)
The biggest coffee chain in the Indian market is Café Coffee Day. The owner of this
coffee chain business is the business named Coffee Day Enterprise and it is the leading coffee
business in India. The company tags them as the ‘pioneer of the café culture’ in the Indian
market. The company is dwelling with more than a thousand cafes in almost 200 cities in India.
This coffee chain market is one of the competitors of Starbucks in the Indian market. Apart from
Coffee Day, the British company Costa Coffee also belongs to the group of competitors for
Starbucks India.
On the other hand, Starbucks in the US market is in core competition with Dunkin’
Donuts and McDonald’s. These two companies are dwelling on the topmost positions during the
past few years. According to the study, Dunkin Donuts and Starbucks were at a peaceful run
from the past few decades. During 2006, Dunkin was able to raise its position in the US market
and declared competition against Starbucks, where Starbucks also created a positive environment
within the marketplace. Similarly, McDonald's was familiar as a fast-food restaurant. After
joining the global franchise, the group also appeared as a part of the coffee industry. In the year
2017, the annual revenue of McDonald’s withstood the competition level of Dunkin Donut and
Starbucks.
Hence, a general comment can be made on Starbucks that in both the countries, the US
and India, the organization faces a high level of competency.

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Policy (US VS India)
Starbucks announced a new policy for all its consumers. Their policy allows the
consumers to have a seat in the cafes or using the restroom without any purchase. According to
the executives, the company policies were ambiguous during previous years. Both in the US and
Indian markets, the company policies stick to the same policies and regulations. Their policies
are dedicated not only to the business but also for the health of their employees. In the Indian
market, Starbucks had a false start in the year 2012. The joint venture of Tata and Starbucks was
known as Tata Global Beverages. According to recent research, Tata Starbucks has more than
140 outlets covering the cities of entire India. According to the report, the US-based Starbucks
had filed a lawsuit in the high court of Delhi. The claim was the misuse or copying the name and
logo of Starbucks.
After a few years, Starbucks has expanded its venture with other corporations outside
India. In the US market, the company introduces a commitment to treat all the customers with
due respect and dignity. The Global Human Rights policy of Starbucks is depended on the basic
and governmental human rights. Both the nations, Indian and the US, the company’s policies are
made with a dedication to the company’s mission and vision. These policies ensure proper
maintenance of workplace culture within the organization. The policy also stands against child
labor and forced labor for all the employees. Moreover, Starbucks is an incomplete commitment
in doing ethical business, proper integration, and obeying the law and regulations.

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Technology (US VS India)
The impact of technology on Starbucks can be seen in every store located in the world.
Both in the US market and the Indian market, the consumers can observe a similar scene of
grinding coffee beans, hand-crafted coffee orders, and espresso shots. Microsoft is the helping
hand for Starbucks in creating a more personal and seamless experience for the consumers. The
scene is only possible by proper implementation of advanced technologies including the process
of cloud computing and block-chain (Lemus et al., 2015). According to the Starbuck executive,
the company has a greater connection with the world’s best technologists dedicated to innovating
groundbreaking technologies to improve the service and appearance of the company (González,
2015).
Order Winners
Order winners refer to the specific aspects of a particular product or service that provide a
competitive advantage for the business. It can include the quality, speed of delivery, design of
the product, flexibility and the corporate image of the organization. It is the main reason behind
the preference for the product or service by the potential consumers.
Indian market the products of Starbucks are comparatively lower than the price of the US
market. The average price for Starbuck drinks in the US market in $2.75 and a normal
cappuccino in New York City is available at $3.25. In the Indian market, $3.25 refers to 240
rupees. On the other hand, in the Indian market, a normal brewed coffee is available at $1.85
(Voigt, Buliga & Michl, 2017). However, it is worth to mention about the other existing rivals of
Starbucks in the Indian market are selling similar drinks and beverages with comparatively low
price. For instance, Café Coffee Day and Barista selling coffee and other beverages with
comparatively low price. Starbucks is selling a normal brewed coffee with 130 rupees whereas

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Café coffee Day is selling the same with 110 rupees. Hence, in the Indian market, Starbucks is
still existing as an expansive brand in comparison to Café Coffee Day and Barista (Refer to
appendix no. 6).
Operations analysis
Impact of increasing major market share
2016 is considered as the officially strong fiscal year for Starbucks. Starbucks has
introduced various loyalty programs, business expansion in the Asia Pacific region, and increase
market share made the organization prepared for other important impetus (Papke, 2013). Along
with increasing the footprints, Starbucks is concentrating on altering the store mix. In spite of
launching more number of restaurants, the coffee chain is focusing on drive-thrus in the
suburban areas. According to the study, the statistics of Starbucks is impressive and high. The
company owns a 39.8% share in the US coffee market (Hutt, 2016). The income of the company
is $24, 72 billion covering the entire world (Refer to appendix Figure 3 & 4). The store count of
Starbucks is 29,324 covering almost 72 countries across the globe. The company conducts more
than 90 million transactions weekly. Along with India, it is much popular in the Chinese market.
Researchers found that it opens a new store every fifteen hours in the Chinese market (Lawrence
& Weber, 2014). In the Indian market, 23% of the company revenue comes from foods and
beverages. In the next fiscal year, Tata Starbucks is expecting more approximately ₹450
crores from the Indian market (Schultz, 2014). It refers to a 30% growth in the
next fiscal year with remarkable growth in stores and increasing quality of
performance.