Business Plan

Starbucks India

INTRODUCTION :
in Seattle's Pike In 1971, the Starbucks coffee company opened its first location

Italy, Howard Schultz wanted to introduce the coffee bar culture to America. Now Starbucks has over 7, 500 locations in over 30 different countries. coffeehouse chain based in Seattle, Washington.Starbucks is the largest coffeehouse company in the world, with over 17,817 stores in 49 countries, including over 11,000 in the United States, almost 800 in 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 cold sandwiches and panini, pastries, snacks, and items such as mugs and tumblers. Through the Starbucks Entertainment division and Hear Music brand, the company also markets books, music, and film. Many of the company's products are seasonal or specific to the locality of the store. Starbucks-brand ice cream and coffee are also offered at grocery stores.

Place Market: Inspired by the espresso bars in Milan,

Starbucks Corporation is an international coffee and

From Starbucks' founding in later forms in Seattle as a local coffee 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 United States or Canada opened in the mid-'90s, and overseas stores now constitute almost one third of Starbucks' stores. The company planned to open a net of 900 new stores outside of the United States in 2009, but has announced 900 store closures in the United States since 2008. Starbucks has been a target of protests on issues such as fair-trade policies, labor relations, environmental impact, political views, and anti-competitive practices.

In 2009, Starbucks released an annual Corporate social responsibility report.

Grounds for your Garden Environmental impact In 1999, Starbucks started "Grounds for your Garden" to make their business more environmentally-friendly. This gives leftover coffee grounds to anyone requesting it for composting. Although not all stores and regions participate, customers can request and lobby their local store to begin the practice. In 2004, Starbucks began reducing the size of their paper napkins 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 Protection Agency's list of Top 25 Green Power Partners for purchases of renewable energy. In October 2008, The Sun newspaper reported that Starbucks was wasting 23.4 million litres of water a day by leaving a tap constantly running for rinsing utensils in a 'dipper well' in each of its stores, but this is often required by governmental public health code.

In June 2009, in response to concerns over its excessive water consumption, Starbucks re-evaluated its use of the dipper well system. In September 2009, company-operated Starbucks stores in Canada & the United States successfully implemented a new water saving solution that meets government health standards. Different types of milk are given a dedicated spoon that remains in the pitcher and the dipper wells were replaced with push button metered faucets for rinsing. This will reportedly save up to 150 gallons of water per day in every store.

A bin overflowing with Starbucks cups Recycling The U.S. Food and Drug Administration granted the first-ever approval to use recycled content in food packaging for Starbucks coffee cups. In 2005 Starbucks received the National Recycling Coalition Recycling Works Award. Starbucks bought 2.5 billion cups for stores in North America in 2007. The 10% recycled paper cups used by Starbucks are not recyclable, because the plastic coating that prevents the cup from leaking also prevents it from being recycled. The plastic cups used for cold drinks are also non-recyclable in most regions. Starbucks cups were originally made using plastic #1 (polyethylene terephthalate, PETE) but were changed to plastic #5 (polypropylene, PP). The former type of plastic can be recycled in most regions of the U.S. whereas the latter cannot. Starbucks is considering using biodegradable material instead of plastic to line the cups, and is testing composting of the existing cups. The exception to this is stores in Winnipeg, Manitoba, Canada, where paper cups are recycled to a local company called "Wriggler's Wranch", where they are composted. The majority of Starbucks stores do not have recycling bins; only 1/3 of company-owned stores recycled any materials in 2007,[95] however improvements have since been made and recycling bins are popping up in more stores (the only thing

hindering Starbucks' ability to have bins in every store is the lack of facilities for storage and collection of recycling in certain areas.)Allen Hershkowitz of the Natural Resources Defense Council says that Starbucks claimed they were using only 10% recycled material partly because the recycled material costs more. Starbucks gives customers a 10-cent discount when they bring their own reusable cup, and it now uses corrugated cup sleeves made from 60 percent post-consumer recycled fiber.

Fair trade

Starbucks coffee beans In 2000, the company introduced a line of fair trade products. Of the approximately 136,000 metric tons (300 million pounds) of coffee Starbucks purchased in 2006, only about 6 percent was certified as fair trade. According to Starbucks, they purchased 2,180 metric tons (4.8 million pounds) of Certified Fair Trade coffee in fiscal year 2004 and 5,220 metric tons (11.5 million pounds) in 2005. They have become the largest buyer of Certified Fair Trade coffee in North America (10% of the global market). Transfair USA, the only third-party certifier of Fair Trade Certified coffee in the United States, has noted the impact Starbucks has made in the area of Fair Trade and coffee farmer's lives: Since launching {its} FTC coffee line in 2000, Starbucks has undeniably made a significant contribution to family farmers through their rapidly growing FTC coffee volume. By offering FTC coffee in thousands of stores, Starbucks has also given the FTC label greater 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 lattes are brewed with 100% Fairtrade Espresso.

Groups such as Global Exchange are calling for Starbucks to further increase its sales of fair trade coffees. Beyond Fair Trade Certification, Starbucks argues that it pays above market prices for all of its coffee. According to the company, in 2004 it paid on average $1.42 per pound ($2.64 kg) for high-quality coffee beans. This is in comparison to commodity prices which 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. An article in BBC NEWS, states that Ethiopian ownership of popular coffee designations such as Harrar and Sidamo is acknowledged even if they are not registered. The main reason Ethiopia fought so hard for this acknowledgement was to allow its poverty-stricken farmers a chance to make more money. Unfortunately, this has not been the case. In 2006 Starbucks says it paid $1.42 per pound for its coffee. At, the coffee Starbucks bought for $1.42 per pound had a selling price of $10.99 per pound. As of August 2010, Starbucks sells only one Ethiopian coffee on its website and it is proclaimed by the website to be new. Staff training Black aprons displaying the title "Coffee Master" are worn by employees who have completed the Coffee Master course, which educates employees in coffee tasting, growing regions, roasting, and purchasing.

Whats the next step?

Starbucks India! The probability of Starbucks successfully introducing its coffee bar culture in India is relatively high for many reasons.

young are becoming world-class consumers, and multinationals are taking note, reads the sub header for an article titled Hey, Big Spenders! in the August 2003 issue of TIME Magazine. This change can be attributed to many factors. For one, the Indian economy went through a massive liberalization under the new minority government of P.V. Narasimha Rao in 1991. This revolution opened the economy to foreign investment and trade: it dismantled important controls, lowered customs duties, and devalued the currency: it virtually abolished licensing controls on private investment, dropped tax rates, and broke public sector monopolies. This was good news for both foreign and local entrepreneurs (Das 3).

There is a new consumer culture emerging in India. Indias

and Motorola have been taking advantage of these new policies and finding a new home in India. These companies owe their success to the rising young elite due to the mass outsourcing by foreign companies especially from the US. Jyoti Thottam in her Time5 Magazine entitled Where The Good Jobs are Going, writes next 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:

Multinational companies such as Citibank, McDonalds

U.S companies are expected to send 3.3 million jobs overseas in the

Those relatively low-skilled jobs were the first to go,

starting in 1997. But more and more of the jobs that are moving abroad today are highly skilled and highly paideducated Indian

workers are quickly adjusting to their new status as the worlds most sought-after employees. They have never been more confident and optimisticFive years ago, computer-science graduates had one career option in India: routine, mind-numbing computer programming. Anything more rewarding required emigrating. Until three years ago, the first preference was to go overseas. Nowadays [these educated Indians] are interested only in business trips 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 the

palms 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 towards money are also changing. The mantra for the average Indian family, as in most of Asia, has always been save, save, save, but young Indians today, inspired by job opportunities, have switched to spend, spend, spend. Pramod Saxena, president for Motorola in India, backs him up stating, The attitude of the young generation is to enjoy life and spend money. Were looking at India as a major growth market.

follow western trend. As put simply by Indian entrepreneur Ravi Deol, Indian consumers want to do what the rest of the world is doing. The young Indians buyers want everything from McDonalds, to Levis Jeans, and Brittney Spears CDs, but whats more is that they are willing to pay for it. Indian consumers will definitely welcome the internationally popular Starbucks Coffee Company to its country, as thirty-nine other countries have. The two new proposed locations for Starbucks Coffee shops are strategically picked to ensure their success. Both Mumbai and New Dehli are home to many call centers where these younger spenders work, and many colleges and Universities are also located here. This will allow Starbucks to target the younger consumer generation

In addition, Indias pop culture shows a heavy desire to

with the advertisement campaign. These two cities are also major hot 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 the Indian tastes.

PROPOSED PRODUCT /SERVICE :

The Product tarbucks Coffee shops sells a variety of coffee
and tea beverages along with different types of pastries, confections, and baked goods, coffee-related accessories and equipment. The coffee shops provide customers with a pleasant place to come and relax, study, work, or have business meetings. Both locations will provided wireless Internet access in the stores so that customers can bring their laptop and continue their work if they wish. The Starbucks Coffee Company must customize their menu to fit the tastes of the Indians. A new menu will be formulated after several months of research and development. There are some common tastes preferences of the Indians known already. For example, Indians tend to take more cream in their coffee. Also, the skim milk option will not be offered in India because dieting is not a commonly accepted practice in the country. Indians will feel that they are being cheated out of their money if skim milk is put in their beverages.

Indians also like spices in their tea and coffee, especially

ginger and black clove. One of Indias favorite fruit flavors in mango, and in fact the mango is Indias national fruit. The coffee beans and tea will be bought from local Indian farmers in order to support the local agricultural economy, save money in transportation and tariffs, and gain tax benefits. Through inspections of the crops will ensure the high quality and stands behind the Starbucks brand name. These goods will then be transported to the Starbucks 14 roasting plant located near the New Delhi location and then transported to Mumbai making use of India vast and efficient railway system. Equipment and other necessary supplies will be shipped from the United States keeping in mind there 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 can be made after observing consumer trends. To begin with policies can be formulated assuming an average of five hundred consumers per day.

TARGET MARKET :
Age break-down

Primary Target Market:

The Primary target market for Starbucks Coffee Co. in India is the young both male and female from the ages of 16-38. This market is well educated and comes from middle class to upper middle class population. Since our locations are close the newly opened call centers where well educated and highly paid consumers work, special marketing strategies will be used to gain their brand loyalty to Starbucks. The geographics of the target market are mainly consumers who live or work in the vicinity of 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 multinational company, as most tourists in India come from the countries of U.S., England, Germany, and Japan. This market will also fall in the middle to upper middle class population and will find the Starbucks India prices relatively cheap.

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 costs Rs. 68,01, 000 Labor- Starbucks India employees ex. Managers, marketing specialists, human resources generalists, etc. (approximately 50 employees) Rs. 90,68, 000 Marketing- billboard and print advertising. Costs listed in previous sections. Rs. 3,75,000 Licensing and Legal WorkRs. 4,55,000 Miscellaneous Costs- repair , emergency costs Rs. 2,30,000 Total: Rs. 4,40,00, 000

REVENUE:

The predicted amount of customers per day for the

Starbucks Coffee Co is 3,000. If Rs 55 is amount of money on average spent by each customer then the projected revenue per day is Rs 1,28,000. If Starbucks closes for only 3 days in the year for Diwali (Indian holiday) and Christmas, then the per annum revenue would be Rs. 60,00,00, 000.

PROFIT :
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 the new amount of profit to be Rs. 1,31,00, 000.

Subtracting the predicted costs from the predicted

reduce 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 first year proves to be a success, Starbucks Coffee can open over 200 location in the subcontinent of India, taking advantage of their international partnerships with Sheraton (Starwood) Inn, and Hyatt Inn. Starbucks will also try to win accounts with local airlines companies, so that they may serve Starbucks drink on flight. In three years profits are expected to exceed one million dollars per annum.

Keep in mind that the costs for the following years will

SELLING AND DISTRIBUTION :

Transportation of goods:

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

PROPOSED STRATEGIES :
1. Pricing Competitive pricing is necessary for the success of
the venture, but we must take our costs into consideration. Because of 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 of this pricing policy, Starbucks prices will be 20% lower than those of the Barista Company. This use of penetration pricing will ease the companys slide into the market place. Though it is possible to get a cup of coffee for merely 5 rupees in small stalls on the street, the success of the Barista Coffee Company show that the customers are willing to pay for better quality, service, and environment.

2. Promotion
in India are very similar to those of the United States, which include everything from newspaper advertising to television ads. Since this is a test venture and there are only two locations of Starbucks being opened, the promotion for the store has to be very focused on our target markets. Billboard advertising on the roads leading to the store locations is a good way to increase awareness of the locations. Direct mail advertising with promotional coupons will be used to reach the homes of the target market. Sales brochures offering delivery services will be sent to the local call centers and big companies.

Types of available media for marketing purposes are

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 mail directly to the homes. Sales Brochures: 3500 rupees (USD 63.63) per 2500 prints. Starbucks, in partnership with Jump Start Co., is committed to giving back to the communities of its locations. Starbucks India will sponsor scholarship contests for the local students and make an annual large donation of 275, 000 (USD 5000) to the local public school systems. This environmental campaigning will give Starbucks positive publicity.

SWOT ANALYSIS
Strengths
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.

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

 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.

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.

Recycling..
Starbucks is considering using biodegradable material instead of plastic to line the cups, and is testing composting of the existing cups. Starbucks gives customers a 10-cent discount when they bring their own reusable cup, and it now uses corrugated cup sleeves made from 60 percent post-consumer recycled fibre.

Convenient Location

Starbucks 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 people migrating 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.

Presented By:

Meeta Lalwani Amit Khemka Abhishek Toshniwal Sapna Premjani Hiral Gupta

Students Of Sir K.P. College Of Commerce S.Y.B.Com (HONOURS)