The following PESTLE analysis gives an outline of the challenges and favorable conditions for growth of Starbucks coffee

in India:-

Political Factors:The political factors are important and crucial and have strong influence upon the regulation and controlling of business and the spending power of consumers and other businesses. The Indian economy has been subjected to a series of positive economic reforms since 1991 which has created a better working environment for foreign companies and has made it possible for foreign investors to operate in the country more easily. Thus taking into consideration the political environment in India as a whole i.e. the bureaucracy complications and the regulatory FDI controls and regulations, it is safer for Starbucks to enter India via a joint venture or a strategic alliance with an Indian company that can provide a buffer from possible political tension .Also Starbucks can face some opposition from the existing competitors like CCD and Barista through the use of political influence and delaying tactics. The chances of these happening is low taking into account the factor that the Indian market is large enough to hold more companies and the so leaders in the Indian gourmet coffee industry will not be strongly affected by Starbucks entry.

Economic factors:A favorable environment for entry of Starbucks in India is provided by the big cities in the country. Mumbai is regarded as the countrys financial center and accommodates many foreign financial organizations as well as many IT companies. Delhi and Bangalore, other major cities with population totaling just below 20 million, are centers of call-center hubs and international IT companies.Starbucks coffee can find major growth opportunities in these cities.

Socio-Cultural factors:Starbucks coffee is widely known for its humane approach towards sourcing its coffee and related products and towards converting its employees to dedicated brand ambassadors. In addition to that, the company also plays an important role as a sustainable leader in the market .This positioning as sustainable business player is an important facet for the Indian market and its many socio-cultural dimensions. It gives Starbucks a position with regard to an important cultural trend. With the growing employment rate of young people, their disposable income also is growing and so they have become a very profitable target audience Also with the westernization of the social trends, youngsters trust western brands and prefer foreign goods. This places Starbucks at a very dynamic position, where it has a good opportunity and much possibility to capture quick customers. The only problem with them is that they will not be the first in the Indian market with specialty coffee offering and their otherwise leadership position can be strongly undermined. Also, the culture and cuisine of India poses a very interesting challenge. The mix of traditional tea-drinking population makes it difficult to divide and place the concrete consumer groups.

Technological factors:In 2004 Starbucks entered into a strategic alliance with Tata Coffee LTD., the largest coffee producer in India. Signing this agreement gave Starbucks, the partner it needed. Tata Coffee LTD met all the conditions and standards followed by Starbucks. Tata has proved its quality standards by winning a gold medal for the best Robusta coffee in the world. Thus, with this strategic relation with the Tata Group, the company, Starbucks, might be able to succeed with competitive pricing in India.

Legal factors:The legal environment in India might not very positive as compared to USA or Europe. Corruption is high in the country and thus it raises concerns.Starbucks has already experienced some drawbacks from the legal environment in India. The case of Starbucks is being mentioned as an example of weak copyright and trademark protection in the country.

Environmental factors:The Starbucks coffee is for a large part highly dependent on the quality of coffee beans. Thus, several environmental factures must be taking into account for growing coffee. Sufficient water and trees and a diverse flora and fauna are very important for growing coffee beans.The rapid growth of the population and economic development will lead to a number of environmental issues like uncontrolled growth, urbanization, industrialization, intensification of the agriculture and destruction of the forest. The growing population has an adverse effect on natural resources and the environment. Therefore, it is very important that India grows in a sustainable way.

Strategies adopted by Starbucks to overcome the challenges:Maxi-maxi strategy:The growing Indian economy provides attractive opportunities for companies like Starbucks. The favorable economic conditions create an environment in which exclusive and luxury products such as Starbuck coffee will be in growing demand. The international popularity of the Starbucks as a brand will help the company to position itself in the Indian market. On the other hand, in order to gain market share, Starbucks can reduce the prices (Though not below the competition levels and by maintaining healthy profit margins). This is possible since Starbucks procures coffee beans from a local supplier. One way in which the firm can protect its position involves developing a marketing campaign that will emphasize its superior customer service in comparison to its competitors. Maxi-mini strategy:-

The high brand equity and recognition of Starbucks products is definitely the biggest advantage it has over its competitors. Taking into account the size of its Indian competitors and the size of the market as a whole, Starbucks has to put more emphasis on its marketing strategy and try to stress on the promotion of its exclusiveness and premium product portfolio in order to differentiate its brand in the customers mind. In order to grow and outperform its already existing competitors Starbucks must also emphasize on the company`s points of difference, which include the brand experience as a whole, the brand quality and the convenient access to its locations. Starbucks is well known for its high quality and distinctive products that substitute products cannot deliver to the customers. In order to create and retain a position in the customers` mind, Starbucks must extend its product portfolio so that it can match the local preferences. For example it can include special Indian tea in its menu for the Indian market. Mini-maxi strategy:As a company that offers specialty coffee, the limited portfolio of Starbucks in terms of noncoffee products, can be considered as exclusive offering. Also the company is in a good position to take advantage of the growing opportunity that the cultural westernization is offering. As a premium product, Starbucks` specialty coffee can give the targeted consumers the desired social status. Mini-mini strategy:Starbucks should keep its prices. Extensive lowering of prices will undermine the exclusivity and top quality image of the product. Even though, the main competitors have similar, and even more extensive product portfolios, Starbucks has the competitive advantage of its exclusive brand image to combat the price the price war. Also Starbucks should slightly try to extend its product portfolio in order to answer the consumers existing demand for instant coffee. References:http://www.ukessays.com/essays/marketing/the-starbucks-coffee-company-in-india-marketingessay.php