Tuesday, January 31, 2012

Starbucks New Frontier : India

Starbucks Coffee which everyone knows to be an upscale coffee chain has finally made moves into India's markets. Within the article, it is explained that Starbucks will open their first store in September and may have up to 50 stores open by the end of the year. Also, eventually India could have up to 3,000 Starbucks stores all around India.

Why the decision to expand to India? Easy. Due to India's large amount of youth in their population, cafe's have recently been booming. The problem that Starbucks seems to face is that the coffee in India is extremely cheap. For example, according to the article, "CafĂ© Coffee Day's small cappuccinos cost about $1." From my experiences at Starbucks I know that their small cappuccino could be three times that price or more.

This is similar to hardships that Walmart has and still is facing in China's market. Walmat expanded to China and attempted to create a shopping experience that was much nicer than what the Chinese were originally used to but to still have low prices. This was unsuccessful because the labor costs in China are so minute that there was no way Walmart could have the same brands and products from America and charge such a low price.

It seems that Starbucks has two options. They can either lower their prices to that of their competing companies, or they could keep their prices and hope that they get a upper-class market to bring success to Starbucks in India. What do you think would be the best decious they could make to prosper in India?

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