Assignment for Managerial Economics Research Paper

Assignment for Managerial Economics - Research Paper Example The generic strategy of differentiation can really assist Starbucks to meet consumer interests and to grow its business in India. Finally, it is recommendable for the company to start soft drinks business in India because this business sector has strong growth potential in the Indian market in spite of intense competition threats. 1. The business 1.1 Brief overview Starbucks Corporation is a multinational coffeehouse chain headquartered at Washington in the United States. It was founded in 1971 by Jerry Baldwin, Gordon Bowker, and Zev Siegl. Starbucks is the world’s largest coffeehouse company with 20,891 stores spread across 62 countries. The organization has a strong market presence in economically leading countries like US, UK, Canada, Japan, China, Mexico, and South Korea. It has played a significant role in developing a distinct coffee culture in many countries and this uniqueness is the main reason why the brand is still admired by millions of customers. As per CNN repor ts, the firm has a diverse product line and it mainly focuses on products such as whole-bean coffee, microground instant coffee, hot and cold beverage, pastries, snacks, and full-leaf teams. In addition, this coffeehouse company also operates an entertainment division for the purpose of marketing items like books, music, and film. The organization achieved a tremendous growth rate over the last two decades and currently the firm’s overseas stores constitute nearly one third of its total stores. In order to confront recessionary pressures successfully and to make its operations more productive and profitable, the Starbucks Corporation announced hundreds of store closures since 2008 in the United States. This downsizing strategy greatly assisted the company to effectively survive the recent global recession and further fuel its business growth. According to the Fortune 500 rating (as cited in CNN Money), Starbucks was ranked at number 227 in terms of largest corporations in Ame rica in 2012. While analyzing the business strategy of Starbucks, it seems that the company has been using focus and differentiation generic strategies to drive its business growth. 1.2 Rationale for the country choice Currently the Starbucks Corporation plans to enter India as part of its global business expansion because growth opportunities are rapidly emerging in this world’s one of the largest markets. In order to justify this country choice, a PEST analysis is conducted. Political factors While evaluating the political spectrum of the country, political instability seems to be a great threat. Emergence of more local parties and religion-based political parties contributes to the political uncertainty of the country. However, analysts indicate that India would institute more economic reforms after the national elections scheduled in 2013-2014 (Lucintel). In addition, the government is taking immense efforts to eliminate corruption. India has a free market environment and the government extremely encourages foreign investment to deal with issues like unemployment. Hence, legal barriers would not disturb the market entry of Starbucks. Economic factors India has achieved a steady GDP growth rate of 8% over the last five years (Lucintel). Economists predict that the Indian economy is expected to maintain its growth rate over