Summary of the domestic market and company position
Starbucks has over seventy percent of its stores situated in the US where economic recession is deeply impacting business. It needs to explore newer markets for its future viability.
The country chosen for expansion is India as Starbucks has a favorable image and brand recall in India. India’s big cities will be targeted because of high population, higher discretionary income, literacy rate and likeability towards foreign brands.
India is considered a major player in the emerging economies of the world. It has established itself as an information economy full of knowledge workers. Its high skilled and comparatively cheaper workforce has attracted foreign direct investments over the years. Outsourcing of foreign firms and relocating of facilities to India has lead to the creation of many jobs in the economy. Indians are rapidly moving up the social ladder with this economic boom and discretionary income of the knowledge workets of India has remarkably increased.
The Indian economy is much more relaxed in its liberalization policies as compared to the past. It has cheap and abundant energy resources, a well developed transportation network and a higly skilled labor force.
India has a presidential form of democracy though President is a ceremonial head and all powers lie with the Prime Minister. Indian judicial structure is very strong and transparent to keep accountability of executive and legislature. The Indian National Congress supports foreign investments and has further liberalized the economy. No particular tax relaxations are available to foreign firms. However, there is political stability in the country and it does not follow protectionist policies.
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