1. What entry strategy has Starbucks used internationally? Should Tata Starbucks use a strategy that is modified for the Indian market or should it pursue the same strategy it has in all other international markets?

2. What forces in the industry environment might affect Tata Starbucks’ choice of strategy? And what does an internal analysis tell us about this? What intellectual assets are most important to Tata Starbucks?

3. What business-level strategy should Tata pursue?

In early 2015, the financial press reported that the Tata Starbucks joint venture had incurred major losses in its first full year in the Indian market. However, the company remained committed to making this venture a success over the long term, and by early 2017 Tata Starbucks had adopted an India-specific strategy as a more promising path for future growth and success among Indian customers. One of the ways it did that was to introduce Starbucks Teavana with 18 diverse varieties of tea to serve the Indian market.

Starbucks had entered the Indian market in October 2012 by forming a 50:50 joint venture with the Tata Group. The Indian Café market offered a lot of potential for the new Tata Starbucks alliance. While India was a nation known for its tea drinkers, sipping coffee and socializing at coffee shops was becoming increasingly popular. Domestic consumption of coffee had risen 80 percent in the past decade, but the overall market in India was intensely competitive, with multiple domestic and foreign players. Success in the Indian café market would require overcoming the usual two key challenges – competition and profitability.

The joint venture appeared to be at the crossroads of an important strategic decision. It could revert to a plan to grow its store count aggressively, much like it did in the US. It is possible that this was the original intent. After all, the initial launch pricing had been set to be competitive with Café Coffee Day’s (CCD) pricing (coffee drinks available for as low as Rs 100).  Alternately, it could choose to embrace a premium-priced, niche approach similar to the one it had used successfully in other Asian countries like Japan and China. The premium offering would then cater to an older business elite consumer with higher spending power. This would result in less rapid growth with a cherry-picked list of high profile, business-friendly locations that could also allow it to build a premium brand with premium pricing.

In 2016, Sumi Ghosh succeeded former CEO Avani Davda, and replaced the menu-as-usual approach with his India-specific strategic vision. Would Starbucks and Tata under Ghosh’s leadership finally be able to crack the code for sustained success in the competitive and complex Indian market?