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strategic intent of Tata Starbucks alliance

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  1. 1. N I K I T A A G A R W A L E - 0 3 TATA- STARBUCKS
  2. 2. HISTORY OF STARBUCKS  Starbucks Corporation is an international coffee and coffeehouse chain based in Seattle, Washington.  Starbucks is the largest coffeehouse company in the world.
  3. 3. History of TATA Coffee  Tata Coffee is Asia’s largest coffee plantation company and the 3rd largest exporter of instant coffee in the country.  It exports green coffee to countries in Europe, Asia, Middle East and North America
  4. 4. Strategic Intent  India and China are the world‘s two fastest growing economies. Starbucks had already ventured into the Chinese market and not surprisingly, their Chinese venture turned out to be much profitable than that of their US business.  Thus, they want to replicate their success in Chinese mainland in India. Also, the Indian market is heavily driven by the upcoming youth culture which is totally driven by the western trends.
  5. 5.  With the success of Indian owned Café Coffee Day and Barista Coffee, it is a widely proven fact that there is lot of scope for the development of coffee café culture in India.  Thus, Starbucks want to capitalize on this particular opportunity.
  6. 6. Starbucks Mission Statement “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”
  7. 7. STARBUCK’S PREVIOUS ATTEMPTS TO ENTER INDIA  Starbucks had tried to enter India by striking an alliance with Kishore Biyani's Future Group three years ago, but these plans were rejected by the Foreign Investment Promotion Board.  A year ago, Starbucks revive its plans for India and began talks with Shyam and Hari Bhartia-controlled Jubilant Group for a possible alliance.
  8. 8. ALLIANCE
  9. 9. Alliance  On January 2011, Starbucks Corporation and Tata Coffee, Asia's largest coffee plantation company, announced plans for a strategic alliance to bring Starbucks to India.  Starbucks has announced its entry to India by signing a non-binding Memorandum of Understanding (MoU) with Tata Coffee Limited.  The MoU will create avenues of collaboration between the two companies for sourcing and roasting high-quality green coffee beans in Tata Coffee's Coorg,
  10. 10.  India is one of the fastest growing coffee markets in the world with a potential for over 5,000 coffee bars. The coffee retail market in the country is expected to grow at an annual rate of over 40%. So, there seems to be enough room for all to brew and grow.  In accordance with the MoU, the two companies will collaborate on the promotion of responsible agronomy practices, including training for local farmers, technicians and agronomists to improve their coffee-growing and milling skills.
  11. 11.  R K Krishnakumar, Chairman of Tata Coffee, said, “We welcome Starbucks entry into India because of both its unique experience with the store format and for its commitment to society, values that we share.”  “India is one of the most dynamic markets in the world with a diverse culture and tremendous potential,” said Howard Schultz, Chairman, President and CEO, Starbucks Coffee Company.
  13. 13. Strengths  High Brand Visibility.  Superb Marketing and positioning skills of Starbucks.  Access to TATA's premium Robusta and Arabica coffees (Sourcing Agreement).
  14. 14. Weakness  Image of luxury coffee outlets.  High price of coffee is felt as a barrier  Coffee dominant business. (need to diversify)  Certain rigid standards and policies at outlets.
  15. 15. Opportunities  India is the second most populated country in the world.  Growing Middle Class and increasing spending power of Indian Population.  Tea-based culture of India could be used as opportunities by offering more tea-based drinks.
  16. 16. Threats  India is a tea-based culture.  Rising prices of coffee are putting pressure on the profit margins of the company.  Visiting cafes is not a frequent habit among most of the Indians.  Homegrown brands dominate the retail coffee market.
  17. 17. Advantage of Alliance to starbucks  “The knowledge and understanding of the Indian market can be brought by TATA Global Beverages.”  Starbucks will benefit from TATA Global’s infrastructure.  TATA has a local knowledge on the real estate market and they have opportunities to leverage their capabilities in this area.
  18. 18. Advantage of Alliance to TATA  TATA Group will also benefit from the pact. TATA’s experience in retailing is not sufficient to open a coffee retail shop on their own; so, by entering in such alliance they will gain a vast amount of knowledge.  TATA Global Beverages produces bottled Himalayan water which might be offered in Starbucks stores around the world.
  19. 19. Disadvantage of Alliance  After gaining enough knowledge in retailing industry and knowing the Indian market better, TATA might decide to compete with Starbucks instead of working with them.  Potential conflict might occur regarding the strategy of the alliance and how it should be managed.