Strategic intent of Tata Starbucks alliance

1. N I K I T A A G A R W A L E - 0 3
TATA- STARBUCKS

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. 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. 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.  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. Starbucks Mission Statement
“To inspire and nurture the human
spirit – one person, one cup and one
neighborhood at a time.”

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. ALLIANCE

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.  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.  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.

12. PORTER’S
FIVE FORCES
FRAMEWORK

14. Strengths
 High Brand Visibility.
 Superb Marketing and positioning skills of
Starbucks.
 Access to TATA's premium Robusta and Arabica
coffees (Sourcing Agreement).

15. 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.

16. 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.

17. 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.

18. 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.

19. 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.

20. 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.