Research Paper - COSTA, SBTL & GLORIA

StudentName;FaridAl-Amudi
1
RESEARCH REPORT
On
COSTA, CBTL & GLORIA JEANS
Assignment Two
By:
Farid Al-Amudi

2
Executive Summary
In this report, the global operation of Costa Coffee, Coffee Bean and Tea Leaf
and Gloria Jean’s is discussed. All three companies were successful in their
home countries prior to going global, thus reasons for the companies going
global are touched on and these include increasing profit and having better ways
of competing against rivals in the market. The corporate strategies of these three
corporations are highlighted and include the use of international franchising,
related diversification, differentiation and ways to give back to the environment.
The organisational design of these companies is discussed and aspects such as
their headquarters’ location and global presence are touched upon. The supply
chain structure of Costa Coffee, The Coffee Bean and Tea Leaf and Gloria
Jean’s is also focused on and some detail is provided in relation to the origin of
their coffee beans and what process these beans go through before reaching the
end consumer.

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Contents
Introduction.................................................................................................................................4
Reasons for Operating Globally .....................................................................................................4
Corporate Strategy ....................................................................................................................... 5
Organisational design ................................................................................................................... 6
Costa Coffee............................................................................................................................. 6
CBTL:........................................................................................................................................7
Gloria Jeans.............................................................................................................................. 7
Supply Chain ................................................................................................................................ 8
Costa Coffee............................................................................................................................. 8
CBTL.........................................................................................................................................8
Gloria Jean’s............................................................................................................................. 8
Conclusion ...................................................................................................................................9
Reference List............................................................................................................................. 10

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Introduction
In this report, the global operation of three multinational corporations will be discussed. The
first company is Costa Coffee (Costa), a British company that is currently the fastest growing
and largest coffee chain in the UK (Costa Coffee, 2013). The second company is The Coffe
Bean and Tea Leaf (CBTL) the largest privately owned coffee and tea retailer in the US that
first opened its doors in California back in 1963 (International Coffee & Tea, 2013) and
currently operates in over 27 countries (International Coffee & Tea, 2013). The third
company is Gloria Jean’s Coffees (Gloria Jean’s), an Australian brand that originated in
Chicago USA in 1979, with stores now operating across 39 countries (Gloria Jean's Coffees
International Pty Ltd, 2013). Why each corporation penetrated the global market, their
corporate strategies, their organisational design and their coffee and tea supply chain will be
highlighted in this report.
Reasons for Operating Globally
Going global is not an easy task, in fact it creates many obstacles and challenges along the
way due to issues including cultural, religious and communication barriers as well as legal
and political factors (Griffin & Pustay, 2013). So why would an already successful company,
such as the three coffee shops, which this report is about, decide to enter the global market?
When a business has become successful and mature in their home country, it becomes
necessary at times to seek new markets in the international arena to continue increasing their
growth in revenue and profit (Griffin & Pustay, 2013). Since Costa Coffee became a leader in
the UK market in 1995 with over 41 stores in the UK, they decided to open their first
international store in Dubai in 1999, thus gaining a foothold in a new market ( Whitbread
PLC, 2013). CBTL was also very successful in the US as being the largest privately owned
coffee and tea retailer in the country before expanding internationally (International Coffee &
Tea, 2013). Gloria Jean’s blossomed in the Australian market to an extent that by 2003 it had
stores in every single state in Australia, and the co-founders purchased all international
roasting and branding rights for all countries outside the US (Gloria Jean's Coffees
International Pty Ltd, 2013).
The coffee shop business is a highly competitive area in the marketplace to get into. There
are literally hundreds of brands out there competing head to head around the world for market
dominance. Starbucks Coffee, for example is the world’s number one coffee shop in the
world followed by Dunkin’ Donuts (Ektajalan, 2013), McCafé is yet another competitor that
has fiercely dominated the market in recent years (Hoyland, 2009). As competitors –such as
the mentioned above- have entered the home-countries of our chosen corporations, it became
necessary for the three to go global in order to better compete with them (Griffin & Pustay,
2013).

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Corporate Strategy
The international franchising concept is a strategy shared by all three corporations. Costa
Coffee only uses established businesses with similar industry experience in the market and
that meets other strict criteria as acceptable franchisees in the global market (Costa Limited,
2011). CBTL is just as strict, by only choosing businessmen with proven track records of
success and experience in multi-unit operation in the retail or restaurant industry, real estate
and the ability in operating a franchise (International Coffee & Tea, 2013). Gloria Jean’s on
the other hand, is only interested in hearing from franchisees who are from the countries it
has not entered, as it uses the Master Franchising method (Gloria Jean's Coffees International
Pty Ltd, 2013).
All three use related diversification as a global strategy, where they deal in several different -
yet related- businesses (Griffin & Pustay, 2013). Everything all three corporations sell has to
do with coffee, tea or both. Costa has divided its business into ‘Coffee Shops’, ‘Costa
Express’, ‘Costa Drive Through’ and ‘Proud to Serve Costa’. It has over 1300 ‘Coffee Shops’
in the UK and over 600 in the international market. ‘Costa Express’ is self-serving coffee
machine found in various locations such as petrol stations, and is claimed to be as good as a
barista made coffee. ‘Costa Drive Throughs’ are specially built mini stores with a window to
take orders from passing cars, and last but not least ‘Proud to Serve Costa’ provides catering
companies with Costa products, such as their coffee beans (Costa Limited, 2013). CBTL,
apart from coffee, also sells coffee machines along with a unique variety of coffee flavoured
capsules (You Tube, 2013), accessories, giftware, gifts, and offers the option to become a
subscription member of their capsules similar to a newspaper subscription (Internaitonal
Coffee & Tea, 2013). Gloria Jean’s concentrates mainly on selling their beverages for their
income, but it does however sell other merchandise such as coffee mugs, travel mugs, cups,
powdered coffee and coffee machines that can be purchased through their website or in their
stores (Gloria Jean's Coffees International Pty Ltd, 2013).
Costa Coffee, CBTL and Gloria Jean’s all use the differentiation strategy, where they hold
that their products and services are fundamentally unique in comparison to their competitors
(Griffin & Pustay, 2013). Costa Coffee does this through its specially formulated Mocha
Italia blend that all their coffees are made of, which is made from special coffee beans
gathered from distinctive places, which have gone through various testings and roasting
techniques before reaching the grinder in the shops, and are the secret behind why the coffees
at Costa have fuller flavours and stronger aromas than other coffees (Costa Coffee, 2013).
CBTL is trying to distinguish itself in their name, which is larger than its competitors to stand
out and to assure that not only are they experts in coffee, but they are also tea experts, which
can prove successful in attracting tea lovers to their brand. They also distinguished
themselves by having a huge variety of hot and cold teas, coffees and other beverages in an
ambience of relaxation and tranquillity when enjoying it in their stores, they will even
customize a drink for a guest based on his/her preference (International Coffee & Tea, 2013).
Gloria Jean’s tries to differentiate itself by having an easy going and casual atmosphere
which is good for people on the go. Gloria Jean’s also handpicks each individual bean from

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the world’s finest quality Arabica beans and roasts them in special roasters to ensure the
unique flavour its patrons enjoy (Franchising, 2009).
What should also be mentioned as a corporate strategy is what they give back to the world
and to the environment. Costa Coffee is Rainforest Alliance certified, which means that all
their beans come from rainforest alliance certified farms, ensuring that the people and their
land where the beans grow are sustained and supported. The cups are also recyclable and
made from environmentally friendly ink, and Costa Coffee has also started the Costa
Foundation, which gives back to the communities where the beans come from (Costa Coffee,
2013). CBTL is also committed in ensuring social responsibility, they call it their ‘caring cup’
where they ensure support to charitable organisations and schools around the world. Gloria
Jean’s has also started a humanitarian organisation called ‘With Heart’ that seeks to make
lives better by helping disadvantaged children and their families who live in the coffee
producing regions of the world (Gloria Jean's Coffees, 2013).
Organisational design
All three coffee shops are headquartered in their original country base, giving the company
the bulk load of decision making responsibilities and less autonomy to the non-corporate
owned franchises. Costa Coffee’s headquarter is based in Whitbread PLC in the UK
(Whitbread PLC, 2013). CBTL has their headquarters in California, USA and offer their
franchisees assistance in all areas including training, store locations, store design, marketing,
logistics and operations (International Coffee & Tea, 2013). Gloria Jean’s has two
headquarters, The American headquarter is in charge of the US and the Puerto Rican market
as that is what they own, whereas the rest of Gloria Jean’s global ownership and franchise
rights belongs to the Australian co-founders and their international headquarters are based in
Castle Hill, Australia ( Gloria Jean's Coffees International Pty Ltd, 2013).
Costa Coffee
Costa Coffee is a company owned by Whitbread PLC, UK’s biggest company in hospitality.
Whitbread has divided their management into the ‘Board’ , ‘Executive Committee’, ‘Hotels
and Restaurants Management Board’ and ‘Costa Management Board’ (Whitbread PLC,
2013). Therefore, Costa is the only venture that has its very own management board assigned
to it by Whitbread. Christopher Rogers is Costa’s general managing director since 2005, the
rest of Costa’s board members and their titles can be seen here (Whitbread PLC, 2013).
Whitbread takes diversity and equality as an integral part in governing their enterprise
(including Costa Coffee), when people are chosen to join their company, they are done so
based on qualifications and merits without any sort of discrimination. The company has
responsibilities towards the board of directors, their shareholders, their internal control and
their overall staff around the world (Whitbread PLC, 2013).
After Costa decided to open its first international coffee shop in Dubai in 1999, just over a
decade later its managers announced that they will reach the goal of opening 100 in the UAE

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by 2012 with plans to open a further 50 by 2014 (Ferris-Lay, 2011). Part of the reason they
were so successful was their understanding of cultures and habits of their Arab clientele.
Marshall, one of the board’s directors announced that Costa would start targeting the other
Emirates in the UAE as he believed that they had prime locations that could be set up in their
premium malls and he acknowledged that over 25% of their clients are Arabs thus efforts
should be made to customise the menu to suit the clientele’s taste. A date cooler, dates and
date-cakes to compliment the Ramadan feel was a great example he mentioned that
demonstrates how Costa Coffee is trying to cater for the culture of the countries it is entering.
CBTL:
The Coffee Bean & Tea Leaf first opened its doors in 1963 in Southern California
(International Coffee & Tea, 2013) and now operates in over 928 in over 27 countries from
which 250 are company owned. The company owned stores are mainly located in the US,
Singapore and Malaysia, whereas most of their franchised stores are situated in various other
countries like the US, Bahrain, China, Egypt, Germany, India, Israel, Saudi Arabia and
Turkey to name a few (International Coffee & Tea, 2013).
CBTL franchisees get extensive support from the CBTL Corporation who owns the process
of the supply resources from seed to cup. The product development team at CBTL are in
charge of developing the recipes of the food and beverages sold in all stores worldwide to
ensure that items are kept to CBTL standard (International Coffee & Tea, 2013). The real
estate and Development team assist in location and store design, specification and
construction. They further give support to franchisees through their support team, this
includes the Franchise Business Manager to get in touch with for day-to-day activities and
obstacles, and training centres located in L.A., Kuala Lumpur and Singapore. To help
maintain the status and image of CBTL, the marketing team provide guidance to increase
brand visibility for example (International Coffee & Tea, 2013).
Gloria Jeans
Even though Gloria Jean’s is now Australian owned, it first originated in 1979 in Chicago,
where Gloria Jean and Ed Kvetko opened up the first gourmet coffee outlet. Not until 1995
did the brand enter the Australian market, Nabi Saleh and Peter Irvine, who wanted to
provide Australia with high quality coffee. In 1996 they opened their first coffee shop in
Sydney, one year later they started to franchise and by 2003 every state in Australia had a
Gloria Jean’s coffee shop. By 2004 it became Australia owned. From then, not even a decade
passed and Gloria Jean’s has now over 1000 stores across the globe with 42 Master Franchise
agreements signed in 39 countries. Gloria Jean’s Coffees International was able to purchase
all remaining Gloria Jean’s stores and franchising rights in 2009. (Gloria Jean's Coffees
International Pty Ltd, 2013), (Gloria Jean's Coffees International Pty Ltd, 2013).
Nabi Saleh is the Executive Chairman and co-founder of Gloria Jean’s, Keith Brown is the
Group Chief Executive Officer who was able to lead the company successfully through a
repositioning project. Craig Fishburn is the Global commercial Manager and is the one in
charge of the commercial contracts in and out of Australia. Last but not least, Rudi Selles,
who is the Global Legal Counsel of Gloria Jean’s and his main duties include negotiating

8
large and complex transactions locally and internationally (Gloria Jean's Coffees
International Pty Ltd, 2013).
Supply Chain
Costa Coffee
Costa Coffee became the first coffee shop to source all of their coffee supplies from
Rainforest Alliance Certified Farms in 2008 (Rainforest Alliance, 2008). Costa Coffee
sources all their beans from Central and South America, Africa and the Far East where
special fields grow the beans that will end up making Costa’s special Mocha Italia Blend.
After acquiring the beans, Costa goes into its testing phase, where a special team at Costa’s
rotaries critically examine the beans to determine which are good enough to eventually
produce the fine taste and aroma. Then special Petroncini and Probat drum roasters - which
are the same roasters used back in 1971- are used to slow roast the beans in a special
environment under low heat where they stop the roast just at the point when the oils and
blend are still fully contained in the beans. These beans then get distributed to all Costa
Coffee outlets around the globe, where the special trained baristas grind the coffee which
releases the oils that create the special aroma the customers enjoy (Costa Coffee , 2013)
CBTL
The Coffee Bean & Tea Leaf only uses special Arabica beans that are grown in over 6,000
feet of altitude. The beans come from small private farms in East Africa, Latin America and
the Pacific where they claim to get the very best coffee the world has to offer. In choosing
their beans they take climate, geographic location and agriculture into account. Like Costa,
they have special techniques in how to roast their coffee to perfection, and they too go
through extensive testing to make sure that their global standards are met.
The teas at CBTL come from tea plantations in Sri Lanka, Kenya, China, Japan, Thailand and
India. CBTL stays connected with the tea growers and does all business transactions without
the use of middle men in order to keep a long lasting relationship with the farmers
(International Coffee & Tea, 2013).
Gloria Jean’s
Gloria Jean’s started increasingly purchasing their coffee from Rainforest Alliance certified
farms around the world since 2005, including farms in Nicaragua, Mexico, Indonesia, Costa
Rica, Colombia, Brazil and Papua New Guinea (Gloria Jean's Coffees International Pty Ltd,
2012). Each Master Franchise Partner around the globe is able to order inventory from the
main supply chain hub in Sydney Australia, where quick and efficient restocking gets
distributed all around the world (Gloria Jean's Coffees International, 2013).

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Conclusion
In conclusion, Costa Coffee, CBTL and Gloria Jeans are all multinational corporations that
use related diversification as a one of their strategy as they all supply customers with coffees
and coffee related products. All three corporations were successful in their home lands prior
to going global. Reasons for going global included being able to increase profits by entering
new markets and to better compete against their rivals. All three also use the differentiation
strategy, as their products and services are to some extend unique to their competitors. They
also give back to the world and the environment through various donations and programs as
well as using environmentally friendly resources. All three corporations have their
headquarters based in their own countries and are operating the globe through them by the
means of franchising and corporate owned stores. They all get their beans from selected
unique farms which they have chosen, these beans go through special treatment before
reaching the stores, through which each coffee shop is able to have their own unique blend.
Costa Coffee is a company solely owned by Whitbread PLC, whereas the other two are an
independent company not owned by another.
WORD COUNT 2,711

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