INDEX

CHAPTER PAGE
TOPIC NO

I STARTEGIC ALLIANCE
1.1 Introduction
1.2 Definition
1.3 Features
1.4 Types Of Strategic Alliance 6-13
1.5 Advantages
1.6 Disadvantages

II TATA COFFEE & STARBUCKS

2.1 History Of Tata
2.2 About Tata
2.3 Brands Of Tata Coffee 14-23
2.4
Tata Coffee Instant Brands Of Coffee
2.5
History Of Starbucks
2.6
Principles
2.7
Objectives

III STRATEGIC ALLIANCE OF TATA COFFEE AND STARBUCKS.

3.1 Joint Venture
3.2 Products
3.3 Outlet In New Delhi
3.4 24-35
Location
3.5
Objective Of Tata Coffee
3.6
Objective Of Starbucks
3.7
3.8
Swot Analysis
3.9 Industry Analysis
3.10 Market Analysis
Tata Starbucks Private Limited.

IV Conclusion 36

V Biblography 37

CHAPTER-I {STRATEGIC ALLIANCE}

1
1.1- INTRODUCTION TO STRATEGIC ALLIANCE

Strategic alliance is an agreement between two or more organization to cooperate in a specific

business activity, so that each benefits from the strengths of the other, and gains competitive
advantage.

The formation of strategic alliance has been seen as a response to globalization and increasing
uncertainty and complexity in the business environment.

Strategic alliance involve the sharing of knowledge and expertise between partners as well as
the reduction of risk and costs in areas such as relationships with suppliers and the development
of new products and technologies.

Strategic alliances are becoming an important form of business activity in many industries,
particularly in view of the realization that companies are competing on a global field. Strategic
alliances are not a panacea for every company and every situation.

Partners may provide the strategic alliance with resources such as products, distribution
channels, Manufacturing capability, project funding, capital equipment, knowledge, expertise, or
intellectual property

Strategic alliances are critical to organizations for a number of key reasons:

Organic growth alone is insufficient for meeting most organizations required rate of growth.

Speed to market is essential, and partnerships greatly improve it.

Complexity is increasing, and no single organization has the required total expertise to best
serve the customer.

Partnerships can defray rising research and development costs. 5. Alliances facilitate access
to global markets.
1.2 DEFINATIONS

2
 Strategic alliance are long term agreements between firms that go beyond normal market
transactions but fall short of merger. Forms include joint ventures, licenses, long- term
supply agreement, and other kinds of inter firm relationships PORTOR, 1990.

Strategic alliances are voluntary arrangements between firms involving exchange,

sharing, or co-development of products, technologies, or services.. GULATI, 1998

Alliances are long-term, trust-based relationships that entail highly relationship-specific

investments in ventures that cannot be fully specified in advance of their execution
PHAN, 2000

A strategic alliance is a partnership between two or more firms that unite to pursue a set
of agreed upon goals but remain independent subsequent to the formation of the alliance
to contribute and to share benefits on a continuing basis in one or more key strategic
areas, e.g. technology, products YOSHINO & RANGAN, 1

1.3 FEATURES .

VALUES : To be successful in an alliance the organization need to hold a shared set of

values about the cause they are championing and about ways of working together. These
values will influence the way the parties approach the alliance and how they work together.

LEADERSHIP: Partnerships require champtions in each of the participating organizations,

and these individuals need to take direct responsibility for achieving the partnership goals.
Partnerships also require the unequivocal support of the leaders of the participating
organizations.

CLARITY OF MISSION AND STRATEGY: Strategic alliances need a compelling

mission, realistic objectives and a clear strategy for achieving them. Each partnership needs
to have great clarity over its goals, achievable objectives with win win opportunities for
both organizations.

3
BOARD COMMITMENT: The boards of all participating organizations need to be
strongly committed to the partnership and willing to support it through the good times and
the difficult times.

RESOURCES: Strategic alliance need to be properly resourced and there needs to be great
honestly and realism about the time and financial commitments each organization will have
to make to the partnership.

OPEN AN D HONEST COMMUNICATIONS: Manager need to recognize that many

different stakeholders such as funders, board and committee members, staff, chapters and
volunteers, may be affected by a strategic alliance. Each requires regular and through
communication. Formal communications should be supported by plenty of informal
communication, ideally at board, senior management and staff levels.

1.4 TYPES OF STRATEGIC ALLIANCE

JOINT VENTURES:
A joint venture is an agreement by two or more parties to form a single entity to undertake a
certain project. Each of the businesses has an equity stake in the individual business and
share revenues, expenses and profits. Joint ventures between small firms are very rare,
primarily because of the required commitment and costs involved.

OUTSOURCING:
The 1980s was the decade where outsourcing really rose to prominence, and this trend
continued throughout the 1990s to today, although to a slightly lesser extent.

AFFILIATE MARKETING:
Affiliate Marketing has exploded over recent years, with the most successful online retailers
using it to great effect. The nature of the internet means that referrals can be accurately

4
tracked right through the order process. Amazon was the pioneer of affiliate marketing, and
now has tens of thousands of websites promoting its products on a performance-based basis.

TECHNOLOGY LICENSING:
This is a contractual arrangement whereby trade marks, intellectual property and trade
secrets are licensed to an external firm. It is used mainly as a low cost way to enter foreign
markets. The main downside of licensing is the loss of control over the technology as soon
as it enters other hands the possibility of exploitation arises.

PRODUCT LICENSING:
This is similar to technology licensing except that the license provided is only to
manufacture and sell a certain product. Usually each licensee will be given an exclusive
geographic area to which they can sell to. It is a lower-risk way of expanding the reach of
your product compared to building your manufacturing base and distribution reach.

FRANCHISING:
Franchising is an excellent way of quickly rolling out a successful concept nationwide.
Franchisees pay a set-up fee and agree to ongoing payments so the process is financially
risk-free for the company. However, downsides do exist, particularly with the loss of control
over how franchisees run their franchise.

RESEARCH & DEVELOPMENT:

Strategic alliances based around R&D tend to fall into the joint venture category, where two
or more businesses decide to embark on a research venture through forming a new entity.

DISTRIBUTORS:

5
 If you have a product one of the best ways to market it is to recruit distributors, where each
one has its own geographical area or type of product. This ensures that each distributors
success can be easily measured against other distributors.

DISTRIBUTION RELATIONSHIPS:
This is perhaps the most common form of alliance. Strategic alliances are usually formed
because the businesses involved want more customers. The result is that cross-promotion
agreements are established.

1.5 ADVANTAGES OF STRATEGIC ALLIANCES

NOWADAYS, strategic alliance has become a common strategy to businesses. Two or

more enterprises choose to form a partnership and work cooperatively to achieve their mutually
beneficial objectives.

In a plain view, strategic alliance just reflects the desire of enterprises to achieve their
independent business objectives cooperatively. But, in the true fact of todays globalizes and
complex market place, there is the need to make such a business arrangement in order to gain
competitive advantages among the fierce competitors in the market place.

Enterprises that enter into strategic alliance usually expect to benefit in one or more
ways. Some of the potential benefits that enterprises could achieve are such as:

GAINING CAPABILITIES

An enterprise may want to produce something or to enquire certain resources that it lacks in
the knowledge, technology and expertise. It may need to share those capabilities that the
other firms have. Thus, strategic alliance is the opportunity for the enterprise to achieve its
objectives in this aspect. Further to that, in later time the enterprise also could then use the
newly acquired capabilities by itself and for its own purposes.

6
EASIER ACCESS TO TARGET MARKETS

Introducing the product into a new market can be complicated and costly. It may expose the
enterprise to several obstacles such as entrench competition, hostile government regulations
and additional operating complexity. There are also the risks of opportunity costs and direct
financial losses due to improper assessment of the market situations.

Choosing a strategic alliance as the entry mode will overcome some of those problems and
help reduce the entry cost. For example, an enterprise can license a product to its alliance to
widen the market of that particular product.

SHARING THE FINANCIAL RISK

Enterprises can make use of the strategic arrangement to reduce their individual enterprises
financial risk. For example, when two firms jointly invested with equal share on a project,
the greatest potential that each of them stand to loose is only half of the total project cost in
case the venture failed.

WINNING THE POLITICAL OBSTACLE

Bringing a product into another country might confront the enterprise with political factors
and strict regulations imposed by the national government. Some countries are politically
restrictive while some are highly concerned about the influence of foreign firms on their
economics that they require foreign enterprises to engage in the joint venture with local
firms. In this circumstance, strategic alliance will enable enterprises to penetrate the local
markets of the targeted country.

7
ACHIEVING SYNERGY AND COMPETITIVE ADVANTAGE

Synergy and competitive advantage are elements that lead businesses to greater success. An
enterprise may not be strong enough to attain these elements by itself, but it might possible
by joint efforts with another enterprise. The combination of individual strengths will enable
it to compete more effectively and achieve better than if it attempts on its own.

For example, to create a favorable brand image in the consumers mind is costly and time-
consuming. For this reason, an enterprise deciding to introduce its new product may need a
strategic arrangement with another enterprise that has a ready image in the market.

1.6 DISADVANTAGES OF STRATEGIC ALLIANCE

SHARING:

In a Strategic Alliance the partners must share resources and profits and often skills and
know - how. This can be critical if business secrets are included in this knowledge.
Agreements can protect these secrets but the partner might not be willing to stick to such an
agreement.

CREATING A COMPETITOR:

The partner in a strategic alliance might become a competitor one day, if it profited enough
from the alliance and grew enough to end the partnership and then is able to operate on its
own in the same market segment

OPPORTUNITY COSTS:

Focusing and committing is necessary to run a Strategic Alliance successfully but might
discourage from taking other opportunities, which might be benefitial as well.

8
 UNEVEN ALLIANCES:

When the decision powers are distributed very uneven, the weaker partner might be forced
to act according to the will of the more powerful partners even if it is actually not willing to
do so.

FOREIGN CONFISCATION:

If a company is engaged in a foreign country, there is the risk that the government of this
country might try to seize this local business so that the domestic company can have all the
market on its own.

CHAPTER II {TATA COFFEE & STARBUCKS PROFILE}

2.1 HISTORY OF TO TATA COFFEE

Tata Coffee's past was rooted in 1922 when two companies M/s. Coorg Co. Ltd., London and
M/s Pollibetta Coffee Estates Co. Ltd., London both managed by M/s. Matheson & Co.,
combined to form Consolidated Coffee Estates Ltd., Edinburgh.

In 1943, M/s. Consolidated Coffee Estates Ltd., Edinburgh became a full fledged Indian
company headquartered in Pollibetta. In the same year, the shares in M/s. Consolidated Coffee
Estates Limited (CCE) were offered to the general public through a prospectus, with the parent,
M/s. Edinburgh Company, being allotted a major share as a consideration for transfer of its
estates.

Shortly thereafter, during the early part of the 1950-1960 decade, M/s. Edinburgh Company sold
all its shareholdings to the Indian public, relinquishing its controlling interest in CCE and
becoming one of the first sterling plantation company to become an Indian company.

9
During 1966-67, Volkart properties in India, which included four estates, two curing works and
an export division, merged with CCE, and the company was renamed as the erstwhile M/s.
Consolidated Coffee Limited (CCL).

M/s. Tata Tea Limited, in a trend setting and transparent open offer to the resident shareholders,
acquired a controlling interest in CCL during 1991-1992.

In a historic move in September 1999, M/s Asian Coffee Ltd., M/s Veerarajendra Estates Ltd.,
and M/s Charagni Ltd., merged with CCL, and became the single largest integrated plantation
company in the world.

CCL became the single largest coffee plantation company in Asia with its estates located in
Kodagu, Hassan, and Chikmagalur districts of Karnataka.In 2000, the company was renamed as
'Tata Coffee Limited'

2.2 ABOUT TATA COFFEE

Tata Coffee Ltd (TCL), a 57.48% subsidiary of Tata Global Beverages Ltd. (TGBL) [earlier
known as Tata Tea Ltd], is Asias largest integrated producer of coffee. TCL is the largest
integrated coffee plantation company in the world and the 3rd largest exporter of instant coffee
in the country.

The company owns 19 coffee estates in southern India. The estates are spread across the districts
of Coorg, Chickmaglur, and Hassan in Karnataka and Valparai district in Tamil Nadu. TCL sells
instant coffee as well as roasted and raw coffee beans in India, Russia, the US, Japan and
countries in Africa. It also owns the Eight OClock coffee brand in the USA.

The Company produces more than 10,000 MT of shade grown Arabica and Robusta coffees at
its estates in South India and its 3 Instant Coffee manufacturing facilities have a combined
installed capacity of ~8500 MT. It exports green coffee to countries in Europe, Asia, Middle
East and North America. TCLs manufacturing units are triple certified: Utz, Rainforest Alliance
and SA8000 reinforcing its commitment to the people and the environment.

10
TCLs tea estates are located in Tamil Nadu and Kerala. The total extent of the holding is 10,320
Hectare (Ha), out of which 7,447 Ha is under Coffee, 2,465 Ha is under Tea and 408 Ha under
Cardamom/Paddy/Pepper/Areca etc. TCL has its curing works in Karnataka and three instant
coffee plants in Andhra Pradesh and Tamil Nadu.

MISSION & VISISON

VISION

Tata Coffee will strive to be the preferred choice in the premium markets.

Customer centricity, quality, sustainability and an engaged workforce will be our drivers to
achieve a Rs.1,000 crore enterprise by 2015.

Tata Coffee shall be perceived as one of the most respected organisations in the plantation
and extraction business.

MISSION

To continuously enhance value to stakeholders through our operations while preserving and
enhancing the ecological wealth entrusted to us.

Improving the quality of life of our people.

.2.3 BRANDS OF TATA COFFEE

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 MR. BEAN

The jewel in the crown of Tata Coffee, this is a high-quality

product made from the finest coffee beans. It is a blend of 53
per cent conventional coffee and 47 per cent chicory. Selected
from the finest grades of Arabica and Robusta mixed with
premium chicory, Mr. Bean delivers a fine cup with high
cuppage. Mr.Bean also has the credit of introducing a very
innovative packaging, first of its kind in its category.

It is the second largest brand in the segment it operates in. The brand is positioned on
growers advantage. The positioning statement says that, "it is the bean that makes the
difference". Tata Coffee grows best beans and hence can guarantee best coffee. The
brand is very popular in the states of Kerala and Tamil Nadu.

COORG PURE
Coorg, a 100 per cent pure filter coffee is the connoisseurs' choice. It is
made from premium Arabica and Robusta coffees to
give a balanced flavour and strength and is packed in
triple laminate polypacks which safeguard the product's
aroma and freshness. The brand has become as much a
part of the purist's morning as the sound of temple bells,
suprabatham and the morning newspaper. A rich shot of
the traditional hand-grinder, lit by shafts of morning
light is a key image that triggers off memories of a time
when coffee was ground at home. It is the only brand of pure coffee available in triple
laminate polypack (seals in aroma and freshness) in the market. Coorg pure is available
in Chennai, Bangalore and in parts of Tamil Nadu.
FRENCH PRESS

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 Medium roasted, coarse ground coffee packed in two cup sachets is
brewed in the French press and gives a mild taste and good
flavour. This is a favourite product of the leading hotels in the
country for their in-room beverage facilities.

ROASTED COFFEE BEANS

Tata Coffee's basic strength is its coffee plantations, its processing

facilities and its ability to offer high quality coffee beans.

Today, we are witnessing an ever increasing demand for

high quality roasted coffee beans for out-of-home
consumption, especially at premium hotels and cafs.

TCL's cultural practices at it's coffee plantations and processing at its state-of-the-art curing
plant ensures a high quality bean.

Thereafter, TCL's high quality cupping facility enables the company to develop customised
blend for its valued customers.

The coffee beans are roasted in the new state-of-the-art Neuhaus Neotec roaster at it's modern
roastery, to deliver an accurate and consistent taste profile. Roasted coffee beans are packed with
strict protocols in one way valve packs to deliver the same quality promised to its customers cup
after cup.

With this commitment to quality assurance, TCL has been able to bag prestigious orders in high
volumes in both India and abroad.

Today TCL has many satisfied customers in the caf segment from Sikkim in the north to
Trivandrum in the south and from Guwhati in the east to Gujarat in the west.

13
 2.4 TATA COFFES INSTANT COFFEE BRANDS

Tata Coffee has two Instant Coffee manufacturing units that produce spray dried agglomerated
instant coffee, where stringent quality measures are observed and is customer driven meeting all
quality requirement. The Instant Coffee Division of the company is ISO 9001 certified.

Tata Coffee's Instant Coffee brands are:

TATACAF

Tata Caf is a 100 per cent pure Instant Coffee. Launched in 1996, it offers a cup of pure
instant coffee with a 'coffee bush to cup' experience. Innovative marketing and
endorsements by popular film artists like Sridevi and Renuka Sahane and ace cricketer
Saurav Ganguly, have given this product a larger than life image.

TATACAFINTERNATIONAL

International Tata Cafe consists of an Arabica Robusta blend that combines the fine
aroma of Arabica with the strong taste of Robusta. It appeals to buyers who want an
instant kick in their coffee. The brand had a strong following in Russia and CIS
countries and continues to sell there

TATAKAAPI

Tata Kaapi is a mixture of instant coffee and chicory and is the third player in the instant
coffee-chicory segment. This brand attempts to strike a balance between tradition and
modernity. A blend of tradition and lifestyle imagery have been used to project this
brand. Innovative marketing has been the hallmark of this brand, with everything larger
than life and beyond ordinary. The response to this product has been positive with a
heartening response from the most discerning coffee state of them all - Tamil Nadu. This
brand has also entered the Guinness Book of World Records with the world's largest
coffee mug.

14
 MYSOREGOLD

Mysore Gold is one of the most popular spray dried coffee brands in Russia and
Ukraine. The brand has a long heritage of more than 15 years and was one of the first
Indian brands to be introduced in Russia. True to its name Mysore Gold is one of the
purest Indian blends and hence a gold standard.

Many consumers in Russia are nostalgic about the brand and continue to remain loyal
to the brand.

2.5 HISTROY OF STARBUCKS

Starbucks was established in 1971 by three local businessmen to sell high quality whole beans
coffee. In 1981 when Howard Schultz visited the store he plan to build a strong company and
expand high quality coffee business with the name of Starbucks. Starbucks air is to provide high
quality of coffee to its consumer and aim to achieve product innovation, retail expansion and
provide service quality for long term.

Starbucks open its first coffee store in Seattle, Washington. In 1990 Starbucks expand its
headquarters in Seattle and also build a new roasting plant. In 1990s Starbucks opens 60 retails
shops in United Kingdom. At the end of 2000s Starbucks total branches was 3500. Coffee is one
of the rapidly growing industry in this world due to its business strategy. According to national

15
coffee association, USA 49% of American age 18 and more drink coffee beverage every day.
Coffee industry was in peak of its success at the end of 1990s.

VISION, OBJECTIVE AND MISSION

VISION STATEMENT

Starbucks vision statement is;

To establish Starbucks as the most recognized and respected brand in the world and
become a national company with values and guiding principles that employee could be proud of

The vision statement clearly describes the dream or the future of the company that is to be the
worlds most well known coffeehouse and also to be the most appreciated and positively graded
brand by all levels of people around the world. The company also focuses its vision to employee
satisfactions, so that the employees will be happy.

OBJECTIVES OF STARBUCKS

Is to Grow by making employees feel valued

Starbucks approach the employee with good compensation and comprehensive benefits
package. The company beliefs that sharing the companys success with the people who made
happen will help them think and acts like an owner of the company.

Is to Recognize that every dollar earned passes through employees hands

Starbucks will always appreciate the employee as the revenue which is increasing every year is
by the efficient and hardworking employees. This drastic increase in profit is not recognized
without the support of the employees who attracts the customers to a long term relationships
with the coffeehouse.

16
 Use the pays, benefits and opportunities for personal development to help gain
employee loyalty and become difficult to imitate.

Paying scale and fringe benefit package allowed it to attract motivated people with above
average skills and good work habits and also to make the employee to be loyal with Starbucks.

MISSION STATEMENT

Starbucks Mission Statement is;

Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining
our uncompromising principles while we grow.

The six principles are:

1. Provide a great work environment and treat each other with respect and dignity.

2. Embrace diversity as an essential component in the way we do business.

3. Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our
coffee.

4. Develop enthusiastically satisfied customers all of the time 5. Contribute positively to our
communities and our environment 6. Recognize that profitability is essential to our future
success.

2.6 MAIN PRINCIPLE OF STARBUCKS

Provide a great work environment and treat each with respect and dignity.

Embrace diversity as an essential component in the way we do business.

Apply the highest standards of excellence to the purchasing, roasting and fresh delivery
of their coffee.

Develop enthusiastically to our communities and our environment

17
 Recognize that profitability is essential to future success

2.7 OBJECTIVES

CUSTOMER + CORPORATE SLIDE

To maintain starbucks standing as one of the most recognized and respected brands in
the world.

To be the leading retailer and brand of coffee in each of target markets by selling the
finest quality coffee and related products, and by providing each customer a unqiue
Starbucks Experience

To build and maintain a great, enduring company that strikes a balance between
profitability and a social conscience based on three major framework of ethical sourcing,
environmental stewardship and community involvement

EMPLOYEES SIDE

To Grow by making employees feel valued

Starbucks approach the employee with good compensation and comprehensive benefits
package.

To Recognize that every dollar earned passes through employees hands

18
Starbucks will always appreciate the employee as the revenue which is increasing every year is
by the efficient and hardworking employees.

Use the pays, benefits and opportunities for personal development to help
gainemployee loyalty and become difficult to imitate.

Paying scale and fringe benefit package allowed it to attract motivated people with above
average skills and good work habits and also to make the employee to be loyal with Starbucks

CHAPTER III {STRATEGIC ALLIANCE OF TATA COFFEE AND STARBUCKS}

3.1 TATA GLOBAL BEVERAGES AND STARBUCKS FORMS -- JOINT VENTURE

Separate coffee sourcing and roasting agreement with Tata Coffee will accelerate the
discovery of Indian arabica coffees in India and around the world

Tata Global Beverages and Starbucks Coffee Company,

JANUARY 2011, announced a joint venture between the iconic
international coffee brand and the second-largest branded tea
company in the world. The 50:50 joint venture, named Tata
Starbucks, will own and operate Starbucks cafs which will be
branded Starbucks Coffee A Tata Alliance.

19
The retail stores will be developed in cities across the country, beginning with stores in Delhi
andMumbaiincalendar2012.

In a separate sourcing and roasting agreement between Starbucks Coffee Company and Tata
Coffee, Tata Coffee will roast coffee to supply Tata Starbucks, and to export to Starbucks Coffee
Company. This agreement paves the way for consumers in India to enjoy the premium Starbucks
Experience, while further discovering the unique taste of high-quality Indian arabic a coffee
worldwide. Tata Starbucks brings together two companies with a rich heritage in, and passion
for, coffee, tea and innovative beverages. Together, the JV will enable an expanded range of
beverage offerings for Indian consumers. As an example, the companies have agreed to jointly
leverage assets and innovation to offer a premium tea product branded TataTazo.

The joint venture with Starbucks is in line with Tata Global Beverages strategy of growing
through inorganic growth focusing on strategic alliances in addition to organic growth, stated
RK Krishna Kumar, vice chairman, Tata Global Beverages. It opens up exciting business
opportunities and new formats for Tata Global Beverages. Starbucks brings unique retail
expertise as well as a shared sense of business values. We are excited about the opportunities the
alliance presents to innovate in the retail space and bring new beverage experiences to more
consumers in India, leveraging the global in-home expertise of Tata Global Beverages and the
global out-of-home expertise of Starbucks.

Were very pleased to have found the best partner for Starbucks in Tata a group that shares
so many of the same values for conducting business in a way that earns the trust and respect of
our customers and partners (employees), said John Culver, president, Starbucks China and Asia
Pacific. We look forward to bringing the Starbucks Experience to customers in India by
offering high-quality arabica coffee, handcrafted beverages, locally relevant food, and-
legendary-service.

The Tata Starbucks joint venture will operate cafs under the Quick Service Restaurant category.
This partnership will enable the introduction of the unique Starbucks Experience to Indian
consumers. Through a separate coffee sourcing and roasting agreement, Starbucks and Tata
Coffee will work towards developing and improving the profile of Indian-grown arabica coffees
20
around the world by elevating the stature of Indian coffee through joint marketing efforts, as
well as improving the quality of coffee through sustainable practices and advanced agronomy-
solutions.

Starbucks and Tata share common values of responsible business ethics and a commitment to
community. Tata Coffee has been working to improve the lives of coffee growing communities
in the state of Karnataka. Through an initial financial commitment.

Starbucks will work with Tata to support 'Swastha', a school for children with special needs (in
partnership with the Coorg Foundation) and aim to increase its capacity and outreach into the
rural communities in the coffee growing region of Karnataka. Tata Coffee and Starbucks also
plan to work together on initiatives including the promotion of responsible agronomy practices
and the provision of training for local farmers, technicians and agronomists to improve their
coffee-growing and milling skills, along with exploring community projects which could
positively impact the communities in the coffee growing regions where Tata is active.

3.2PRODUCTS

Apart from the usual products offered internationally, Starbucks in India has some Indian style
product offerings such as Tandoori Paneer Roll, Elaichi Mawa Croissant and Murg Tikka Panini
to suit Indian customers.

On 15 June 2015, Tata Starbucks announced that it was suspending the use of ingredients that
had not been approved by the Food Safety and Standards Authority of India (FSSAI). The
company did not specify what the ingredients or the products they were used in were. The
company also stated that it was in the process of applying for FSSAI approval for these
ingredients.

Free Wi-Fi is available at all Starbucks stores

21
3.3-TATA STARBUCKS LAUNCHES NEW OUTLET AT SELECT CITY WALK MALL
IN DELHI

NEW DELHI: Expanding its footprint, coffee chain Tata Starbucks today opened its ninth outlet
in the country with the inauguration of its latest cafe in South Delhi.

Commenting on the launch, Tata Starbucks Chief Executive Officer Avani Davda said: "Our
customers in New Delhi have extended a very warm welcome to us and we are thrilled to open
our second store in the city."

3.4- LOCATIONS

As of April 2015, Starbucks operates 75 outlets in 7 cities of India.

STATE/REGION CITY NO.OF OUTLETS FIRST OUTLET

Delhi New Delhi 13 24th January,2013

Delhi NCR Gurgaon 6 10th July, 2013

Maharashtra Mumbai 26 19th October, 2012

(IncludingThane And
Vashi)

Karnataka Bangalore 10 22ndnovember, 2013

Tamil Nadu Chennai 5 8th July, 2014

Telangana Hyderabad 5 1st October,2014

22
3.5 OBJECTIVE OF TATA COFFEE BEHIND THIS DEAL

The agreement will allow Tata coffee to provide roast coffee bean to starbucks in
India.
Get opportunity to jointly invest in additional facility for export to other market.
Starbucks provide new technology to the promotion of responsible agronomy
practices.
Along term relationship will be formed with this MoU with Starbucks.
After this deal, Tata Coffee is become Asias biggest publicity traded coffee
grower.

3.6- OBJECTIVE OF STARBUCKS BEHIND THIS DEAL

Starbucks aiming to enter in Indian market through this MoU.

Starbucks believe that India can be an important source for coffee in the domestic
market, thats why they entered in India.
The knowledge and understanding of the Indian market can be brought by Tata Global
Beverages, because it has been in this play for a while.
The Tata also have an arm in retail so theres a synergy there as well.

3.7-SWOT ANALYSIS

STRENGTH :

High Brand Visibility. (International popularity of the Starbucks brand.)

Ethical and Environmental Practices.
Superb Marketing and positioning skills of Starbucks.
Access to TATA's premium Robusta and Arabica coffees (Sourcing Agreement).
Tata as a cultural fit for Starbucks will help in building core competencies of each other.
(Tata has met all the stringent standards and conditions followed by Starbucks such as
quality, soil, water, pest, waste and energy management, forest and biodiversity
23
 conservation to workers welfare, wages and benefits, living conditions, health, safety,
etc.)

WEAKNESSES

Image of luxury coffee outlets.

High price of coffee is felt as a barrier in the South and the North. (Starbucks products
were priced at a premium and the per capita income in India is lower compared to other
markets where it is already present, there is immense need to offer products at locally
competitive price.)
Coffee dominant business. (Need to diversify)
Certain rigid standards and policies at outlets. (They apply the same business models and
formulas, regardless of culture and values of the country they are operating in like no
smoking policy, etc.)
The entry of Starbucks is aimed at the out-of-home coffee consumption market and this
may affect the alliance of Tata Coffee with Barista.

OPPORTUNITIES

India is the second most populated country in the world. Huge Market.
English speaking populations
Growing Middle Class and increasing spending power of Indian Population.
Young Population (Consumers in the age group of 2045 years were emerging as the
fastest growing consumer group and the average age of an Indian in 2020)
Favorable Cost of Labor
Favorable cost and quality of telecom infrastructure
Fair availability of workforce (Quantity as well as skilled)
Tea-based culture of India could be used as opportunities by offering more tea-based
drinks.

THREATS

India is a tea-based culture. (The Indian hot-beverage market is dominated by tea. India
was the largest producer and consumer of tea in the world and accounted for 29% of the
total production and over 20% of the total consumption globally.60 Most of the Indians
consumed tea at least twice a day, in the morning and in the afternoon.)
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 Homegrown brands dominate the retail coffee market. Coffee Caf Day (CCD)
pioneered the concept of specialty coffee in India followed by Qwikys and Barista
Coffee.
Lower per capita income in India. High price of coffee is felt as a barrier in the South
and the North. (Starbucks products were priced at a premium and the per capita income
in India is lower compared to other markets where it is already present, there is immense
need to offer products at locally competitive price.)
Visiting cafes is not a frequent habit among most of the Indians.
Other fast food chains like that of McDonalds, Dunkin Donuts, Burger King, etc.,
already have the infrastructure in place and are instead adding quality coffee to their
menus to compete with Starbucks. Rising prices of coffee are putting pressure on the
profit margins of the company.

3.8-INDUSTRY ANALYSIS PORTERS FIVE FORCES FRAMEWORK

One of the widely held assessment tools of

an industrys competitive forces is the five
forces model of competition created by
Michael Porter. These five forces are: the
competitive force of rivalry among sellers,
the competitive force of potential new
entrants, the competitive force of substitute
product, the competitive force of supplier
bargaining power, and the competitive force of buyer bargaining power (Porter, 1980)

INDUSTRY RIVALRY

Major competition for Starbucks in India comes from that of Caf coffee day. The
abbreviation CCD is known to most of the people in urban parts of India. Their positioning is
same as what Starbucks have in US. The other competitors include Barista Lavazza, Quicky's,
Barista and Costa Coffee, which are also the multinational brands, and widely recognized. Apart
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from them, secondary competitors include the Georgia Coffee, served in fast food joints like that
of Mc Donalds and KFC, etc.

POTENTIAL FOR NEW ENTRANTS

The entry barriers in the coffee retail industry are relatively low in India, particularly for
the foreign players. This is possible owing to the fact that 51 % FDI is allowed in India in retail
sector. Any large or well-funded company having the thorough understanding of the market can
enter into retail sector in India. Given the fact that Starbucks is a global, it is having its own
advantages when it comes to achieving the economies of scale. Starbucks being the global
coffee retail chain, they are not going to have any particular capital related problems.

Also, they are having MoU being signed with TATAs for opening their outlets in their
TAJ group of hotels and resorts. India, being the sixth largest producer of coffee in the world is
having the largest home grown supply of coffee beans and thus, sourcing coffee in this industry
is not going to be much of the problem.

Customer or Supplier Loyalty - Indian market is already being captured by the long
established brands like Caf coffee day, Barista, Barista Lavazza and Costa Coffee. Thus, it is
going to be pretty much difficult for any of the new entrant to establish its brand name in the
Indian market. However, Starbucks being the international brand will definitely help in
attracting the educated Indian crowd.

Market Experience - The existing players in the Indian coffee retail industry have been here in
the market from last 10 years. Thus, their management must be having greater understanding of
the Indian markets and Pallets. Therefore, for Starbucks, it is going to be important to first
understand the Indian preferences, before making any major move.

Differentiation - Coffee is not the product where there is a great scope for product
differentiation. However, it depends on most of the cases on the store ambience, which can act
as the point of differentiation.

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BARGAINING POWER OF BUYERS

In the past, buyers in India were not having much of the bargaining power as there were
not many food retail giants which were present in the country. However, with the advent of
multinational food retail giants in India, like that of Mc Donalds, Barista Lavazza, Caf Coffee
Day and Costa Coffee, consumer is faced with lots of choices. Thus, it will be difficult for
Starbucks to influence the Indian buyers to pay premium for their products. As also the per
capita income of Indian Customers is low and their mindset is not so affirmative with coffee 19
culture, however it is catching up among youths, the pricing need to be highly competitive and
on zonal basis.

3.9-MARKET ANALYSIS- DAVID AAKERS 7 DINENSIONS OF MARKET FORCES

MARKET SIZE

The recent past has witnessed an upward shift in the per capita consumption of coffee in
India, with growing preference amongst the young population. Moreover, the increasing
spending propensity of the young Indians and their changing lifestyle has increased the demand
for coffee in India. As compared to FY2005 a clear growth can be witnessed in FY2010 in per
capita consumption. The per capita consumption in FY2010 increased to 89.3 grams as
compared to 70.9 grams in FY2005 due to presence of a strong preference towards instant
coffee.

MARKET GROWTH RATE

The consumption of coffee in India has grown steadily at a historical CAGR of 6.3%
during FY2005-FY2010 and is expected to pace at a CAGR of 4.9% in the near future. In
FY2010, the per capita consumption has increased to 89 grams from 85 grams in 2005 at a
growth rate of 5%.

The Indian coffee market has witnessed a steady growth in the past 5 years due to the
growing preference for instant and organic coffee amongst the coffee drinkers. Moreover, rising

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consumer expenditure and export promotion schemes implemented by government has
influenced the growth of the market in India.

MARKET PROFITABILITY

The revolution in the Indian coffee market has changed the tastes of the consumers and
overwhelmed them with variety of new options. Today people prefer instant coffee over the
traditional coffee, 20 because of the busy lifestyle and changes in their tastes and preference
towards instant coffee.

The Indian coffee market is dominated by big players such as Nescafe who has a share of
68.8% followed by BRU and Tata Coffee with 13.5% and 3.2% respectively. Marketers today
see a lot of potential in the instant coffee segment, which is one of the reason many big
companies are adopting various strategies to capture it.

INDUSTRY COST STRUCTURE

Competitive pricing is necessary for the success of the venture; hence Starbucks must
take various costs into consideration. Because of the costs involved in startup, transportation and
imported goods, the price need to be set at about USD 1 per drink using the concept of zone
pricing to make the coffee affordable to the target audience. Exchanges need to be done in
rupees so that would be about 55 rupees.

The prices for all goods need to be relative to the others. With the use of this pricing
policy, Starbucks prices would be 20% lower than those of the Barista Company. Though, it is
possible to get a cup of coffee for merely 5 rupees in small stalls on the street, the success of the
Barista Coffee Company show that the customers are willing to pay for better quality, service,
and environment.

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DISTRIBUTION CHANNEL

As its distribution strategy, the Starbucks has already started its first store at Mumbai. This
flagship store is located at the historic Elphinstone Building, Horniman Circle, Mumbai and
marks the beginning of the iconic brands India journey. In addition to the flagship store at 21
Horniman Circle, Tata Starbucks Limited will launch two more stores in near future at Oberoi
Mall and the Taj Mahal Palace Annexe in Mumbai. Subsequently, the other stores will be
opened at other metropolitan areas. The urban areas are thus the first choice of Starbucks as its
both primary market of youths and secondary market of tourists from other countries are catered
here.

MARKET TRENDS

A major part of the countrys foreign exchange earnings come from the Coffee industry.
Since the inception of coffee in India, the production has been rising along with changes
experienced in the consumption pattern over the years

Increasing per capita consumption due to growth of the indian population which led to
boost coffee market.

Evolving coffee retails chain concept-Barista, CCD etc

Global players foraying into the Indian market

Increasing preference towards instant coffee

Growing preference towards organic coffee

KEY SUCCESS FACTORS

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 The Primary target market for Starbucks Coffee Co. in India is the young both male and
female from the ages of 16-38. This market is well educated and comes from middle class to
upper middle class population and out-of-home coffee drinking culture is catching up. The
international appeal of Starbucks will add up to the promotion of this culture.

The highly trained baristas of Starbucks, its technologies and processes by which it sources high
quality coffee, roasts, brews and serves to its customers will surely act as Key Success Factors
of the Company. Besides its alliance with Tata Coffee to source high quality Arabica Coffee will
also help.

3.10TATA STARBUCKS PRIVATE LIMITED- (PROFT)

Tata Starbucks added 29 new stores during the year taking the store count to 72 stores as at
the end of the financial year. The business continues to perform well and the overall
performance of most stores continues to be robust. The company launched its loyalty
programme during the year and received encouraging response.

The focus during the year has been improving customer experience and sharing coffee
knowledge. In order to achieve this, we commenced coffee master certification program and as
at March 2015, we have 60 certified coffee masters. Our commitment to community continues
to be a key priority at our stores and participated in 172 community initiatives during the year.

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 Tata Starbucks which was originally incorporated as a Public Company under the name
'Tata Starbucks Limited' was converted into a private limited company on 16th March 2015
pursuant to Section 18 of the Companies Act, 2013 and Rules framed thereunder.

CONCLUSION

Starbucks is another industry stalwart to enter the Indian market due to vast potential and
huge untapped market where Indian are influenced by western Lifestyles
Indian consumers have always welcomed change when it comes to their buds
Worlds largest young population (aged 30) with growing purchasing power
Timing of their entry couldnt be better with 100% FDI in single brand retail
It comes as a breath of fresh air with CCDs Barista Costa coffee, almost losing their
sheen
Indian which is the 5 largest producer of Coffee and cheap skilled manpower could mean
more profit margins for the Company
50-50 joint venture with TATA will act as symbiotic relationship, both will improve each
others core competencies

Thus Coffee Culture is poised to be deeply in grained into Indian Culture in the near future and
this will mean great opportunities for this partnership.

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BIBLOGRAPHY

1. http://www.geohaz.in/

2. http://scridb.com

3.http://slideshare.com

4.http://strategic.com

5.http://linkin.com

6.http://slideshare.arvind.com

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