Tata and Star Bucks SWOT analysis

7/31/2019 Tata and Star Bucks SWOT analysis

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Strategic Alliance of Tata Coffee

and StarbucksBy-Anita Sharma

Prestige Institute of Management, Gwalior


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Indian Coffee Industry

Indian Coffee Industry The coffee industry of India is the fifth largestproducer of coffee in the world, accounting for over four percent ofworld coffee production, with the bulk of all production taking placein its Southern states

Avg. Coffee consumption in India is 10 cups per day. India is the only country that grows all of its coffee under shade.

Indian coffee has a unique historic flavor.


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Starbucks coffee and Tata coffee signed MoU(Memorandum of Understanding) on 13 January 2011.The MoU was aimed at collaboration between the twocompanies for sourcing and roasting high quality green

coffee beans in Tata Coffees facility in Coorg in SouthIndia. Moreover, the two companies is jointly explore thedevelopment of Starbucks retail stores in associatedretail outlets and hotels. The Mou was an important step

taken by Starbucks towards market entry. On 12 January, 2012 they have announced to open

outlet in Mumbai, Delhi, Bangalore


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Tata Coffee

Area of business

-Grows coffee on its own estates,

-Processes the beans,

-Exports green coffee,

-Manufactures and exports Instant Coffee


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Competitive Advantage of Tata Coffee

The largest integrated coffee plantation company in the world .

It's uniqueness lies in its ability to produce large quantities of estatespecific, strain specific, special and premium coffee, while maintaining astrict consistency in quality.

It has a hand in every aspect of the coffee making process

With the major coffee consumption markets being Arabica-centric, thislobby has been prevailing in international markets by Tata coffee.


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Starbucks

It is an international coffee and coffeehouse chain based in Seattle, Washington.

Starbucks stresses quality above price and other features it could emphasize.

Starbucks specializes in coffee and related beverages.

The company sells coffee, Italian-style espresso beverages, cold blended beverages, as well as a selection of premium teas and coffee-related accessories and equipment.


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Competitive advantage of Starbucks

Strong brand image

Starbucks specializes in coffee and related beverages.

Starbucks is the largest coffeehouse company in the

world.

They have loyal customer worldwide.


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Marketing Strategy of Starbucks

Starbucks started a community website, My Starbucks

Idea

Its rare to find a Starbucks ad in a billboard, ad space,

newspaper or poster in places.

The company has went to great lengths to create a

communityatmosphere among premium coffee lovers.

Starbucks operates primarily through joint ventures andlicensing arrangements with consumer products business partners


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About the deal

*Starbucks is coming India with joining hand to Tata Coffee.

*Starbucks will explore setting up stores in the Tata group's retail

outlets and hotels, besides sourcing and roasting coffee beans

Tata Coffee's Kodagu facility.

*This Agreement includes opening cafes, bean sourcing and roasting.

*One of the hurdles that the two companies have to sort out is Starb

ucks franchisee-led business model


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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 forexport to other market.

Starbucks provide new technology to the promotion ofresponsible agronomy practices.

A long term relationship will be formed with this MoUwith Starbucks.

After this deal, Tata Coffee is become Asias biggest

publicly traded coffee grower


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Objective of Starbucks behind this deal

Starbucks aiming to enter in Indian market through thisMoU.

Starbucks believe that India can be an important sourcefor coffee in the domestic market, thats why they enter

in India.

The knowledge and understanding of the Indian marketcan be brought by Tata Global Beverages, because ithas been in this play for a while

The Tata also have an arm in retail so theres a synergy

there as well.


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Relationship Marketing.

Starbucks and Tata Coffee developed a long term and intimate relation-ships.

Through this deal they developed open communication

With this MOU Tata Coffee able to know the requirementand preference of Starbucks more closely


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SWOT Analysis

Opportunity

* Coffee consumption in India is expected

to grow.(6%)

* Global players who are in the market

of coffee outlet they can approach Tatacoffee for there raw material

Threats

* Starbucks need to address pricingissue for India, since demand is highlyelastic

* There are several competitors in thesegment for starbucks.

StrengthBoth the companies are leading in theirsectorSocial project in India.High quality green coffee beans.Consider jointly investing in additionalfacilities for exports to other markets.

Utilize resources of each other enhancingcore competencies

WeaknessThe selling price of starbucks is notcheapThe entry of starbucks has on out ofhome coffee consumption market andthis will affect alliance of Tata cofee withbarista

From both the side there is noexclusivity on each other


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This deal will be beneficial for both the side, because this deal hasgiven a new phase to both the company.

As Starbucks prospect After having MoU with Tata Coffee,Starbucks is able to enter in Indian emerging market.

From Tata Coffee prospect, after this deals they are entering incoffee retail outlet business, which is also giving a new phase toTATA Coffee.

They may be revolutionized the Indian coffee retail outlet industry.


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Tata and Star Bucks SWOT analysis

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