Professional Documents
Culture Documents
Question 1: What should be the important goals for Siddhartha and Venu Madhav when
considering their responses to Starbucks entry into India?
Answer:
1. CCD has always competed well with foreign brands in the past. But with
Starbucks entry into the Indian market, CCD needs to be more aggressive in
its approach and stay relevant to its customers.
2. One of the goals of CCD could be to increase its customer base which has
predominantly been Students or youngsters. The customer base of Starbucks
has been much more wide in its range.
3. CCD can also increase the number of Squares and lounges.
4. Another goal of CCD has to be to retain its customers. It has to come up with
different schemes to retain its customers, like the Starbucks offered health
coverage to its customers based on some criteria. Measures like these can go a
long way in retaining customers.
5. The pay level of CCD is much higher than Starbucks. Its because of this
reason that many of the staffs of Star Bucks were taken from CCD. CCD
should consider revamping its salary scale to retain customers.
6. CCD should also strive to improve its service like Starbucks which is on par if
not higher than many five star hotels.
Question 2: What are CCDs most important competitive advantages? Biggest
competitive challenges?
Answer:
Competitive Advantages of CCD
1. First mover advantage has helped CCD to become a market leader with 1500
stores worldwide.
2. The coffee plants are easily available which helps the company in leveraging
the leadership position and while the backward integration program will help
them in managing its operation.
3. It has a strong nationwide presence and strong customer loyalty from the
youth, i.e. people below 25 years of age
Competitive Challenges:
4. Improving customer services and adopting international standards to compete
with international brands.
5. Improving the food options, upgrading interiors and inculcate better culture
among its employees.
6. Improving the morning usage of their centres though it looks culturally
difficult.
shoppers.
Its products include coffee, eateries, instant coffee powder, Starbucks branded
ice creams, ground coffee and beans and other merchandise.
Starbucks owned most of it stores, rather than franchising them.
One of the earliest coffee shops to go international.
The service provided by Starbucks to its customers is at a personal level and is
no less than that provided at 5-star hotels.
Starbucks came with a status symbol and as a sophisticated, upscale coffee
shop.
The stores which opened internationally kept in mind the local arts and culture
14. Its coffee and other products are priced too high.
i) In India, it is 50% more expensive than CCD. This will reduce its
customer base to working professionals as Indians are highly price
sensitive.
ii) Students cannot afford such high rates on a regular basis. Hence, Starbucks
might lose out on this major market segment.
15. Maintaining the quality of service in a country like India, where attrition rate
is high is difficult, especially as the number of stores increase.
16. Retail estate prices are sky rocketing and it will be costly for Starbucks to
expand once special deals cease to exist.
17. Its a challenge for Starbucks to overtake CCD which has been the market
leader in India with 1496 stores PAN India.
Question 4: Which of the following paths should Siddhartha and Venu Madhav
follow and why?
- Slight Course Correction
- Bigger, bolder, aggressive reaction
Answer:
CCD must consider Starbucks a strong threat to their market leadership and adopt an
aggressive approach towards Global expansion and Customer Relations. It must
decide on a short term, medium term and long term strategy to tackle Starbucks and
creating an international image for itself. CCD could also choose to go for a slight
course correction approach by concentrating solely on improving their processes and
offerings and responding to what Starbucks bring on to the table.
In order to justify the need for an aggressive approach, it is important to look into
following parameters:
1. Owing to its global brand recognition, Starbucks has attracted enormous
media coverage and long queues of customers at its launch. It comes with an
international image which is very popular in Indian youth culture (current
target segment of CCD).
2. Growth Potential of Coffee chain market in India: India is a growing retail
market and Indian Coffee retail & Coffee chains market is no exception. Since
both CCD and Starbucks have means, it gives them an equal opportunity to
increase their share of the bigger pie. So it comes down to the question that
which, out of the two, can capitalize more on this opportunity.
3. Access to premium realty space & raw material: Both CCD and Starbucks
(in turn Tata Group) own premium realty space as well as Coffee plantation
and hence are capable of fully backward integrated operations model. This
gives both CCD and Starbucks an equal opportunity and means of standing
apart from other foreign and local coffee chain retailers.
4. CCDs Global aspirations: CCD has a long term ambition to be recognized
as an international player. They aspire to be number 2 or 3 in the World in next
20 years.
5. Starbucks success in China: Starbucks comes to India on the back of its
success in establishing itself as a big player in China. Many were skeptical
when Starbucks entered China but it partnered with local firms, as it has
associated itself with Tata Group in India, in order to obtain local expertise
about consumer tastes in various regions. It was also able to educate Chinese
consumers about Coffee and influence the culture of Chinese people working
at coffee bar. This indicates that Starbucks has the expertise and vision of