Coffee Chain 1

8/4/2019 Coffee Chain 1

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Wanna have a cuppacoffee


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Introduction & Rationale

Booming coffee market in India.Global coffee chain landing in India.Analyzing the Market Potential and Market

Players

International MarketNational MarketUnderstanding Market Strategies adopted by top

competitors.Emerging New Players-Potential for New Formats

like Garden Caf, Fashion Caf.

Countering future competition.


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Coffee consumption:120 million (60kgs) bags in2007-08The second most traded commodity in the worldMarket growth rate: World coffee exports totaled

8.01 millionTop three Players:StarbucksCosta CoffeeGloria Jeans Coffee

International scenario


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GLOBAL SALE.


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Current Scenario

More than 16000 stores spread across 50countries.Revenue $2.01billion.Accounts 73% market share of US

coffeehouse sale.


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India has yet to get the taste of starbucks coffee.

Their proposal to enter India was rejected by theforeign Investment promotion Board on theground that equity structure was ambiguous.

Tata tea brings Starbucks to India.

Under a non-binding memorandum ofunderstanding (MoU), Starbucks will exploresetting up stores in the Tata group's retail outlets

and hotels, besides sourcing and roasting coffeebeans at Tata Coffee's Kodagu facility.

Indian perspective


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The first Starbucks outlet could open in the nextsix to seven months.

One of the hurdles that the two companies haveto sort out is Starbucks franchisee-led businessmodel something Tata is uncomfortable with.

Its up to Starbucks to decide what kind of asustainable partner they are looking at and whatwill be the shared values,

Starbucks initially start their operations bysourcing coffee beans from Tata Coffeesplantations and set up shop in Taj Hotels.


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Analysis of the trading company

Economicalpolitical

legal analysis

Analyses of Internationalbusiness

situations


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Socio- Economic & Political Risks

Rising communal violence and terrorism incidents slow-down in government decisions due to political instability

Labour unrest and industrial action Corruption and bureaucratic inefficiency Unexpected delays and cost-overruns due to Overlapping governmental jurisdiction Fluctuation in interest, inflation and currency

rates


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Political scenario

India

Either congress or BJPcoalition govt.

Both supportdevelopment ofeconomy

Power will receive

encouragement Stable policy


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Economic policies for International business stillhave many restrictions.

The most common business organization used by

foreign investors in India is the locallyincorporated company because of other formssuch as sole proprietorships and partnerships areessentially impossible under the Indian law.

Companies may be public or private but it is notallowed to buy shares of the company and therecan only be up to fifty shareholders.

Legal laws


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Import duties are applied to almost allgoods entering India. The tariff system is based on

the Harmonized System (HS) and

tariffs are in the 40 to 60 percent range for basic

raw materials, 60 to 100 percent forsemi-processed goods, and 100 percent and above

on finished and consumer goods.

F i i t t li i


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All foreign investment projects, not considered a

priority industry eligible for automatic clearanceby the Reserve Bank of India, require approvalby the Foreign Investment Promotion Board or anewly created committee for review of smaller

investment projects.

The government permits foreign firms to hold upto 51 percent equity in Indian venture on a case-by-case basis.

Foreign investment policiesof India


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Automatic approval is granted to foreigninvestments of up to 51 percent equity in 34

high-priority industrial sectors.

Foreign companies are permitted to acquireland and own buildings as long as permissionis obtained from the Reserve Bank of India.

No specific tax incentives exist to attract foreigninvestment.

Documents

Coffee Chain 1