Coffee wars in India Harvard Case Solution & Analysis

External Analysis

Porter’s five forces analysis for CCD

Bargaining power of buyers:

The bargaining power of buyers is relatively high because the swapping cost of coffee is not extremely high in India as there are numerous native and international coffee brands that are available at the door step. Further, there is an extensive diversity in the products and services available at other coffee outlets.

Bargaining power of suppliers:

Bargaining power of suppliers is bit to be low because there is no presence of cartelization. Further, the government and other regulatory bodies have enforced several regulations and limitations on the prices of coffee and milk. There is an enormous level of backward integration in the coffee industry that actually reduces the bargaining power of suppliers.

Threat of new entrants:

Threat of new entrants is found to be medium because there are previously well established native and international brands in the Indian coffee marketplace. Moreover, the cost of coming up with a coffee business is quiet high and needs huge investment in the machinery and other required setup.

Threat of substitutes:

Threat of substitutes is exceedingly high for numerous reasons. First reason is that India is well-known for tea nation and therefore tea can be a straight away substitute of coffee. Further, other beverages like juices and flavored milk can also be worthy substitutes of coffee. Moreover, teenagers can go for other places to hangout like pubs or ice cream parlors instead of visiting to these coffee shops.

Industry rivalry:

Rivalry in the industry is found to be at a higher side because  there are numerous presence of some domestic and international coffee brands. In addition to that, there is an aggressive support to the departure of international players like Starbucks and Gloria Jean from across the globe.

Starbucks entry into the Indian market

Starbucks is a globally recognized name in the coffee industry and possess a modern retail outlet network worldwide with an exceptional brand image.  Starbucks announced its entry into India back in the year 2012 by a 50-50 joint venture with Indian business tycoon TATA.  Starbucks prices were not extremely high but more expensive then CCD because of having an international brand image with exceptional quality. The price which was charged by Starbucks was Rs. 95 (cappuccino) quiet high as compare to CCD’s cappuccino which has the price of around Rs. 66.  Much the same as CCD, Starbucks also offered a variety of other products like frozen yogurts, sweets, quick sustenance, and other food as well in every last bit of its shops as per the preference of customers.  Starbucks was the serious threat because they owned a globally established brand name and exceptionally well financial position.

Moreover the joint venture with TATA has a significant role to play. TATA has been successfully creating the business stories not only India but across the globe. Being professional CCD’s executives knows that Starbucks will for sure give them the toughest possible time. Since TATA is completely an Indian brand and deeply rooted in all over India as well, so therefore it could advice some premium locations to Starbucks as compare to other international brands. Moreover, like in every country there are so many people in India who are fond of international brands which would eventually support the Starbucks to go more aggressively. But one element which might become threat for Starbucks itself is the element of price because the average bill for two persons at Starbucks is around Rs. 600 which is quiet high as compare to Rs. 175 of CCD’s.

CCD’s position

In the beginning phase, Café Coffee Day started its business in India with a café that was initially offering cappuccino. To gain maximum competitive advantage Café Coffee Day has made numerous successful attempts to grab interest of the local customers by offering them a variety of native products like idli, tanduri and Vada Pao as well. Moreover, the company also introduced a number of games and other interesting sports to entertain customers in the lounge, squares and café’s. Enhancing the product portfolio, Café Coffee Day also offers a specialty coffee to their consumers. In addition to that, Café Coffee Day is also offering several types of desserts that include ice creams, pastries and other valuable items. Moreover for the highly religion oriented people.....................................

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