Coffee Wars in India: Café Coffee Day Takes on the Global Brands Harvard Case Solution & Analysis

1.      STRATEGIC OPTIONS (ALTERNATIVES)

a.      Three business-level strategies and competitive dynamics with discussion on a corporate-level strategy

  • Cost Leadership Strategy

It can be seen that at present, Café Coffee Day is using the cost leadership strategy. Starbucks named coffee and beverages are priced according to the international rates. Therefore, they have an advantage over the foreign firms to attract more of their target market, who does not have too much to spend on a daily basis. As Café Coffee day follows a backward integrated model, hence, it can be seen that the company also owns its distribution network, which can help it to further cut down costs. This can prevent the Café Coffee day company in fulfilling the market expectations.

  • Focused Cost Leadership Strategy

Holding the position power to be the same, Café Coffee day can retain on its strength of delivering coffee at low cost. It can prevent foreign competition through this as foreign new entrants can’t afford to sell their coffee at this low rate like Café Coffee day. In addition to this, Café Coffee day should focus on youth only with such low pricing or achieve economies of scale while attracting other segments too.  Here the particular buyer group for Café Coffee day is the youth who wants to socialize.

  • Integrated Cost leadership and Differentiation strategy

Café Coffee day can sell low cost coffee with a little differentiation that is valuable to its target market. As Café Coffee day has a backward integrated business model, hence, it can sustain an integrated cost leadership very easily. However, it needs to add in the menu fast food or other sides that can be served along to increase their revenues. In addition to this, they can also have different flavored coffees according to the taste that is acceptable in the Indian Market such as Elaichi or Masala (spicy) Coffee along with Elaichi and Masala (spicy) Tea in India.

  • Corporate Level strategy

Café Coffee Day should look to opt for growth strategy under the corporate level strategy. It is because Café Coffee Day doesn’t offer franchising system at present. In fact, the company looks forward to operate in those countries where they can perform business activities themselves. Although, this has been a good move for the company but to move forward and to grow globally the company Café Coffee Day has to offer franchising system in non-native countries. For example, at present Café Coffee Day is not available in most of the Middle East Arabic countries, which has great potential to serve the need for coffee lovers. Therefore, by offering franchising system with standard royalty fee, Café Coffee Day can expand itself in various other markets.

2.      CONCLUSION AND RECOMMENDATION

The recommended strategy for Café Coffee day is to pursue an Integrated Cost Leadership and Differentiation Strategy. As Indian consumers are price sensitive, therefore, Café Coffee day has a clear advantage in this area. Hence, it can easily integrate cost leadership model by helping it to prevent competition and hold position power in the market. In addition to this, as the consumer preference change from time to time, hence, it can amend the taste or the complementary products according to consumer preferences. However, this can be a risk, if Café Coffee day fails to meet consumer expectation.

Moreover, they should make sure to have such attractions in its product offerings that consumer try their products first before they go to any foreign franchise. As it is a local coffee chain and has established a good reputation in the Indian Coffee market, hence, Café Coffee day holds a 60% share in the coffee industry. This is hard to beat for other industry incumbents as they will not be able to penetrate the market with such low prices and backward integration at their initial phases.................................

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