Cafe Coffee Day: Strategies for International Expansion

This presentation discusses the strategies and analysis for Cafe Coffee Day's international expansion. It covers topics such as SWOT analysis, DESTEP analysis, Ansoff Matrix, Porter's Five Forces Model, and more. The presentation provides recommendations for the company and concludes with the importance of choosing the right location and maintaining good relationships with suppliers and customers.

Cafe Coffee Day

Table of Content
• Introduction
• Selected destinations
• SWOT Analysis
• DESTEP Analysis
• Ansoff Matrix
• Porter's Five Forces Model
• Mode of entry and Plan B
• Porter's Diamond
• Relevant costing
• Strategies of attracting new customers
• Mc Kinsey framework
• Four link analysis
• Recommendations
• Conclusion
• References

Introduction
Cafe Coffee Day is a business that is based in Chikmagaluru which is among
the largest producer of Arabica beans in Asia and also exports the same to
various countries like US, Japan and Europe (Jana, Das and Mishra, 2015).
The company's primary objective is to provide the best possible experience to
its customers. Founded in the year 1993 and popularly referred to as CCD,
cafe coffee day continues to be a hangout spot for the youth. It has got a
presence worldwide including locations like Austria, Malaysia etc.

Selected destinations
Brazil
Ireland
China
Australia
Bangladesh

SWOT Analysis
Strengths Weaknesses Opportunities Threats
Products offered by
CCD are extremely
good in quality and
are priced at
affordable rates.
The brand does not
invest much in
promotions and as a
result, is losing its
popularity. Also,
many outlets incur
loss due to selection
of a wrong site
(Rahul and Keerthi,
2018).
The company
should introduce
new and innovative
items on its menu
and should also
market itself as a
point of informal
gatherings.
CCD faces direct
and indirect
competition from
brands like
Starbucks, Costa
Coffee etc.

DESTEP Analysis
• Brazil
Demographics CCD should have a complete understanding of the size of
population that it will serve.
Economic These factors include information about finances, characteristics as
well as trends of the market etc.
Social These factors include emerging new trends in the culture of the
country.
Technological The country has is technologically advanced and people prefer
using smart phones.
Ecological Proper locations to store all the raw material as well as the role of
the Brazilian government should be determined.
Politics The company will be involved in a lot of paperwork since Brazil is
a highly bureaucratic country.

Cont.…
• Ireland
Demographics CCD should conduct analysis of demographics of Ireland in order to
understand the factor in a better way.
Economic The country has low tax rates and a highly skilled workforce which
will be beneficial for CCD.
Social The social condition is not very good as there is a large segment of
customers that falls under poverty.
Technological The country is not as much technologically advanced as other
countries and fails to connect to a large proportion of households.
Ecological The country is ecological and if an outlet is set up here, it will attract
a lot of tourists.
Politics Ireland is a politically stable country.

Cont.…
• China
Demographics The country has a cheap labour, enhanced infrastructure ans is
politically stable.
Economic Economic challenges include fast urbanisation, high rates of
inequality as well as damages to the environment.
Social The Chinese market is huge with great opportunities for customer
products.
Technological Technology is highly advanced as a large percentage of the
population uses online services.
Ecological Fast ecological development has impacted the natural climate of the
country drastically.
Politics China is among the most powerful countries in the world.

Cont.…
• Australia
Demographics Over 78% of population consumes coffee per day, which opens a
huge market for CCD.
Economic Australia is a developed economy with GDP of A$1.89 trillion as of
2019. Its economic growth is good. People there can afford the prices
of CCD.
Social The crazy of coffee is into the people is at peak. They are enjoying
the new experiments, innovation or creativity done with coffee.
Technological With respect to technology, the county is well advance. Any advance
technology with respect to coffee industry can be available there.
Ecological People now a days has become more concern about environment.
They more prefer sustainable goods and products.
Politics The political situation in the country is very stable making the
investors feel confident in their purchase.

Cont.…
• Bangladesh
Demographics The growth for coffee in country is assumed above 7% over a pop. of
163 million people, which can set quite a strong base for CCD.
Economic The country is a developing nation and its GDP runs at an average
rate. Also the % of corruption and criminality is quite high. Therefore
the company can invest but only after secure research.
Social People there are becoming more trending with the taste of coffee and
enjoying the upcoming innovations and experiments with it.
Technological As the country is a developing nation, the technological
advancements could be very basic or limited.
Ecological There people are becoming more aware towards the environment and
prefers the sustainable goods and products.
Politics Government party is quite stable there but the transparency of
bureaucracy is limited, also the laws form are weak along with
corruption and criminality.

Ansoff Matrix
Market Penetration Product Development
The company should decrease the prices of
existing products in order to attract customers.
CCD should invest more in its research and
development in order to fulfil the needs of
existing customers significantly.
Market Development Diversification
It can start operations in an untapped market to
serve a new segment of customers.
The company can also diversify its business by
getting involved in a new business like selling
coffee equipment that is in sync with the latest
trends of the market.

Porter's Five Forces Model
• Brazil
Threat of New Entrants The country is located such that the threat of new businesses
entering the country is high.
Bargaining Power of
Suppliers
Due to presence of a large number of suppliers, the
bargaining power of individual suppliers is less.
Bargaining Power of
Buyers
People in Brazil have a high power of bargaining as there
are less number of people who consume coffee
Threat of Substitutes CCD starting is business in Brazil will be new to the
country, thus this force is high.
Competitive Rivalry There are only few such business in the country which
makes this force low.

Cont.…
• Ireland
Threat of New Entrants This force is high as the country does not have a lot of
coffee businesses.
Bargaining Power of
Suppliers
This force is also high as there are limited suppliers of
coffee equipment.
Bargaining Power of
Buyers
This power will be low as there will not be a large number
of buyers initially.
Threat of Substitutes This force is low as the country does not have a lot of
businesses offering same services.
Competitive Rivalry Less presence of such businesses means that there will be
less competitive rivalry among brands.

Cont.…
• China
Threat of New Entrants This force is less as there are already a large number of
businesses that offer similar products to CCD.
Bargaining Power of
Suppliers
The force is also low as there are a lot of suppliers in the
country.
Bargaining Power of
Buyers
This force is low as there are a lot of people who consume
coffee on a daily basis.
Threat of Substitutes This force is also low as the country is already filled with
such businesses.
Competitive Rivalry This is a high force as there are a large number of businesses
that offer similar services to CCD.

Cont.…
• Australia
Threat of New Entrants As the country is very prosperous in its growth, many
companies can target it with their products.
Bargaining Power of
Suppliers
As majority of population is coffee drinker, the suppliers can
join together and can become more rigid with their terms &
conditions causing trouble for industry.
Bargaining Power of
Buyers
Customers are totally aware about available products with
their prices. They can any time stop consuming a particular
brand's coffee whenever they feels so.
Threat of Substitutes Competition in coffee industry is very cut throat. Any
product can substitute other product with same features offer
at lower prices.
Competitive Rivalry Competition in food and beverages industries is normally
very high. This causes burden on existing company to gain
competitive advantages in market.

Cont.…
• Bangladesh
Threat of New Entrants As the country is a developing nation, new entrants of
competition can be possible, causing difficulty for existing
companies.
Bargaining Power of
Suppliers
As the competition of big houses coffee shop is low, the
Terms and condition of supplier will not be rigid. The
company can do required bargain with them.
Bargaining Power of
Buyers
Customer can easily influence the prices and demand of
products.
Threat of Substitutes With the rise in competition, the fear for substitute products
also come. Any brand can come with similar product with
low price offer.
Competitive Rivalry The competition among big Coffee houses like CCD is quite
low.

Mode of entry and Plan B
Brazil The company enter the country through franchised ownership
and if this plan does not work out, it can export its products
directly to the location.
Ireland CCD can start a joint venture in Ireland and keep the option of
acquiring a similar business as plan B.
China Outsourcing can be a cost effective option of starting business
in China and if the plan does not work out, it can keep
franchising as a second option.
Australia The respective company can enter the country by opening
outlets through franchised ownership and if this plan does not
work out, it can start a joint venture with an already existing
brand.
Bangladesh Cafe Coffee Day can open a joint venture in Bangladesh and
keep the option of a franchised ownership as a second option.

Porter's Diamond
Porter's Diamond model is a framework that is the shape of a diamond and
primarily focuses on explaining why do some industries in a particular country
are competitive internationally whereas others are not. This model is useful for
organisations as it helps in analysing their external environment and is also
referred to as “Theory of National Advantage”. The four factors included in
the model are – firm strategy and rivalry, factor condition, demand conditions
and related and supporting industries.

Relevant costing
Brazil and Ireland China Australia Bangladesh
Penetration pricing
strategy should be opted
by can be Cafe Coffee
Day in Brazil and Ireland
in order to penetrate in
the market and attract
large number of
customers.
Competitive pricing
strategy should be
adopted by the Cafe
Coffee Day in Ireland
in order to increase
overall sales as well
as profitability.
Penetration Pricing
strategy can be used
by the respective
company in order to
penetrate the market
and thus attract
customers.
Price skimming
strategy can be used
in Bangladesh by the
company so as to
increase its overall
sales and
profitability in the
market.

Strategies of attracting new customers
The respective company can implement various strategies to attract new
customers like providing various offers and discounts on their first purchase or
carry out event marketing. The company can also use various social media
platforms effectively in order to reach out to new segments of customers.

Mc Kinsey framework
The Mc Kinsey 7S model was developed by Robert H. Waterman and Tom
Peters and helps organisations in examining how different parts of their
business work collectively. The model can also help organisations in
improving their overall performance. The 7s included in the framework are
Strategy, systems, skills, style, staff and shared value. The primary objective
of this model is to ensure that these areas are interconnected with each other
and function in coordination.

Four link analysis
Four Link Analysis is a model that helps organisations in assessing the intent
as well as strategies of their competitors in the market. By evaluating the
current strategies of the competitors, businesses can modify their own
strategies and gain a competitive advantage against competition. The four
corners of the model are – current strategy, motivation, capabilities and
management assumptions.

Recommendations
• Cafe Coffee Day is recommended to analyse various internal as well as
external factors of the countries in which it plans to start operations.
• Models like DESTEP and Porter's five forces framework can be used to get
a detailed insights of the same.
• Other analyses like Porter's diamond model, Mc Kinsey model etc. can be
used to identify various strategies that are used by the company's
competitors and accordingly CCD can tailor its strategies to stand out in
these markets.

Conclusion
From the above report, it can be concluded that while planning to start a
business in a new country, the location of setting up the business should be
chosen wisely. The location should be easily accessible and the company use
ensure that the demographic, social, economic factors match the same. Also,
the suppliers of the raw material and other equipment should be chosen wisely
and a healthy relationship should be maintained with the suppliers as well as
the customers.

References
• Jana, S.K., Das, J.R. and Mishra, U.S., 2015. Effect of Brand Personality Congruence on Brand Loyalty in
CCD Outlets–A Structural Equation Modelling Approach. Mediterranean Journal of Social Sciences. 6(6
S2). p.352.
• Rahul, K.V. and Keerthi, H.K., 2018. A Study on The Effectiveness of Welfare Measures Towards
Employees of Coffee Day Global Ltd, Bangalore.
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Cont.…
• Shaw, S., 2016. Airline marketing and management. Routledge.
• Mathooko, F.M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other factors that
influence the choice of response strategies adopted by public universities in Kenya. International Journal
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• Zhao, Z.Y. and et. al., 2016. Competitiveness assessment of the biomass power generation industry in
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Cont.…
• Konsolas, I., 2017. The competitive advantage of Greece: an application of Porter's diamond. Routledge.
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Online
• Ansoff Matrix. 2020. [Online]. Avaiable through:
<https://corporatefinanceinstitute.com/resources/knowledge/strategy/ansoff-matrix/>.

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