Posted: June 30, 2011 |  AUTHOR: KEN FOX | CONTACT ME

 

I publish and present on the idea of Invisible Competition.* My original definition was when disparate companies or organizations in different industries form a strategic alliance or joint venture to offer a new product or service. My favorite example is Listerine PocketPaks, which was created by acquiring the rights to a proprietary technology from a Japanese confectionary company and, at the time, Warner-Lambert, with marketing and sales distribution expertise, and owner of the Listerine brand name.

 

If I stretch the definition, I could include the January 2011 announced Memo of Understanding (MOU) between the Tata Group of India and Starbucks. This MOU includes a number of multiple agreements involving retail operations and sourcing. Tata, as most know, is the monster Indian conglomerate, which operates 100 companies with total annual revenues of $67 billion (2010). Some of Tata Group’s divisions include:

[list type=”check”]

  • Tata Steel
  • Tata Communications (including broadband and internet services in India and South Africa)
  • Tata Consultancy Services (present in 42 countries, 180,000 associates)
  • Tata Motors (owns: Jaguar, Land Rover and Nano)
  • Tata Power (thermal, hydro, solar and wind)
  • Tata Chemicals-soda ash, fertilizers and pharmaceuticals
  • Beverages-brands owned include: Tata Tea, Tetley Tea, Eight O’Clock Coffee, Good Earth and other brands
  • Hotels-owns 108 hotels in 12 countries, including upscale Taj Hotels

[/list]

 

Historically, India has not been open to large retailers to enter their country. Frustrated global retailers such as Wal-Mart, Ikea and others are not allowed to directly open branded stores as we know it. This is justified to protect the millions of mom and pop stores where most Indian shoppers buy their daily product needs. With Starbucks forming a number of agreements with Tata Beverages, it will allow the company to gain a foothold in India. One agreement will allow Starbucks to buy coffee beans from Tata Coffee and to work with that group to open retail stores in Tata owned hotels and other Indian locations. Tata owns retail chains that sell electronics, watches, clothes and other goods. Other agreements between The Tata Group and Starbucks are to be announced.

 

These agreements may also coincide with Howard Schultz’s (CEO of Starbucks) decision earlier this year to change the Starbucks logo by removing the mermaid or siren and the Starbuck’s name from their logo. Many think Starbuck’s wants to become an iconic brand like Nike and Apple, with no need to state its brand name in the logo. Howard Schultz has stated that Starbuck’s future plans may well go beyond coffee. The Starbuck’s alliance with the well diversified Tata Group, in a market population size only second to China, may well be the testing ground to see if the Starbuck’s name can extend well beyond coffee and tea.

 

The two companies will also collaborate on “responsible agronomy practices, including training local farmers, technicians and agronomists to improve their coffee growing and milling skills.” Future plans may also include investing together in additional facilities for growing and roasting green coffee for export to markets outside of India.

 

*Invisible Competition: Think Differently, Competitive Intelligence Magazine, Vol. 9, Sept.-Oct. 2006, pgs. 30-32

 

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©2017, The Global Galaxy blog is produced by The Soundings Group, LLC, Charleston, South Carolina, USA, www.thesoundingsgroup.com. The company is an international business consulting firm, specializing in new market assessments, market entry strategies and marketing guidance. The scope of Global Galaxy is to cover timely international trends, issues and business building ideas. Its purpose is to educate, inform and stimulate thinking for business opportunity analyses.

 

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