Monthly Archives: September 2012

Come late October, Mumbai will have India’s very first Starbucks Coffee!

But here’s the catch…

Tata Starbucks

Starbucks in India will be known as Tata Starbucks. A 50-50 joint venture between the two massive companies. Now hold on a second, a JV between Tata and Starbucks? No of course not. Its a joint venture between Tata Global Beverages and Starbucks. Tata is not not only in the beverages market, but also in the coffee market with Tata Coffee Ltd – India’s largest producer and exporter of coffee. What isn’t Tata in? Steel, cars, power, internet, insurance, coffee…What else is left for them to stick their Tata label on?

The economic slump in Europe and the US has pushed Starbucks to try and tap into India’s emerging market. Partnering with Tata on their expansion is an interesting concept. Will we see more Tata – ‘Foreign company’  joint ventures in the future? Other foreign food/beverage companies such as Dunkin’ Donuts and Krispy Kreme have also got plans in the coming years in the Indian market.

Tata Starbucks will have a lot of competition in India’s coffee market with companies such as Costa Coffee, Barista and the current market leader Cafe Coffee Day. Will Indians go for Tata Starbucks instead of their trusted Cafe Coffee Day? Foreign brands tend to do quite well amongst Indian consumers so Cafe Coffee day might have some strong competition coming their way. But, a question still remains, will indian consumers associate Tata Starbucks with Tata or with Starbucks?

Articles:

http://www.bbc.co.uk/news/world-asia-india-19754584

http://www.livemint.com/Industry/3wb6oj2oBsFbrQU8XiJ2RI/Starbucks-to-open-first-India-outlet-in-Mumbai.html

http://www.business-standard.com/india/news/tatas-to-get-brand-royaltyjvstarbucks/463513/

At the end of October 2011, Qantas CEO Alan Joyce grounded the entire Qantas fleet. 108 aircraft stayed on the ground, over 50,000 people’s travel plans were ruined and Qantas’ reputation was left damaged. The reason Mr. Joyce grounded Qantas is very simple – to save Qantas. Since August that year, workers unions were taking industrial action against Qantas. Plans for restructuring and moving some operations to Asia would result in the loss of 1,000 jobs. The unions were not happy and wanted more job security…and so began intense strikes and industrial action against the company.

Qantas CEO announcing the grounding of all fleet

All flights CANCELED

A few effects of the industrial action on Qantas before the grounding;

• 600 flights disrupted
• 70,000 people affected
• $AUS 70 million of financial damage increasing at a rate of $AUS 15 million per week
• Reduction in number of people booking with Qantas

BBC News – Labour row grounds Qantas flights

There are 2 ethical issues associated with this event. The first is; did Mr. Joyce make the correct decision in grounding Qantas operations? The second issue is; were the union’s demands and actions justifiable?

We have to consider what drove Mr. Joyce to take such drastic measures? Look at the numbers. $AUS 70 million of financial damages and 70,00 affected passengers is no joke, especially in the highly competitive airline industry. It seems easy to say that he should have simply given in to the union’s demands but, realistically speaking, the workers were not looking to compromise and continued to escalate their demands. So Mr. Joyce had his reasons, but did he take the right action? It was a gamble. However, from an ethical point of view, Mr. Joyce showed great ethical integrity – he stuck with his decision knowing all of the risks. He also used his leadership to solve the problem to the best of his ability in the company’s best interest. However, it can also be seen that he went against the company’s best interest by stopping what makes an airline an airline, which is ethically wrong.

Now lets look at the workers unions. Their actions were directly against Qantas’ best interest, which is ethically wrong. However we should also take into consideration their disagreement with the companies future goals and targets, which in part justify their actions. But where is the limit? The unions threatened to continue their industrial action for an entire year and were not wiling to compromise. Their actions were destroying Qantas. Is that the role of workers unions?

Workers Unions on Strike

With the help of the Australian government, the issue resolved within a day. But there are so many questions that arise from such an event. Should workers unions exist and what role should they have? Should industrial action be legal? The airline industry is highly competitive and ever changing. For an airline to achieve their goals they have to make sure that their aims and their workers aims are in unison. In recent news, Qantas announced that it will be forming a partnership with airline giant Emirates – another grand decision that can be debated. Let’s see what happens…

Qantas – The Spirit of Australia