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CCDs Expansion HRDs Restructuring & InterventionGroup 1

CCDs Expansion

HRDs Restructuring &Intervention

Group 1

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Introduction

Cafe Coffee Day is an Indian cafe chain owned by V.G. Siddhartha. It is basically owned by

Amalgamated Bean Coffee Trading Company (ABCTC! now "nown as Coffee Day Global

td. Caf# Coffee Day was started as a retail resta$rant arm in %&&'.The first CCD o$tlet was

set $p at Brigade road in Bangalore )arnata"a.

C$rrently they ha*e %+,- stores and '-- "ios"s across India as well as ,---- *ending

machines in %%--- corporate offices across & states of India. CCD is a mar"et leader in

India with /'0 mar"et share in terms of *ol$me of o$tlets. Also CCD has its footprints in

A$stria C1ech 2ep$blic D$bai 3alaysia 4 5gypt.

oo"ing at their prod$ction capacity they prod$ce their own $ni6$e coffee beans and they

are one of the largest coffee e7porter in India .Also their coffee machine costs lesser than the

western co$nterparts li"e a*a11a and 8estle machines. 9n an o*erall basis re*en$e growth

has slowed to &0 year:on:year in ;

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5asy so$rcing of coffee beans

Cost control beca$se of go*ernment reg$lations?olitical

Eea*y coffee drin"s in So$th India Cheaper so$rcing maintain 6$ality

5conomic

Targets yo$th and middle class

Affordable for a meeting placeSocial

Fifi facility at e*ery o$tlets and m$sic

Digital mar"eting for promotionsTechnological

5thical and based on c$stomer delight

ess cons$mer complaints and 6$ic" c$stomerser*ice

egal

Gse biodegradable prod$cts5n*ironmental

S'O (na$sis

SRE)GHS 'E(*)ESSES

argest retail chain of cafes

IS9 &-- certified company

H$ality and taste Caf# Coffee Day has %/'& stores in India and had "ept lowest price of

small Capp$ccino i.e. 2s.''. Indian Coffee 3ar"et in food ser*ice was e7pected to grow at

%,:%/0. So many companies were interested to la$nch in India.

Caf# Coffee Days reach was *ery high as compared to its competitors as they had %+,-

stores.

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.igure 1/1

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%= % % %% ' +

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IndiaKs Specialist Coffe Chains

8o of Stores Series ,

Small Capp$cino Cost(April -%+!

Fe are ta"ing one of the competitors into consideration to reflect on where CCD differs.

Ca#0 Co##ee Da$ vs S(R2+C*S di##erentiation strateg$

Para-eters Ca#0 Co##ee Da$ ata Star!uc3sStore .or-at 3$ltiple:o$nge Caf# and

S6$are

Single ;ormat

(-!ience Experience Satisfactory Eighly Satisfactory

arget Custo-er Caters to wide range of age

gro$ps

Abo*e ,- pl$s age gro$p

(##orda!iit$ Affordable Aspirational

Service 4uait$ 8ot $p to the mar" S$preme 6$ality

Price A*erage ?rice 2ange Eighly 57pensi*e( +-0 more

e7pensi*e than CCD!

Co##ee 4uait$ S$preme 6$ality S$preme 6$ality,ocation Pre#erence ocated in highly pop$lated

areas s$ch as railway stations

airports and hospitals

?remi$m locations near to offices

Co-paring certain #actors !et%een CCD and Star!uc3s

.actors CCD Star!uc3s

9wnership ABCTC 57ports .S Based Starb$c"s Coffee

Company 4 Indias Tata

Gro$p ( Joint Vent$re +->+-!(?ri*ate arge Scale company!

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8$mber of Stores %+,- Stores (%/, Cafes %- lo$nges

and + s6$ares!

%% Single store format

%--- Lpress )ios"

/+- ;resh and Gro$nd 2etail o$tlet

--- Vending machines

Brand Stat$s ocal brand Global brand

Type of ocations CCD o$nges and S6$are>

3etropolitan Cities

3etropolitan cities

Segment ?rofile =:,' Age gro$ps in

Bengal$r$

Starb$c"s loyal c$stomer

Teenager and college st$dent $nder +

?rod$ct Classic coffee cold coffees iced drin"s Cold coffees Eot coffees

;ood Items> 2eady to eat sandwich and

b$rgers

Tandoori chic"en sandwich

Indianised snac"s li"e samosas and

chic"en ti""a sandwiches

5lachi mawa croissant

Desert li"e brownies pastries and ice

cream.

3erchandise incl$ding Tee Shirts

bags pen and coffee filters

?rice Capp$ccino 2s '' Sandwich 2s =+ Capp$ccino 2s &+ Sandwich

2s %+

A*erage Cons$mption (

Bill for two!

2s %+ 2s /+-:'--

?rofit 3argin '0 ,/.'-0

For"force --- ' appro7.

Staff ?ayroll 2s =--- %,--- 2s %'---:'---

?romotional Acti*ities Sell tic"ets for roc" concert J$st say Self ser*ice is now getting replaced by the waiter:ser*ice ha*e led to

increased cost to the company

Sta##ing> ac" of good 6$ality training poaching of employees lac" of loyalty and

commitment among its employees and mitigating attrition in front line employees

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,ac3 o# Go!a Presence> oss of e7citement in yo$th and they may get bored of the

e7isting prod$cts and ser*ices

Rea Estate prices> Eigh store set $p cost and increased monthly rent and too many

stores increases the fi7ed cost of the company

Pro#it Margin>Affordable prices as compared to the competitors

C"anging taste o# consu-ers> 8ew and inno*ati*e prod$cts are the need of an ho$r

and they concentrate on maintaining an $pdated men$ and store appearances with

cons$mer preferences

Cost o# renovation> E$ge cost is in*ol*ed in $pgrading e7isting cafes and o$nges

( @+++- and @=/+-- respecti*ely!

In order to attain a competiti*e ad*antage CCD needs to b$ild socially comple7 reso$rces

and capabilities. It needs to b$ild a social reso$rces li"e rep$tation tr$st teamwor" c$lt$recannot be easily imitated. It needs to thoro$ghly re*iew its E2 in*estment in the *ario$s

sectors to see if b$siness performance is aligned with the E2 Strategy and ser*es its p$rpose.

As the c$rrent en*ironment is *ery m$ch changing beca$se of changing c$stomer preferences

and needs CCD needs to de*elop dynamic capabilities to gain a s$stained competiti*e

ad*antage. To ens$re all this below are the following b$siness goals.

2usiness Goas

To b$ild the reso$rce and capabilities to manage the wor"force thro$gh E2 policies

and practices

To effecti*ely manage attrition in frontline employees and to foc$s on effecti*e E2

in*estments

To de*elop socially comple7 reso$rces and to de*elop dynamic capabilities to handle

f$t$re

2usiness Strateg$5 Clear and effecti*e trac"ing of E2 in*estment and b$siness performance

and b$ilding capabilities and capacity to gain competiti*e ad*antage

HR Strateg$

To inc$lcate the )AS9 among the E2s and new recr$its in order to meet

organi1ational goals

To b$ild the reso$rce and capabilities to manage the wor"force *ia implementation of

new E2 policies and practices

Consu-er 6aue Proposition

2rand Experience> CCD has become the MaddaN or the second place for most of the

yo$ngsters in India. This is beca$se of its laid bac" and rela7ed en*ironment it

pro*ides to them and also beca$se of the cost effecti*e offerings.

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2rand Rein#orce-ent Custer (pproac"> CCD has m$ltiple o$tlets within a close

radi$s of its other o$tlets. 5.g. The Bandra area has ' CCDs in the same *icinity to

ma"e it Mthe SpotN for s$dden h$nger pangs co$pled with some warm con*ersation.

Mutipe .or-ats> CCD has *ario$s formats of Cafes which incl$de S6$ares

o$nges Eigh Street Cafes Garden Cafes 3all Cafes Lpress etc. .ranc"isee Co-pan$ O%ned> All the o$tlets are company owned. It may ma"e it

more e7pensi*e to r$n b$t ens$res there is no brand dil$tion.

6ertica Integration> Fith the *al$e chain integration Ofrom bean to the c$p

ABCTC was able to red$ce costs ass$re ade6$ate s$pply demand and gain

economies of operation and scale.

6aue C"ain

Val$e Chain

5lements

General Trend CCDS Capability

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Capa!iities5 A capability is the ability to perform or achie*e certain actions or o$tcomes

thro$gh a set of controllable and meas$rable fac$lties feat$res f$nctions processes or

ser*ices. Ab$siness capability is what a company needs to be able to do to e7ec$te its

b$siness strategy. Fhen a firm e7pands the tas" of global strategists is to b$ild a platform of

capabilities c$lled from the reso$rces e7periences and inno*ations of $nits operating in

m$ltiple locationsP to transplant those capabilities where*er appropriateP and then to

systematically $pgrade and renew them: ahead of the competition. The following points

s$mmari1e the approach>

%. Expoit existing capa!iities5The e7ploitation of e7isting capabilities can also ta"e

place thro$gh the ac6$isition of companies in the new location. Two cr$cial 6$estions

e*ery strategist m$st as" are how well the companys capabilities will tra*el and

where they might best be replicated. 9ne way to answer these 6$estions is to $se what

we call the M2AT TestNP 2AT stands for relevant, appropriable and transferable.

. Create ne% capa!iities5De*eloping new capabilities is on some occasions achie*ed

thro$gh a single deliberate action s$ch as the ac6$isition of a foreign company

"nown to ha*e mastered a partic$lar technology b$t at other times it deri*es simply

from coping s$ccessf$lly with the challenges presented by another co$ntryscompetiti*e and instit$tional en*ironment. In order to e*al$ate the potential for

enhancing the c$rrent so$rces of ad*antage thro$gh the assets and new capabilities

de*eloped in foreign mar"ets global strategists can $se what we call the MCAT Test.N

CAT stands for complementary, appropriable and transferable.

,. ( continuous c$ce5 Ta"en together 2AT and CAT represent a cycle of capability

e7ploitation and enhancement. The res$lt is a contin$o$s cycle of e7ploration

e7ploitation adaptation and enhancement. A systematic process for incorporating

these impro*ed capabilities into the companys o*erall core capabilities can complete

the cycle.

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Geograp"ic Expansion Capa!iities5 As companies sta"e their growth strategies on

global e7pansion and p$rs$it of new mar"ets>

Their ability to forge a h$man capital strategy and E2 capability

Their f$nctional capabilities that can impro*e profitability

Their Infrastr$ct$ral capabilities that can be critical to the s$ccess

Product Expansion Capa!iities5 As the company goes global it re6$ires>

The ability to mar"et and brand the locally:specific prod$cts thro$gh their mar"eting

capabilities and efficient distrib$tion and logistics capabilities

Su! Capa!iities5 ;ollowing points pro*ide details on how geographic and prod$ct

e7pansion capabilities can branch o$t f$rther>

(a! E$man 2eso$rce Capabilities>

- Eiring new people across different global mar"ets- nderstanding and complying with *arying labor laws

- nderstanding *arying attit$des and policies towards wor"ers in different c$lt$res

- Str$ct$ring an organi1ation so that credible and competent leadership is placed in

the right locations- ;ashioning a c$lt$re that is consistent b$t also accommodates local differences

- ?ro*iding career opport$nities to employees and engage employees so as to bring

down the attrition rates

(b! ;$nctional Capabilities>

- Fhen a company is e7pands regionally areas li"e financial management internalcomm$nications financial reporting sales and mar"eting p$blic relations and

ris" management in order re6$ire most changes.- Fhen a company is e7pands globally areas li"e sales and mar"eting ris"

management financial management s$pply chain internal comm$nications and

IT in order re6$ire most changes

(c! Infrastr$ct$ral Capabilities>- De*eloping a *ision (to:be! of what the infrastr$ct$re will loo" li"e in the f$t$re

- De*eloping a c$rrent capabilities map (as:is!

- 3apping the infrastr$ct$re capabilities to o*erall b$siness architect$re andre6$irements (difference between as:is and to:be!

(d! Distrib$tion and logistics Capabilities>- Deciding whether to de*elop in:ho$se or o$tso$rce distrib$tion and logistics

capabilities- 3anaging the system of distrib$tion centers wholesale operations and retail

stores

(e! Branding and 3ar"eting Capabilities>- nderstanding the c$lt$re in different geographies

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- Deciding the additions to made to the men$ in new locations

- Incorporating the c$lt$ral differences when deciding on which prod$cts to add to

the men$- Designing branding strategies on the basis of different c$lt$res

- Deciding the promotions strategies ta"ing into acco$nt the c$lt$ral differences

Practices5 ;ollowing practices wo$ld be re6$ired once Caf# Coffee Day is on:board>

(a! E2 Capabilities>- Attracting and retaining s"illed wor"ers

- Training in terms of 2eg$lations aro$nd the handling and sharing of employee

data across co$ntries- Training in terms of s"ills in accordance with the global b$siness strategy

- Training to familiari1e with the companys c$lt$re

- Grooming in terms of emotional and psychological mind:sets needed

- 2ethin"ing the global str$ct$re and organi1ational design

(b! ;$nctional Capabilities>- De*eloping a sophisticated finance f$nction by "nowing the m$ltiple financial and

acco$nting en*ironments since they *ary across the globe- ?lanning ta7 as it can play an important role in accelerating the transition to

profitability- Ea*ing the right incenti*es and controls in place to manage e7pansion as rapid

growth e7acerbates ris"s- Ea*ing fre6$ent comm$nication between head6$arters and local management

teams- B$ilding m$t$ally beneficial relationships with s$ppliers and other partners

- Choosing which f$nctions sho$ld be global and which will be local. ;$nctions

s$ch as finance and IT can remain centrali1ed

(c! Infrastr$ct$ral Capabilities>- Inf$sing fresh capital helps establish infrastr$ct$re capabilities

- Deciding the layo$t and design of each of the cafes in all locations

- Impro*ingQad*ancing the machinery and technology to be $sed in the new

locations

(d! Branding and 3ar"eting capabilities>- 2ecr$iting a local mar"eting head for each geography who can incorporate the

c$lt$ral differences in the mar"eting and branding strategies- Deciding the location and layo$t based on the demographic and geographic

profiles of the target mar"et- B$ilding the technology that s$pports prod$ct e7pansion

(e! Distrib$tion and logistics Capabilities>- Deciding the n$mber of distrib$tion and wholesale centers across each location

- De*eloping capabilities to forecast demand and then decide the distrib$tion

networ" accordingly

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- Deciding the logistics in terms of reg$lations (e.g. on tr$c" si1es! transportation

and its costs etc.

.igure15 C"anges re7uired %"en a Co-pan$ expands8 Resuts o# a Surve$

Metrics

%. Cost per hire (Ad*ertising cost R Cons$ltancy fees R Total Inter*iew cost Q Total

Eires!>

It meas$res the effecti*eness of recr$itment efforts

Eelps organi1ations to $nderstand how m$ch they are spending per hire

. Vol$ntary T$rno*er 2ate (Total Vol$ntary Separations e7cept temporary with - to %year of ser*ice Q Total Eeadco$nt e7cept temporary!>

It can point to poor hiring decisions

It also points organi1ation is lac"ing in benefits and rele*ant s$pport

,. 9rientation 2ate (8ew hires oriented Q Total new hires!>

0 of new hires recei*ing an orientation program

/. Time to fill (Total days to fillQTotal hires !>

analyses the a*erage time it ta"es to fill a *acancy

+. Cost to orientation 2ate(Cost to 9rientation Q Total new hires!>

trac"s the a*erage cost of orienting newcomers to the 9rgani1ation

'. 8ew Eire ?erformance 2ate (A*erage performance score of headco$nt within -:%

years of ser*icesQ A*erage ?erformance rating of total headco$nt e7cl$ding

temporary staff>

allows for the assessment of the 6$ality of the candidate

. 8ew Eire ?romotion 2ate (Total promotion of headco$nt with -:% year of ser*ice Q

Total new hires in % year!>

trac"s the effecti*eness of the recr$itment

Capa!iit$ Gaps

A capability gap refers to the space between Uwhere we areU (the present state! and Uwhere we

want to beU (the target state!. A gap analysis may also be referred to as a needs analysis needs

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assessment or need:gap analysis. A gap analysis is a method of assessing the differences in

performance between a b$sinessK systems to determine whether b$siness re6$irements are

being met and if not what steps sho$ld be ta"en to ens$re they are met s$ccessf$lly.

Caf# Coffee Days present problems>

%. (ttrition5

: C$rrently Caf# Coffee Day is facing /-0 attrition at the entry le*el

: This rate is too high in comparison to the ind$stry a*erage and poses a threat to Caf#

Coffee Day as an employers brand image

. Product Port#oio5

: C$rrently Caf# Coffee Day has the same men$ across the co$ntry where as they

co$ld cater to different c$lt$res by locali1ing their men$ according to the region

: Their men$ has been restr$ct$red many times b$t does not offer anything that is

specific to a certain region

,. Consutants8 "iring strateg$ 5 CCD has tied $p with %- cons$ltants for hiring

p$rposes b$t they do not pro*ide a specified time period or ob description which

ends $p hindering their whole recr$itment process

/. Go!a expansion5

: In order to compete with Starb$c"s CCD needs to loo" into global e7pansion

: Caf# Coffee Day aims to be one of the top fo$r coffee chains aro$nd the globe in

order to do that they need to foc$s on international e7pansions

: Their competitor Starb$c"s is pre*alent thro$gho$t the world

Ho% can Ca#0 Co##ee Da$ #i t"ese gaps9

I. ( -ore co-pre"ensive and standardi:ed "iring process and sove t"e attrition

issue at "and

: Since CCD is facing a attrition rate of /-0 they need to wor" on their hiring process

as well as their retention plan. This can be done after identifying the problems with a

comprehensi*e analysis of the employee en*ironment. This analysis can be done

thro$gh cond$cting ssatisfaction s$r*eys: Also coaching training mentoring stretching obs and pro*iding ade6$ate

ad*ancement opport$nities can be $sed as ways to retain employees

II. E##ective i-pe-entation o# t"e induction and on8!oarding process

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: Caf# Coffee Day is dealing with a *ery high attrition rate th$s it needs to concentrate

on the whole hiring process with some changes in the on:boarding and ind$ction

system

III. ,ocai:ed -enus and store a-!ience in order to attract ne% custo-ers

: C$rrently Caf# Coffee Day has the same men$ across the co$ntry where as they co$ld

cater to different c$lt$res by locali1ing their men$ according to the region. Their

men$ has been restr$ct$red many times b$t does not offer anything that is specific to

a certain region.

IV. Speci#ied ti-e #ra-e;

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Standardi1ed ind$ction and on:boarding proced$res will allow new recr$its proper training

and bonding to company c$lt$re. It can also consider o$tso$rcing its recr$itment processes to

e7perienced E2 agencies. Internal recr$itment methods that can be $sed in CCD are ob

postings and promotion from within as well as a career path for the management employees.

57ternal recr$itment methods that can be $sed in CCD are wal":ins where people apply ontheir own and also employee referrals where c$rrent employees recommend possible ob

applicants. Specified time frame ob description with clearly defined roles and

responsibilities.

. Hiring ne% peope across di##erent go!a -ar3ets

As of 3arch -%+ there are %+,- o$tlets across & states of India. Cafe Coffee Day has also

e7panded o$tside India with its o$tlets in A$stria (Vienna! C1ech 2ep$blic D$bai 3alaysia

4 Cairo 5gypt. CCD sho$ld slowly start e7panding and *ent$ring into newer mar"ets

whereby impro*ing its footprint as well as attracting newer talent. By employing local

baristas and middle management more informed decisions can be made.

The c$stomer ser*ice and labo$r reg$lations are more smoothly carried o$t. Can e7ploit

5astern and 5$ropean mar"ets. Di*ersification strategy can be followed and college st$dents

(for f$ll and part time! can be $tili1ed.

;oreign college st$dents and hospitality maors can be targeted so as to red$ce the cost of

training. CCD can e*en target the $ni*ersity le*el recr$itment a*en$es offered in foreign

ed$cational instit$tes to get fresh talent at affordable pac"age bands. CCD sho$ld stri*e to

become an 56$al 9pport$nity employer. All 6$alified applicants sho$ld recei*e considerationfor employment witho$t regard to race national origin age se7 religion disability se7$al

orientation marital stat$s or any other basis protected by local state or federal law.

,. (ttracting and retaining s3ied e-po$ees

)eeping in mind the high attrition rate in the ind$stry it is *ery important to attract and retain

talented employees. CCD sho$ld occ$py significant mind share amongst prospecti*e

aspirants. By becoming the Oemployer of choice in the coffee retail ind$stry the brand

*isibility widens. If the employees are treated well they perform well. 5no$gh and more

career opport$nities and training will attract s"illed talent. By coming $p with neweremployee welfare and benefit schemes e7isting employees can be retained.

Baristas and yo$nger employees can be gi*en t$ition and ed$cation assistances. 8ew

recognition programs career sabbaticals and other time:off programs for employees at e*ery

le*el. ?l$s ,-0 in:store and onlinedisco$nts can be considered. 3ore employer branding

thro$gh word:of:mo$th and social media can attract talent. 5mployee stoc" option facilities

medical and health care ins$rances as well as performance based incenti*e schemes can

retain talent to a h$ge e7tend.

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/. E-po$ee engage-entactivities

At Caf# Coffee Day ob satisfaction comes only when the employees lo*e their ob. At CCD

thereKs no reason not to Eence the 5.5. Cl$b was formed as an initiati*e to enco$rage inter:

di*isional engagement. By hosting a plethora of e*ents li"e o$tbo$nd trips employee picnics

and ;riday f$n days etc the employee morale can be boosted.

A constant chec" on the employee satisfaction le*els thro$gh s$r*eys and random chec"s can

lead to higher employee prod$cti*ity. By introd$cing monthly employee engagement

acti*ities to dri*e a for$m can be created for talent e7pression as well as to pro*ide

opport$nities to networ" with employees of the gro$p companies.

Best performer awards and best caf# of the region titles sho$ld be "ept so as to ha*e spirited

competition. CCD brand is nothing witho$t its baristas. By gi*ing employees reasons to

belie*e in their wor" and that theyre part of a larger mission An employee with aconnection to the wor" of the company will then operate for its good $st li"e a personal

matter. Treat each store li"e a small b$siness and be creati*e with training sessions.

S(REG=

O!

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