Starbucks and Teavana

Introductions The article is about the acquisition, Starbucks which is a very famous company has bought the Teavana which is in tea business. A statement given by the Starbucks CEO Howard we want to replicate the success with tea. And he knows that entering into tea business would create the new opportunities for the company. Starbucks is a very popular American company kwon for the serving Italian style coffee. The company is based in the Seattle, Washington. The Starbucks was opened by the three partners, jerry Baldwin, Zev Siegl and Gordon Bowker in 1971. The company was opened to serve the best roasted coffee beans. In 1988, the company was sold to Howard Schultz, who has madness about the Italian style coffee, before buying the Starbucks, he had his own coffee outlets named Giornale and he changed his store names very quickly to Starbucks' and quickly began to expand. The reason behind the madness of Howard, once in 1983 he visited Italy and saw that in Italy coffee is not a beverage, it is more than that people in Italy not only drink coffee they enjoy it. People usually talk to each other and spend time with their families. He wanted to bring this coffee culture to America. The company has introduced the music concept in Starbucks. It started in the 1990 adding in few retail locations for a change. The company purchased the Hear music in 1999 and produced the Starbucks opera album and in March 2007, a new album hit the market called Memory almost full by Paul McCartney. Right now the Howard Schultz is the chairman, president and CEO of the company. By the end of 2012 the total revenues of company was 13.29 billon U.S. dollars. The company is giving employment to 150000 people worldwide. Time to time company has done various acquisition and strategies some of them are given below

In 1991 the company started serving coffee in airports; the first store has been opened in settle airport. The company has introduced the drive thru window for those customers who are always in hurry. In 1996 the company came into partnership with Pepsi co, the Starbuck want to create a drink which can compete with the other companies cold beverages and they have created frappucino. A cold beverage packed in bottle and ready to serve. In 2008 the company is continues to expand in Brazil, Argentina, Portugal. Starbucks has introduced a new line instant coffee called VIA. In 2009 the company has launched VIA in New York where it started serving two flavours include Italian and Colombia. The product was also introduced in other areas across the U.S. and Canada. Many researchers said that serving fresh roasted coffee is the key feature of Starbucks, launching instant coffee would devalue the brand. On 2011 the company has brought the juice company Evolution Fresh for 30 million U.S. dollars. In 2011 the Starbucks ready to expand in Indian market with a strategic alliance with TATA coffee. Today Starbucks has 18000 stores in 55 countries and doing will serving its products, in 2003 the company brought the Seattle Best Coffee and Torrejazione Italian form of AFC enterprise. Through the acquisition the company was able to take over the 6400 stores worldwide. And in 2006 the Dietrich coffee sold its most of the stores. The company has done various acquisitions time to time to expand its business in the various countries and in various kind of food industry. Starbuck is not involve into coffee business it has grown itself into various food line. The company has started with the coffee business but now it serves more than 1000 products. The company is in tea business and doing but Howard want the same success in the tea business as they did with coffee business today. As it is known for us that tea is second most consumable business and as it is 40 billion U.S. dollar business growing continually. Starbucks has done 18 months of research before buying the Teavana. Mack, a former restaurant industry executive, founded Teavana with his wife Nancy as a single outlet on Peachtree Road in 1997. The company is mainly involved into selling the verity of herbal tea. They have range of teas and they also sell unique kind of cup sets and teapots inspired from Asian culture. They have around more than 100 type of tea which company import and prepare itself. The Teavana started with a dream that people would taste a high quality and healthy tea. The company has introduced the variety of teas with different aroma, beneficial qualities. The company provide the various kinds of product range for gifts and also in the crockery business the name of the company is very unique itself which means the heaven of tea. The company has opened its first tea store in Atlanta, Georgia. The company has 200 Teavana store throughout the US and Mexico.

The acquisition of the Teavana by the Starbucks is the part of expansion strategies. Starbucks has acquired many companies during the time as per its expansion plans. In year 2011 the company has already brought the two companies. The company is heavily investing the money in products and creating a new range of products

Analysis The acquisition of Teavana by Starbucks is the part of the strategies as the company is well aware about the future of tea. According to the research, Starbucks found that tea business has 40 billon US dollars global market and company want to earn huge amount of profit. It is not the first time that the company will start selling the tea in their store as it is already selling it in their stores and doing well the main reason of acquisition is to get name of Teavana. Teavana is very popular company know for variety serving of tea. The shocking part is that CEO Howard wants to expand the tea business as he has done with the coffee business. The company does not have any need to open new store as Teavana has 300 stores in shopping mall. Starbuck is using the Teavanas name to build the market. If Starbuck start selling its own tea business it wont be able to grow as CEO Howard wants. The Teavana has already a strong chain through which the company buys and sells it product, Starbucks is getting a strong network. Starbucks is ready to pay 620 million U.S. dollars for the acquisition. CEO Howard has announced that they will open tea bars in every Teavana store in the county. The company want to prove that they can deliver the profits like IBM. As the recent acquisition with Teavana and other companies shows that the company is going to make huge profit in future. The companys recent earning has showed that the company is not able to generate more profits with existing business. To make profit in future the company need to do another successful operation to earn profits from the tea business. The company has shown its plans related to Teavana that the products of Teavana will be offered through the Starbucks stores and will introduce the new stores for selling tea. The store will be branded with the name of Teavana (it shows that the company wants to get the benefits of the brand name). The Howard believes that the Teavana will support it already existing tea line that is Tazo and it will create the unique opportunity of two tiered market position. He announced that the company will open new Teavana stores in domestic and international market. Starbucks president said that the acquisition of Teavana help the company to add its more products in the stores and to other supermarkets. Adding Teavana products will add more products to their global consumer product scoop. The company is hoping to grow the consumer product scoop by 6 times.

Red Bull's space jump

The article is about the stunt that organized by the Redbull on Sunday, Oct. 14, the stunt was the space diving project. The athlete who has performers this stunt his name is Felix Baumgartner. The stunt is about the free fall from the edge of the space to earth. The distance from the space and earth is 24 mile and took him 4 minutes to land on surface and completed the longest and fastest free-fall on record. The stunt was extremely dangerous. There was lots of risk and uncertainty with this stunt. The stunt was contributing to its image of extreme thrill, adventure and excitement. The Redbull stratus team has the worlds most brilliant minds in aerospace medicine, pressure suit development, engineering, balloon fabrication and capsule creation. . Redbull is very popular brand name around the world know for the energy drink. The company was established in 1987 by the Dietrich Mateschitz. The company is very popular for its extreme sports and energy drink. In year 2011 the company has sold 4.631 billion of cans which was 11.4 % comparing with the last year. According to the company the reason behind there mass sales is their marketing campaign through which the company advertise their products. The companys products are marketed through the advertising, events (Redbull air race, Redbull crashed ice). The company has their sports team; these are Redbull racing, EC Redbull Salzburg, FC Redbull Salzburg, football team Redbull New York, Redbull Leipzig and Redbull Brazil. The company also use the celebrity endorsements to support their brands and use music through its own record studio REDBULL RECORDS. The company has always a different concept and planning for its marketing. They always do risky and extreme sports events for promotion. The companys main target is to associate their brand with sports. Redbull does not spend its all money on one kind of marketing, it diversify its marketing campaign using different sports events for example the extreme sports BMX, snowboarding, kayaking and formula one racing in which the company has won three awards in 2010,2011 and 2012. The example of their

marketing style is when the company organized the rap battle, where the Eminem judged the show. Through this event Redbull tried relate their brand with cool pop stars. Creating perfect storm The free fall from space by the Felix Baumgartners not only broke world record of highest free fall but also broke the YouTubes record as millions of people watched the drop live. And with that event the Redbull has won the heart and mind of marketers all around the globe. The stunt was more than the fulfilling a dream, it was more about the effort of a team who had given too much for this event. Through this stunt Redbull has demonstrated the power of fully integrated marketing plan. The company has used all the media engines to produce a perfect storm. What we can do, you cant Redbull has demonstrated it Redbull has shown the world that what they can do with their recourses no one can. Today, there is no brand which can take risk and promote the brand as Redbull does all the time. Most of the companies dont have that many resources or they dont have budget to do so. Most of the companies have lack of the innovative marketing idea. All the time the company relates their brand with fast and adventure like Redbull formula one and BMX. What Redbull does? Planning:-planning plays very important part of the marketing strategy. one must have good plans to implement the idea. This is not only the stunts or the event that makes your brand popular. It is all about the concept of marketing, every time Redbull comes up with unique and different idea like free fall from the edge of space. It needs huge resources and brave heart to perform these kinds of stunts and I dont see any other company with brave heart. If Redbull had used the formula of making a short film and after that they broadcast it on TV might not work well, because there might be some other advertisements on TV clutters the impression of stunt. Live streaming through the internet, around 8 million people have watched worldwide on YouTube. It was the part of the plan of focusing the attention of people on stunt and Brand and they have done well. Brand as a media channel It can be said that few consumer care about much of brand rather than the product they are getting Form Company. Redbull has executed the idea well for this they have created the media channel by organizing the events and stunts those include the high level risk and adrenaline Way of advertisement The way of the advertisement of company is very unique. The company try to create the interest of public in their event and athletes so that they can use it as a boost to their marketing strategy. So, that how company inform and persuade the people.

Diversify the portfolio The Redbull new stunt has created a wave between the media pundits. The company does not sponsor one athletes or one of the kind of event, if you study the event portfolio of the company, you will find that company has diversified its marketing portfolio through the different events and atlantics. This includes their way of advertisement and it also includes their way to relate the event to brand. Having diversified marketing portfolio is very critical but it is effective. Be a renegade Redbull does not follow the other companies ideas of advertisement or try improve what some other had done with the marketing scheme. Redbull create those marketing and promotion activities which are out of the convention. The company does not break the rules of marketing but their way of marketing is marvellous. Making plans, creating the own media and leverage the advertisement to support their efforts.

Analysis The Redbull stratus is the most ambitious stunt yet support to its caffeinated drink to the qualities of the speed and adventure, starting from the event like motorcyclist jumping on to the Arc de Triomphe to plans racing just meters above the Thames. While the company has earned great media impact which will undoubtedly increase the effectiveness and reach of the any campaigns and promotion in future. The company has used the COPE content in marketing. Which means the create once and publish everywhere, the company can use content on multiple platforms to promote its Energy drink During the past years the company has done many stunts to promote the brand and they were very successful at what they have done during these years. These risky and creative stunts are very effective for the companys image. The reason behind the risk taking for effective stunts is that more the risky and extreme stunt more the effective advertising endeavour. Redbull is not only promoting the stunts, they are also promoting the athletes who do all the stunts for the company and it helps their products to gain public recognition. Promoting the brand means creating an image in the mind of the consumer that our brand is associate it with trill and Redbull knows it very well that it will influence the decision of the consumer. Redbulls marketing formulas are always eye caching. During the REDBULL STRATOS the company has gained the attention of 8 million people around the world and more of them are watch through TV new channels. What other companies cant in months they have done in minutes. Redbull believes that the exposure could be 100m worldwide. And according to market research after the stun, the brand has gained the minimum value of 5 billion. The company not only gained the popularity, the mission statement showed something else also. During the

preparation of stunt the company has gained the scientific information which is very valuable because this kind of experiment has never been done by the NASA due to lack of information about the effect of supersonic speed on human body. This stunt has gained the company very popularity in scientific world. The data collected during the stunt can be used in future for medical and scientific purpose. At the last I would say that the company has been using the strategy of performing risky stunts and organizing various other sports and music activates to promote their brand and they have done well with it. Before entering into the energy business, someone asked the Dietrich Mateschitz that there is no market for energy drink then he replied we will invent one and as we can see that he has done it very well with his marketing and promoting activities.

USL and Diageo

Basically the article is about the deal between the USL and Diageo, the USL (united sprits limited) is Vijay Mallyas liquor company. According to the news, the Diageo will buy 53.4 percent share in USL which would be for Rs 11166.5 crore. The deal would be like this, Diageo will be acquiring a stake of 27.4 percent which will be done by buying the shares at Rs 1440 per share. For the other half, Diageo will pay around Rs 5300 crore to Mr Vijay mallya by deposing the amount into his personal account. Diageo also confirmed that the Mr Vijay mallya will remain the CEO of the company. Diageo is the famous liquor making company, founded in 1997. The company is famous for its vodka Smirnoff and also for the world famous whisky Johnnies walker. With the deal company seeks great opportunities in Indian market to sell whisky. Diageo knows that they are paying more than the actual value but they know that their profits would be doubled in next 4 to 5 years. The reason behind the deal could be the crisis of the king fisher airlines, the condition of kingfisher airline is very bad and by the passing of time its getting worst. The company is not able to pay employees salaries and suffering from the huge debts which are increasing day to day. The airline has been shut since oct1, 2012. According to the state bank of India the kingfisher need to pay at least $ one billion at the end of the November 30, 2012

The deal with Diageo will help the company to raise the funds which Mallya can use to pay the airline debts. The company was not able to satisfy the aviation department regarding the safety of flights and due to daily cancelation of flights and there were no new schedule for the flights, the aviation ministry has suspended the licence of the kingfisher. People were suffering from this and the company form the debts which have gone too far. The government has given the company a deadline of 31 December 2012 to come up with new plans otherwise the kingfisher would be no longer. The deal with Diageo has opened the new opportunities for the company to pay back the debt but the amount isnt enough for it. But several banks have given the statement that the deal might be good for the company and this positive feedback worked as fire for the people who were suffering from cold. Diageo is very happy to have this agreement with USL. The COO Ivan Menezes said This will become Diageos number two market after the United States and if you look at the projection on what happening with the emerging middle class ... it has the potential in long term to become our largest market. The problem with kingfisher was that they dont have enough working capital for the operations, and due to this they were not able to run their planes and not able to the money for the other operation activities, which were required for day to day running of the business. There is still uncertainty about how the Mallya will use the funds (raised by selling USLs stake) to recapitalize the kingfisher airlines Mallya said we are working on a comprehensive rehabilitation plan that includes recapitalisation of the kingfisher airlines By the end of the 30 September 2012, the company has reported the record loss of 754 crore in the second quarter and revenue fell down by 87%. The reason behind the losses in second quarter was the suspension of the license. The losses started since the company has started its operations in 2005, by the end of the 2012, the company has reported the aggregate loss of Rs 7000 crore. To cut the cost and to save money, the company also restructured the Rs 8000 crore debt into the equity shares and preference shares and company saved around Rs 500 crore of interest payment every year. On November 2011 Kingfisher airline has tried to recast loan for further operation of the company form the banks, the govt of India has denied the request of loan. Payment problem with company

On 5th Jan 2012, the SBI decides that kingfisher airline a non performing assets, which means that there is no hope for the company to generate any kinds of revenues. SBI has funded around Rs 1457.78 crore to kingfisher airlines and by the end of the Feb. 2012 other banks who have landed money to the kingfisher declared the company a non performing asset. These banks include the bank of Baroda, Punjab national bank, IDBI, Central bank, Bank of India, and corporation bank. Since 2008 the company was unable to pay the lease rents to the aircraft manufactures. During these crises the Income tax court has issued an arrest warrant against the Vijay Mallya because their cheques paid to Hyderabad airport ministry bounced many times. According to the analysts The amount which company will receive form the deal is enough to bring back kingfisher airline on track, they have also said that the amount could be use to payback the debts to the lenders and can make company able to talk about fresh loan for the operations of the airline. According to the Amber Dubay, the head of the aviation at KPMG said Kingfisher airlines need a significant cash infusion if it is to be revived, the deal with Diageo may be the good first step for the company but there might be more funds required to bring back the company to life. It depends on the Vijay Mallya how he will bring back life in his Aviation Company. Analysis The deal with Diageo will open the new opportunities for the USL and have the large amount of cash, when there was just rumours about the deal between the Diageo and USL, people who are have shares of kingfisher airline believed that the deal might be beneficial for the kingfisher airlines and could bring back the company back on track but when Vijay Mallya has given a statement that deal has no connection on the crisis of kingfisher airline and said that the company has different business units and all work independently. This created the doubt about deal and in the minds of banks those have given the loan to the company. The kingfisher has the total debt of Rs 8450 crore, with the deal the company would able to pay around Rs 3000 crore to its lender. For this Vijay mallya has sold it 53.4 shares to Diageo for Rs 11667 of USL. The deal will open the gate for USL to compete in the international market, according the COO of Diageo Ivan said that the company has great potential to grow and the Indian market also has the great potential in future. The merger with Diageo help the company to achieve the growth in future but it seems very unfair that if all the control will be in the hand of Diageo, how one company can can help the other competitor to grow. We will see in the future that on what kinds of Strategies Company will use. For Diageo, entering in the Indian market is going to profit making for the Diageo in future. Because the company knows that this business has great potential and still growing. Diageo is already is popular for it whisky called jonnie walker and for it great vodka Smirnoff. The deal will bring not only cash for the company but also bring back the trust of

people on kingfisher. We have seen that when the announcement has been made for the deal between the Diageo and USL the share price of both company has gone up, USL share by 15 percent and Diageos 25 percent. The deal came up with good opportunities for the USL to enter into new market structure where Diageos strategy plans will help USL. The deal also tells us that the Diageo will change all the management system in the company to enhance the operational efficiency of the company. The amount will help the USL to pay back the debt and this will cut down the cost of the interest and save cost on debt can help the suffering company to save more and will indirectly increase the EPS.