Case Study

1. Case Study 06国贸01班第四组: 陈海霞 陈丽芳 陈渐仪 程颖欣 方淑敏 PPT制作: 陈丽芳

2. Illycaffe (A): Internationalization

3. About illycaffe Based in Trieste, Italy, illycaffe produces and markets a unique blend of espresso coffee under a single brand leader in quality. Over 6 million cups of illy espresso coffee are enjoyed every day. illy is sold in over 140 countries around the world and is available in more than 50,000 of the best restaurants and coffee bars. illycaffe employs around 700 people and has consolidated turnover of EUR 246 million.(2006 results) 陈丽芳(3206004338)

4. illy buys green coffee directly from the growers of the highest quality Arabica through partnerships based on the mutual creation of value. The Trieste-based company fosters long-term collaborations with the world‘s best coffee growers -- in Brazil, Central America, India and Africa -- providing know-how and technology and offering above-market prices. 陈丽芳(3206004338)

5. question one • To what extent do you think a global strategy in coffee is well‑founded? For example, is the espresso market global or multi-domestic? (陈海霞3206004336) To put it simply, the globalization of coffee about consists of three components: a globalization of coffee-off, the globalization of the coffee beans and globalization of a coffee shop. Globalization of coffee-off, arises from the international population movement. With the movement of the population ,international exchange and flowing tend to be more frequent.

6. The globalization in coffee close linked to that of coffee shop. Without large-scale coffee shop chain, it would be difficult to achieve the international coffee large purchasing and circulation,and even not to mention the a global strategy in coffee. However,the emergence of Espresso is the most obvious sign of coffee globalization. Espresso even subverts the American light taste of the traditional coffee, occupying large areas of the U.S. coffee market. To a certain extent, Espresso promote the development of globalization in coffee. The simple modulation technique makes no longer be monopolized by some special technicians, which is wisdspread in usual coffee shops,and the technology has no longer become the threshold of the cafe.

7. This saves much time in trainning staff for a cafe, and thereby there is some time to consider a market strategy and the overall pattern of the evolution of coffee, which will speed up the development of the coffee shop chain, making the small and poor-managed Cafe faster integrated into the system of coffee shops chain. Cafe chain with its stunning ability of expansion,allow many people to eat quality coffee. So, a global strategy in coffee is well founded, especially lied in the espresso market globalization

8. question two • How would you define Illycaffe’s FSAs? CSA’s? Can they be transferred abroad?(陈渐仪3206004337) Illycaffe’s FSAs Quality never compromises. That’s why illy produces one single blend composed of nine types of 100% premium Arabica coffee—the very finest—and makes it available in different formats and roasts. This choice guarantees consistent quality and distinguishes the illy blend, ensuring it always has the same unique aroma and flavor.

9. The green coffee beans are carefully selected at source from the best plantations in Brazil, Central America, India and Africa. They are then subjected to 114 quality control steps before being sold.  • For illy, improving and enhancing the enjoyment of espresso is the object of its research and passion.Illy’s advertising and promotion policy both concentrate on the quality of it’s product and connect with its brand name to enhance brand loyalty. • In my opinion,illy’s FSAs can be transferred abroad through establishing new marketing channels where it can ensure the high quality of illy’s coffee and service.

10. Illycaffe’s CSAs • Italy, the birthplace of espresso and coffee bars it is one of the largest exporters of roasted coffee. • In Italy, the cafe is a vibrant hub of the social network and a daily ritual for most people; a place where locals go to relax and connect with others as the barista serves their favorite brew. espressamente illy gives the visitor a truly memorable authentic Italian experience. • I think Illy’s CSAs cannot be transferred abroad since CSAs belong to a country’s long term effect and have a Country-of-Origin Effect. Italian espresso and coffee bars have left a great impression on people all over the world.

11. question three • What were the difficulties Illycaffe faced when expanding abroad? How did these impact its choice of entry mode?(陈丽芳3206004338) As you know, Illycaffe is a well-established company which produces not only the high quality Espresso coffee, but also represents a high quality lifestyle. Due to the fierce competitions in the drinks market, illycaffe is without exception faced some difficulties when expanding abroad.

12. For instance, when it puts its steps into America drinks market, it will be surely faced with the competitions from American Coca-Cola company,the biggest drinks company in the world. What’s more, the tarbucks coffee company is also a well-known coffee company which has a great many costumers, therefore, illycaffe also has to compete with it. Apart from these two biggest competitors, there are various brands of drinks especially in China. so Besides these, it will face several obstacles, such as cultural and social barriers, political barriers and tariffs and trade restrictions.

13. These difficulties will impact its choice of entry mode. It depends what country it goes into and what obstacles it may have. • For example, it may set subsidiary in the country where there are a lot of persons who are rich enough and enjoys Espresso coffee. • It may choose licensing as the best way to enter foreign markets to keep the financial risk to a minimum. • Furthermore, it can merger a foreign company or set a joint venture to share the costs and risks.

14. question four • What created the problems with the existing distribution strategy in the German market? Was the distribution alliance with Hag ill-advised?(程颖欣3206004339) Coffee is the best-selling drink in German.The consumption of coffee to the Germar was average 150 litre in 2004. But as the report said, the selling of Germany traditional coffee has declined recently.Because consumers have more interesting on the specail and soluble coffee.Illycaffe is one of their chose.

15. Illycaffe growth quickly in 130 countties.illycaffè grows their business without growing their IT budget . illycaffè’s sales grew over 8% from 2003 to 2004, and they continue to grow. • This meansmore employees, more distributors and an increasingly complex IT infrastructure that needed to accommodate a significant rise in demand. • I don’t think it was the distribution alliance with Hag ill-advised.Because every coin has two sides,as the business expands, the cose must increse,and we must find out the way to settle the problems.

16. question five • What negotiation strategy would you have recommended to Mr. Illy? (方淑敏3206004340) How to make a successful negotiation?there are many skills,but in my opinion, there are four major ones. 1.the patience to outlast the other negotiator. Patience is a good excellence of a negotiator. 2.To be a good negotiator,I suggest you to callenge the situation that you don’t know what the outcome will be.

17. 3. The courage to ask for more than you expect to get.Effective on the negotiating desk depends on overstanding what you expect .You can just provide a high initial price that includes your real aims. • 4. The integrity to press for a win-win solution. • 5. the willingness to be a good listener.Only a good listener can be a win-win negotiator and only a good listerner can detect the other side’s real needs of the negotiation.

18. thank you!