Barista outlet: Hope the mocha will taste the same

Do-it-yourself is taking on an entirely new meaning at the coffee chain. After having opened 128 company-owned stores in the past three years (that's one store every nine days), the Rs 65-crore Barista is changing tack. Henceforth, its expansion into smaller towns will be driven by franchisees. Some of the towns on its radar: Amritsar, Jalandhar, Allahabad, Indore, Surat, Guwahati, Nagpur, and Cochin.

The first franchisee store opened in Kolkata three months ago, and another one in Delhi is in the offing. But why did it take Barista three years to come around to an established retail practice? ''We invested our equity to establish the concept (of coffee bars) with consumers, and now we have the management resource to de-capitalise the business as we go forward through franchisees,'' says Ravi S. Deol, Barista's Managing Director. For the record, Barista is the first coffee chain to rope in franchisees, who could also be handed some of the company-owned stores. Its two key competitors, Qwiky's and Café Coffee Day, still run self-owned stores.

Also on the anvil is a sharper segmenting of its cafés, based on the kind of coffee and snacks the outlet stocks, with sub-branding of the store's look and feel. That's all fine, but franchising may create some challenge to the Barista model. Currently, all of the chain's frontline staff gets stock options. What happens to the employees of franchisee stores? ''Yes, convincing the franchisees to follow (suit) will be a challenge,'' admits Deol. The making of the first storm in Barista's cup, did you say?

-Shailesh Dobhal

No Stitch In Time
SARS and war cripple garment exports.

Sharad Mathur, partner in the Mumbai-based Essential Clothing Company, a Rs 9-crore garment export company, has just cancelled his participation in the Hong Kong Trade Fair to be held in July this year. Reason: The US-Iraq war followed by the SARS epidemic and the general slowdown in the world economy. As Mathur puts it: ''Even if I do participate, important customers from Australia, the US and Europe will not be there because of the SARS fear.'' The general impression, most exporters point out, is that the ''buying sentiment'' is not just there now.

According to Virender Uppal, Chairman of the Apparel Export Council of India, total export orders worth Rs 200-300 crore have either been cancelled or delayed. Compounding the problem is the fact that most foreign buyers have put on hold travel plans to India. That means vendors will have to wait for a few more months before business picks up.

However, amidst all this gloom and doom, exporters are seeing a glimmer of hope. If China continues to suffer due to sars, a lot of its orders could well come India's way (China is the country's biggest competitor in garments). Again, with the Office for Iraqi Programme (OIP) slowly clearing goods stuck at Iraqi ports, garment exporters are heaving a sigh of relief. According to a senior Commerce Ministry official, as many as 22 contracts worth more than Rs 500 crore have already been cleared, and the rest will be cleared shortly. Now, all eyes are on SARS.

-Ashish Gupta

Three Heads On Globalisation

Three London Business School gurus, Saul Estrin, an expert on deregulation and privatisation; George Yip, a strategy maven; and P. Christopher Earley, a specialist in organisational behaviour were in Mumbai recently to speak on what it takes to succeed in a global economy. BT's Roshni Jayakar caught up with all three for some valuable sound bytes. Excerpts.

Saul Estrin: "Acquisitions key to FDI inflow"

You have completed a survey on FDI inflows into India. What do you think are the barriers to FDI?

The barriers include institutional weaknesses, cost of labour, and barriers to (accessing) the domestic market. The Indian market is complicated. It is expensive for foreign firms to come in and get a grip of the country as a whole. The solution to that would be acquisitions. In practice, even they are proving difficult.

Has India lost the FDI race to China?

What is the race for? If you think you need FDI to create more jobs, then India doesn't need it (FDI). But 15 years ago, China required FDI to do just that. In a country like India, the real benefit of FDI is the spillover of technology and the pressure to be globally competitive. That's where India is perhaps losing out.

George Yip: ''A global company has capability to go anywhere"

What is a global company?

A global company does not have to be everywhere. But it has the capability to go anywhere, deploy any assets, and access any resources. And it maximises profits on a global basis.

How should Indian companies go global?

They should start off with an Asia or regional strategy before going global. Or they can gain global leadership by exploiting low cost locations, moving into key markets preemptively, and internationalising human resources.

How can we catch up with the rest of the world?

First, become aware of the company's global potential. Second, leverage a huge domestic market to go global. Finally, expand into markets similar to the home base, using competencies developed there.

P. Christopher Earley: "Cultural intelligence is critical"

How is it that some managers work effectively across cultures while others don't?

The answer is a global mindset. This is what we call Cultural Intelligence or CQ. This is an individual's ability to adapt and manage successfully across new cultures. It reflects a capability to gather and manipulate information, draw inferences, and engage in effective actions in a new cultural setting.

Cultural misunderstandings lie at the root of failed business relationships. How can a company that needs to work through multinational teams avoid this?

You need to build teams that are either homogenous or heterogenous. Homogenous teams are good if you need to complete a task quickly. If you have several months, then heterogenous teams are better. The very process of searching for a commonality creates a bond between members.