SWOT Analysis and Balanced Scorecard for Community Coffee - Research Paper Example

? SWOT Analysis and Balanced Scorecard for Community Coffee SWOT ANALYSIS AND BALANCED SCORECARD FOR COMMUNITY COFFEE IntroductionRunning a coffee shop involves more than having knowledge of the difference between a caramel macchiato and a mocha latte. It is essential to have a strategic operational plan. A SWOT analysis that identifies the ago, ugly, and bad of the business is vital before starting a coffee shop. It is important to know where one stands within the coffee industry and in comparison to one’s competition. Following a SWOT analysis of one’s position within the industry, it becomes important to come up with a strategy that aims to capitalize on strengths and opportunities while mitigating weaknesses and threats (Pahl & Ritcher, 2009). Finally, the strategy needs to be translated into action. A balanced score card translates the mission of the organization into a set of comprehensive measures of performance that give the business a framework for the implementation of the strategy. The BSC helps in the development of creative objectives that can be used in performance measurements, including the financial, process, customer, and growth perspectives. SWOT Analysis Strengths Health benefits: Recent evidence has dispelled rumors that coffee is linked to illnesses like high blood pressure and cancer. In fact, studies have shown that coffee has more healthful benefits than harmful effects, which can only be good for the coffee industry. Convenient location of coffee shops A unique coffee house blend A wide selection of coffee brands and homemade pastries Commitment to diversity Weaknesses Coffee growing is affected by unpredictable elements that could, in turn, affect Community Coffee’s pricing of the coffee. The recent economic downturn has seen consumers less likely to spend $6 on a cup of coffee. Most consumers are now willing to compare prices before buying. The coffee market already has massive competition from such household names as Starbucks Opportunities There is a sustained growth in the coffee franchise industry due to the upsurge in coffee use by working Americans There is an upsurge in demand for specialty coffee in America with the US having over 21,400 coffee bars compared to Italy’s 200,000 There is also a growing preference among Americans for independent cafes compared to national franchises Increased demand for coffee blends in rural areas of the United States Threats The recent economic recession and subsequent uncertainty have reduced consumption Recent health results that have shown coffee to have some negative side effects, despite others showing it is good for you. This acts to confuse the wary customer. Rising costs of dairy and coffee products that cannot be foreseen but could have a serious impact on the coffee industry Strategic Objectives Community Coffee is geared more to a business strategy, especially since it concerns competition within a specific market (Nair, 2010), i.e. coffee shops. It follows that they will have to establish a competitive advantage over its rivals. In order to achieve this, Community Coffee needs to build their strategy on differentiation of products. This will contribute to a competitive advantage and shield the business from price wars in the industry. It is also important for Community Coffee to think about expanding nationally, which will be incorporated into the financial aspect of the scorecard. Finally, the diversity of the locations that Community Coffee seeks to operate in might make it difficult to grab a significant market share. They need to incorporate a faster service pace to compliment an on-the-go customer base; in addition, adjusting to a slower pace for the rural coffee shops that require a friendlier and slower pace since everyone there is community (Nair, 2010). Community Coffee will need to incorporate the two elements in its overall strategy. Balanced Score Card Financial Perspective On the objective concerning revenue growth, Community Coffee needs to concentrate on market diversification (Nair, 2010). Community Coffee intends to cater to both urban and urban rural clientele with their aim being to have at least 6% market share in the rural areas and 3% market share, in the urban areas, by 2014. The key indicator of performance will aid in measuring this objective with the major similar measure being percentage revenue increase at the individual store level. In order for this objective to be achieved, they will have to implement schemes for bonuses and incentives to motivate employees to reach set targets. They also need to target a larger customer segment through advertising in other locations like near offices and universities. A drawback that could derail this measure is the economic recession that could decrease disposable income, which will make revenue growth delicate. For this reason, mark up percentage was omitted to limit problems of shareholder value effects, especially since incorporation of percentages will add pressure to the business if there is a decline in shareholder expectations (Nair, 2010). Another essential objective under this perspective is an improvement of operational efficiency that seeks to reduce business wastage costs. Achievement of this objective involves providing more awareness regarding wastage reduction, which, in turn, could aid in improving Community Coffee’s overall brand image. This links to the customer’s perspective of maintenance of brand image. Customer Perspective Measuring objectives in the customer perspective is important because it involves feedback collation from the public in reference to the perception they have of Community Coffee (Nair, 2010). The objective allows the business an opportunity to participate in environmental and charity events that help in giving the company a better image. Community Coffee intends to be part of the “Go Green” movement that aims to standardize operations to be environmentally healthy. This will have the intention to improve customer satisfaction and revenues, which is why it is essential to include it in the scorecard. The main objectives to achieve will be customer retention, satisfaction, and profitability, which all link together. This can be measured by increased retention rates of customers, customer service efficiency, and product quality, which cement relationship with customers (Nair, 2010). These objectives will be involved with improvement of customer involvement as they adopt a face-to-face relationship. These objectives will be measured through feedback received from customers. Process perspective The first objective involves product innovation, which is essential for maintenance of strategy and brand image (Nair, 2010). Community Coffee intends to have at least three new brands of coffee by the year’s conclusion. Consequently, it is essential for Community Coffee to come up with innovative products to compete favorably. This objective can be measured via looking at sales increase from innovations to measure their success. Therefore, employees should be aware of available new products through offering them to advertise them, which links to the development of internal product knowledge. This is achievable via work booklets and daily staff meetings that aim to test knowledge of the staff. Objectives also should include delivery time improvement since this aids the achievement of high service quality that is linked to client satisfaction (Nair, 2010). Delivery times can be measured via comparison with other coffee houses and customer expectations, which can be gotten through feedback. Through ensuring a balanced ratio of customers to employees, they can improve customer and delivery service with decreased waiting times. Learning and Growth Perspective This focuses on employees in regards to employee empowering and motivation, increase in skills, employee satisfaction, and retention of loyalty (Nair, 2010). These objectives, in theory, participate in the maintenance of a focus that is customer centric. These objectives can be measured using one-to-one meetings, as well as appraisals, used for the assessment of performance and improvement of revenue growth. Every level can be assessed by mangers at store level. Reward and incentive programs can be linked to scorecards to promote the intended strategy’s realization, which can be incorporated into this perspective’s scorecard. At store level, Community Coffee should focus, on direct customer service, to achieve sales targets and retain employees and clients while also maintaining a working environment that is conducive for the staff. References Nair, Mohan. (2010). Essentials of Balanced Scorecard. Hoboken: John Wiley & Sons . Pahl, Nadine. & Richter, Anne. (2009). SWOT Analysis - Idea, Methodology And A Practical Approach. Mu?nchen : GRIN Verlag GmbH . Read More