The Recent Business Context and Changes in the Business - Essay Example

?A Report for Real Coffee LTD Table of Contents Introduction 3 Part External Analysis 3 Consumer Buying Behaviour 3 Increasing Competitors 3 Industry Analysis 4 Part 2: Internal Analysis 5 Marketing Issues 5 Human Resource (HR) Issues 5 Operational Issues 5 Financial Issues 5 Part 3: Conclusion and Proposals 6 References 7 Introduction With the advent of globalization, the recent business context has made it gradually important that small and medium enterprises also focus on their gradual expansion beyond the geographic boundaries of their home nation. Thus, efficient change management has become an essential approach in subsequence to the notion of global expansion amid small-sized business firms, through the establishment of coordination amid the individuals, teams and organizations to suffice pre-set goal and overcome challenges presented by the global economy in their continuous expansion (Asiedu & Freeman, 2006). Under such circumstances entrepreneurs face non-negligible challenges in controlling and executing the business functions in a smooth fashion, given the obstacles in the form of staff management, delegation of power and business opportunities identification as well as their subsequent achievements (Welter, 2010). Correspondingly, it has been viewed that Real Coffee Ltd., which is a small chain of coffee shops has been facing challenges to maintain a desired level of employee retention rate. The main objective of this paper is therefore, to provide a detailed analysis of the external and internal analysis of the business. Based on the analysis, the discussion further intends to provide rational suggestions that would help in understanding on how curtained changes in the business can help Real Coffee Ltd. to meet its organizational goal. Part 1: External Analysis Consumer Buying Behaviour UK is observed to be amongst the top ten countries that dealt in coffee around the globe as of 2011. It is worth mentioning that coffee is also measured to be the third-favourite non-alcoholic drink in the country. Over the year, it has been viewed that in the UK, the chain of coffee shops had grown 5.6% and contributed almost 29.1% market share by 2005. However, it has been viewed that independent and local coffee shops only grew by 2% and faced considerable amount of challenges over the year. Economic disturbance in the UK is also assumed to have affected the customer’s behaviours of drinking coffee. For instance, it was viewed that the coffee market grew by 17% from 2005 to 2009, again out of which, 57% of the total consumers 47% of the customers preferred sitting in coffee shops and 8.3 preferred take away services (Business Case Studies LLP, 2013). Moreover, it has also been viewed that today’s teenagers and young adults frequently visit cafes, which replicates it to be a growing trend. A thorough understanding of the consumer buying behaviour also revealed that about 37% of the coffee consumers prefer black coffee in the UK, while the remaining 63% like to add sweetener with it. 57% of the total consumers further stated to prefer having it at breakfast (Liang & Wu, n.d.). Increasing Competitors Globalization and the rapid technological aspect is not only considered to be a boon for every individual and business house, which aims at establishing themselves at the global market, but is also stated to be a course for small business houses with limited resources. Coffee market in the UK is considered to be one of the largest industries. With the increasing adaption of coffee by the people worldwide, whereby many multinational organizations are being established in the nation creating greater competiveness for smaller coffee shops, it has been viewed that although, small shops provide better quality products at lesser price, people prefer going to branded stores like Costa and Starbuck as a symbolisation of economic status in the society (Hospitality & Catering News, 2013). According to a survey conducted by Euromonitior international (2012), it was viewed that Nestle UK almost held 38% of the retail value share and 32% of the retail volume share in its business environment, with the virtues of the growing trend in favour of large brands. The main reason behind the strong liking of the brand image amid the people is considered to be because of its strong presence in the instance coffee segments. In this respect, if Real Coffee Ltd. provides better eating experience and markets its products locally, the issue can be mitigated from its root (Euromonitior international, 2012). Industry Analysis Rivalry among Existing Competitors Coffee industry in the UK is considered to be amongst one of the largest markets around the world. Many well-known coffee businesses have been established in the region to conquer the market with the assistance of their unique set of strategies. As a consequence, their product differentiation initiatives are different from each other, following a service-driven approach. This has increased the establishment cost for small coffee shops in the nation. Thus, it can be stated that the aspect of rivalry seems to be very high in the free market structure of the UK coffee shop businesses (Euromonitior international, 2012). Threat of New Entrants As the UK is ranked amongst the top 10 places in the coffee market, it has been viewed that over times, the nation has not only attracted many well-known businesses that deal in coffee products, but has also motivated the local industry players to compete at the global level. In this respect, it can be stated that since majority of the well-known business are already established in the nation, no small industry would make possible plans to get established here. Hence, the threat of new entrance can be considered medium when assessing the industry context of Real Coffee Ltd. (Hospitality & Catering News, 2013). Threat of Substitutes Tea is considered to be the best substitute for coffee as it’s provides the same mental satisfaction. But unlike coffee, overconsumption of tea causes comparatively lesser harm to the body than irregular and overconsumption of coffee. However, over time, many industries have been coming over with various products like energy drinks and fruit juice, as substitutes to coffee products. These products have also gained considerable fame within the targeted customers of coffee shops, promoted as much healthier and less expensive than coffee based drinks. Hence, the threat of substitute can be considered high in this industry (1Crown, 2013). Bargaining Power of Suppliers Since the UK is one of the largest producers of coffee, this provides the business to choose raw materials from a wide variety of suppliers available in the market. In this respect, it can be stated that the bargaining power of suppliers is low in the business environment (1Crown, 2013). Bargaining Power of Buyers Coffee business in the UK is ranked amongst the top in the world. People have a wide choice of products to choose from in this industry context. Additionally, coffee has also been adapted as a part of the daily life of individuals, making the bargaining power of the buyer’s quite low (1Crown, 2013). Part 2: Internal Analysis Marketing Issues Real Coffee Ltd. is a small chain of coffee shops that operates in Witney, Summertown, Cowley and Aylesbury as well as in Oxford town. However, over the time, it has been viewed that the business is facing numerous challenges from the establishment of multinational firms in the UK resulting in decreasing customer retention rate. In this respect, strategies like creating a fan page in social networking sites can be implemented, as it has been viewed that today social networks are considered to be the best way of promotion. This would help in identifying the needs of the customers. It can also act as an informational site where the business can also upload messages related with the price of the various products that are offered by the company and would also help to identify the differences in the pricing ranges practiced by multinational companies, to obtain a comparative understanding of the market environment (The State of Queensland, 2013). Human Resource (HR) Issues Human Resources are considered to be an integral part for any business as they are the one who makes an organization run by developing, controlling and implementing the strategies of the business, related to its various activities and therefore, confirms active participation in the progress of the company. Correspondingly, it has been viewed that individuals associated with Real Coffee Ltd. develop a feel of dissatisfaction after a period of time of lack morale and thus, increases employee retention rate to a substantial extent. To counter this challenge, the business needs to implement a well-structured, transparent and all-inclusive HR policy framework rendering due significance to the employees’ commitment, motivational needs and performance based reward system (Dow Jones & Company, Inc., 2013). As a result, it is likely that the company will be able to retain its employees for a longer period of time. Operational Issues The operational dimension of a business is considered to be a vital aspect acting as a bridge between all the business activities that work with an intention to help the company in attaining the business goal successfully. However, in this respect, it has been viewed that Adam Franklyn, the owner of the business takes all the decisions without consulting the other members of its staff, which has been causing significant disruptions in the organisational efficiencies as well as has also been denoted as a major cause of dissatisfaction among the senior employees of the company. Hence, the establishment of a structure Corporate Governance system in the business would help in mitigating these issues as it would provide a more detailed description of the various factors that are creating a barrier in the achievement of the business goal, eradicating the ethical issues currently witnessed in the decision making system of the company (Harvard Business School, n.d.). Financial Issues Tough competitions in the business industry have been viewed to have decreased the customer level in the business, resulting in diminished financial resources for the company. In order to overcome this issue, the business needs to focus on promoting its products in a manner that would differentiate it from the competitive brands and therefore, help in increasing its sale figure in the short-run. Additionally, the business can apply for the Enterprise Finance Guarantee (EFG), a loan guarantee scheme launched by the regulatory bodies in the UK to facilitate lending to a viable business that have been facing challenges resulting from business environment changes. This would help in expanding the business through the launch of new product lines and investments in aggressive promotions of the same (2Crown, 2013). Part 3: Conclusion and Proposals Bringing change to a business is considered to be a vital task in the recent phenomenon as it sometimes involves huge monetary requirements that may dissolve the firm subjected to the appropriateness of the decisions made. Correspondingly, it has been viewed that Real Coffee Ltd., a small chain of coffee chain business, has been facing numerous challenges resulting from following a rigid set of rules. Additionally, establishment of large multination coffee chain business like Starbucks, Nestle and Costa among others are providing tough challenges for the business to grow in the local market. Furthermore, it has also been viewed that the business lacks in proper management approaches that is resulting in maintaining a poor customer as well as employee retention rate resulting in decreasing the sustainability as well as profit of the firm. With reference to the above discussion it can be viewed that the main reason behind this was because of its ineffectiveness and inaccuracy in the decision making process, owing to the fact that the entrepreneur of the business, Adam Franklyn applied a centralised decision making system, causing dissatisfaction amid employees and developing prejudiced decisions inhibiting the overall success potentials of the business. In this aspect the first step that can be taken is to renovate the business through loan or any other financial borrowings from the governmental bodies. Considering the stated discussion, it can be viewed how the coffee market in the UK has been changing over time. In this respect, if Real Coffee Ltd. should implements effective market segmentation strategies, as each group of customers decipher their unique choices in the business sector. For instance, showcasing its products using banners and leaflets in the local area of the business would help in attracting more young customers. Additionally, the business can also introduce new line of packaged instant coffee, considering that the business is known for its quality coffee and attract a greater volume of coffee preferring adults. Modifying the shops with drive in facility would also help in significantly influencing the future development of the business. Additionally, pages in social networking that would provide a detailed view of the stores along with the products and process sold in the stores and integration of Customer Relations Management (CRM) would also help in managing the customers’ demands more efficiently. This would further help the customers to compare its products with other similar store and help in bringing more customers applying effective competitive strategies. The corresponding HR issues can also be mitigated by building a homely environment and other facilities that would help the employees to be a part of the business for a longer time and thereafter, increase employee retention rates. References Asiedu, E., & Freeman, J., 2006. The Effect of Globalization on the Performance of Small and Medium Enterprises in the US: Does Owners’ Race/Ethnicity Matter? American Economic Association, pp. 1-23. Business Case Studies LLP, 2013. Responding to an Emerging Market. Changes in the Business Environment. [Online] Available at: http://businesscasestudies.co.uk/portakabin/responding-to-an-emerging-market/changes-in-the-business-enviornment.html#axzz2mgHImSbd [Accessed December 6, 2013]. 1Crown, 2013. Food Standards: Labelling, Durability and Composition. Department for Environment, Food & Rural Affairs. [Online] Available at: https://www.gov.uk/food-standards-labelling-durability-and-composition [Accessed December 6, 2013]. 2Crown, 2013. Understanding the Enterprise Finance Guarantee. Department for Business, Innovation & Skills. [Online] Available at: https://www.gov.uk/understanding-the-enterprise-finance-guarantee [Accessed December 6, 2013]. Dow Jones & Company, Inc., 2013. Employee Retention – How to Retain Employees. Hiring and Managing Employees. [Online] Available at: http://guides.wsj.com/small-business/hiring-and-managing-employees/how-to-retain-employees/ [Accessed December 6, 2013]. Euromonitior international, 2012. Coffee in the United Kingdom. Country Report. [Online] Available at: http://www.euromonitor.com/coffee-in-the-united-kingdom/report [Accessed December 6, 2013]. Hospitality & Catering News, 2013. UK Coffee: Market Grows and to Grow Strongly. UK Branded Coffee Shop Market. [Online] Available at: http://www.hospitalityandcateringnews.com/2013/01/uk-coffee-market-grows-and-to-grow-strongly/ [Accessed December 6, 2013]. Harvard Business School, No Date. Corporate Social Responsibility. Executive Education. [Online] Available at: http://www.exed.hbs.edu/programs/csr/print.aspx [Accessed December 6, 2013]. Liang, W. K., & Wu, R. A., No Date. Analysis of Coffee shop market. A Case study of UK. The State of Queensland, 2013. Using Social Media to Market your Business: The Basics. Business and Industry Portal. [Online] Available at: http://www.business.qld.gov.au/business/running/marketing/online-marketing/social-media-business [Accessed December 6, 2013]. Welter, F., 2010. Contextualizing Entrepreneurship — Conceptual Challenges and Ways Forward. Baylor University, pp. 165-184. Read More