Strategic Opportunities for Costa Coffee - Case Study Example

 Strategic Opportunities for Costa Coffee Table of Contents Introduction………………………………………………………………………..3 Models and Concepts for Strategic Planning……………………………………...3 Industry Analysis and Strategic Theory…………………………………………...5 Analysis of Costa Coffee………………………………………………………….7 Conclusion……………………………………………………………………….10 Executive Summary The implementation and strategies that can be used for various industries can provide the enhancement of specific areas. When looking at the food industry, it can be seen that diversification of the market and of products are the most important aspects of strategic planning and growth. Costa Coffee is one of the areas that can utilize diversification of the current products to create a stronger target market and more opportunities for growth that is associated with the corporation. Introduction The different implementations and strategies that are a part of a corporation make a difference in the success and growth of the company and how it moves forward with specific functions in the business. When looking at Costa Coffee, it can be seen that there are various strategic options and implementation of new concepts that can be used with this particular shop. The aims and objectives of this corporation as well as the movement into growth for the company is able to lead into new opportunities of the industry and the way that it is able to work within the given framework of different models. Implementing the correct strategies and defining the issues and weaknesses that may arise creates a difference in how well Costa Coffee is able to function over a longer period of time. Models and Concepts for Strategic Planning The first model that can be defined through the concept of strategic options and implementation is Ansoff’s Matrix. This particular model is one that is strongly associated with the food industry and is able to provide a definition of success for those that are working within various restaurant and food product arenas. More specifically, there is the ability to define the life cycle model that is a part of the food industry, which differs from other types of products and services that are used and implemented by different individuals. The growth process that is a part of the Ansoff’s Matrix is one that can create a new set of opportunities within the food industry while defining aims and strategies that are specific to the food industry (Watts et al, 101, 1998). The main concept that is associated with the food industry and Ansoff’s Matrix is based on diversification of products and services within a given arena. The diversification of products and services is one that leads into strategies of what should be offered or not offered among a specific restaurant or group (Luffman, 29, 1986). The matrix that is used consists of four main areas, including market penetration, product development, market development and diversification. The matrix then moves into a combination of present situations within a corporation and future opportunities and threats that are a part of the corporation (see appendix A). Within each of these areas, is also an analysis of the current customers and products that are available as well as new opportunities and target markets that can be used with the expansion of the company (Ansoff, 1957, 113). The second model and strategy that can be used is based on Bowman’s Clock. The particular analysis that is used with this strategy is based on defining the current situation that is a part of the company. When determining the current placement of a company, there can be direct implementation of where the company needs to move and what they need to do to create a stronger presence and brand name. There are eight potential areas that a business can be in, each which will create a different response that the company should have. The strategic clock that is used is first divided by price and value, which is divided into low, medium and high components of both. In each of these areas are specific strategies that can be implemented to change the way that the product works and to create an alteration in both the value and the price. For instance, if it is a high value and low price, then hybrid concepts can be used. A high price and high value should focus on differentiation of the products that are being sold. Medium value and high price should concentrate on raising prices for added value. Medium value and low price should focus on being a cost leader. Low value and low price is segment specific and low value and medium price can implement an increased price and low value (see appendix B) (Russel Jones, 70, 2000). The overall analysis that can be used with Bowman’s Clock is one that can’t work effectively unless there is an understanding of the complete strategy that is needed. The analysis of the internal and external environment will first need to be understood. More importantly, there is the need to create a background and history of the specific industry. The analysis should also include a deeper understanding of the overall industry and the key strategic positions and strategies that work and don’t work within the corporation. Competitive advantages, positioning, responses from current and potential customers and the ability to match specific approaches from this all help to define where a corporation is in the clock and provides a different alternative for the success of the company (Rosenhauer, 7, 2005). Industry Analysis and Strategic Theory The market of coffee is one that can be analyzed according to the strategic theories that are a part of the components. Understanding the overall industry and the way that it focuses on specific implementations of products can help Costa Coffee to have a stronger basis with their needs. The social and cultural aspects are one that is beginning to rise on a worldwide basis because of the implications of coffee as a social and cultural event. The export industry of coffee continues to grow on a global basis, with several areas of the world providing specialized coffee beans that have a different taste and concept. The trade of coffee is one that continues to grow, as well as the implementation of new coffee shops that offer specialized and exotic coffees for those that are a part of the social and cultural growth of coffee (Linton, 600, 2005). The growth of coffee as one of the most important agricultural industries in the world is not only to provide a specific cultural and social implication through exotic tastes. There is a continuous emergence of new tastes and different ways to mix the industry with what is needed. Bioprocesses are now being used to create new flavors, pulps and exotic tastes that can be used with those that are interested in the different experience that is a part of coffee. The economic utilization of coffee is continuing to expand as more tastes and levels of expertise are providing new opportunity for those that are looking into coffee as a commodity (Pandey et al, 153, 2000). The different opportunities for growth within the coffee industry are associated with Ansoff’s Matrix, specifically by providing product development and diversification as a part of the coffee shop, which can continue to grow in the market. The social and cultural aspects that are a part of the coffee as an experience not only have provided new product opportunities for those that are looking for the new coffee applications. The newer experiences with coffee shops are moving into specialty and differentiated components that are a part of the coffee shops. The value chain that is currently being developed by coffee houses is based on importing and exporting through specialized coffees and with exotic types of coffee houses that are in different regions. Power concentration is being used with different coffee houses, all which are able to create unique and specialized tastes that can be enjoyed from the cultural and social aspects of the community. The cultures are then divided according to age, demographic preferences and culture that is in the environment of the coffee shop, all which create a difference in how one associates with the culture of the coffee shop. For newer coffee shops, there is the need to create an environment that customers can link to when associating with the restaurant (Oldenburg, 10, 1999). The competitive strategy that can be used according to Bowman’s clock is one that is associated with product differentiation, quality of the coffee, exotic flavors and higher prices that come with the specialized cultural concepts that are a part of the coffee flavoring and environment. Analysis of Costa Coffee Costa Coffee was developed in 1970 in London as a small coffee shop that was able to supply exotic flavors and components that differed from other coffee shops. The store prides itself on an authentic feel and warm atmosphere that differs from the other coffee shops that are in the area. There are also several advertisements that are based on authentic and specialized drinks. Costa Coffee began this trend with a specialized mix, known as the Mocha Italia Blend. To do this, Costa Coffee has developed a range of coffee makers, all which create a specialized type of coffee and which is able to provide a different taste to the drinks that are produced. Each of the coffees are based on a gourmet flavor as well as customized ways of preparing the coffee so that it can provide a better taste as a part of the drink that is ordered. The company has also developed several informative areas that prove the worth of coffee from a nutritional standpoint, combined with their pledge to the environmental trends in coffee while only producing the best of coffee beans. The focus on quality from the internal environment and from the overall organization of the corporation serves as the foundation of Costa Coffee (Costa Coffee, http://www.costa.co.uk/coffee/nutritional_info.aspx, 2010). When analyzing the Costa Coffee from the standpoint of the Ansoff’s Matrix, it can be seen that there are several strengths and opportunities that are a part of this specific corporation. The market penetration that is a part of this is based on the concept of quality. The focus on providing coffee beans without harming the environment, quality cups that have specialized blends and the ability to provide a variety of mixtures to those that want to experience an environment within a coffee house are some of the aspects that continue to develop with the current market penetration. The current situation with the product and market development combines with this as there are several newer coffee cups that are made, as well as a diversity of the products that are a part of the corporation. The foundation that Costa Coffee has is one that can continue to provide opportunity while allowing Costa Coffee to have a signature brand from the environment, quality of the products and the overall development of the brand. While the present situation of Costa Coffee is one that is providing a strong foundation for the corporation, there are also several ways for the corporation to expand into newer opportunities. The blends that are currently developed and the environment of the coffee company are based on a target market that is interested in coffee that seems sophisticated and exotic. Creating a separate branch of coffee that is focused on a more relaxed atmosphere and which incorporates more brands would lead to more market penetration and development of products. However, Costa Coffee would have to define a secondary target market and would need to create a subsidiary brand to ensure that there was success within the coffee company. The current movement in coffee is one that is continuing to emerge into different individuals that are interested in coffee, such as demographic differences. Creating specialized brands that cater to these differences would help with further development of the company while providing a specific atmosphere that caters to a different group of people. The second analysis that can be looked at within this is Bowman’s Clock. The products that are offered through Costa Coffee are currently based on high quality and high pricing. This means that there is a focused differentiation of Costa Coffee, which can be seen from the products that are offered through the company. The specialized blends and the ability to create a customized cup is a part of the focus of Costa Coffee, which is combined with the main concept that is incorporated into the environment and the organizational structure that is a part of the company. The main advantage that Costa Coffee has is based on the differentiation and diversity that it has outside of other coffee companies, which other atmospheres and types of shops are not able to meet because of the specialized blends that are offered. Even though the signature of Costa Coffee is based on the product differentiation, there is the ability to expand into lower end products or prices while keeping the same value. Keeping a high end value and incorporating low and medium prices will provide more opportunity from the current market. This will include hybrid types of coffees and atmospheres that can be incorporated into what is needed with Costa Coffee. More importantly, there is the ability to create different areas of differentiation, such as diversifying the environment or the types of blends that are offered. By doing this, there will be the ability to attract different demographics and to diversify what is offered to various target markets. As Costa Coffee does this, it will open the door to new opportunities and the ability to expand into different types of social and cultural markets within the coffee shops. The incorporation of different social values and cultural aspects of the coffee shops will provide even more insight for Costa Coffee to expand what is in demand among various coffee shops. Conclusion The concepts that can be applied to Costa Coffee can provide an implementation of new strategies and opportunities as a part of the corporation. Understanding what is needed for this specific company and implementing the newer components to the target market will help Costa Coffee to diversify the target market that is currently attracted to the area. The environment and the specialized blend of coffee that is currently a part of the market is the main attraction that is a part of this coffee shop. However, to diversify the life cycle and to continue to implement new opportunity, Costa Coffee will need to expand the products, market and the value that is incorporated into the foundation of the coffee shop. By doing this, there will be more opportunity for expansion and to attract different types of individuals into the coffee shop while incorporating more into the market that is currently developing for this area of the food industry. References Ansoff, I. (1957). Strategies for Diversification. Harvard Business Review (35), (5). Costa Coffee. (2010). The Costa Story. Retrieved from: http://www.costa.co.uk/coffee/nutritional_info.aspx. Linton, April. (2005). Partnering for Sustainability: Business – NGO Alliances in the Coffee Industry. Development in Practice (15), (3). Luffman, George. (1986). Diversification: The Growing Confusion. Strategic Management Journal (7), (1). Oldenburg, Ray. (1999). The Great Good Place: Cafes, Coffee Shops, Bookstores, Bars and Salons. New York: Marlowe and Company. Pandey, Ashok, Carlos Soccol, Poonam Nigam, Debora Brand. (2000). Biotechnical Potential of Coffee Pulp and Coffee Husk for Bioprocesses. Biochemical Engineering School (6), (2). Rosenhauer, Sven. (2005). Profit is a Wonderful Word. Bristol Business School. Russell – Jones, Neil. (2000). Marketing Pocketbook. New York: Management Pocketbooks. Watts, Gerald, Jason Cope, Michal Hulme. (1998). Ansoff’s Matrix, Pain and Gain: Growth Strategies and Adaptive Learning Among Small Food Producers. International Journal of Entrepreneurial Behavior and Research (4), (2). Appendix A appendix B Read More