The Application and Impact of The SWOT Analysis to Costa's Success - Case Study Example

Introduction Context of the Research Organizations in contemporary times benefit from the applications of theoretical frameworks in various fields of discipline. The members of the executive management team steer their respective organizations into unprecedented growth and success with the help of advanced knowledge gained by corporate owners and managers. The ability to sustain targeted market shares, or even leadership within the industry necessitate effective application of theories and concepts that aptly address increasing pressures from competitors as well as other factors in the external environment. The SWOT analysis is one of the useful analytical tools that organizations have used to evaluate internal strengths and weaknesses and match core competencies to capture external opportunities as well as address threats. The use of this analytical tool is deemed to be instrumental and contributory the success of an organization in terms of its ability to capitalize on the strengths, correct the weaknesses and enable the decision makers to design strategies that would effectively tap on the opportunities and ward off impending threats. Aim or Objective of the Study The current discourse aims to evaluate the strengths, weaknesses, opportunities, and threats that besiege Costa, an organization where making and serving coffee is their specialty. After presenting the SWOT analysis of Costa, the research question would be responded to: How much has the application of the SWOT analysis influenced Costa's success? As such, the study would initially present a theoretical background of SWOT analysis as an analytical tool; prior to a presentation of the case study where the tool would be applied to Costa. Methodology for Research The research would utilize a review of current literature on the subject matter: on SWOT analysis as the conceptual framework, as well as on the relevant factors that affect the internal resources of Costa and the external factors that impact on the organization. Through cognitive and qualitative analysis of the findings from secondary sources, an appropriate response to the research question would be determined and confirmed. Theoretical Background The origin of SWOT analysis was traced to Albert S. Humphrey in the 1960s [Was11]. The SWOT analysis is a useful analytical tool which provides crucial information on the internal and external factors impinging on the organization and enabling decision makers to formulate effective strategies. As emphasized, organizations “use it to get an understanding of competitors, which can give the insights needed to craft a coherent and successful competitive position” [Was11]. Likewise, the tool is deemed applicable in diverse settings and situations, such as in discerning courses of action in terms of exploring new efforts or solutions to a particular problem; in considering changes; as well as in making adjustments or refinements in mid-course projects or plans [Uni139]. Concurrently, SWOT analysis is acknowledged only as a technique to guide decision makers on course of action that should be undertaken, using the organization’s core competencies (strengths) and its ability to capture opportunities in the external environment. As emphasized, “a SWOT analysis will be most helpful if you use it to support the vision, mission, and objectives you have already defined. The SWOT will at least provide perspective, and at best will reveal connections and areas for action” [Uni139].Therefore, it is imperative that decision makers use the tool in conjunction with complete awareness of the mission, vision, and goals of the organization to ensure that the strategies to be developed would be aligned towards the direction that the organizations aims to achieve. Case Study and SWOT Analysis of Costa Company Overview Costa’s humble beginnings was traced to the talents of brothers Bruno and Sergio Costa in 1971[Cos14]. Now, 43 years later, Costa grew to become recognized as one of the fastest growing coffee shop business which boasts of establishing as many as 3,500 stores and outlets globally as of 2013; and located in as much as 29 countries around the world (Costa Coffee, 2014; Thomas, 2012). The organization is considered the market leader in specialty coffee in the U.K. From among the awards and accolades gained by Costa, the following were noteworthy: “voted number 10 in the list of top 25 best companies to work for, and have also recognised as Top Employer for the third year running” (Costa Coffee: A great place to work, 2013, par. 2). The following SWOT analysis would reveal a wealth of information for Costa’s success in this particular field of endeavor. SWOT Analysis Strengths The organization has started more than 40 years ago and has exhibited core competencies in preparing and selling specialty coffee. It boasts of using 100%of their ingredients from Rainforest Alliance Certified farms [Cos]. This means that “whenever you drink Costa coffee, you're supporting farmers and farm workers worldwide who are working to improve their livelihoods and those of their families, while protecting the planet at the same time” (Costa Coffee: Rainforest Alliance, 2013, par. 1). Therefore, the product is recognized as high quality product and the having identified a consistent source, makes sustainability one of the organization’s strengths in meeting the demands of a distinctively sophisticated clientele. In addition, from the awards and recognition given, it could be deduced that Costa Coffee takes good care of its human resources. The organization provides training and development which makes its 10,000 personnel committed to the highest standards of quality, as well as enabling them to serve the clientele with excellent customer service. Its official website was noted to reveal that “we have training academies across the world where you can learn to make coffee, a training team equipped to teach you about a whole host of things (coffee, cake, management and beyond!) and to top it off, a whole lot of support from your colleagues along the way” (Costa Coffee, 2013, par. 7). Concurrently, the most important strength is Costa’s products: the coffee, other hot or cold drinks, and varied food items. Their menu is filled withdiverse and delectable offers whichcustomers could choose from. For instance, the food that Costa offers range from paninis, toasties, hot breakfast, sandwiches, wraps and salads, pastries, muffins, tray bakes, and cakes [Cos131]. For the beverages, Costa serves the following aside from their specialty coffee: mocha and hot chocolate, speciality drinks (babyccino, chocolate babyccino, chai latte, gingerbread latte, roasted hazelnut latte, cinnamon latte, vanilla latte, caramel latte, and caffe caramela) (Costa Coffee: Specialty Drinks, 2013). Further, the organization does not stop in creating new food items to liven up and entice customers to try. Their new product offers include: gluten free wrap, hello costa ice, and a whole lot of new food range (Costa Coffee:What’s New, 2013). Likewise, the commitment of the organization for corporate and social responsibility is an added strength. Their commitment was evident from their philosophies of preserving and protecting the environmenthrough “recycle, use (of) sustainable materials, technologically smart machinery and renewable energy” (Costa Coffee: Responsibility – Environment, 2013, p. 1). In addition, the 100% use ofnatural ingredients from the Rainforest Alliance attests to their commitment to social responsibility inhelping local farmers and putting their professional interests at heart. Finally,Costa has reportedly established the Costa Foundation which aimed to “relieve poverty in coffee-growing communities. Its mission is to improve the life chances of boys and girls by providing them with the opportunity for a quality education. Foundation schools deliver both academic and extracurricular programs that enhance health, gender equality and environmental awareness” (Costa Coffee: Costa Foundation, 2013, par. 1). Weaknesses One of the weaknesses noted was the limited number of stores, when compared to other competitors, such as Starbucks. The limited location is tantamount to restricted resources that could be steered into finding more appropriate locations to expand their market share. This could be presumed to be a matter of thrust or long term planning of the strategic directionand goals for further organizational growth of the owners. Another weakness is the lack of information on the owners or leaders who manages the organization.The lack of access to information on people who run the organizationcould be perceived by the public as a lack of trust or transparency to disclose information that would reveal management profiles and enable the public to evaluate leadership competencies and qualifications. Finally, another weakness noted was the very generalized structure of the mission statement of Costa, to wit: “our mission has always been to save the world from mediocre coffee” (Costa Coffee: The Costa Way, 2014, par. 1). The manner by whichthe statement was structured is so widely encompassing that designing appropriate strategies would be challenging. Opportunities Its major competitor, Starbucks, as established thousands of franchises and outlets all over the world: “19,000 stores worldwide and 14.9 billion U.S. dollars in total revenues in 2013” (The Statistics Portal, 2013, par. 1). Having been established in the same year, Starbucks manifested a more aggressive stance in the establishment of store outlets domestically and in international soils. As such, the information attests to the vast opportunities in the domestic and international markets for speciality coffee. In this regard, Costa could also tap more opportunities for organizational growth by venturing to other geographic locations in the domestic and international markets. Concurrently, Costa could pursue venturing to emerging markets like China or India, in addition to other developed and developing countries through acquisition or joint ventures. In addition, changing demands and tastes of contemporary generation make product development an opportunity for Costa. Aside from the new products that were mentioned above,Costa could delve into product research to try new food offers that are healthier and could matchtheir specialty coffee or other hot and cold beverages. Likewise, other opportunities that Costa could capture include offering their products in retail outlets and packaging them in alternative and innovative ways. They could even try to establish mini-outlets or stores in corporate offices, academic institutions, or in public esablishments (government offices or public transport settings and system). The patterns and prospects for growth in the coffee industry attest to the increased opportunities in the market, to wit: “the future coffee shop marketplace will be shaped by further increasing consumer participation and more savvy consumers, with the desire for premium quality coffee anywhere and anytime, driving improved coffee offers across a broader set of channels” (The Food and Drink Innovation Network, 2014, par. 17). Thus, growth patterns revealed increasing opportunities in the specialty coffee market, not only in the U.K. but also in international markets. Threats External threats are usually posed by increasing competition. The intensity of the pressures in fighting over a defined market share make venturing into more locations virutally challenging. Likewise, as opportunities in both domestic and international markets abound, similar trends in applying basically the same marketing strategies exhibited by the competitors could be detrimental. As such, the designand development of marketing strategies to respond and react to competition would pose as a imminent challenge and threat of retaliation. Costa should assume a proactive stance to anticipate the reaction and response of competitors to designed stategies, as required. The deteriorationof economic condition of the country could also be a threat in terms of minimizing the purchase capacity or buying power of people. Since Costa specializes in premium and partially higher priced coffee than instant coffee, which is most affordable to the low income group, any difficulty in the economic condition would create greater challenge in gaining more clientele who could afford their products. How much has the application of the SWOT analysis influenced Costa's success? From the SWOT analysis, it could be deduced that Costa has exhibited immense strengths in virtually all significant major aspects: product, supplier, human resources, and commitment to corporate social responsibility. Acknowledgement and awareness of these core competencies and strengths enabled Costa to stand out and enhance product awareness to the specialty coffee market. In the U.K. it was revealed that Costa dominates the market, to wit: “Costa Coffee (1,670 outlets), Starbucks Coffee Company (790) and Caffè Nero (560) remain the UK’s leading brands with 54% branded chain market outlet share” (The Food and Drink Innovation Network, 2014, par. 4). Therefore, Costa was able to dominated market leadership in the U.K. which attested to the awareness that the use of SWOT analysis enabled them to capitalize on their core competencies and to tap on the opportunities that abound. In addition, the results generated from the SWOT analysis enabled Costa to address their weaknesses and the impending threats of competition. By employing an aggressive marketing strategy which focused on its competitive advantage and core competencies in the U.K. market, Costa was able to sustain market leadership and consumer preference for their brand. This was revealed in the article published in the Shropshire Star which revealed intended opening of branches or stores in the Market Drayton: “the arrival of a branch of coffee giant Costa in a town in Shropshire could spell the end of independent traders… Concerns have been raised that smaller traders in Market Drayton will be unable to compete with the firm” [Shr14]. Thus, their opportunity has been regarded as a threat to smaller independent coffee traders within the U.K. Concurrently, Costa signified intent to pursue China as a target international market. As emphasized by Thomas (2012), “the company was "100pc focused" on delivering Costa's growth plans, particularly in China” (par. 7). The venture would enable them to increase their entrenchment in the global speciality industry. Thus, their strengths are used as the driving force to intensify their marketing strategies and to ward off threats of competition, especially in the areas where they have been regarded as the market leader. Conclusion The current research has successfully achieved its objective of applying the theoretical framework of the SWOT analysis to evaluate the strengths, weaknesses, opportunities, and threats that impact Costa, the leading specialty coffee brand in the U.K. The results of the SWOT analysis has confirmed that its effective application has instrumentally contributed to the success of Costa. Through acknowledgement and capitalization of Costa’s core competencies and strengths, the organization had evidently designed marketing strategies that were deemed more effective than those applied by their competitors. The market shares and number of store outlets in the U.K. had attested to their leadership in this particular field of endeavor. Overall, the case study confirmed that the use of an analytical tool such as the SWOT analysis would benefit the organization in terms of assisting leaders to capitalize on their core competencies to design strategies that would ensure sustained leadership in current and potential target markets. Reference List Was11: , (Washington State University, 2011), Was11: , (Washington State University, 2011, p. 3), Uni139: , (University of Kansas, 2013), Uni139: , (University of Kansas, 2013, p. 1), Cos14: , (Costa Coffee, 2014), Cos: , (Costa Coffee, 2013), Cos131: , (Costa Coffee, 2013), Shr14: , (Shropshire Star, 2014, p. 1), Read More