Business Analysis of Cafe Coffee Day

MAIN BODY

SWOT Analysis

• Strengths – Products offered by CCD are extremely good in quality and are priced at affordable rates.
• Weaknesses – The brand does not invest much in promotions and as a result, is losing its popularity. Also, many outlets incur losses due to the selection of the wrong site (Rahul and Keerthi, 2018).
• Opportunities – The company should introduce new and innovative items on its menu and should also market itself as a point of informal gatherings.
• Threats – CCD faces direct and indirect competition from brands like Starbucks, Costa Coffee etc.

DESTEP Analysis

Brazil

• Demographics – CCD should have a complete understanding of the size of population that it will serve.
• Economic – These factors include information about finances, characteristics as well as trends of the market etc.(Osseweijer and et. al., 2018).
• Social – These factors include emerging new trends in the culture of the country.
• Technological – The country has is technologically advanced and people prefer using smart phones.
• Ecological – Proper locations to store all the raw materials as well as the role of the  Brazilian government should be determined.
• Politics – The company will be involved in a lot of paperwork since Brazil is a highly bureaucratic country.

Ireland

• Demographics – CCD should conduct analysis of demographics of Ireland in order to understand the factor in a better way (Beretta and et. al., 2016).
• Economic – The country has low tax rates and a highly skilled workforce which will be beneficial for CCD.
• Social – The social condition is not very good as there is a large segment of customers that falls under poverty.
• Technological – The country is not as much technologically advanced as other countries and fails to connect to a large proportion of households.
• Ecological – The country is ecological and if an outlet is set up here, it will attract a lot of tourists.
• Politics - Ireland is a politically stable country.

China 

• Demographics – The country has a cheap labour, enhanced infrastructure ans is politically stable.
• Economic – Economic challenges include fast urbanisation, high rates of inequality as well as damages to the environment.
• Social – The Chinese market is huge with great opportunities for customer products.
• Technological – Technology is highly advanced as a large percentage of the population uses online services (Nikolaidis and et. al., 2016).
• Ecological – Fast ecological development has impacted the natural climate of the country drastically.
• Politics -China is among the most powerful countries in the world.

Ansoff Matrix

Porter's Five Forces Model

Brazil

• The threat of New Entrants – The country is located such that the threat of new businesses entering the country is high.
• Bargaining Power of Suppliers – Due to presence of a large number of suppliers, the bargaining power of individual suppliers is less.
• Bargaining Power of Buyers – People in Brazil have a high power of bargaining as there are less number of people who consume coffee (Mathooko and Ogutu, 2015).
• Threat of Substitutes – CCD starting is business in Brazil will be new to the country, thus this force is high.
• Competitive Rivalry – There are only few such business in the country which makes this force low.

Ireland

• Threat of New Entrants – This force is high as the country does not have a lot of coffee businesses.
• Bargaining Power of Suppliers – This force is also high as there are limited suppliers of coffee equipment.
• Bargaining Power of Buyers – This power will be low as there will not be a large number of buyers initially.
• Threat of Substitutes – This force is low as the country does not have a lot of businesses offering same services.
• Competitive Rivalry – Less presence of such businesses means that there will be less competitive rivalry among brands (Zhao and et. al., 2016).

China

• Threat of New Entrants – This force is less as there are already a large number of businesses that offer similar products to CCD.
• Bargaining Power of Suppliers -  The force is also low as there are a lot of suppliers in the country.
• Bargaining Power of Buyers – This force is low as there are a lot of people who consume coffee on a daily basis.
• Threat of Substitutes – This force is also low as the country is already filled with such businesses (Aithal, 2016).
• Competitive Rivalry – This is a high force as there are a large number of businesses that offer similar services to CCD.

Mode of entry and Plan B

Brazil

The company enter the country through franchised ownership and if this plan does not work out, it can export its products directly to the location.

Ireland

CCD can start a joint venture in Ireland and keep the option of acquiring a similar  business as plan B.

China

 Outsourcing can be a cost effective option of starting business in China and if the plan does not work out, it can keep franchising as a second option.

Porter's Diamond

Porter's Diamond model is a framework that is the shape of a diamond and primarily focuses on explaining why do some industries in a particular country are competitive internationally whereas others are not. This model is useful for organisations as it helps in analysing their external environment and is also referred to as “Theory of National Advantage” (Konsolas, 2017). The four factors included in the model are – firm strategy and rivalry, factor condition, demand conditions and related and supporting industries.

Relevant costing

Brazil and Ireland

Penetration pricing strategy should be opted by can be Cafe Coffee Day in Brazil and Ireland in order to penetrate n the market and attract large number of customers.

China

A competitive pricing strategy should be adopted by the Cafe Coffee Day in Ireland in order to increase overall sales as well as profitability.

Strategies for Attracting New Customers

The respective company can implement various strategies to attract new customers like providing various offers and discounts on their first purchase or carry out event marketing. The company can also use various social media platforms effectively in order to reach out to new segments of customers.

Mc Kinsey Framework

 The Mc Kinsey 7S model was developed by Robert H. Waterman and Tom Peters and helps organizations in examining how different parts of their business work collectively. The model can also help organisations in improving their overall performance. The 7s included in the framework are Strategy, systems, skills, style, staff and shared value (Rong and et. al., 2015). The primary objective of this model is to ensure that these areas are interconnected with each other and function in coordination.

Four Link Analysis

Four Link Analysis is a model that helps organizations in assessing the intent as well as strategies of their competitors in the market. By evaluating the current strategies of the competitors, businesses can modify their own strategies and gain a competitive advantage against the competition. The four corners of the model are – current strategy, motivation, capabilities and management assumptions.

Recommendations

Cafe Coffee Day is recommended to analyse various internal as well as external factors of the countries in which it plans to start operations. Models like DESTEP and Porter's five forces framework can be used to get a detailed insights of the same. Other analyses like Porter's diamond model, Mc Kinsey model etc. can be used to identify various strategies that are used by the company's competitors and accordingly CCD can tailor its strategies to stand out in these markets.

CONCLUSION

From the above report, it can be concluded that while planning to start a business in a new country, the location of setting up the business should be chosen wisely. The location should be easily accessible and the company use to ensure that the demographic, social, and economic factors match the same. Also, the suppliers of the raw material and other equipment should be chosen wisely and a healthy relationship should be maintained with the suppliers as well as the customers. Lastly, since employees form the face of the organization, they should be selected and hired carefully to ensure that the brand image of CCD does not suffer.

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