SG7001 Managing Strategy Operations and Partnerships
SG7001 Managing Strategy Operations and Partnerships
Part 1
Activity 1
| Vision | To be the one-stop solution for freshly brewed coffee and everything that needs to meet the demands of coffee in hospitality industry | ||
| Nature of business | This organization operates within the hospitality industry, and most services are associated with areas of North Durban and KwaZulu Natal. They have offered freshly brewed coffee to its customers with a flavor of espresso that most of their customers love. On the other hand, this organization is also a one-stop solution for entire beverages or known as a full-service beverage solution (Coffeemerchant.co, 2023). They provide flavors of premium Arabica coffee with freshly roasted beans that attract coffee lovers in this area from all over the world. | ||
| Division | This business can be divided into beverage industry as well as these divisions are extensively included in the hospitality industry because of exponential services of this organization in this industry. | ||
| 4Vs and SQFD&C | Evaluation | Description & justification | Implications |
| Volume | High | ● The business of Coffee merchants has offered a high volume of freshly brewed coffee production to their customers with different flavors (Coffeemerchant.co, 2023). Total revenue of this company is over $50 million within a year, which helped them to produce a large volume of coffee to provide services to their customers.
● It has been seen they have used six types of coffee machines top produce different types of coffee they have offered to their customers including Espresso machines, coffee grinders, premium barista machines, bean-to-cup coffee machines, and super automated coffee machines, and filter coffee machines |
● This high volume coffee production with usage of different machines help organization to meet preferences of their customers
● They have become a one-stop-solution mainly in KwaZulu Natal and North Durban areas for unique roasted aromatic coffee. |
| Variety | High | ● As per the case study, it has been seen that this organization offers a darker roasted variety of coffee beans in their coffee, which are mostly preferred by customers. Along with this they also have offered premium arabica coffee and aroma of which is preferred by customers.
● They have served in entire hospitality industry, corporate and business organization as well as different hotel and lodges |
● High variety of services impacted to increase competitive advantage of this business |
| Variation | High | ● Customer demand is always changed as they pewter their taste, therefore, variation in operation is necessary. According to variation, they have offered (Coffeemerchant.co, 2023)
● They have offered four type of coffee blend depending on taste of customers including Premium, Africa, non mara, Sterling to their customers |
● It helps to increase customer base through meeting tastes and preferences of customers |
| Visibility | Moderate | ● This business offers customers to visit their stores to get taste of different coffee and their online services are not as much strong | ● They need to develop their business visibility to their customers with development of online reach to customers |
| Speed | Low | ● They have served in two areas mostly North of Durban and KwaZulu Natal
● Business expansion service is low of this organizations |
● They need to develop strategy to increase extensions of their business to others areas of Africs as well |
| Quality | High | ● As per the case study it has been seen companies have provided high quality darker roasted, and aromated freshly brewed coffee beans to customers. They have used automated and bean-to-cup coffee machines to provide high-quality products | ● Wide variety and quality of coffee is adjacent to growth of their company that helps to increase profitability
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| Flexibility | High | ● High flexibility as organizations provide different tastes as per tastes and preferences of different customers.
● On the other hand, they have provide Barista training to make Barista in home with tastes of premium Arabica Coffee |
● They tend to make production depending on the tastes of customers and need of different hotels and hospitality organizations |
| Dependability | Medium | ● The company is dependable to tastes and preferences of customers, however, supply of raw material is also need to check because of this final service quality can be altered | ● Tend to obtain feedback always because of their high dependability on customers |
| Cost | High | ● Affordability of customers is beneficial for the organization | ● Provision of products with reasonable cost increases sales and profitability. |
Table 1: Business Analysis
Activity 2
Introduction
This report sheds light on the critical analysis of business of Coffee merchants in Africa. Relationship of this organization with other industries, along with marketing and sales strategy provided by the company to benefit customers and enhance growth of the organization. This report also sheds light on unique services and coffee blends provided by organizations to make organizations profitable.
Discussion
Coffee Merchant is a coffee brewing, manufacturing, and training organization in Africa that offers unique services for its customers to make them satisfied with organizations. As per the view of Baiyere et al. (2020), flexibility in services is necessary for growth and increase of profitability in an organization. Flexibility in business is also helpful to increase the position of organizations among industry. Thus, Coffee Merchant is an organization that produces almost four blends including premium blends as per tastes of their customers. Premium blend, which is crafted for perfect espresso is mostly significant in this company, which is preferred by 70% of their customers. Along with this into Africa, A gourmet blend is also served to customers including customers of Ethiopia, Zambia, Malawi, and other Arabic beans. A multi content and not bitter blend known as Nonmara, and Sterling, a mixture of Costa Rica and Colombia with blushing chocolates and nuts is also included to make a smooth blend. Thus, this organization has provided greater flexibility to the company, which is an indirect key of profitability.
On the other hand, this organization also provides the services of different types of coffee machines with demonstrations of different tastes of coffee. Bean-to-cup coffee is an extensive aromated coffee that attracts customers from far away to taste the coffee of these organizations. In Spite of this, organizations have also used coffee machines of the world’s top brand to offer unbelievable tastes of coffee to its customers. Brewing is a significant method to make coffee and it is important to brew coffee perfectly to enhance tastes and reduce the content of caffeine (Janda et al. 2020). Thus, the organizations have used different types of brewing category to darker roasted coffee beans, which are marvelous in tastes, however, with low caffeine content. This method of coffee making has helped this company to reach a greater customer base with development of competitive advantage in the company. As stated by Pawlak and Smutka (2022), competitive advantage of the company is increased with development of profitability, and variety of productions in the company.
However, this organization only provides 90% of their services in Durban and KwaZulu Natal, which reduced the business growth of Coffee Merchant to some extent. Business expansion is inevitable for a company, which always deals with new and experimental ways of production for their customers (Jafari-Sadeghi et al. 2021). Therefore, it is helpful for Coffee Merchants to increase their business areas to obtain growth and development of the company.
Conclusions
Hence it can be concluded that Coffee Merchants have the right strategies that are appropriate for their organizations and development of competitive advantage along with positioning of the company in the industry. On the other hand, it has been seen that, except for business areas, flexibility and other divisions of the company are beneficial for the growth of coffee merchants.
Activity 3
Activit3a:
| Identification of the industry in question | Coffee Industry | ||
| Factors | Challenges | Impact | |
| Political Factor |
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| Environmental Factor |
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| Social Factor |
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| Technological Factor |
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Table 2: PEST analysis (Source: Self-Created)
Activit3b:
| Porter’s Force | Strength | Justification |
| Threat of substitute products or services | Medium |
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| Threat of established rivals | High |
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| Threat of new entrants’ ‘vertical’ competition | Medium |
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| Bargaining power of suppliers | Low |
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| Bargaining power of customers | Medium |
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Table 3: Porter’s 5 Forces (Source: Self-created)
Activity 4
4a
| Stage in the industry
life cycle |
Growth of business areas or extensions |
| Recommendations | In Africa the Coffee brewing industry and manufacturing of different kinds of coffee have extensive growth, which is compatible with the development of the beverage industry in Africa, especially in South Africa. According to a report 13% of the world’s total production of coffee has been done in Africa, and Ethiopia has gained most of its popularity in coffee production and customer base (Africa-business, 2023). Different ways of roasting coffee beans help this country to become a significant place of coffee. It takes up to 3% of the global coffee market (Afdb, 2023). Thus, as per the view of Business expansion theory, this organization has the growth of marketing areas or entering new markets to compete with the growth stage of the coffee market among the beverage industry. Business expansion theory has suggested experimental market development is needed to develop customer base and growth of business. |
Table 4: Stage in the industry
Life cycle
4b
| Issue | Survival Factor | Success Factor |
| Lack of technology used for business growth and market expansions | Entry of new markets and new customers along with existing markets has been seen as survival factors that help Coffee merchants to develop their business and grow in organizations. | Franchising and Direct Exporting has been seen as a success factor that helps organizations to reach new customers along with existing customers for the organization. Direct exporting is a strategy that helps organizations to sell products directly within a market to obtain new customers (Tien and Ngoc, 2019). |
| Cost of some products | It has been seen that a variety of products have to set their cost according to tastes, quality, and rating provided by customers. | Premium Arabica and other coffee should have differences in prices of almost 10 to 15% that helps customers to identify differences of tastes in both coffees, which is beneficial in reduction of cost (Qi et al. 2020). |
Table 5: Issues
Part 2
Executive Summary
This study helps to analysis the marketing strategy of the coffee industry, and also their blending strategy has described in this areas. The consumers’ attraction and discuss about the marketing expansion and development in this study, VRIO analysis and also described about the Ansoff matrix and their applications for the development of the market trends. It helps to understand the goals of the business and also evaluate the kind of strategy helps to increase the revenue and future employability.
Introduction
The coffee industry has managed the organization, through the use of the strategy, that both business owners and managers have focused on the business trends and planned for the organizational success. This company has focused on the quality of coffee and roasted “Arabica coffee”.
| Factors | Valuable | Rare | Inimitable | Organized | Impact of Competitive Advantages |
| Strong global presentation | Yes | Yes | No | Yes | Temporary Competitive advantage |
| Specialty of coffees | Yes | Yes | Yes | No | Unused competitive advantage |
| Product quality and popularity | No | Yes | No | Yes | Competitive disadvantage |
Table 6: VRIO analysis (Source: Self-created)
During this analysis, this company’s coffee merchants have developed a strong global presentation regarding their innovative thoughts, and also from this aspect they have got temporary advantages. The organization has taken approaches that help to make a difference in their taste of the coffees. In this regard, they have faced unused competitive advantages and for this reason, they are preferred on the quality of the product in this regard, they increased the development and achieve the competitive advantages. They always effectively make the products and maintain the product’s quality day by day the organization has increased its competitive advantages and developed the revenue that helps to achieve future goals.
The competitive advantage of coffee merchants compared to Pears
Compared with the other company, the coffee merchant has focused on the flavor of the coffee, and for this reason, they always try to make different strategies regarding the manufacturing of the products. They have used “green coffee beans” through the roasting of the coffee beans. And during the roasting, they brought up the beans during the high temperature and employees tried to change the chemical changes of the raw beans (Ghebreyohannes, 2023). During the process, they tried to cool the coffee and then carried the beans through this process. They provided the proper training and make the expert roaster for generating the ability that read and then make decisions through “split-second timing” (Van Hille et al. 2020). According to the other company’s comparison, the company has roasted the beans and prefers the traditional rich coffee aroma process which makes the less weight of products, and also they are moisturizing the roasted coffee beans.
According to the Pears Company, they made the story name, and produced the brand’s reputation and the brand’s reputation has developed and continued to preserve the different contents and characteristics. They also tried to make soaps with fragrances, and through this, they are trying to attract their consumers (Civera et al. 2019). This company is very popular and they are continuously operating soap the brand and making the presentation for the better attraction in the world. The company provides the proper quality with its products which is the reason they use glycerin, which makes the smooth. The organization uses the proper quality raw materials that help to manufacture the products and increase sales and develop revenue.
This is the benefit of the quality of the products, and it has increased the crunchiness during the bite also the employees are ready to make the “ground and brewed”. They are trying to roast the coffee beans as soon as possible, because if it will be late then the aroma begins will be diminished (Pereira et al. 2021). Fresh roasting beans always help to generate the flavor of the coffee quality. This company’s coffee merchants preferred one motive, and they followed this tag line “Taste the freshness”. For this reason, they attract consumers, and their sales have been increasing day by day. Compared to the other companies they preferred the product’s taste, change the manufacturing strategy of the coffee, and increase the taste which is very necessary for the food industry, ultimately good quality products will be attractive to the consumers.
According to the coffee merchants, the Pears Company has focused on the purity of the products and also makes transparent products, which has tried to increase the purity of the products (Rosca et al. 2022). The organization has made the connection that makes the promotional campaigns to promote better advertisement and reinforced to the company that they can boost to increase the sales of the products.
According to coffee lovers, the company has taken the initiative approach that they invite all of their consumers for roasting the coffee during this week. They will be taking the opportunity for taking the witness and also making a better roasting process, and getting the experience from the aromatic smells, and also give the opportunity that helps to taste the various types of coffee blends and they give offered to their consumers (Zhu et al. 2021). As per the consumers’ taste, the customers can purchase the products.
According to the coffee merchants it has been shown that they preferred coffee blends for their consumers, for this reason, they preferred premium coffee blends, and regarding this approach, they make the expresso bliss of extraction that is made through the genuine expresso machine. The organization manufactures and uses automated coffee machines, and the organization supplied the beans, and also the organization has focused on the products’ volume and price. Employees are trying to reduce the supply chain issues and they are developing the supply of the coffee beans (Silva et al. 2023). During the analysis of the gourmet and they are representing the expresso blend including of Africa and Ethiopia, and also the other Arabian company. During the roasting process, the organization focused on the smooth cup and focused on the full body of the cup, and they decorated that particular cup with the use of chocolate and also undertones with cinnamon.
According to the other company’s management strategy, the organization has focused on the Nonmara strategy, which refers to the Non and Mara which means not bitter, for this reason, the other company’s coffee taste is not attractive to the consumers. They are roasting with multiple roasting processes and make an intense espresso experience and also focused on the great body and it is generating snappy and vibrant (Malinao, 2022). They are focused on the taste after taste they make they want to provide bitter less coffee for their consumers and it has increased their revenue.
Compared to the coffee merchants, they have focused on the promotion of the product and they advertised based on the gentle skin, and also make it more supple that make it soft skin to their consumers. Also, they provide an emotional advertisement that is based on the mother-child bond.
As per Sterling, the organization has exceptionally blended the coffee and equally blended each portion, and smoothly made the coffee. Columbia and Costa Rica both country’s can effectively balance their great body. The organization has focused on the bursting flavor and uses chocolate nuts and giving pure enjoyment to their consumers.
Proposal
Issues faced by the Coffee Industry
The coffee industry is facing intense competition, which is restricting the Coffee merchant company in the global presence. This is also affecting the business developmental factors in the market, which is eventually disrupting the business operations, and the industrial growth in the South African market.
Further, the company is also facing poor product quality, which is resulting in the deterioration of the consumer’s engagement with the organisation. Deterioration of product quality can also affect the quality of the business operations and the position of the organisation in the market (Rhiney et al. 2021). Therefore, it can also influence the sales of the company, which can affect their sales and revenue to survive their business in the market.
Recommendations for the mitigation of the issues
Coffee merchant company can focus on innovation in business operations, which can help the company to implement some innovative strategies for the development of business operations and the value in the South African market. Hence, this can also influence the stakeholders to support the company to sustain itself in the market.
Coffee merchant companies also need to improve their Global presence for increasing their value and recognition in the market. This can effectively encourage the consumers to engage with this company for developing their position on an international level. It can also develop financial stability, which can influence business operations and organisational growth.
Cross selling can be influential for the coffee company to deliver more value to the consumers, which can enhance the reputation of the organisation in the market. Implementation of cross selling technique might resolve many of the issues, which can further enhance the opportunities for the company to expand their business (Van Hille et al. 2020). It can also develop the sustainability of the business in the market, which might influence the capability of the organisation to assimilate better techniques.
Strategically implication and stakeholders
Coffee merchant company need to focus on the specification of the consumers that can refer to the consumers, which has an influential role in the development of the industrial growth in the market. Thus, market diversification can encourage the engagement of investors, which results in the development of financial stability that can develop the quality and the position of the company in the South African market. This can also be beneficial for this company to expand their operations to new markets.
Further, social media advertisement can develop the marketing level, which can improve the recognition level of the coffee company in the market. This can also help the company to mitigate the issues related to global presence and can contribute to the expansion of the business effectively. Thus, Social media can also help to cooperate with the trade associations for strengthening the position of the brand in the market (van Keulen and Kirchherr, 2021). This can improve the value of the organisation among the consumers, which can eventually result in the increment of sales in the South African market.
Ansoff Matrix:
The organization has given huge preferences, for making better market penetration, and also developing the multinational chain of coffee merchants. It helps to develop the market strategy and also develop the products. The organization has tried to develop the products with a better strategy that has mitigated the business goals developing the marketing strategy; they have focused on the diversification. As per this context, they want to make the coffee taste as per the consumer’s desire. The organization always tries to provide the proper taste of coffee that helps to mitigate the customer’s demand (Zhang et al. 2022). They used the Arabia taste of flavor and used the raw green coffee beans and roasted it for a better taste and fragrances. They provide several various flavors for testing to their consumers. This regarding they can easily attract them and their selling process will increase day by day.
Reflection
During the analysis of this coffee merchant’s business strategy, it has shown that during the pandemic situation, the organization has faced huge losses. This is regarding the increased, and developing of the working environment and also hiring the local workers who can easily know about the trends. From this analysis, I have learned that organizational development is depending on the “Smart business strategies” that refer to the organization for better development, and the organization has adapted several factors and made the cultural development.
The organization increases its employability through the provision of the best quality products, and it can achieve the entire goal to mitigate the issues. Workers’ rights are very much necessary that builds momentum and increase the grassroots significantly. The organization has placed the order as per the mitigation of the consumer’s demand and gives the support to generate better exploration for the growth and decades to the making of the community.
They are collecting on the companies’ founders and also make the belief for the better broadcast and they are trying to prefer on their business growth. I have learned from this study, that the Ansoff matrix and its appliances help to know the marketing plan and also help to develop the market growth and help to increase the product’s growth. Through this aspect, they can associate the growth of the strategies.
The organization has developed the business strategy through the use of diversification and promotes the brand policy across the world. The organization needs to provide its coffee through the online application because this approach helps to increase the global growth of the company’s revenue.
As a future developer, the organization has identified the new products and their benefits for the consumers. Through the development of the Ansoff matrix, the organization has tried to develop sales during the application of the Ansoff matrix strategy, and they can adopt the strategy in different ways. The organization has focused on the promotion of the products and deeply focused on personal sales and penetrating the market.
I have known the development process, of the coffee merchant that they are always trying to use the raw materials and develop their products’ quality and they also try to increase the flavor of the products through the application of the roasting process. The company also makes advertisements and also giving attractive offers for their consumers, so that they can easily attract them and increase the sales of the products.
The organization has always made the growth of the products development and for this reason, they applied the Ansoff matrix strategy. The organization tried to make loyal consumers for their development of the organizational goals. Regarding they have focused on the famous coffee house chain policy, which helps to increase sales and loyal consumers.
Regarding market development, I have known that market expansion is helping to develop market penetration, and new marketing development always approaches to develop the present products. The organization has explored the markets and helps to achieve the goals based on the particular customer base.
According to the diversification I have known that this strategy helps to introduce new products for the new development of the marketing strategy, and it helps how to mitigate the risks from the organization, invent new different types of products and give offers their taste of the several flavors. This kind of variation makes the development for the future. The organization also trying to increase the sales of the products they need to promote the new variation of products and generate the opportunity for their employees, and makes the growth of the market share.
Conclusion
They made the long-term development preparation for the organization and want to mitigate several challenges, through the help of “smart business strategies”. Developing the organization, they have demonstrated their critical theory and developed the strategies for better operations and then they can evaluate the current trends that the organization has faced. The organization has focused on the growth of the revenue, and they can evaluate the hybrid model and also apply the formula that depends on the “number of transactions”, and “increase of the dollar amount on per transaction”. The organization has also focused on the costs management strategy, and “sold the “Goods and Labor”. This coffee shop has increased its revenue and developed the net profit and managed the whole costs with the development of the important expenses. The employee needs to be developed through the proper training of employability and they can increase their revenue and develop their selling of the products.
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