Costa Coffee SWOT Analysis and PESTEL

This assignment provides a detailed analysis of Costa Coffee's business operations, using SWOT and PESTEL analysis to identify key factors affecting the company's performance. The report examines Costa Coffee's market position, strengths, weaknesses, opportunities, and threats, as well as its strategy for growth and expansion. With a market share of 36.7%, Costa Coffee is a significant player in the UK coffee industry. However, the company faces challenges such as high income tax rates, weak economic conditions, and competition from other coffee chains like Starbucks and CCD. To overcome these challenges, Costa Coffee has implemented various strategies, including lowering prices, improving customer experience, and leveraging technology to enhance its operations.

English Academic Skills

Table of content
Introduction......................................................................................................................................3
Thesis statement...............................................................................................................................3
Analysis...........................................................................................................................................4
Conclusion.......................................................................................................................................6
Reference List..................................................................................................................................8
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Introduction
One of the most popular UK coffee brands of the world include Costa coffee which has gained
worldwide fame by their introduction of innovative products and ideas. With a huge competition
with their rival star bucks in 2010, it has becomes the largest coffee chain in the world. Several
researches have been carried out in the market structure of coffee Costa thereby understanding of
the strengths and weakness of each section in particular and carrying out audits followed by a
PESTLE analysis and SWOT analysis. Adding up the marketing model mix helps to thoroughly
understand the strategies to reach the desired targets. Following all these implications can help to
make use of all the strategies in the right manner and make efforts to reach the desired target
scale. The assignment would thus be focusing on the understanding and proper analysis of the
business company Costa coffee which is present in UK and its implications to the world market
following the business essential modules to understand the working of the company and the
competition that prevails alongside this with other famous coffee businesses.
Thesis statement
With headquarters based in Dunstable, Costa coffee has taken control over the entire ownership
of the brand and Whitebread thereby widening their control over the entire UK and spreading
further in the world as not only the best coffee maker in the world but also other related products.
Currently, Costa coffee has the ownership of almost two thousand restaurants in UK and in the
overseas. Through the strategic plans they have constantly been making, it has become evident
that their profit margins have already reached its heights but there is still on a constant run
towards generating further growth of the organization. One of the main focus of Costa coffee is
towards boosting the sales rate of their business thereby expanding their share among the
multinational companies (Estrada et al, 2015).They not only aim at providing an increase in the
sales of their products but also towards providing better employment opportunities to those
individuals who seek for part time jobs thereby increasing their workforce thereby providing a
better customer service for all. Setting up special strategies to reach the targets include providing
special discount offers to increase in the chances of reaching their targets through promotions
(Guiyu and Yi, 2017). Till date they have succeeded in getting hold of about 890 branches in UK
itself thereby covering all the possible areas and increase in their fame of their products. They
specialize in the usage of espresso coffee drinks which are made from the specially made
Arabica beans thereby influencing their quality and increase in the demands of the consumers for
their superiority in this sector. There is an extensive connectivity and spread of their brand
among the customers making them one of best thereby affecting the other coffee based brands in
a critical position where they have to now fight harder in order to compete with this brand. Their
biggest rival being Starbucks who has also succeeded to a great extent in achieving fame
worldwide but is still in a long run towards meeting the quality and profit margin of Costa
coffee. Their difference lies in the share of the market where the product prices play an important
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role towards meetings the needs and satisfaction of their customers. The market force therefore
plays a crucial role in determining the goals set by them thereby leading to a constant
competition prevailing among them and taking all the efforts to get hold of maximum number of
customers in the market. Costa coffee has uniqueness in setting up their communication
strategies according to the needs of the market at that time thereby enhancing their business
further. Contact with the media as well as the consumer's make it all the more easier and brings
them one step closer to their goals thereby making a good reputation of their particular brand and
entrusting their customers to get the best products possible from their brand (Nelson, 2016). The
product quality and the prices therefore play a very important part in attracting the customers of
making them displeased if not taken due care of while framing them. Costa coffee therefore
several well planned strategies such as proper way to advertise their customers and attract
maximum attention from them by following the methods of sales promotion and personal selling
thereby following several tactics of improving their relations with the customers. Following
these processes not only entitles them to deliver the best products to their clients but also
removing all forms of barriers that may come in between by increasing their incentives to act
professionally to increase the customer satisfaction as much as possible. In this way they are able
to make a proper representation of their company thereby displaying the best parts of Costa
coffee and maintaining long term relationship with the customers. They even welcome feedbacks
from their customers which further help them to improvise the different sections of their business
and understand the flaws and make efforts to work on them in order to prevent them from
befalling again in the near future (Wilkinson, 2015). They therefore use the marketing strategies by
being fully aware of the competition prevailing in the market before they take an initiative to
introduce any new product in the market and understand what the customer expects from them in
return.
Understanding the needs of the customers and their preferences is therefore given the maximum
importance and all efforts are made by them to make their customers aware of how their business
is better from others through strategic promotional methods and usage of social media as a
platform to showcase each of their products and the price ranges and ratings that are associated
with each product to gain the attention of their customers thereby influencing them to make a
visit themselves. Following all these efforts in return help them to reach their targets and make a
suitable position on this business thereby forming a supreme monopolistic power in the near
future keeping aside all their other competitors.
Analysis
One of the most famous coffee brands situated in UK is Costa Coffee with its headquarters in
Dunstable, Bedfordshire and widely in the Whitbread. Being the second largest coffeehouse with
its wide chain spread on a global basis, several analysis’ have been made in order to understand
the happenings within the organization. Based on a SWOT Analysis made on the company, the
following has been concluded: The following are the strengths and weaknesses of Costa coffee
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along with the possible opportunities that it provide and the threats that they have to go through:.
Strengths:
● The company prides in having a strong hold over the retail sector.
● They have succeeded in attaining a global expansion and fame on a nationwide
basis.
● The attributes of the brand has helped to great extent in increasing their brand
visibility to a great extent.
● They provide the customers with a wide range of products to choose from.
● They have earned a good reputation of their brand thereby increase their profits.
Weaknesses:
● Even with the help of the IT companies, they have not succeeded in having a
supreme control over their brand till now.
● It is restricted to a certain amount of countries with a less number of stores if
compared with their biggest competitor Starbucks thereby failing to spread its
wings to all the countries and achieving worldwide fame
● The flexibility level lacks in the company.
Opportunities:
● They have been forming several strategic alliances with other companies of coffee
business thereby merging with them to increase the developmental process.
● Various consumer markets have merged with them as a result of which they have
expanded their market to countries such as India and china with such a huge
population of people present thereby resulting in increase in their number of
customers and more profit.
● A sudden shift of the branches of Costa coffee from local market to big
departmental centers.
Threats:
● Biggest threat is reaching the targeted goal against their competitors.
● The presence of political parties in the various countries causes disruption in the
operations of their business.
● There is a constant and excessive price competition in the market which
determines the number of customers coming and the profit margin that they are
expected to achieve.
● The IT companies pose another serious threat in terms of changing the market
structure which may hamper their strategies and plans already made.
● Several fast food companies are now coming up such as McDonalds and KFC
which result in attracting more customers and providing all the necessary
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products which lessens the customer’s attraction to a coffee company such as
Costa coffee.
The biggest rivals of Costa coffee are thus found to be star bucks, CCD, Barista Lavazza and
such all of which make the business tough for the company with such an intense competition
present and so many customers to influence.
One of the main tools for analyzing the business which is made use of while implementing a new
product or service in the organization is the analysis through PESTLE.
Political: Prevalence of high income tax rate in UK, The prices of products of Costa coffee has
been increased accordingly to meet the profit rate. This has however resulted in a negative
impact on the sales of the company. Associated with high quality products, Costa coffee has
been able to merge with the market condition and still maintain a considerable standard in the
trade market. As a result of this, the job opportunities in the sector have increased, with an
increase in their economy.
Economic: Due to a weak economy in Europe, the overall employment levels have decreased
with a decrease in the purchasing power of all. This has therefore resulted in lower consumption
of the products of Costa coffee. Thus an effort has been taken by Costa to lower down their
prices of products keeping the quality intact with the hope of increase in their sales.
Social: With the increase in standard of living of the people with the growing times, it has
become essential to maintain the quality of the products. Besides this, they also provide other
facilities such as free wifi, bookshops and such to allow the customers to spend their leisure
times in the coffee shops and utilize their time nicely.
Technological: With the advent of globalization, technology has seen a drastic change in the
business and Costa coffee has made use of technology properly to change in their operation
process. They have installed their own personal app to make a better sell of their products and
make their customers aware at all times about their new products and the location of their coffee
shops.
Environmental: One of the strategies the company follows is aimed at providing environmental
protection to their customers thereby maintaining the basic hygiene level of their locations and
keeping it tidy at all times. This not only keeps the health of customers safe but also keeps them
satisfied with the service.
Legal: Costa coffee chooses the health and satisfaction of their customers at their first priority
and employs those people who have previous experiences so that proper services are provided
and attention is paid to the quality of food that is served by signing with the Food Standard
Agency (FSA) to ensure a healthy environment for all.
Thus, with the share hold of 36.7% in the market, they aim at reaching its heights in the near
future and expand their branches to all the countries globally and fulfill all their desired goals
and objectives in the right manner.
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Conclusion
Thus, from this assignment we can conclude that Costa coffee has become one of the biggest
brands of coffee business in Uk with their company spreading to other outside countries as well
and increasing their hold over the market in a rapid process. Following the SWOT and PESTEL
analysis it is evident that the company does have certain flaws which need to be rectified by the
manager of the company and keeping all aside, the progress they have made in the last few years
is dramatic with a hold of over 36.7% in the market and is still continuing. They have succeeded
in achieving a good reputation in the business and is on a constant run to compete with their
biggest rivals such as Starbucks and CCD thereby implementing new strategies constantly to
make their business better and attract as much customers as possible.
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Reference List
Estrada, T., Sandu, P., Zrncic, D. and McNulty, K., 2015. Entrepreneurship in Costa Rica: A
SWOT Analysis from an Entrepreneurial Ecosystem Perspective. Business Journal for
Entrepreneurs, 2015(2).
Guiyu, D. and Yi, C., 2017. Application of Case-Task Based Approach in Business English
Teaching—A Case Study of the Marketing Course in SEIB of GDUFS. Higher Education
Studies, 7(1), p.23.
Nelson, R.A., 2016. The Costa Coffee Librarians. School Librarian, 64(2), pp.80-81.
Wilkinson, J.S., 2015. Exploring the Successful Skills of Small Business Owners in Arizona's
Coffee Industry (Doctoral dissertation, Walden University).
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