Cafe Coffee Day: Analysis and Recommendations

This report provides an analysis of Cafe Coffee Day's macro environment, including SWOT analysis, DESTEP analysis, Ansoff Matrix, Porter's Five Forces Model, and more. It also offers recommendations for attracting new customers and entering new markets.

Cafe Coffee Day
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
SWOT Analysis......................................................................................................................3
DESTEP Analysis..................................................................................................................3
Ansoff Matrix.........................................................................................................................5
Porter's Five Forces Model.....................................................................................................5
Mode of entry and Plan B.......................................................................................................6
Porter's Diamond....................................................................................................................6
Relevant costing.....................................................................................................................7
Strategies of attracting new customers...................................................................................7
Mc Kinsey framework............................................................................................................7
Four link analysis...................................................................................................................7
Recommendations..................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
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INTRODUCTION
Cafe Coffee Day is a business that is based in Chikmagaluru which is among the largest
producer of arabica beans in Asia and also exports the same to various countries like US, Japan
and Europe (Jana, Das and Mishra, 2015). The company's primary objective is to provide the
best possible experience to its customers. Founded in the year 1993 and popularly referred to as
CCD, cafe coffee day continues to be a hangout spot for the youth. It has got a presence
worldwide including locations like Austria, Malaysia etc. The presentation analyses the macro
environment of the company and also comprises of Ansoff Matrix and Porter's five forces model.
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 loss due to selection of a 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 material as well as the role of the
Brazilian government should be determined.
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 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.
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Ansoff Matrix
Market Penetration Product Development
The company should decrease the prices of
existing products in order to attract
customers.
CCD should invest more in its research and
development in order to fulfil the needs of
existing customers significantly (Shaw,
2016).
Market Development Diversification
It can start operations in an untapped market
to serve a new segment of customers (Ansoff
Matrix, 2020).
The company can also diversify its
business by getting involved in a new
business like selling coffee equipment that
is in sync with the latest trends of the
market.
Porter's Five Forces Model
Brazil 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.
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 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
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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
Competitive pricing strategy should be adopted by the Cafe Coffee Day in Ireland in
order to increase overall sales as well as profitability.
Strategies of 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 organisations 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 organisations 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 competition. The four corners of the model are – current strategy, motivation, capabilities
and management assumptions.
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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 ensure that the demographic, social, 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 organisation, they should be selected and
hired carefully to ensure that the brand image of CCD does not suffer.
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REFERENCES
Books & Journals
Jana, S.K., Das, J.R. and Mishra, U.S., 2015. Effect of Brand Personality Congruence on Brand
Loyalty in CCD Outlets–A Structural Equation Modelling Approach. Mediterranean
Journal of Social Sciences. 6(6 S2). p.352.
Rahul, K.V. and Keerthi, H.K., 2018. A Study on The Effectiveness of Welfare Measures
Towards Employees of Coffee Day Global Ltd, Bangalore.
Osseweijer, F.J. and et. al., 2018. A comparative review of building integrated photovoltaics
ecosystems in selected European countries. Renewable and Sustainable Energy
Reviews. 90. pp.1027-1040.
Beretta, S. and et. al., 2016. A tool for the comparison of transcript differential expression
analysis pipelines. PeerJ PrePrints.
Nikolaidis, P.T. and et. al., 2016. Test de Step y capacidad de trabajo en jugadoras de voleibol: la
paradoja de un mejor rendimiento en las jugadoras mayores. Cuadernos de Psicología
del Deporte. 16(2). pp.153-160.
Shaw, S., 2016. Airline marketing and management. Routledge.
Mathooko, F.M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other
factors that influence the choice of response strategies adopted by public universities in
Kenya. International Journal of Educational Management.
Zhao, Z.Y. and et. al., 2016. Competitiveness assessment of the biomass power generation
industry in China: A five forces model study. Renewable energy. 89. pp.144-153.
Aithal, P.S., 2016. Study on ABCD analysis technique for business models, business strategies,
operating concepts & business systems. International Journal in Management and
Social Science. 4(1).
Konsolas, I., 2017. The competitive advantage of Greece: an application of Porter's diamond.
Routledge.
Rong, K. and et. al., 2015. Understanding business ecosystem using a 6C framework in Internet-
of-Things-based sectors. International Journal of Production Economics. 159. pp.41-55.
Online
Ansoff Matrix. 2020. [Online]. Avaiable through:
<https://corporatefinanceinstitute.com/resources/knowledge/strategy/ansoff-matrix/>.
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