Cafe Direct Case Study Analysis

This assignment requires a detailed case study analysis of Cafe Direct, focusing on its business strategies and performance. It involves conducting a SWOT analysis to identify the company's internal strengths and weaknesses, as well as external opportunities and threats. The analysis will provide insights into Cafe Direct's market position, competitive advantage, and potential for growth or decline.

Running head: CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY
CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY
Name of the Student
Name of the University
Author Note

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY1
Café Direct
Café Direct is a trading organization that aims to provide the growers of tea, coffee
beans and cocoa with a larger size of the purchase price of the concerned products. The Café
Direct has been one of the first brands to bear the Fairtrade Certification mark1. The
following essay deals with the challenges faced by Café Direct according to the given case
study. The essay proceeds further to put forth three recommendations that the concern might
need to address in the current scenario. The essay proceeds towards the conclusion with the
explanation of the reasons that underlie the suggested recommendations.
According to the SWOT analysis based on the given case study, Café Direct faces
challenges due to the increase in the number of the private label products that exist in the
market (Please refer to the Appendix I). The brand faces an issue with the major relaunches
that it had undergone twice since its inception. This step was undertaken by the concerned
company in order to attract more clients to the company by relaunching the brand. The
company might also face challenges in the current global market due to the fact that the
company deals only in the hot drinks like coffee, tea and other beverages. The competitors of
the company in the market are found to have been offering their customers with the variations
in the beverages that they have been offering to the clients. The global competitors like
Starbucks, Greggs or Costa do have an upper hand in the matters pertaining to the various
versions of the beverages that they are capable of providing to the concerned clients. This
might lead to the decrease in the client base of the company in discussion, Café Direct. The
concerned organization also faces a negativity in the financial position during the end of the
year 2016. It faces the challenge of being stuck in the negative equity by the year 2020.
In order to cope with the challenges, the company might need to undertake certain
steps. The company might put forth the advertisements of the products that it aims to sale to
1 Cafedirect.co.uk (2018) <https://www.cafedirect.co.uk/> accessed 13 March 2018

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY2
the potential clients. The clients must be made aware of the various products that the
company aims to provide them with. The concerned management must attempt to introduce
the various products to the potential consumers of the company. The company is known for
the various types of the organic coffee blends that they provide to their consumers2. The
company is known to have observed the various ethical issues that are involved in the
marketing of the same. The criticism concerned management of the organization might invest
in the various methods of advertising in order to allow the potential consumers to have a
sound knowledge of the products that they offer3. The company does not own retail stores
wherein the consumers might visit in order to procure the products. The company must focus
on establishing partnerships with the other organizations and shops that might help them to
increase their potential client base.
The other challenge faced by the company in discussion, Café Direct is the fact that
the company provides its customers with only the hot beverages unlike the other competitors
of the company. In order to resolve this issue, the company might conduct a survey of the
concerned client base. This might help the concerned company to form a better understanding
of the demands and the needs of the clients. The understanding of the client needs might help
the concerned company to launch the products that would best suit the needs of the clients.
The company might try to add value to the various products that they aim to introduce to the
existing as well as the potential customers of the company. In order to do so the company
might conduct the needed surveys over the various platforms. The concerned management
might introduce the creativity in the manufacture of the products that the company might plan
on launching in the concerned market4. The company might also help the potential clients to
2 Confino J, 'Café Direct Seeks To Push The Frontiers Of The Fairtrade Movement' (the Guardian,
2018) <https://www.theguardian.com/sustainable-business/cafe-direct-fairtrade-movement-coffee-competition>
accessed 13 March 2018
3 Heerde, Harald J. Van, et al. "Price and advertising effectiveness over the business cycle." Journal of
Marketing Research 50.2 (2013): 177-193.
4 Zikmund, William G., et al. Business research methods. Cengage Learning, 2013.

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY3
have a slight hint on the upcoming products. This might help in building the anticipation of
the clients as well as opens an avenue for them to put in their suggestions on the issue5.
The third challenge that the company has been facing is the fact that the company has
been functioning in the negative financial condition by the end of the year 2016 and might be
stuck at the same area till the year 2020. In order to recover from this situation, the concerned
management might attempt to consider the reviewing of the measurements of the financial
performances of the company6. These financial measurements might help the concerned
management to gain insight into the facts pertaining to the coverage of the production cost,
alignment of the overhead costs with the sales profit, the capability of the concerned
company to sustain the operations based on the profits that they earn. The concerned
management of the company must tend to focus on the operations of all the departments that
has been functioning within the organization. It is advisable to develop the entire system of
the organization in a systematic fashion from the initial days of the company. The early
investment in the infrastructure might help the concerned organization to deal with the
problems that the concern might face in the later stages of its journey7. The concerned
management of the concern is advised to conduct an assessment of the employees at regular
intervals in order to keep them motivated towards the betterment of the company. The
concerned management of the concern is also advised to apply the appropriate strategies that
might help them in the improvement of the financial performance of the company.
Thus, from the above discussion it might clearly be observed that the company in
discussion needs to implement a few changes in the management and the operations of the
5 Castellion, George, and Stephen K. Markham. "Perspective: new product failure rates: influence of
argumentum ad populum and self‐interest." Journal of Product Innovation Management 30.5 (2013): 976-979.
6 The Guardian, 'Cafédirect - Still Redefining Fair Trade' (the Guardian, 2018)
<https://www.theguardian.com/sustainable-business/cafedirect-redefining-fair-trade> accessed 13
March 2018
7 Ingenbleek, Paul, Ruud T. Frambach, and Theo MM Verhallen. "Best practices for new product
pricing: Impact on market performance and price level under different conditions." Journal of Product
Innovation Management 30.3 (2013): 560-573.

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY4
company in order to recover from the challenges that it is observed to have been facing. The
essay puts forth recommendations that might help the management of the company in the
recovery of the state of Café Direct.

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY5
The company that aims at introducing changes in the operations might face a few
challenges during the process of the implementation of the changes. The following essay
deals with the various challenges that Café Direct might face during the implementation of
the recommendations that are stated above.
The company is recommended to advertise for the products that it might aim to launch
in the concerned market. The company might face a number of challenges in the activity of
advertisements for the products8. The company should take care of the fact that the
advertisement that it aims to air for the concerned products reaches the potential target
customers during the time that might dedicate to the entertainment media wherein the
company might be advertising.
The company might also face challenges in the matters pertaining to the launch of the
new products in the market. The challenges in this field might be present in the form of the
similar products that are already present in the target market that the concerned organization
aims to capture9. The already existent products in the market might prove to be a hindrance
for the concerned organization in the launch of the new products.
The concerned company, Café Direct might also face some challenges in the matters
that deal with the improvement in the financial conditions that the concern has been facing.
The existing staff of the organization might not accept the changes that the concerned
management implements in order to boost the financial performance of the company10. The
8 Tsao, Shou-Min, and Wei-Hao Lien. "Family management and internationalization: The impact on
firm performance and innovation." Management International Review 53.2 (2013): 189-213.
9 Cavaco, Sandra, and Patricia Crifo. "CSR and financial performance: complementarity between
environmental, social and business behaviours." Applied Economics 46.27 (2014): 3323-3338.
10 Trudgen, Ryan, and Susan Freeman. "Measuring the performance of born-global firms throughout
their development process: The roles of initial market selection and internationalisation speed." Management
International Review54.4 (2014): 551-579.

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY6
management of the concern might also face opposition from the clients in the matters that
pertain to the hike of the prices in the products that have already been present in the market11.
Thus, from the above discussion it might be concluded that the concerned company
might face issues in the implementation of the afore-mentioned recommendations in the
various fields related to the same.
11 Rodriguez-Fernandez, Mercedes. "Social responsibility and financial performance: The role of good
corporate governance." BRQ Business Research Quarterly 19.2 (2016): 137-151.

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY7
Café Direct Consultancy
Accor Hotels is a French group of multinational hotels that has been operational in
over 90 countries all over the world. The chain of hotels is headquartered at Paris, France and
is being headed by the current CEO, Sebastien Bazin12. Café Direct is recommended to
respond to the proposal laid by the Accor Hotels in a positive tone and accept the offer. The
following essay aims at viewing the challenges that might be faced by the company in
discussion, Accor Hotels. The essay also takes into account the potential suppliers at the
Sunshine Co-operative and the River Co-operative. The essay also aims to provide
recommendations based on the proposal that has been extended by the multinational hotel
chain, Accor Hotels.
The merger of the organizations, Café Direct and Accor Hotels, do at the initial
instance seem to be a fruitful one. However, on close introspection it might be found that the
concerned merger has some challenges for Café Direct as well. The company in discussion,
Café Direct, has currently been facing some limitations in the operational capacity of the
concern. The company has been facing a lack sufficient working capital in the recent times.
The average unit retail or the AUR has been observed to be increasing over the time period of
2010-2012 which has led to the decrease in the return of sales or the ROS during the same
time period. The liquidity of the assets of the concerned company are observed to be
continuously fluctuating, however they have not been observed to enter in to the negative
realms.
The commitment towards the proposed merger with the Accor Hotels demands a huge
time period from the concerned company, Café Direct. The cash reserves and the long term
as well as the current assets of the company have been observed to have gone through a huge
12 Accorhotels.group, 'Accorhotels Group – Worldwide Leader In Hospitality And Services – Feel
Welcome' (Accorhotels.group, 2018) <http://www.accorhotels.group/en> accessed 13 March 2018

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY8
drop over the last six years. There has also been observed a drop in the investment income of
over 90% over the same time period13. The merger might also jeopardize the goodwill that
has been created by Café Direct over the long duration of time since the inception of the
company. The offer that has been extended by the Accor Hotels tend to demand a great
amount of organic coffee that might not be possible for Café Direct to produce
independently. There might also arise discrepancies between the pricing strategy of both the
organizations.
The pricing strategy of Café Direct is based on the minimum pricing strategy while
that of Accor Hotels is based on the pressure pricing strategy. The major concern that might
be faced by the concerned company is the request on the part of Accor Hotels for the
reduction in the prices of the organic coffee that is to be supplied by Café Direct based on the
huge volumes of the supply. This might prove to be a hindrance in the merger due to the
lowering of the rate of the profit that Café Direct had been expecting from the deal. This
would in turn affect the growers of the organic coffee which would be vehemently against the
ethical principles that are followed by Café Direct. The merger of Café Direct with Accor
Hotels might lead to the loss of the brand uniqueness of the former. This might render Café
Direct to lose its own identity as a separate brand and instead be recognized as a mere
supplier to an internationally acknowledged chain of multinational hotels.
The company in discussion, Café Direct, is advised to accept the assistance from both
the co-operatives for the initial two years in order to meet the demands of the multinational
chain of hotels, Accor Hotels. The company in discussion, Café Direct must confirm with the
River Co-operative regarding the matters that pertain to the illegal activities that are
associated with the procurement of the cocoa leaves and the global issue of child labor14. The
13 Davies, Iain A., Bob Doherty, and Simon Knox. "The rise and stall of a fair trade pioneer: The
Cafédirect story." Journal of Business Ethics 92.1 (2010): 127-147.
14 Achim, Monica-Violeta, and N. S. Borlea. "Environmental performances-way to boost up financial
performances of companies." Environmental engineering and management journal 13.4 (2014): 991-1005.

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY9
company should confirm with these details as these pertain to the ethical standards that are
maintained by the concerned company15. The River Co-operative demonstrates a larger
capacity of the production and have been currently involved in the process of the production.
However, the quality of the product that is delivered by the company since there have been
past cases wherein the delivered products that the company have been rejected. The River
Co-operative, despite the shortcomings in the quality of the product, might boast of having
good storage facilities. The figures of the co-operative that reveal the productions of the
organic coffee demonstrate discrepancies that might lead to risking the reputation that might
have been built by Café Direct.
The Sunshine Co-operative might initially need the investments on the part of Café
Direct in the core area that might need improvements. The collaboration of Sunshine Co-
operative and Café Direct might prove to be beneficial for both the companies in the due
course of time16. The collaboration with the Sunshine Co-operative might provide with
greater scope for the expansion in the organic production of the coffee beans. The
collaboration might also help Café Direct to bring about an improvement in the corporate
social performance of the organization on the successful restoration of the needed stability in
the field of finance17. This collaboration might also help Café Direct with the continuation of
the investment that the company extends towards the farmers who intend to put forth the
efforts that are needed to produce the organic coffee.
In conclusion to the above essay it might be said that the proposal extended by the
Accor Hotels towards Café Direct should be accepted by the concerned organization. the
organization might also consider the collaboration with the River Co-operative and the
15 Chun, Jinseok S., et al. "How does corporate ethics contribute to firm financial performance? The
mediating role of collective organizational commitment and organizational citizenship behavior." Journal of
Management 39.4 (2013): 853-877.
16 Datamonitor, Cafédirect Case Study (Datamonitor 2008)
17 Sodeyfi, Setareh. "Review of literature on the nexus of financial leverage, product quality, &
business conditions." International Journal of Economic Perspectives 10.2 (2016): 146-150.

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY10
Sunshine Co-operative in order to be able to deliver to the needs and demands of the
multinational chain of hotels in the matters pertaining to the sale of organic coffee. The
company in discussion is observe to have a bright prospective in the matters that pertain to
the worldwide supply and recognition of the organic coffee that the company provides to its
client base. Thus, considering all aspects of the situation, it is recommendable for Café Direct
to accept the proposal extended by Accor Hotels.

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY11
The following essay deals with the various advantages and disadvantages of the use of
the case studies in the exploration of the management issues that are faced by the
organizations discussed in the concerned case studies.
The advantages of using the case studies in the exploration of the management issues
in the concerned company is the fact that the case studies might involve the narrative
techniques that might help the concerned reader to understand the scenario in a better manner
even in the cases where the concerned reader might not have sound knowledge on the given
topic18. The case studies put forth the problems faced by the concerned company in a
descriptive manner which helps the reader to understand the current situation of the company
in a better manner19. The case study approach helps the concerned company to put forth the
various types of information regarding the problems that it might have been facing. This
helps the readers of the concerned case study to explore the ideas that are presented within
the case study and build on the theories on the given programs or the given dynamics
involved in the project.
The case study approaches towards the exploration of the various management issues
in the organizations have several disadvantages too. The experts in the field suggest that the
case studies often tend to be unreliable and qualitative. The case studies generally relate to
the various single projects or a small group of projects. The results of the case studies,
however, might not reflect the overall performance of the concerned organization20. The case
study approach has another great disadvantage. The case study approach loses in on the
external validity and gains in the internal validity as the findings of the case study might only
be valid in the cases that are similar to the case study in discussion.
18 De Massis, Alfredo, and Josip Kotlar. "The case study method in family business research:
Guidelines for qualitative scholarship." Journal of Family Business Strategy 5.1 (2014): 15-29.
19 Hancock, Dawson R., and Bob Algozzine. Doing case study research: A practical guide for
beginning researchers. Teachers College Press, 2016.
20 Moriarty, Sandra, et al. Advertising: Principles and practice. Pearson Australia, 2014.

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY12
Thus, from the above discussion it might clearly be pointed out that the case study
approach towards the exploration of the management issues might display a huge range of the
disadvantages despite being advantageous in certain contexts.

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY13
Reflection
The ALE activities comprise of the composition of a series of essays that might help
the readers to form a better understanding of the case studies based on the trading
organization, Café Direct. The following essay aims at pointing out the ways in which the
ALE activities have assisted the researchers in examining the various theories, models and
the concepts that have been dealt with in the duration of the course. The essay proceeds
further to explain the ways in which I might be able to apply the acquired knowledge in the
context of the work that I might take up in the future days to come. The essay finally nears its
conclusion with the areas in the module that I might require to improve in prior to taking the
exams. The essay also puts forth the ways in which I aim to approach these needs.
The ALE activities comprising of the essay series based on a certain condition that
arose in the trading company of Café Direct has helped me to study the major functionalities
of the organization based on the various organizations and the employees who have been
working in the concerned organization. The case study approach towards the solutions of the
various problems faced by the concerned organization might help the readers of the case
study to develop a better understanding of the major areas wherein the concerned
organization might face the problems. The identification of the problems plays a major role in
the solution to the given problem that has been identified in the given case study. The case
study approaches also help the students and the other researchers to put forth a clear
understanding of the management of the financial performance of the organization as well as
the financial resources that have been available to the concerned organization. The case study
approach has also helped me to form a clear understanding of the concepts of marketing that
have been put forth in the given case study. In the composition of this assignment, the
activities that I had undertaken deal with the understanding of the present scenario at the
trading company of Café Direct and providing recommendations as to whether the concerned

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY14
trading company, Café Direct, should accept the proposal that was put forth by the French
multinational chain of hotels, Accor Hotels.
The ALE activities might help me in my future work career in the analysis of the
situations that might arise within an organization. The activities that I had undertaken in order
to provide a complete solution to the given case study might help me in solving the various
real-life situations that I might face in the future. The ALE activities have also helped me to
integrate the matters that I have studied during the course and thus incorporate the matters of
the study into the understanding that I have developed. The ALE activities have also helped
me to develop a clear understanding of the ways to solve a given problem and to draw upon
the creative thinking regarding a situation in order to develop a solution to the incurred
problem. The activities have also helped me to hone the abilities to explore and recognize the
various ethical dilemmas and the challenges that are associated with the choice, situations and
the values that are associated with the organization that is being discussed in the given case
study. The case study that had been considered in the composition of the above document
deals with the current financial condition of the trading company, Café Direct. The case study
also deals with providing recommendations to the company on the proposed collaboration
with the Accor Hotels as a supplier of organic coffee.
The area that I need to prioritize before taking the exams in the concerned subject is
the area that pertains to the understanding of the ways that might help in the analysis of the
financial condition of the organizations and the development of the ability to put forth the
suggestions and recommendations regarding the same. I would like to take the help of my
tutor and the other fellow students in order to improve my skills in the concerned field. I
would like to consult the concerned educator on the area where I might not be competent
enough, thereby developing the needed skills in the given fields.

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY15
In conclusion to the above essay I would like to point out the fact that the ALE
activities have helped me to learn a lot about the key areas of the functionality in the various
organizations and the management of the situations that might arise in the given
organizations. The ALE activities have also helped me to obtain a clear understanding of the
management of the financial resources of the organization and the financial resources of the
concerned organization.

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY16
References
Accorhotels.group, 'Accorhotels Group – Worldwide Leader In Hospitality And Services –
Feel Welcome' (Accorhotels.group, 2018) <http://www.accorhotels.group/en> accessed 13
March 2018
Achim, Monica-Violeta, and N. S. Borlea. "Environmental performances-way to boost up
financial performances of companies." Environmental engineering and management
journal 13.4 (2014): 991-1005.
Cafedirect.co.uk <https://www.cafedirect.co.uk/> accessed 13 March 2018
Castellion, George, and Stephen K. Markham. "Perspective: new product failure rates:
influence of argumentum ad populum and self‐interest." Journal of Product Innovation
Management 30.5 (2013): 976-979.
Cavaco, Sandra, and Patricia Crifo. "CSR and financial performance: complementarity
between environmental, social and business behaviours." Applied Economics 46.27 (2014):
3323-3338.
Chun, Jinseok S., et al. "How does corporate ethics contribute to firm financial performance?
The mediating role of collective organizational commitment and organizational citizenship
behavior." Journal of Management 39.4 (2013): 853-877.
Confino J, 'Café Direct Seeks To Push The Frontiers Of The Fairtrade Movement' (the
Guardian, 2018) <https://www.theguardian.com/sustainable-business/cafe-direct-fairtrade-
movement-coffee-competition> accessed 13 March 2018
Datamonitor, Cafédirect Case Study (Datamonitor 2008)

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY17
Davies, Iain A., Bob Doherty, and Simon Knox. "The rise and stall of a fair trade pioneer:
The Cafédirect story." Journal of Business Ethics 92.1 (2010): 127-147.
De Massis, Alfredo, and Josip Kotlar. "The case study method in family business research:
Guidelines for qualitative scholarship." Journal of Family Business Strategy 5.1 (2014): 15-
29.
Hancock, Dawson R., and Bob Algozzine. Doing case study research: A practical guide for
beginning researchers. Teachers College Press, 2016.
Heerde, Harald J. Van, et al. "Price and advertising effectiveness over the business
cycle." Journal of Marketing Research 50.2 (2013): 177-193.
Ingenbleek, Paul, Ruud T. Frambach, and Theo MM Verhallen. "Best practices for new
product pricing: Impact on market performance and price level under different
conditions." Journal of Product Innovation Management 30.3 (2013): 560-573.
Moriarty, Sandra, et al. Advertising: Principles and practice. Pearson Australia, 2014.
Rodriguez-Fernandez, Mercedes. "Social responsibility and financial performance: The role
of good corporate governance." BRQ Business Research Quarterly 19.2 (2016): 137-151.
Sodeyfi, Setareh. "Review of literature on the nexus of financial leverage, product quality, &
business conditions." International Journal of Economic Perspectives 10.2 (2016): 146-150.
The Guardian, 'Cafédirect - Still Redefining Fair Trade' (the Guardian, 2018)
<https://www.theguardian.com/sustainable-business/cafedirect-redefining-fair-trade>
accessed 13 March 2018

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY18
Trudgen, Ryan, and Susan Freeman. "Measuring the performance of born-global firms
throughout their development process: The roles of initial market selection and
internationalisation speed." Management International Review54.4 (2014): 551-579.
Tsao, Shou-Min, and Wei-Hao Lien. "Family management and internationalization: The
impact on firm performance and innovation." Management International Review 53.2 (2013):
189-213.
Zikmund, William G., et al. Business research methods. Cengage Learning, 2013.

CAFÉ DIRECT AND CAFÉ DIRECT CONSULTANCY – CASE STUDY19
Appendix I
SWOT analysis of Café Direct
Positive Negative
Internal Factors
Strengths
 Increase in the awareness
among the consumers in
matters pertaining to the
social and the
environmental issues.
 Ethical business
capabilities
 The establishment of the
marketing strategy that
includes a huge number of
distributing channels.
Weaknesses
 The supply chain of the
company does not depict the
capability of handling the
situations that deal with the
unpredicted events.
 The producers who have been
associated with the company
often belong to the countries
wherein the political
conditions are unstable.
 The company has no retail
outlets
 It serves only the heated drinks
of coffee and thus might not be
able to compete with the other
giants in the industry
External Factors
Opportunities
 The company might bring
about an increment in the
global consumption of the
coffee produced by them.
 The company might resort
to the various social media
platforms in order to
strengthen the
partnerships.
 The company might
leverage the closer links
that it has with the
growers in order to offer
the clients with a deeper
and better experience.
Threats
 The increase in the
competition from the products
that have been priced low in
the past.
 The products of the company
might be easily imitated by the
competitors.
 The clients have resorted to
various methods of ordering in
coffee over the various e-
commerce portals.
 The negative criticism and
publicity might affect the
brand image of Café Direct.