Costa Coffee: Business Health Check, Factors, and Improvements

This report presents a comprehensive business health check of Costa Coffee, analyzing its objectives, internal and external factors, and operational processes. It begins with an introduction to the concept of a business health check and the company's background. The report then delves into ...Read More

Business Health Check

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1 ...........................................................................................................................................3
1.1 Objectives of business...........................................................................................................3
1.2 Factors that affect process of business..................................................................................4
1.3 Improvement and changes to the business operations and processes...................................8
M1. SMART objectives..............................................................................................................8
D1. Analyse how Ansoff Growth Matrix helps in business improvements................................9
TASK 2 ...........................................................................................................................................9
2.1 Effectiveness of the business................................................................................................9
2.2 Develop plans to improve business and define their values...............................................10
M2 Evaluate the impact of business areas of the organisation ................................................10
D2 Critically analyse development of plan in improving the business ....................................10
TASK 3 .........................................................................................................................................11
3.1 Current skills of management staff ....................................................................................11
3.2 Plans for the development of skills for management and staff .........................................12
M3 Analyse the current experience, abilities and skills of management and staff ..................13
D3 Methods that can used for developing skills of management and staff .............................13
CONCLUSION .............................................................................................................................14
RECOMMENDATION ................................................................................................................14
REFERENCES .............................................................................................................................15

INTRODUCTION
In present time, business health check can be defined as the a process that helps in
looking into all the weaknesses and strong point of a business organisation. It is essential for
every single business organisation to keep on checking all its operations, procedures and other
activities done on a regular basis. With the help of this, maximum benefits can easily be gained
by a firm and aid in running business in much more successful manner (Akter and Et, 2016). It is
being analysed that, there business health check is basically divided among two sections where,
first section consists with all the succession of business and on the other hand, second phase is
basically enclosed with review report. Organisation, which has been undertaken for conducting
the report i.e. Costa Coffee. It was found in the year of 1971 by Bruno Costa & Sergio Costa and
sells coffee, tea, sandwiches, sweet snacks and iced drinks to targeted customers at international
level.
Along with this, assignment will put light on both internal (SWOT Analysis) & external
(PESTLE Analysis) elements, which basically impacts upon business operations of a company.
Away with this, report will also cover Ansoff Growth Matrix, that aid a business organisation in
bringing improvements with in the structure, effectiveness of the business, current skills of
management staff and lastly, assignment is also enlighten the current skills of management staff,
which is continuously helping a business organisation in reaching to new heights in specified
time frame.
TASK 1
1.1 Objectives of business
Costa Coffee, one of the famous British Coffee House company in all over the world,
which offers customers with roasted coffee beans based coffee products, sweet snacks, tea,
sandwiches and iced drinks. It's main objective is that to improve the nourishment level among
humans, through offering them with the best roasted coffee been based coffee products.
According to the analysis done by investigator named as Allegra, Costa has taken the first
position as United Kingdom's coffee chains where it's market share is approximately to 39
percent (Campbell and Helleloid, 2016). Along with this, considering the same objective, Costa
has found growth harder to come by in a maturing market. Along with this, Costa Coffee's main
main objective is to enhance the market share through raising number of customers (consumer

base). With the help of this, organisation (Costa Coffee), is carrying a famous status symbol in
all over the world. Away with this, there is another objective, which Costa Coffee has built in
order to grab a good position within the market in a short span and i.e. To offer customers with
great experiences through offering them good quality based roasted coffee products.
1.2 Factors that affect process of business
Costa Coffee, a multi-national coffee house brand, found in 1971 and continuously gave
higher experience to its targeted customers through offering them good quality based coffee and
other sorts of products (Clinton and Whisnant, 2019). This has given a range of opportunities for
Costa Coffee, and made company one of the largest coffee house within the United Kingdom. In
present context, it is being found that there are two factors (internal and external), which majorly
impacts upon Costa Coffee and in order to analyse them in a much more detailed manner. There
are many tools/analysis can be done. Here, in order to evaluate the macro environment, PESTEL
analysis has been done, that will aid in understanding the impact upon Costa Coffee and this is
done underneath:
PESTEL Analysis of Costa Coffee :-
Political factors – This is being considered as one of the crucial factor of external
business environment, which impacts in both positive and negative sense on a business company.
In the same way, if it is talked about Costa Coffee, political factor has impacted. Governmental
policies along with the rules and regulations (legal laws) for businesses has changed the whole
scenario for Costa Coffee of conducting the business. This could be understood with a good
example of a country like America, where Costa Coffee is already dealing and operating. Here,
slight change among healthcare policies related to staff. This change would require to be made
by Costa Coffee as well. Failure into this, may lead Costa Coffee to may a range of issues, which
could be anything from heavy charges, penalties or even decrease within the customer base. If
Costa Coffee, adopts the changes it might directly help company in improving the sustainability
within the business market of America (Dälken, 2014).
Economical factors – Economic conditions of a nation, could be considered as one of the
major external element that might impact upon a business organisation. If it is talked about Costa
Coffee, it might get affected due to change among economic conditions of a business country.
This could be understood with a good example of Brexit, where decline within the
unemployment rate was faced by the whole country. This happened due to all the staff members

who belongs to European Union has got evicted from United Kingdom with the fear of loosing
their jobs. This impacted negatively upon Costa Coffee as well due to many individuals who,
were performing operations among different stores of United Kingdom, has left their jobs. This
directly affected profit margins of Costa Coffee as well.
Social factors – Due to demand of coffee is increasing every year, it might help business
organisations that are performing at international level to raise their profit margins. It can also be
said that, revenues can easily be improved due to demand of coffee culture. Here, it can be said
that Costa Coffee, which is having an opportunity for widening a range of healthy products and
attract various health conscious consumers as, organisation is offering coffee products
considering the hygiene factor. This culture followed by customers (health consciousness), has
been adopted by Costa Coffee and this has raised maximum profits for company as well (Heaton,
Linden and Teece, 2014).
Technological factors – Major technological issues faced by Costa Coffee has increased
within mobile purchases, technology transfer to farmers of coffee and increase in availability of
special coffee machines for home use. Here, it can be said that Costa Coffee could easily
increase its values through offering new technology and techniques within the cafes. This will
help to attract more number of customers. Different steps that can be taken by this company
include improvement of mobile application and services that are linked to purchases through
mobile.
Economical factors – In present context, this is being considered as one of a crucial
factor which might affect overall sustainability of a business organisation like Costa Coffee.
Here, it is being analysed that organisation like Costa Coffee needs to keep its focus on
enhancing corporate social activities so that it's image will be developed in society. Considering
or using paper bags rather than poly bags would help Costa Coffee in building good image
among targeted customers.
Legal factors – This company can improve the performance of business by providing
satisfaction to customers. This may include providing products which are made by following all
safety regulations and safe ingredients. Costa Coffee would require to follow all legal rules and
regulations for providing products and services in market. The increase in employment
regulations in the developing countries limits Costa coffee's access to labour market.
Porter's Five Force Analysis

Another crucial tool, which could be considered as a business model that directly aid in
analysing the external (competitive) forces through which, right decisions can be made by the
business organisation (Koehn and et. al., 2014). On the other hand, it has also been analysed that,
Porter's five forces model might also aid in looking into all the strengths and weaknesses at the
same time. All the five forces model are basically covered underneath:
Competitive Rivalry – Since, Costa Coffee is performing its operations at international
level and due to coffee products are running in trends, company has faced strong competitive
rivalry. Here, it is essential for Costa Coffee to do proper analysis and through this, maximum
benefits can easily be gained by Costa in a short span. Strong force of competition that includes
large number of firms, moderate variety of enterprise and less switching costs.
Bargaining power of Costa Coffee's Suppliers – In present time, if it is talked about
Costa Coffee, company do not consists with a strong bargaining power of suppliers. Due to
company offers customers with quality based roasted coffee to its customers, it do not has many
suppliers. This might impact negatively upon overall performance level of Costa Coffee. On the
other side, it will be required for Costa Coffee to add number of suppliers in order to reduce the
bargaining power of suppliers.
Threat of substitution of Costa Coffee's Products – This element of the five forces
model determines that substitutes have a strong potential which impacts the business of
Starbucks coffee negatively. It is being analysed that, ample number of substitutes of Costa
Coffee products in market such as drinks and beverages, instant beverage powder, energy drinks
and etc, which makes high treat of substitution products for Costa Coffee.
Bargaining power of Costa Coffee's Buyers – As Costa Coffee, is having high range of
customer base in all over the world, this makes company to experience heavy or strong force of
bargaining power of buyers. This is happening because of high competitive environment where,
business companies like Starbucks' consists with similar but low prices then Costa. This could be
considered as a reason behind why bargaining power of buyers is high.
Threat of new entrants and new entry - Threat of new substitutes for Costa is high and
because of this competition within Coffee industry has got raised, which attracted many business
person to start running their business within the whole new company like Starbucks, Cafe Coffee
Day, Dunkin Donuts, and many more (Mathooko and Ogutu, 2015).

SWOT Analysis of Costa Coffee:
Strength Weakness
 The biggest strength of Costa Coffee is
it recently collaborated with Coca cola
and produce coffee stores with a new
variant in its product line and
popularised among top five in a nation
and across the globe.
 The improvement in quality of
commodities was accepted by
consumer in almost all countries.
 The production department of Costa
increased, quantity of beans in order to
expand the quality good for running
business.
 The drawback for this company is
difference gap of number of channels
which competitors are using for
running a business.
 The ranking order of firm have high
influence on growth of business, which
has to be fulfilled through improving
quality of goods from surveys and
feedback of consumer in order to
sustain in industry and across the
world.
 The weakness might occurred due to
improper knowledge of current market
trends and low promotional channel
used by Costa Company.
Opportunity Threats
 The Costa manager are thinking of
exploring business in hospitality
industries, colleges, schools as well
introducing high tech machinery in
supplying of goods and services.
 This initiatives will help in successful
flow of operations for running
operational activities. The result
impact major influence for effective
growth of business across national
boundaries (Mkude and Wimmer,
2015).
 The Costa is facing direct and indirect
competitions from their competitors as
they are producing highest quality
coffee to consumer and most buyers
are switching their taste from coffee to
tea. This resulted, in major drop of
Costa image in international market.
 The company has to plan new
marketing strategies for retaining
existing buyers, adapt innovative,
promotional activities for attracting
potential buyers for instance free trial

should be given to new consumers.
1.3 Improvement and changes to the business operations and processes
Ansoff matrix could be considered as one of a crucial marketing planning tool or model
that can be used by a business organisation. H. Igor was basically the profounder of this model
and it was done in 1957. it consists of four different strategies of market growth and these are
given beneath within the Costa Coffee's context.
Market penetration – This approach can be utilised by Costa, because this is being
considered as one of the less risky strategy due to no requirement of investments to be made by
company while adopting a change. Here, existing products and resources can be utilised, but it is
said that for Costa this sort of technique might not help organisation in reaching to new heights.
Product development- If Costa Coffee, basically adopts this type of approach then it is
basically be done to attract much more targeted customers through offering a range of new
products along with the services. Along with this, it can be said that this strategy is much more
beneficial for Costa.
Market development- This strategy, can be utilised by Costa Coffee through offering
coffee and other beverages and this company has an opportunity to launch product within the
new market of different countries. With the help of this, Costa Coffee could easily gain many
competitive advantages in specified time frame.
Diversification - This sort of marketing strategy, might help a business organisation in
sustaining within the market for a longer period of time but, it is risky as well. If it is talked
about Costa Coffee this will result in great financial loss to the company as this will be a
disadvantage for the organisation due to developing a proper plan in regards to gaining
competitive advantages (Schaltegger and Wagner, 2017).
M1. SMART objectives
If it is talked about SMART objectives, then these could be considered as small goals,
which directly helps a business organisation like Costa Coffee in reaching to new heights in a
short span. Here, SMART objective is referred to specific, measurable, achievable, relevant and
time oriented. In present context, Costa Coffee's SMART objective is “To enhance customer
base by 5% in next 12 months”.

D1. Analyse how Ansoff Growth Matrix helps in business improvements
In present time, in order to bring improvements within the business organisation like
Costa Coffee, it is said that Ansoff Growth Matrix can help in reaching to new heights.
Basically, it consists of four quadrants that can be utilised by a company like Costa Coffee to
sustain within the market for a longer period of time. Here, it can be said that product
development is basically referred to the best option that could directly raise ample number of
benefits for Costa Coffee in a short span.
TASK 2
2.1 Effectiveness of the business
In present time, for a business organisation like Costa Coffee, effectiveness plays a
crucial role because this might aid a company in improvising the overall performance level.
Here, some of effectiveness can be seen through various business functions within the Costa
Coffee and these are given beneath:
Marketing: One of a crucial business function of Costa Coffee where marketing
manager looks into all the trends followed by a business organisations (rivals) and develops
effective plans in order to promote products and services in front of the targeted customers.
Product and services: Costa Coffee, consists with quality based coffee products, but it
also offers different things like smoothies, ice-cream and more. Basically, Costa Coffee do make
changes within the services and products based upon the trends and needs of customers. This
kind of effectiveness aid Costa Coffee in reaching to new heights (Sholihah and et. al.,2016).
Finance: Costa Coffee, they always follow the affordable pricing strategies in order to
make effective organisation. This kind of effectiveness basically shows ample number of
benefits to the business company. With the help of this, maximum benefits can easily be gained
right on time by Costa Coffee and does not put any sort of burden on the company.
Staffing: HR department of Costa Coffee, is much effective and efficient where
recruitment and selection process basically aid in improvising different range of training
programmes and through this, workers could effectively learn about various rules and policies.
Along with this, it is said that Costa Coffee could effectively improve all the different
range of stages. Through this, maximum benefits could easily be gained right on time.

2.2 Develop plans to improve business and define their values
A business plan is said to be a written document, which basically consist with objectives, am,
purpose, strategies and many other elements that could help a company in attaining short or long
term goals. In context with Costa coffee, with there whole new product i.e. Butterscotch
smoothie, and in order to do so it will be required for the company to follow arrange of steps and
these are given below:
Marketing planning: in order to improve the customer base, Costa coffee would
required to develop a much effective marketing plan that will help organisation and grabbing the
attention of much more customers within the targeted area and through this, enhancement of
sales of butterscotch smoothie will automatically improve (Song, Sun and Jin, 2017).
Sales and productivity: using a range of strategies within the plan like competitive
pricing, using different range of tools and techniques and many more will help Costa coffee in
reaching to there objectives.
Financial management systems: using optimisation approach and applying range of of
financial systems while launching the butterscotch smoothie will directly e help in controlling all
the risky sections that are connected with finance department of Costa coffee.
Roles and responsibilities of staff and management: based on the requirements,
manager of Costa coffee will directly recruit new who employees and allocate tasks to existing
staff members considering the approach of offering customers with high experience as Costa
coffee is best known for it.
M2 Evaluate the impact of business areas of the organisation
Within the Costa coffee, they always depend on the various strategies and good services in order
to enhance their profit in the market. That's why the financial system have contributed in the
operations of Costa coffee by using books account, ledger, cash statements and more.
D2 Critically analyse development of plan in improving the business
If it is critically analysed then it can be said that, developing a business plan can both
make or break a company like Costa coffee. With the help of this company can bring different
kind of ideas which makes company's value in front of the consumer's. Therefore, the financial
system is very much effective and essential that brings company at higher level without any
issues within the working place. But this can also create high investments as well for the
company that might impact on profit ratios of Costa coffee (Takata, 2016).

TASK 3
3.1 Current skills of management staff
Costa coffee is said to be one of the famous international business organisation that is
dealing within the coffee House sector, consist with the staff that carries a range of skills and
these are given underneath:
Technical skills- Since, Costa coffee is dealing at international level therefore its staff
members consist with many information technology and computation based skills. This helps
business organisation in attaining range of objectives that are linked with IT sector. As
programming within the IT sector gets changes after a time, it is vital for staff members or IT
department of Costa coffee to grab those changes and develop programs for the company e to
improve the efficiency level and help it in growing within the competitive market.
Operational skills- Business negotiation, decision-making and more are set to be some
of the essential operation skills that are required for Costa coffees staff members. Within the
Costa coffee, it is required for both employees and the managers to have all of these skills so that
all the conflicts and the issues can be reduced to minimum (Wach and Wehrmann, 2014).
Managerial skills- planning, motivation, staffing, organising, communication and
decision making are some of the crucial managerial skills that are required for manager of Costa
coffee to have. Here it will be required for Costa coffee’s manager to develop a culture where all
the staff members recently start working with each other considering all the skills. This will
directly impact positively up on performance level of both company and of staff members as
well (Lloyd and et. al., 2016).
Current skills- In present context, manager and staff members of Costa coffee consist
with some of current skills and these are given below:
Decision making- if it is talked about Costa Coffee's manager and staff members, they
are less productive because the decision making is not as good as others staff members of a
competitive company like Starbucks is having. Small training sessions at both offline and online
job training food help in improving the decision making process within the management. This
will help Costa in enhancing the loyalty of staff members towards business organisation
(Shermon and Gilmour, 2016).
Problem solving- Miscommunication is one of the crucial factor which makes both staff
and manager less influenced while performing tasks within the Costa. Here, it is much required

for both staff members, employer and the managers to carry out meetings because then only e
communication among them can be improvised.
Communication skill- Strong listening along with the vocal powers of communication
are said to be the two major elements within this skill. In reference with Costa, manager is
required to to carry out and develop a much more efficient communication process which
consists with a a two way factor where both managers can give tasks and listen to what others are
saying about it.
3.2 Plans for the development of skills for management and staff
Costa Coffee is offering a whole new product to its targeted customers and that is butterscotch
smoothie, in order to improve the sale of this product it will be required for staff members and
managers to develop their skills, as per the requirements. In present context, development
process of skills for both staff and managers has been presented underneath:
Learning objective Target
proficiency
Development opportunities Time scale
Risk management 10 while launching a whole new
product, Costa coffee might face a
range of risks. It is required for
the manager to focus upon all the
risks and develop skills of both
staff and of himself or herself
through giving training.
Both staff and
manager would
required to carry
the training
above 90 days in
order to reach to
the target
proficiency level
which is 10.
Planning skills 10 If it is talked about Costa coffee,
then it will be required for
managers and leaders along with
the staff to improve the planning
skills and this could be done
through planning again and again
Time required
for developing
planning skills is
60-70 days
(Arntz-Gray,
2016).

on different range of tasks that
company e gets at a short span.
Situation analysis 10 There are various situations in
business where managers have to
react immediately and take
effective decisions for the
company (Ransbotham and et. al.,
2017). It is important for the
company to build skills of
performing in different business
situations so that productive
decisions can be made in less
time.
The time
required for
developing
situational
analytical skills
is 40 – 50 days.
M3 Analyse the current experience, abilities and skills of management and staff
Based on the analysis done above, it can easily be said that Costa Coffee's staff members
and the managers already at a good position where they are having many e skills data
required to perform well within the competitive business market. This has helped Costa in
reaching to new heights in a short span where company has gained many competitive
advantages through offering customers with good experience true offering them with good
quality products and services.
D3 Methods that can used for developing skills of management and staff
The important aspect are briefly mentioned below:
 Individual Training: doing comparisons over the previous years towards a particular
skill could help Costa in enhancing the performance level in a short span. Here, training
given to the individuals based upon the capabilities and the weak points is said to be one
of the crucial method that can be utilised for developing skills of both management and
the staff members. with the help of this, Costa can effectively improve the workforce

capabilities and manage all the tasks based on the requirements that could help Costa in
reaching to new heights (Wach and Wehrmann, 2014).
 Workplace Training: this can also be considered as one of the crucial method that can
be utilised for developing the skills based on the requirements of the staff and
management where common objectives of staff and management are said to be the main
goal of the training given to them. this could be anything from communication to
technological requirements. With the help of this, performance level can be boost up in a
short span (Chang and et. al., 2016).
CONCLUSION
With the help of above mentioned report, it is been concluded that business health check
is said to be one of the crucial thing that can be utilised by a business organisation in enhancing
the performance level and reducing all the risks that are present in the business world. Pestle and
SWOT analysis along with the Porter five forces model,. A company can easily improve or
enhance the knowledge level of their own strengths and how external factors can affect their
performance and operations in a both long and short span. Considering development skills with
the plan can help a company in reaching to new heights because this is the place where all the
weak points are being carried out and training is being provided to staff and Management based
on their own requirements.
RECOMMENDATION
Considering the above information which has been provided in this report, it is being
recommended that a business organisation would required to do proper analysis of both external
and internal factors time by time. Along with this, it is also recommended to the business
organisation to directly start training sessions for both management and staff members to
improve the efficiency level. Based on the analysis, if company focuses upon both of these two
factors, it is maybe possible that company might reached to new heights where there will be no
competition left for it.

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