BMSK6004: CafePod Coffee Company Strategic Management Analysis

This report provides a comprehensive strategic analysis of CafePod Coffee Company, an independent coffee company operating in the UK market. It begins by examining the strategic directions taken by CafePod, highlighting its focus on quality, innovation, and market positioning. The report then delves into a detailed SWOT analysis, assessing the company's strengths, weaknesses, opportunities, and threats within the competitive coffee market. The analysis considers factors such as favorable coffee demand in the UK, product quality, competition, and potential threats from wage increases and digital trends. Furthermore, the report identifies and analyzes the key stakeholders of CafePod, including employees, customers, suppliers, investors, and the government, evaluating their relative power and interests. Finally, the report offers strategic recommendations for CafePod to enhance its market position and achieve its growth ambitions, considering factors like expansion, technological advancements, and competitive strategies. The report utilizes various sources, including academic research and industry reports, to support its findings and recommendations.

CafePod Coffee Company
Introduction
CafePod is an independent coffee company found on the simple idea: making exciting and
strong coffee for the coffee drinkers. It tends to serve the great quality coffee with the best
roasting experience and strong dose of originality. CafePod started its operation in the year
2011. Two friends named Brent Hadfield and Peter Grainger started it. They both started this
operation through the mutual trust of exciting and strong coffee. However, CafePod come at
the position of 7th largest ground and roasted coffee. It still has the ambition to become UK
number 1 retail coffee brand in the next few years with the range of high quality, and
innovative coffee products (Carvalho, Paiva and Vieira, 2016).
In the recent time, it is significant for organisations to give emphasis on uniqueness and
creativity in their product offerings. For every small or medium business enterprise also, it is
effective to come up with some new ideas in order to beat competition. CafePod has also
taken several initiatives in the UK market to grow more. It is working hard to align its actions
with the vision and mission of the organisation. Due to the changing rules and demand of
customers, it is advised to do proper research regarding the market. By ensuring proper
research and development, it can gain ample of opportunities available in the market. In the
paper, discussion started with the strategic directions taken by CafePod. Afterwards,
discussion on SWOT analysis has been taken. Due to the tough competition and several
market factors, recommendations are provided to CafePod which will help it in growing
further.

Strategic direction taken by CafePod Coffee Co
It is true that the development of any organisation directly depends on the quality of its
product offering. In this regard, CafePod has also taken several initiatives to develop the
independent coffee company. The aim of CafePod is to develop the exciting and strong
coffee for the coffee drinkers. The objective of CafePod is to develop the quality coffee by
fulfilling the needs of customer. Peter Grainger and Brent Hadfield found CafePod with the
aim of developing the strong coffee with the assistance of professional experts. The quality of
CafePod offering directly depends on the changing need of the customers.
The mission of CafePod is to empower the people for doing better with effective utilisation of
knowledge and experience. Eggers et al, 2013 highlighted that the mission of any
organisation directly assist the organisation by relating it to the needs of the society. In this
way, mission of the concerned organisation is directly attached with the society upliftment.
The development of coffee flavours as well as business proposition innovation assisted the
company in achieving competitive advantage over the other strong players. In the year 2018,
CafePod has gained the revenue of around $6 million. The varied product offering of the
CafePod is being targeted to the coffee lovers. This has directly helped it in positioning of its
varied product offering with the varied demand. Ferreira (2017) said that the varied changes
directly depend on the competition level faced by the organisation at the time of operating in
several markets. Therefore, the increasing market competition will mandate the regular
research and development for retaining the competitive edge.
(BusinessWire, 2017)

Firstly, it has appointed the Venture Field for supporting the CafePod founders in developing
a Go2 market strategy. This strategy was developed for start-up of the coffee capsules. It is
stated that after the fast immersion in the emerging category, it has also developed the major
strategy for approaching the retailers of UK. In order to achieve the success and growth,
CafePod has also encouraged its senior team to drive the relaunch. The hiring of new people
has the ambition to ensure the fast growing business with some creative and fresh approach.
At the core of its range, it has also launched the new range that is designed to capture the
buzz and vibe from the world’s most exiting cities. The new branding named CafePod uses
the strong colour palette that is accompanied by the extension into ground coffee and beans.
Sixth generation coffee capsule has also been launched by the CafePod that benefits from the
improved freshness and cream with the 5.5g of the ground coffee in every pod. In some of the
vibrant cities too, it will expand its business. The availability of its product will be in pods,
whole bean and ground (Ferreira, 2017).
The major competitor for CafePod is the Nespresso and Tsssimo Coffee. Competitive edge of
any business directly depends on the range of products offered by the business over its
competitors. As compare to this, quality of coffee has also assisted it in increasing the
awareness of the target consumers. The modifications that are being done by the organisation
also directly depend on the changing need of the customers. However, CafePod has done only
limited expansion, which has restricted its growth in the different regions. CafePod (2019)
stated that the limited expansion tends to affect the organisation capability in continuing its
operation effectiveness. In this way, it can bring significant changes in order to tap the coffee
market of UK.
As per the survey taken by National Coffee Association, population of UK consumes around
70 million of the coffee cups a day counted in 2014. The figure was increased to 95 million
of cups of coffee a day in the year 2018. Therefore, the growing coffee demand in UK
consumers has directly assisted the CafePod in targeting the large number of customers
towards the product offering. In addition to this, 87 per cent of the UK consumers have also
given the emphasis on product offering quality over price or quantity. In this way, the
enhanced quality of Coffee has directly assisted the CafePod in fulfilling the needs of the
customers.

(Statista, 2017)
SWOT analysis of CafePod Coffee Co.
Strengths:
 CafePod Coffee Company is one of the renowned companies in UK. At the same
time, mission and vision of the organisation is also resembled with the progressive measure.
Mission of the CafePod organisation directly helps in aligning its actions to the mission of
organisation.
 Favourable demand of coffee in UK is the biggest strength for CafePod Coffee
Company. Coffee shop market of UK is seeping continuous growth over the passage of time.
By the day, there is continuous increase in the number of coffee retailers. Coffee drinkers are
increasing day by day in UK due to which CafePod is getting the favourable support.
 Customers are getting attracted toward discounts provided by it. Therefore, discounts
will also prove to be the major strength for CafePod Coffee Company.
Weaknesses

 Irregularities in the raw material are getting affected due to lack of connection with
the suppliers. At the same time, it will also affect the research and development projects of
the company. Productivity is also hampered due to the irregularity in the raw material.
 Top to down decision-making is also one such weakness in the CafePod coffee
company. It is because employees to do not ensure active participation in he practices of
decision-making.
 Lack of advanced technology is also one such significant problem for the organisation
as it is not able to manufacture the unique products. Due to this, product diversification is
also seen to be halted in the company.
Opportunities
It can expand its business in the several emerging economies. Emerging economies such as
Asian market have increasing demand of coffee. In the coming time, technology will play the
significant role in the UK economy. There are huge opportunities available for the coffee
shops through smart payment, loyalty apps, as well as cloud based tools. In the recent time,
consumers are more demanding premium products. Due to this, coffee shops can tap the
market by offering them the same. In this way, it can adopt some innovative and creative
measures in order to ensure the effective use of opportunities lying in the market.
Threats
 Changes in the national minimum wages can out the influence on the profit margin of
coffee company operators. It is true that coffee company has to employ the large number of
low paid staff in order to earn the good share of the total revenue. It is seen that the minimum
wage is highly expected to rise over the year 2019 and 2020 with the annual increase in the
National Minimum Wage. However, this might threaten the profit margin (IBIS World,
2019). Consumers are regularly consuming the growing array of the digital content. Due to
thus, digital rabbit holes will bring the new challenge for the coffee shops. In order to
overcome from the threat, coffee shops are required to convert the digital trends into the
better in store experience.
Competition is found to be the major threat for the coffee company in UK. Due to this, it is
essential for the CafePod to bring the unique and creative ideas in order to get the strategic
advantage. In addition to this, presence of trade unions and government interference also
curtail the freedom of doing business in UK.

Due to the higher consumption of coffee in UK, several new firms are entering into the
market with innovative ideas (Binsardi and Ekwulugo, 2003). If any new company comes
with the strong idea, it might hamper he growth of CafePod. At the same time, the presence
of several strong coffee companies also proves to be the threat for CafePod. It is because
these brands do not allow the companies to adapt the market of UK.
Stakeholders and their relative power
Stakeholder analysis is being done in order to identify the stakeholders and then analyse their
needs for delivering and developing the quality product. it therefore include the collection of
qualitative information in order to determine which interest of stakeholder is required to be
examined.
1. Employees: employees are one of the most significant stakeholders in the coffee
company. Employees tend to demand the better working conditions, better wages and job
security. In every company, employees expect the wages as per specific law made for them.
In case of lower wages of the employees, company is being criticized. Employees also have
higher power in the stake of the organisation. Due to this, company can work in the
improvement of its corporate social responsibility by addressing issues of lower wages. In
addition to this, employees also have stake in the company because they earn income to
support them. However, employees also have safety and health interest that depends on the
nature of business if it is mining, construction, oil, and gas.
2. Customers: these are considered as the top most stakeholders in any company. The
interest of this group lies in the high quality services and product such as better coffee. In
order to become popular coffeehouse chain, CafePod is required to address this interest. For
example: it can ensure the friendly and warm relation with the customers by communicating
them in better way. Customers found to be the actual stakeholder in the organisation due to
higher power in any business organisation (Calvo-Mora et al, 2016).
3. Suppliers: suppliers consist of the coffee farmers as well as whole supply firms. The
major interest of such stakeholder is the growing demand and compensation from the
company. The main objective of the farmer is to increase the yield of coffee for earning
profit.
4. Investors: In the coffee business, it is significant to address the investor as
stakeholder. Investors put interest in the higher financial performance of the company.

5. Government: it is the major stakeholder in every industry. The changing policies and
rules of the government are required to be considered by the companies. Due to the global
presence of the company, it is also required to follow the rules of different countries. For
example: Starbucks is paying low taxes in UK. Due to the reporting of no profit, it is not
paying the taxes from last three years. In this way, government play a significant role in terms
of encouraging as well as influencing the business organisations to expand their business
effectively. In this regard, trade union intervention and government regulatory should be less
so that companies can give high emphasis on the growth.
Pestle analysis of CafePod Coffee Co.
Political factor: UK relationship with EU tends to frustrate the coffee market. The political
impasse is also contributing to the growing anxiety on the rising prices, labour shortage as
well as eroded confidence of customers. It is found that Brexit is also negatively affecting the
business. By considering the political stability, UK stability is found to be 0.26 that seems to
be a little bit volatile for the developed country. In addition to this, effectives of government
in UK is also one such significant factor with the value of 1.41 in 2017. However, it is true
that the corruption rate in UK is comparatively low as compare to other countries.
Economic factors: due to the growth in household disposable income of the people,
preferences of the cafes are getting more stronger by the passage of time. Due to this,
consumer interest is also increasing in the coffee. Industry is also performing strongly over
the years due to the growth in demand. Over the five years also, Coffee industry is expected
to grow at the annual rate. As per the “Global Economic Forum,” UL ranked on the number 8
with the 5.51 score. Due to this, huge opportunities for the organisations present for doing
their business in UK (Ballesteros, Teixeira and Mussatto, 2014). Betides this, the Consumer
Price Index is found to be stable and moderate in the UK market with the rising point of
106.8 in the half year of 2019. By considering the inflation also, it is found that government
has tight control on the inflation rate of UK. However, the corporate taxes are high due to its
development in the market. Government is also giving emphasis to decrease the market
value. In this way, the growth and progress in UK market brings the positive environment for
CafePod. Previously, UK was considered as the tea-drinking nation. In the recent time, coffee
culture has captured the market of UK. The coffee market is growing rapidly. UK shops have
also seen the sales of £10.1bn sales in the year 2018.

Social factors: in this, demographic feature is to be considered for establishing the effective
business orientation. Competition in the market of UK is the significant feature for any new
corporate organisation. It is found that UK society do not have gender biasness. Due to this,
business organisation of UK is required to give their emphasis on this concern and change he
business course toward anti-discriminatory practices. At the same time, higher education
practices also ensure the higher awareness of people toward quality of products. Beside this,
diversity in the practices of religion also forces the CafePod to follow the effective strategies
for varied religious groups. This is however considering as the competitive advantage for the
firms to evaluate their market properly. Diversification as well as cultural vibrancy makes the
market of UK effective for the CafePod Company to introduce creativity and innovation
(CafePod, 2019).
Environmental factors: In the recent time, it becomes essential for every company to take
care of the environmental measures. As part of the sustainability, UK coffee industry is
required to support the economy throughout the supply chain. The cutting down of coffee cup
waste puts the competitive advantage for the company. Packaging suppliers as well as
recycling companies are making roads for the innovation in system to recycle and recover the
existing materials like putting recycling bins in the branded coffee ship chain.
From the report, it is found that UK government has expanded its investment in the waste
management and recycling infrastructure. This will support the Coffee Pod in taking waste
management efforts. However, it will be required to conduct the “Lifecycle Assessment:’
across its supply chain in order to minimise the wastage and creating the efficiency. In terms
of plastic waste, around 58 per cent of the customers have stated that coffee shops are
effectively able to tackle the plastic waste. Customers have also suggested that the
responsibility lies with the coffee shops for motivating them related to the reusable cups.
They can assure it by offering the discounts for bringing their own cup (Vellema, Casanova,
Gonzalez and D’Haese, 2015).
Technological factors: in the recent time, technology is bringing changes in every industry.
Similarly, customers of UK are also embracing the better quality coffee with the prism of
Italian culture. When it comes to the coffee in UK, customers are increasingly demanding the
premium products.
From the future global trends, the rise of customer centric technologies will be seen such as
free Wi-Fi, automation, as well as cashless payment. It is because customers want the
seamless interaction when they receive, order, as well as pay. Other key trends include the

customisation and options to serve the wellness and health trends by increasing the
transparency in business.
Government of UK encourages the business organisations to come up with some new
business innovation with the help of higher technology. In the year 2017, the rate of tech
export was figured as $68,625.23. Due to this, private companies are also giving their higher
emphasis on the introduction and implementation of new technologies (The Global
Management, 2019). It is directly linked with the development of sustainable framework for
the business organisations and thereby developing the environmental friendly framework. In
this regard, it can be argued that the purpose of bringing new technologies might associated
with the motive in shaping the eco-friendly and better business environment. The local
communities in the country will get the equal advantages from this and further foster the
strategic opportunities for CafePod.
Recommendations
Firstly, it is recommended to follow the store strategy that will help it in achieving the
healthy growth. By using this strategy, it will be able to reach more of the customers in US.
Under this strategy, it is suggested to open the several stores in different locations. The new
brand identity will be provided to the CafePod by following the store strategy.
Differentiation strategy is also suggested to the CafePod. By building the branding innovative
and creative way, it is possible to attract the customers. Companies can move from usual
product selection such as organic coffee, wine, team, and snacks. By adopting the
differentiation strategy, customers also get the better experience while they drink their coffee.
The creative coffee spaces tend to provide the customers more than just a refreshing
beverage. The concerned organization aimed at to develop the strong brewed coffee for the
customers of UK. However, the switching preferences and taste of the consumers might
affect the capabilities of the concerned organization in retaining the loyalty of the customer
base. In this context, the concerned organization named CafePod must take steps to develop a
diverse range of coffee offerings. It will be supporting the concerned organization in
retaining the growth and sustenance in the coming years. The diversification of the product
will also help the concerned organization in achieving a competitive advantage over the
other players in the market.

Social media is the most significant strategy for small or medium business organisation. the
introduction of social media has completely changes the way organisations communicate
with the customers (Guesalaga, 2016). Recently, customers no longer trust the traditional
methods because there is no such way to ensure the two-way relationship through traditional
medium. It is the essential piece of the marketing strategy. Social platform will help in
connecting with the customers as well as increase the awareness of the brand. Around 3
billion people across the world make use of the social media every month. Before making any
decision, it is true that customers browse the website and search about the company and its
reviews. Therefore, it is better to provide them some creative content. Social media provides
an environment where people can easily use, access as well as share the information. A good
example of rising social media is the Twitter (Horn et al, 2015). It is true that social media
networks can enhance as well as destroy the reputation of the company. Therefore, it is better
to provide the best services to customers so that it is able to enhance its reputation. A good
reputation or goodwill helps the company in long term. Therefore, the range of different
social media strategy will be assisting the organisation in bringing the consumer awareness
related to offerings. In this regard, Business Wire (2017) also stated that the utilisation of
social media strategy would be assisting or helping the concerned organisation in bringing the
continue effectiveness of the operation.
Localisation strategy: it means adapting to the local taste of particular country. Coffee shops
in UK are vital price of their high street fabric. At the same time, the growing preference for
the digital channel has also been increased. Quality of coffee is the major factor behind the
success of any café in UK.
Operational strategy: by using this strategy, company can give emphasis on the increasing
efficiency and reduction of management. Under this strategy, company can invest its capital
into the new technology as well as some other innovations (Erdoğmuş and Cicek, 2012).
Disruptive strategy: This strategy works in the best interest of the organisation if it is used in
effective manner by the organisation. Disruptive strategy states that firms are required to
notice the changes in trends and then adapt them. By using this strategy, it is possible for
CafePod to capture the opportunity and enter into new market (Dawes, Meyer-Waarden and
Driesener, 2015). At the same, it is also possible to offer the existing product and services in
effective manner with the help of this strategy. It also benefits both consumers and
competition by providing the products in more effective way. More specifically, it allows the
small and middle business organisations to compete with the established corporation by
growing and establishing the new market segment for their own. It also highlights that both

customer as well as employee feedback can generate the new ideas. It might be possible that
employees have the idea related to better technologies and processes; consumers also provide
some new insights related to several markets that are they are looking for. Adaptive the
creative solution to those new insights will definitely ensure the disruptive innovation,
effective employee engagement, and higher revenue stream. However, it is required by the
company to consider the consumer privacy and safety as the major concern. The major
drawback of this strategy is the change resistance that is usually seen from the employees as
well as customers. Whenever any company brings new change, customer or employee might
not like it. In order to avoid such resistance, it is better to give emphasis on more lucrative
markets (Shanker et al, 2017).
Market penetration strategies: Using this strategy, it can develop the consumer awareness in
the current or existing market. It will definitely support the concerned organisation in gaining
the loyal customer base and thereby it will enhance the goodwill. According to Folmer (2014)
social media promotions help the organisation in developing the consumer awareness of the
brand image and proposition. Moreover, Greve (2013) outlined that the brand recognition
help the organisation in maintaining positive image. Due to this, concerned organisation
might take the use of several social media platforms such as Instagram, Facebook, as well as
Twitter for making the customer aware regarding the product.in this way, market penetration
strategy will definitely support the organisation in making effective use of the different social
media strategies for making the customers aware (Bocken, Fi and Prabhu, 2016).
Quality management is also one such significant strategy for retaining the customers and
brand image. Weckenmann, Akkasoglu and Werner (2015) stated that the quality
management is significant to provide the assurance of quality to customers. As compare to
this, the enhanced product quality will also support the concerned organisation in the
achievement of competitive edge over the other competitors. Quality controlling and
monitoring will support the concerned organisation in adhere to the rules and regulations that
are prescribed by the ISO 22000. Due to this, the concerned organisation might take the steps
in improving the product quality with the implementation of varied evaluation mechanism
and quality control. The concerned organisation might is also required to implement the
relevant technologies for supporting the suitable functioning of the research and development
department. In this regard, Serrat, 2017 stated that the innovativeness and creativity assist the
organisation in bringing the awareness regarding the product. As compare to this
Hirunyawipada, Paswan and Blankson, 2015 stated that the existing product development and

new product development support the business in continuation of the operations harmony. In
the recent time, organisation emphasises on the manufacturing of coffee for the generation Y.
due to this, CafePod should take steps regarding the development of wide range of products.
Market expansion strategy: expansion in the overseas market will support the organisation in
continuation of the sustenance id the business. However, CafePod has faced several
difficulties in expansion of its venture in several regions due to the restrictions. It has also
affected the ability of the organisation in drawing the awareness of its product related to
existing product offering. In this regard, CafePod might take the steps to undertake the
market penetration with the effective utilisation of the merger and acquisition in some of the
Asian countries. Acquisition and merger will definitely support the organisation in effectively
align with the foreign brand by drawing the awareness of the customers. Therefore, the
market expansion will be supporting or assisting the concerned organisation in order to
increase the scope of its potential customers (Meyer and Tran, 2006).
Conclusion
In the limelight of above discussion, it can be concluded that the customers preference play a
significant role for the CafePod coffee. It helps in creating the better market exposure. In case
of the product, customers are increasingly demanding the uniqueness in the product. It has
been argued that CafePod is still trying to create the reliability among the consumers. Due to
the tough competition and changing demand of consumers, several strategies are suggested to
the CafePod. The most significant recommendation is to bring variety of offerings that other
competitors are not offering. This will help in attracting the customers toward its brand.