Comprehensive Business Plan for Coffee on the Way, Norwood

This comprehensive business plan outlines the strategy for launching "Coffee on the Way," a new coffee shop in Norwood, Australia. The plan includes an executive summary, corporate objectives, and a detailed situational analysis covering the external business environment, Porter's Five Forces, and the industry life cycle. It details the company's strategic options, business and marketing strategies, organizational infrastructure, operations management, technology, human resource management, and financial management. The plan also addresses capital and funding, economic evaluation, implementation, legal compliance, governance, CSR, communication, and risk management. The business aims to differentiate itself by offering innovative coffee products, such as cascara drinks, and providing exceptional customer service. The plan incorporates market analysis, competitive analysis, and financial projections, including pricing strategy, sales promotion, and investment in a service delivery system. Transformational leadership is proposed to foster company growth, with a focus on securing necessary licenses and managing financial risks. The plan also considers social media promotion, and emphasizes the importance of fair trade coffee and environmentally friendly practices. The overall goal is to establish a successful coffee shop that meets the evolving demands of the Australian coffee market.

Running head: BUSINESS PLAN OF “COFFEE ON THE WAY”
Business plan of “Coffee on the way”
Name of the University:
Name of the Student:
Authors Note:

1BUSINESS PLAN OF “COFFEE ON THE WAY”
Executive Summary
The business operations of this new coffee shop will be focused on introducing new and
innovative coffee products in the market such as cascara drinks. The corporate strategy of this
new coffee business will be to equitably source exceptional coffees and then roast them to
perfection to ensuring exceptional coffee beverage experience for its target consumers. High
standards of coffee producing methods are attaining political prominence where Australian
coffee industry faces high demand for fair trade coffee. “Coffee on the way” coffee shop is
responding to such change through provision of de-cafe drinks and green coffee. Strong force
as “Coffee on the way” coffee shop has several competitors within the industry such as The
Grind, Argo on the Parade and The Lost Deli that operates successfully in Norwood. Strong
force as “Coffee on the way” coffee shop has several competitors within the industry such as
The Grind, Argo on the Parade and The Lost Deli that operates successfully in Norwood. The
resources that will be acquired by the “Coffee on the way” coffee shop will include physical,
financial, intellectual property and human resources. Capabilities that will be attained by “Coffee
on the way” coffee shop in attaining competitive advantages within the target market will include
corporate and financial management capabilities, technological development, operations
management, marketing, sales and service capabilities, procurement, inbound and outbound
logistics along with human resource capabilities. Based on observation of the Porter’s
competitive advantages model indicated in the figure below, differentiation strategy will be
followed by this new coffee shop in attaining competitive advantages. School and nearby
residents of Norwood can also be potential target consumers and to retain these target
consumers the new coffee shop will offer them with some concession on every purchase.
Considering that differentiation business strategy will be followed in the company through
keeping prices reasonable for all its offerings, “Coffee on the way” coffee shop will set skimming
pricing strategy. Social media promotional channels such as YouTube, Facebook and Twitter
will also be employed for sales promotion The Company will also undergo investment of $
10,000 in installing a service delivery system that can brew fresh coffee every hour.
Transformational leadership style will be followed in the new coffee shop in which the leader will
encourage and motivate employees to support constant changes in ensuring future growth of
the company. The licenses that will acquired for opening new café in Australia will include
attaining a business license that will be attained through registering the business and obtaining
Australian Business Number (ABN). For dealing with financial risks ay special deals will not be
accepted on the initial years of business that drifts from target focus and might be unprofitable.

2BUSINESS PLAN OF “COFFEE ON THE WAY”
Table of Contents
1. Background............................................................................................................................. 3
2. Corporate objectives................................................................................................................ 3
3. Situational analysis.................................................................................................................. 3
3.1. External Business Environment Analysis..........................................................................3
3.2. Porter’s Five Forces, Strategic Groups, and Industry Life Cycle.......................................4
3.3. Organizational Resources, Capabilities and Distinctive Competencies.............................6
4. Strategic options......................................................................................................................7
5. Business strategy....................................................................................................................7
6. Marketing strategy................................................................................................................. 10
7. Organization infrastructure.....................................................................................................12
8. Operations management.......................................................................................................13
9. Technology, innovation and knowledge management...........................................................13
10. Human resource management.............................................................................................13
11. Organizational culture and leadership..................................................................................14
12. Financial management.........................................................................................................15
13. Capital and funding.............................................................................................................. 15
14. Economic evaluation............................................................................................................16
15. Implementation and control..................................................................................................21
16. Legal compliance................................................................................................................. 23
17. Governance......................................................................................................................... 23
18. CSR..................................................................................................................................... 23
19. Communication.................................................................................................................... 23
20. Risk management................................................................................................................ 23
21. Conclusion........................................................................................................................... 24
References and Bibliography.....................................................................................................25

3BUSINESS PLAN OF “COFFEE ON THE WAY”
1. Background
The proposed business plan is focused on developing a business plan for the company
named “Coffee on the way” that will be situated in The Parade, Norwood location. This coffee
shop will be a partnership firm in which the partners will have minimum qualification of MBA and
will be residents of Norwood as they are financially sound to invest enough capital in the new
business. The business operations of this new coffee shop will be focused on introducing new
and innovative coffee products in the market such as cascara drinks. The coffee shop that will
be set up in the selected location will attain competitive edge through offering readymade and
wide range of coffee products to all its target consumers. The business model of “Coffee on the
way” is focused on positioning itself as a coffee bar that will offer its consumers with high quality
gourmet coffee along with exceptional service. The coffee shop will offer its consumers with
unique coffee offerings such as espresso, macchiato, mocha and cappuccino. Among the
cappuccino will be one of the most important coffee beverages that will be sold to consumers.
Other offerings will include hot chocolate, coffee flavored candies and chocolates, homemade
biscuits and cakes along with Cascara drinks. Moreover, the coffee shop will have relaxing
environment with furniture that can offer great comfort to the consumers.
2. Corporate objectives
The corporate mission of “Coffee on the way” company will be to offer its target
consumers with perfect and delicious coffee products along with excellent and reliable services
to its consumers.
The objectives of this new business of the “Coffee on the way” coffee shop are indicated
below:
 To create vibrant café which reflects and improves coffee consumption experience for
consumers
 To attain increase in consumer base and profit margin by 10% at the end of the first year
of business setup
 To obtain 15% of the market share by the end of the next five years
The corporate strategy of this new coffee business will be to equitably source
exceptional coffees and then roast them to perfection to ensuring exceptional coffee beverage
experience for its target consumers.
3. Situational analysis
3.1. External Business Environment Analysis
Political Political environment of Australia has significant impact on the Coffee
industry. High standards of coffee producing methods are attaining political
prominence where Australian coffee industry faces high demand for fair trade
coffee. The political stability of the country is high which helps in prosperity of
the country. Moreover, government has can play a significant role in
promoting coffee business of “Coffee on the way” coffee shop in Australia.
Economic The impact of coffee industry in Australia is stronger and the coffee production
in the nation established vital linkages within the country’s economy. Coffee
industry of Australia went through growth periods but is also facing difficulties
related with low concentration in coffee industry that makes it complex to

4BUSINESS PLAN OF “COFFEE ON THE WAY”
acquire market share without facing significant risks that might support
smooth operations of “Coffee on the way” coffee shop.
Social Consumers of “Coffee on the way” coffee shop are observed to become
highly health conscious and are shifting to alternatives such as health drinks
and other herbal teas. “Coffee on the way” coffee shop is responding to such
change through provision of de-cafe drinks and green coffee.
Technological Hi-tech equipment and premium ingredients are easily assessable and are
used as well as sold in coffee shops that can produce from cappuccinos to ice
blended coffees. For this reason consumers are becoming knowledgeable
regarding specialized coffee ranges along with various tastes of such
beverages. Considering same, “Coffee on the way” coffee shop will implement
such technological advancements.
Legal The coffee industry of Australia ensures that they do not violate any laws and
regulations in the domestic market as well as the nations from where they
purchase coffee beans and sources roasted coffee. Such regulations to be
considered by “Coffee on the way” coffee shop include caffeine production
and consumption related policies by Australian health authorities.
Environmental The coffee shops in Australia are following the trend of building environment
friendly stores and facilities that will be considered by “Coffee on the way”
coffee shop along with focusing on water and energy conservation and
making sure that all their cups are recyclable.
3.2. Porter’s Five Forces, Strategic Groups, and Industry Life Cycle
Porter’s Five Forces Analysis
Competitive Rivalry Strong force as “Coffee on the way” coffee
shop has several competitors within the
industry such as The Grind, Argo on the
Parade and The Lost Deli that operates
successfully in Norwood.
Bargaining Power of Consumers Strong force as there is increased substitute
product availability and low switching costs.
Such substitute products include Tea,
Chicory Coffee and fruit smoothies.
Bargaining Power of Suppliers Weak force as there is large overall supply
and existence of numerous coffee suppliers
that includes Bay Beans Coffee, The Coffee
Beanery and Purebean Coffee Solutions.
Threat of Substitutes Strong force because of high affordability of
substitute products and their increased
availability. Such substitute products include
Tea, Chicory Coffee and fruit smoothies.
Threat of New Entrants The threat of new entrants is relied on extent
to which competitors can enter the market and
coffee industry is easy to penetrate as
relatively little capital investment and there are
no government regulations
(Konacoffeefarmers, 2019).

5BUSINESS PLAN OF “COFFEE ON THE WAY”
Strategic Groups and Stage in Industry Life Cycle
The strategic group map indicated in the figure below for “Coffee on the way” coffee
shop indicates that the new coffee shop has few rivals based on product one and geographic
location (Konacoffeefarmers., 2019).Such major competitors of the coffee shop can be The
Grind, Argo on the Parade and The Lost Deli that operates successfully in Norwood. The
strategic groups of the company consider identification of competitors and the level of
competition within the industry based on sales, product penetration, operations and service. In
analyzing the strategic groups, the direct competition of “Coffee on the way” is from The Grind,
Argo on the Parade and The Lost Deli that operates successfully in Norwood. The Grind is well
established in Norwood that has attained competitive advantages through offering consumes
with seasonally crafted coffee blends and online coffee delivery. Argo on the Parade has
attained competitive advantage of operating successfully within the industry through ethically
sourcing coffee beans and its double shot coffee drinks made from black ground coffee beans.
The new “Coffee on the way” coffee shop will initiate its business through being in the
introduction stage of the industry life cycle, where it will focus on building awareness about its
coffee beverage product offerings and pricing will be kept low to attain high market share.
Competitor Analysis
The coffee industry of Australia has low level of market share concentration where a few
companies holding over 5% share in the market. The most established coffee chains in
Norwood are deemed to include The Grind, Argo on the Parade and The Lost Deli that operates
successfully in Norwood. While such coffee chains operate a number of stores but they have
less market power and are not that capable of influencing industry in terms of product and price
trends. As the industry is fiercely competitive it is important for new coffee shops to attain better
understanding of market for responding quickly to changing consumers tastes and preferences
(Coffee Shops – Australia Industry Research Reports | IBIS World., 2019).
Local coffee shops, quick service along with fast food restaurants are also major
competitors that attains huge consumer base through employing strategic strengths of
introducing special offers and loyalty programs. However, certain weaknesses faced by these
competitors are regarding offering low priced coffee beverages with high quality and introducing
diversified coffee beverages in which “Coffee on the way” coffee shop intends to attain
competitive advantages.
Market Analysis
The coffee market of Australia is observed to offer basic coffee types along with
introducing new beverages to attain diversification in the industry. These products are intended
for offering to target market that have high preference of coffee consumption during morning
and prefer relaxing in a cafe enjoying fresh tastes of coffee.
Characteristics of coffee industry of Austria indicate that there is increased preference of
single-serve coffee brew systems by consumers, regular innovation in coffee beverages and
there is increased demand for instant and ground coffee. Coffee industry of Australia is
forecasted to grow at 1.3% CAGR each year due to increasing demand of certified coffee
products(Cafes and Coffee Shops – Australia Industry Report | IBISWorld. 2019).

6BUSINESS PLAN OF “COFFEE ON THE WAY”
Figure 2: Australian Coffee Industry Statistics
(Source: Cafes and Coffee Shops – Australia Industry Report | IBISWorld., 2019)
The coffee shops offering premium quality coffee beverages are observed to set
premium pricing strategy for their offerings such as The Grind. However, local coffee shops and
restaurants set low prices for average quality coffee beverages in attaining competitive
advantage and attract huge consumer base.
The coffee shops are generally located in the busy areas where distribution of coffee
beverage products can attract a large consumer base and increase viability of its shop.
3.3. Organizational Resources, Capabilities and Distinctive Competencies
The resources that will be acquired by the “Coffee on the way” coffee shop will include
physical, financial, intellectual property and human resources. The physical resources will
include raw materials like coffee products, machineries, supplies and building space for opening
a coffee shop. Financial resources that will be needed include capital. Intellectual property
resources will be attained in the form of copyrights, patents and goodwill. Human resources will
include baristas, suppliers, manager and baristas for smooth operations of the coffee shop.
Capabilities that will be attained by “Coffee on the way” coffee shop in attaining
competitive advantages within the target market will include corporate and financial
management capabilities, technological development, operations management, marketing,
sales and service capabilities, procurement, inbound and outbound logistics along with human
resource capabilities. Human resource capabilities will include highly trained baristas,
sustainable suppliers, manager and baristas for smooth operations of the coffee shop.
Technological capability will be developed through implementing highly advanced coffee
roasting and brewing machineries along with efficient point of sale technology. Marketing and
sales capability of the company will include focus on developing strong brand identity through
maintaining complex combination of knowledge, processes, best practices and way of working.
Corporate and financial management capabilities development in the company will be sustained
through keeping track of liabilities and maintaining all payments and receivables transparent.
Operations capability will be focused on managing resources in addressing consumer demands.

7BUSINESS PLAN OF “COFFEE ON THE WAY”
The distinctive competency that will be maintained by “Coffee on the way” coffee shop in
attaining competitive advantages will be through its expertise in coffee roasting and offering
hand-built beverages. The company will source high quality coffee beans ethically and
sustainably from a certified supplier in addressing high quality expectations of consumers
(Knox, 2016).
4. Strategic options
External and Internal
Factors
Strengths
 Premium quality coffee
beverages and
services
 Efficiently managed
supply chain
 Ethical sourcing from
suppliers
 Exceptional consumer
services
Weakness
 Similar products
offered by competitors
such as The Grind,
Argo on the Parade
and The Lost Deli that
operates successfully
in Norwood
 Less diversified
product ranges
Opportunities
 Expansion in the local
market
 Diversification in the
product mix
 Partnership or co-
branding with otherf
brands
SO Strategies
Such strengths will be
employed by the new coffee
shop so that it can capitalize
on new business growth
opportunities. It will also
consider extending its product
mix long with maintaining
increased focus on improving
product quality.
WO Strategies
To address he weaknesses
that can be faced by the
“Coffee on the way” coffee
shop it will consider selling
low priced offering in
attracting huge base of middle
income group and to increase
sales in the target market.
Threats
 Fierce competition
from local and global
coffee shops
 Imitation of its new
coffee product ranges
 Changing needs and
preferences of
consumers
ST Strategies
Through employing effective
marketing strategies, the
“Coffee on the way” coffee
shop will capitalize on the
changing preferences of
consumers and decrease
competitive pressure.
WT Strategies
“Coffee on the way” coffee
shop will also consider
introducing a low cost product
range and decrease the
pricing based challenges from
competitor brands.
5. Business strategy
Porter’s competitive advantage model will facilitate in developing generic business
strategy for the “Coffee on the way” coffee shop. Based on observation of the Porter’s
competitive advantages model indicated in the figure below, differentiation strategy will be
followed by this new coffee shop in attaining competitive advantages. Following this strategy,
the company will prepare coffee beverages with mixed blend of different coffee flavors which
can attain consumers’ attention and facilitate in gathering high market share. To attain enough
profits by differentiating coffee products and maintaining the prices reasonable general cost
reduction in overheads and production and in supply chain will be considered.

8BUSINESS PLAN OF “COFFEE ON THE WAY”
Figure 3: Porters Generic Strategies
(Source: Bertozzi, Ali &Gul, 2017)
Porter’s value chain in recognizing resources, capabilities along with value creating
activities related with the new coffee shop’s differentiation strategy is indicated in the figure
below.

9BUSINESS PLAN OF “COFFEE ON THE WAY”
Figure 4: Porters Value Chain Analysis
(Source: Bhargava, Bafna & Shabarisha, 2018)
Primary Activities
 Inbound Logistics: This will consider sustainably sourcing raw materials from the
suppliers through maintaining excellent relationship with them.
 Operations: The coffee brand will also focus on purchasing, roasting and sourcing high
quality coffee beans that can ensure consumers with deep and intense flavor. It will also
have its own coffee roasting facilities.
 Outbound logistics: The coffee shop will sell its coffee beverages to consumers
through its established store in situated in The Parade, Norwood location.
 Marketing and sales: “Coffee on the way” coffee shop will increase its brand value
through employing several effective marketing and advertising channels. Social media
marketing channels along with banners and fliers will be employed in promoting the
company’s offerings.
 Service: Consumer service will be considered as the major priority focusing on which
the new coffee shop will develop a consumer friendly environment comfortable for
people to interact with one another and can enjoy their leisure time.
Secondary Activities
 Infrastructure: The new coffee shop will develop effective infrastructure through
maintaining proper management, planning, finance along with other resources.

10BUSINESS PLAN OF “COFFEE ON THE WAY”
 Human resource management: The new coffee shop will focus on investing in training
along with facilitating learning and growth of the employees through developing effective
HR policies.
 Technological development: The new coffee shop will implement advanced
technologies in order to enhance its business processes that include information
technology systems along with implementing point of sale along with mobile payment
systems for increasing convenience of consumers.
 Procurement: Procurement management has turned out to be important and focused
on same the new coffee shop has developed strict rules associated with selection of
suppliers along with product quality.
6. Marketing strategy
The marketing objectives of “Coffee on the way” coffee shop are indicated below:
 To increase sales of the coffee shop by 25%
 To increase loyal consumer base by 19% within the time span of 1 year
 To develop brand reputation among a large target consumer base by 10% within
timespan of 1 year
The target market of “Coffee on the way” coffee shop will include the population belonging to
median age in Norwood. Along with that the new coffee shop will also focus on offering coffee
beverages as per the taste and preferences of people belonging to other age group. School and
nearby residents of Norwood can also be potential target consumers and to retain these target
consumers the new coffee shop will offer them with some concession on every purchase. It has
also been observed that the office workers also prefer coffee as energy drinks in the morning
and considering such demand “Coffee on the way” coffee shop will also attract office workers
and staff working in retirement living villages.
Food costs are expected to be 25% for the coffee beverages and 50% of for the retail coffee
beans and pastries. Other target consumers are students of universities and schools it will
dictate seasonality of sales with decreasing revenue during the vacation periods. The chart
below indicates the projected sales of coffee beverages, beans and pastries that will be offered
by the coffee shop.
Market positioning strategy of “Coffee on the way” coffee shop will be focused on promoting
the coffee beverages as premium quality and diversified from others in the selected region as
per the likings of the consumers. Consumer value proposition strategy of the new coffee shop
will be to offer target consumers with exceptional quality coffee grown organically and at an
affordable price. Consumer value proposition aspects will also include selecting convenient
location, organics products, indoor seating and timely services.
Marketing mix strategies that will be implemented for “Coffee on the way” coffee shop are
indicated below:
 Product: “Coffee on the way” coffee shop will offer basic coffee types along with
introducing new beverages. The coffee shop will offer its consumers with unique coffee
offerings such as espresso, macchiato, mocha and cappuccino. Among the cappuccino
will be one of the most important coffee beverages that will be sold to consumers. Other
offerings will include hot chocolate, coffee flavored candies and chocolates, homemade
biscuits and cakes along with Cascara drinks.

11BUSINESS PLAN OF “COFFEE ON THE WAY”
 Price: Considering that differentiation business strategy will be followed in the company
through keeping prices reasonable for all its offerings, “Coffee on the way” coffee shop
will set skimming pricing strategy for attaining competitive advantage and attract huge
consumer base. The company will charge high prices initially and will gradually lower the
price for attracting price-sensitive consumer segment.
 Place: The coffee shop will be located in the Norwood region in the busy areas such as
nearby churches, restaurants, concert halls and nearby residential areas. This can
attract a large consumer base and increase viability of its shop.
 Promotion: The coffee products offered by “Coffee on the way” coffee shop will be
promoted through employing banners and fliers, consumer referrals along with cross
promotions with other businesses within the community. Social media promotional
channels such as YouTube, Facebook and Twitter will also be employed for sales
promotion (Surya, 2019).
The assumptions that are developed for developing sales forecast are indicated below:
 The market in which products will be sold will grow by 2% each year
 The market share can decrease by 2% due to success of competitors
Average number
of customers Revenue
Average number
of customers Revenue
Average number
of customers Revenue
Espresso 5.00$ 300 1,500.00$ 450 2,250.00$ 800 4,000.00$ 7,750.00$
Cafe Latte 4.50$ 600 2,700.00$ 800 3,600.00$ 1,200 5,400.00$ 11,700.00$
Cappucino 6.00$ 1,500 9,000.00$ 1,900 11,400.00$ 2,800 16,800.00$ 37,200.00$
Ristretto 5.50$ 800 4,400.00$ 1,000 5,500.00$ 1,900 10,450.00$ 20,350.00$
Macchiato 4.75$ 550 2,612.50$ 700 3,325.00$ 900 4,275.00$ 10,212.50$
Total 3,750 20,212.50$ 4,850 26,075.00$ 40,925.00$ 87,212.50$
Total Annual Revenue
Sales Forecasting for 1st Year:-
1st month - 4th month 5th month - 8th month 9th month - 12th monthProducts Price per unit
Average number
of customers Revenue
Average number
of customers Revenue
Average number
of customers Revenue
Espresso 5.50$ 700 3,850.00$ 850 4,675.00$ 950 5,225.00$ 13,750.00$
Cafe Latte 5.00$ 1,200 6,000.00$ 1,350 6,750.00$ 1,400 7,000.00$ 19,750.00$
Cappucino 6.50$ 2,600 16,900.00$ 2,800 18,200.00$ 2,600 16,900.00$ 52,000.00$
Ristretto 6.00$ 950 5,700.00$ 1,050 6,300.00$ 900 5,400.00$ 17,400.00$
Macchiato 5.00$ 700 3,500.00$ 750 3,750.00$ 650 3,250.00$ 10,500.00$
Total 6,150 35,950.00$ 6,800 39,675.00$ 37,775.00$ 113,400.00$
Sales Forecasting for 2nd Year:-
Products Price per unit 1st month - 4th month 5th month - 8th month 9th month - 12th month Total Annual Revenue