Analysis of Costa Coffee's Business Environment in the German Market

This report provides a comprehensive analysis of the business environment for Costa Coffee in Germany. It begins with background information on Costa Coffee and the German market, including historical context and key characteristics. The core of the report focuses on analyzing the business scenario, using frameworks such as PESTLE (Political, Economic, Social, Technological, Legal, and Environmental) to assess external factors impacting the company. Additionally, it explores the opportunities and threats associated with Costa Coffee's expansion into Germany, evaluating its competitive position. The analysis considers factors like market size, consumer preferences, economic conditions, and regulatory environment to offer strategic insights for successful market entry and operations. The report concludes with a summary of key findings and recommendations for Costa Coffee's business strategy in Germany.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
Background information of Costa Coffee...................................................................................1
Background information on the German country.......................................................................2
Analysis of business scenario......................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business environment directly make relationship between successful management and its
directly impact on changing the surroundings. There are number of components that contains
internal and external which directly affect business transactions and its purposes. This includes
employees, customers, supply, demand and management. The report is based on Costa Coffee is
the coffee-house which headquarter is located in Dunstable, Bedfordshire. There are around 3401
stores in 31 nations of the company (Osterwalder and Pigneur, 2010). They are provide different
products such as Coffee, tea, sandwiches and iced drinks. The main motive of this report is to
open the business in Germany for analysing various factors such as PESTLE, SWOT and five
force models.
Background information of Costa Coffee Company
Costa coffee is among the big coffee house company which is situated in United kingdom
and was established in 1971 with the consent of Italian brothers Sergio and Bruno costa so
wholesalers deliver roasted coffee to caters and specialist of Italian coffee restaurant. In 1995, it
has been ancillary of the Whitbread firm when the company has been enlarge their business
operation and open more than 1700 stores in united kingdom and other international market. An
organisation current managing director name is John Derkach and Adrian Johnson who is chief
Operating officer.
Bruno and Sergio Costa has established their roasted coffee house in Lambeth, London in
1971 which supply localised suppliers and other coffee shops directed with their slow cooked
mix flavourer Italia. Costa branch bring out with merchandising coffee in 1978, while the first
shop is open in Vauxhall Bridge Road, London, England. In 1995, business was inherited by
Whitbread and now it is the subsidiary of Whitbread organisation. And in 2009, Costa coffee has
celebrating success of opening its 1000th store in Cardiff and this is continuously expanding in
the different countries. In 2010 they also acquired “Coffee Heaven” which has been made strong
existence in the central and eastern Europe for investing approximately 36 million euro in around
79 stores (Storey and Greene, 2010). At the end of the year of 2010, an organisation has overtook
Starbucks in the United kingdom, having 37.6% of the market value which is in accordance with
turnover.
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Costa coffee have their business in around 1175 outlets in the united kingdom in January
2011 which make it the largest British chain in terms of shop. At international level, it directs
approximately in 442 stores in all over the world within 28 nations. Its outlets can be established
in airports and in the Water-stone's book-stores, Home-base branches, Marriott hotels, Tesco
stores, Pizza hut branches, Moto and Roadchef motorways services and in various workplaces.
Costa has small sub units which are set up in railway stations and airports in the united kingdom.
Costa coffee have small retail store which setting up the position of town business parks and
often among other food retailers (Teece, 2010). The largest branch of costa coffee is suitable in
Dubai and where they can providing seats for approximately 320 people. Costa is the largest and
fastest growing coffee store for large chain in the United kingdom. In 1999, costa owner has
been open the first international shop at The Aviation Club in Dubai, UAE. After some years,
costa brand proceed to increase with 79 shops which mainly operates in the Emirates.
Whitbread merge the Coffee Nation for spending 59.5 million euro, a chain of coffee
machines were rebranded as costa Express. Also an organisation plan for expanding for target
hospitals, transport interchanges and universities. Costa coffee move towards with its own
cooked from Lambeth to Basildon, Essex in May 2017 for financing of around 38 million euro
which increasing the cookery capability from 11000 to 45000 tons of coffee seeds per year.
Background information on the German country
Germany is the land of thinkers and poet and by its population it is the largest nation in
Europe. It will share border with another nine countries. Germany capital's is Berlin and it
comprises of world largest zoological garden and their citizen is known as second most beer
consuming country in the nationwide (Trkman, 2010). In Germany, government law abide for
smoking at the public places but drinking is allow for their common people. German nation is
play an essential role in the 2nd World Wars, in which popular person name are Adolf Hitler who
belongs to Germany and by this German are known as very tough country.
PESTLE analysis:
Political factor- Henry Kissinger who is the author states that Germany as “It is an
economic giant but a political midget”. Germany is among the proud country and also they
inclining to seize France nation and then cover Russia, by this they founding their ability upon
the European locations. Unfortunately, they does not make success in their mission and vision
and they had to giving up by signing Treaty of Versailles. On the other side, this was humiliation
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for them as they were develop for accepting complete duty and role of World War II and
compensation was obligatory on them. This will provide the opportunities to Hitler. After the
two world wars, Germany lost their all proud and self-respect and used that policy where no
interference but currently this policy has been changed (Welford, 2013). Such changes is the
consequences for increasing force from the external world and gain internal self-assurance. So
they have been give pressure by the world for accepting waste matter.
Economic factors- This is that factor which directly affect the country domestic income
and its growth level. Germany economy was destroyed after 2nd World War. Also they were
develop for paying advanced sum of compensation. Such condition makes German nation more
enthusiastic for doing hard work to move around the state of affairs and Germany did well in lot
of sector, but slowly this type of state begins weakening with some time but now an average
employee of German spend time for 1450 hours per year in which American duplication act
around 1850 per hours. Another major issue and problem is the ageing population of Germany
and it interest about low productiveness. German country cross the European liability limit in the
year of 2006. Unemployment rate is higher and it leads towards exporting vehicles, household
techniques, chemicals and machinery. In 2014, German country economy started for growing
strong and effective image in the large market place and also higher the growth level.
Social factor- It is also that aspect which identify the customers taste and preferences for
attracting them. After reunion of East and West Germany it was considered that entire Germany
can be actively participating in the effective manner along with allocation and development of
various resources that will also be the same, but unfortunately West Germany is better as
compared with other regions. According to geographically, world map show both the areas
which is one of the major part of the country but in real sense individuals from all these places
are not integrate. Due to this when Soviet Union take power on Eastern half where they does not
pay attention for their improvement as well as development and take whole money generation for
spending large amount (Wild, Wild and Han, 2014). Other main issue and problem with
Germany is higher quitter rate from schools due to high level of violence so instructing
employees or staff members has write to authorities for closed down the learning facilities or
services. Political orientation will be separating the nation and there is increasing in bitterness
and hatred for migratory because of their unemployment and homeless situation that can put
stress on Germany economy for providing facilities to such people.
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Technological factors- German nation has several technological innovation for boast
regarding in 2008, Germany was paying around 2.6% for their total GDP rate in research and
development and its main motive is to increased up to approx. 3% within 2015. therefore, there
are some US funding tasks of Research and Development which can undergone in Germany
country (Wirtz, Schilke and Ullrich, 2010). The main sector of contribution such as
biotechnology, electrical, engineering, nanotechnology etc. producing units which has been
adopting techniques and methods for extending so they can easily implementing artificial
intelligence system for eliminating manual process by the result of this they have been gained
higher productivity and efficiency.
Environmental factor- As many of the industrialised country Germany also face various
issues of air pollution but different from other country this condition is enhancing for controlling
the German nation. After the unfavourable happening that take place in Fukushima nuclear
disaster which was occurred in 2011 and the Chancellor Angela Merkel focused that Germany
should phase out from nuclear projects and by this leads the air pollution in 2012 and 2013 is the
highest in the history. Because of the global warming effect on Germany has been distinct for
effective use the raw material and create utilizing of renewable energy sources and executes
technology and techniques for reducing the wastage of materials at outside the nation. On the
other side, agriculture evolution of insect powder and chemical substance contributes towards
water pollution. It is the ample European economic system so the main responsibility and duty
also lies on its shoulders and other European country looking forward for higher standard of
people.
Legal factor- In this type of factor which directly or indirectly impact the business
operations and its functions of country. After Paris attacks government of Germany have been
make huge alert for such type of terrorist movement, Muslim society also facing any disturbance
within the nation (Zott, Amit and Massa, 2011). There has been a condition of harassment with
the female members who cover the head. Then now enforcing agencies has been decide to render
such punishment and restrictions for a person who travel towards Middle Eastern countries who
are take part in “Jihad”. They can also find and penalise an organisation which are financially
encouraging and financing these terrorists units. High level of safety and security means for
allocating greater budget on defending activities, there are some politicians which are not in
favour of these plan according to them, the role of country people in general that should not be
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compromised where there is not any source for protecting individual person in complete manner
and analyse major threats.
Analysis of business scenario
Before opening of new business in Germany of the Costa coffee company, they need to
analyse the entire country in appropriate manner. So they try to expand their business, it is
necessary to identify the opportunities and eliminate all threats.
Opportunities and threats and its impact
Opportunities-
Costa coffee need to expand their business operation and functions in different countries.
There has been 50% of its current presence in the united kingdom. Costa coffee is exist in 31
countries whereas Starbucks present in 70 other country. For example, Mc-cafe and McDonald
does not offer only coffee but also serve beverage to their customers (Cantwell and et. al., 2010).
Costa coffee also acquired the brand coffee country and it can tie up with some corporate houses
for its coffee vending device and such business can boom within different nations. There are
some restaurant chain in all over the US and UK and another developing nation in which Costa
coffee can setting up the strategic alliances and also supply its separate coffee to their desired
restaurant customers. Costa require to continuously growing and merging which take over for
forming coalition with another coffee companies. As per the survey performed by Allegra
strategies, costa is predicted and calculated which have been serve to 169 million cups of coffee
in the year of 2015. company will increasing its coffee outlets from 1992 to 2163 stores and also
continuously increasing in their profitability up to 15% in effective manner.
Threat-
The one of the major competitor of costa coffee is Starbucks because the brand is not
allow costa for settle and expand their products in large market place. There are different local
players and regional factors for sale the costa coffee products. UK is the high consumption of tea
or coffee centre (Carroll and Shabana, 2010). The indirect competition also affects the income
and sale of such brands. For reducing threats they need to developing brand value because lack
of marketing activities, their brand value is going down.
Porters Five force of Costa coffee:
Threat of new entrance- At first time for enter in the large market place, it is necessary
for company is to make effective policies and strategies in proper manner. These barriers are
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very high and at initial investment they start coffee brand which is high in rate. The saturation
level is higher. New entry is compete with brands like costa coffee at local level.
Competitive rivalry- The fast service restaurant and specialist of coffee sector is intense.
The major rivals of costa coffee such as Starbucks, McDonald, Dunkin Donuts and various small
local coffee-house (Porters five force. 2018). The competitors are working continuously for
specialise, innovate and come forward for making effective strategies and policies and attracting
large number of customers. There are some products which are unique and creative according to
their desired guest.
Bargaining power of suppliers- The products and other raw material used by costa
coffee are supplied by large number of suppliers. Costa coffee works huge number of suppliers
in all over the world. If such customers try to negotiate with company seller which has been
determined as high level of prices. This will lower the profitability of an organisation.
Bargaining power of buyers- Costa coffee facing intense competition which determined
an abundance of choice for their customers. Today buyers are well informed and also analyse the
preferences of customers. If costa coffee and other brand attempt for increasing the price so
customers simply change that seller and choose the another one who provide reasonable rate
products to them. Thus, store environment provided by costa coffee and their creative and unique
taste features has been earned for maintaining brand as well as customers loyalty. There are
certain buyers who are less delicate to prices and they will continue for purchasing products from
costa coffee brand. Also coffee also some addiction level which can force the customers for
return the specific flavour.
Threat of substitutes- The products served by costa coffee have substitutes. The goods of
costa coffee includes tea, coffee and food items etc. most of the people brewage and form tea at
their home and such beverage has been substitutes with that includes drinks, juice and other
drinkable items.
CONCLUSION
From the above prepared report it has been analysed that Business environment directly
make relationship between successful management and its directly impact on changing the
surroundings. There are several factors that consider internal and external which directly affect
on business transaction and its purpose. Before opening of new business in Germany of the Costa
coffee company, they need to analyse the entire country in appropriate manner. Costa coffee
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need to expand their business operation and functions in different countries. The one of the major
competitor of costa coffee is Starbucks because the brand is not allow costa for settle and expand
their products in large market place. For reducing threats they need to developing brand value
because lack of marketing activities, their brand value is going down.
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REFERENCES
Books and journals
Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook for visionaries,
game changers, and challengers. John Wiley & Sons.
Storey, D. J. and Greene, F.J., 2010. Small business and entrepreneurship. Financial
Times/Prentice Hall.
Teece, D.J., 2010. Business models, business strategy and innovation. Long range planning.
43(2). pp.172-194.
Trkman, P., 2010. The critical success factors of business process management. International
journal of information management. 30(2) pp.125-134.
Welford, R., 2013. Hijacking environmentalism: Corporate responses to sustainable
development. Routledge.
Wild, J. J., Wild, K. L. and Han, J. C., 2014. International business. Pearson Education
Limited.Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook
for visionaries, game changers, and challengers. John Wiley & Sons.
Wirtz, B. W., Schilke, O. and Ullrich, S., 2010. Strategic development of business models:
implications of the Web 2.0 for creating value on the internet. Long range planning.
43(2). pp.272-290.
Zott, C., Amit, R. and Massa, L., 2011. The business model: recent developments and future
research. Journal of management. 37(4). pp.1019-1042.
Cantwell, J. and et. al., 2010. An evolutionary approach to understanding international business
activity: The co-evolution of MNEs and the institutional environment. Journal of
International Business Studies. 41(4). pp.567-586.
Carroll, A. B. and Shabana, K. M., 2010. The business case for corporate social responsibility: A
review of concepts, research and practice. International journal of management reviews.
12(1). pp.85-105.
Online
Porters five force. 2018. [Online]. Available through:
<https://www.cheshnotes.com/2017/01/porters-five-forces-analysis-of-starbucks/>.
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