Business Report: Analysing COSTA Coffee's Expansion Strategy in Norway

This report provides a comprehensive analysis of COSTA Coffee's business organization and its strategic expansion plan, focusing on its potential entry into the Norwegian market. It begins with an introduction to business organization, outlining its core components and types. The main body of the re...Read More

BUSINESS
ORGANISATION

Table of Contents
INTRODUCTION...........................................................................................................................1
Main Body ......................................................................................................................................1
PESTLE Analysis of COSTA Coffee..............................................................................................1
STP APPROACH :..........................................................................................................................4
Development Plan : .........................................................................................................................5
CONCLUSION................................................................................................................................8
REFERENCES ...............................................................................................................................9

INTRODUCTION
Business organisation can be defined as a process of creating effective co-ordination and
co-operation among different production factor such land, labor, capital that produces services
and goods in order to earn profit. It defines how an owner control and owns the structure of a
company in systematic way that results in generating higher profitability ratio and sales. It
compromises of activities that are based on skills and knowledge of entrepreneur which further
assist in encouraging trade industry and commerce. Business organisation can be categorise into
four different parts that consist of partnership, sole proprietorship, public limited and private
limited company (Cosh and Hughes, 2012) Types of possession depend upon various factor
related to size and nature of business, market competition, technological difficulties, funds
required etc. A good enterprise is one who use their resources in an effective and optimum way
that benefits them for longer period. It depend upon the ability of firm how they stimulate
creative thinking and enhance technological improvement in their business operations and
functions which results in aiming higher sales and revenues. Business organisation are often
created to earn profit or income for proprietor, but there are also few business organisation which
are formed in order to serve the society and their welfare. This report focused around the firm
COSTA Coffee which centred to expand their current operation in different countries.
Main Body
Costa Coffee is a multinational coffee house headquartered in Bedfordshire, England. It is first
established in London 1971, and is fully owned by Whitbread. It is considered as a second
largest chain of coffee house in UK after Starbucks. The company perform its operation by
providing beans of roasted coffee to Italian coffee shops and caterers.
PESTLE Analysis of COSTA Coffee
Pestle Analysis is used by different enterprise which determines the impacts of external
environment on their current operations. It refers as a marketing framework which tracks the
environment in which company is carrying out their function, so that they can introduce or
launch their new product/ services in a systematic way. This analytical tool is cost effective as it
can be conducted on a single sheet of paper. The main idea behind this is to monitor the macro
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environmental factors such as government intervention, technological improvement etc. that
have an adverse impact on firm. PESTLE compromises of :
Political: These factors deals with the government control and intervention on various
companies. Political factor defines the laws and regulation that are imposed by different political
parties, government bodies on a particular country which adversely affect their economical
condition. For instance, Government may increase the percentage of VAT, or may enforce new
tax which may impact the overall revenue generation of the company. Along with this, it also
includes fiscal policy, trade tariffs and tax policies that can levy by government during an
accounting year. In order to achieve long terms success, company's are require to maintain
stability in their operations which can be attain by altering themselves as per the rules of
government bodies (Massis and Kotlar, 2014)
Political stability in Norway is quite stable as compare to other European countries which
helps to maintain consistency in business policies in the longer run. This will helps for cited firm
to start their operation without any political risk. According to the recent survey which is
conducted by the World Bank proves that 20% employment generation takes place in Norway
because of strategic alliance and joint venture. If Costa Coffee expand their business operation in
Norway, then they will also contribute towards generating higher employment opportunities.
Figure 1: Political stability Index
(Source: The World Bank, 2017)
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Economical: Various economical factors in terms of inflation rate, growth rate, exchange rate,
interest rate comes under this, which impact the overall profitability and performance of
company. For instance rise in inflation rate might affect the buying behaviour of consumer. If the
price of commodities is increased, consumer will spend less portion of their income in
purchasing that product (Harms and Fink, 2011) With increased coffee rate, it has been evaluated
that instead of leaving or lowering the consumption of coffee, Norway people has start searching
for the places which provide them coffee at minimum rate.
Further the income of people also influenced COSTA Coffee profitability, as almost 85%
of Norway people are having jobs which means that they are earning sufficient amount of money
which satisfies their basic needs and wants. COSTA Coffee target those customer who are
employed, because they can spend a portion of their income by consuming coffee.
Figure 2: Costa coffee revenue in million GBP
(Source: Statistics, 2017)
Socio-Cultural: These factors revolve around the culture, taste, trend, population of different
people and country. Organisation are required to make product according to the demand of
customer which is changing continuously. Change in taste, attitude affects the consumption level
of customer which ultimately affects the overall sales of the COSTA Coffee. For instance,
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Company's are conducting their meeting at coffee house which comes out as a latest trend
followed by other firms as well. Thus, sales and consumption of coffee increases.
(Costa Coffee, 2017)
Along with this, COSTA Coffee has opt for the partnership with local library that
provides books to the coffee place, thus altering themselves with the current trend of consumer.
It has been researched that almost 70% of consumer drinks coffee by following the culture of
different countries. It has been believed that only rich people drinks, this increases the
consumption level of coffee among Norway people (Kurien and Qureshi, 2011)
Figure 3: GDP growth rate of Norway
(Source: Statistics Norway)
Technological: Such factors revolve around technological innovation and advancement. It
enables the firm to take the advantage of higher competitiveness level against their rivals. By
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Illustration 1: Costa Coffee

using new technology, company can modify their product as per the current need of the
customer. For instance, company use technological innovation in the form of digital media. They
can promote their product on various social networking sites like Facebook, YouTube which
considers as the latest trend among the young generation.
COSTA Coffee can promote their expansion in Norway through various social
networking sites. It has been observed that 88% of Norway people is using at least one
networking site. COSTA can also use Electronic Point of Sale method where a computerized
machine perform their task. It provides data related to sales and inventory which makes easier fir
the COSTA to have a record on their monthly and annual sales. This method increase the
profitability of COSTA by 20%.
Legal: Such factors are related with laws and regulation that are imposed by government that
adversely affect the current working condition of company. Companies are required to produce
goods keeping in view the safety of customer. Before expanding its chain in Norway, COSTA
Coffee are required to evaluate the living standard of Norway people, and carry out their
business operations that benefits the both customer and employer.
COSTA are required to use original beans in their coffee and also provide healthy food as
per the Food Standard Agency. COSTA are required to give Minimum Wage Act to their
employees as per the standards of Norway.
Environmental: These factors revolve around the conservation of natural resources and
environment. COSTA should focus on use of sustainable energy that benefits them for longer
period. COSTA are required to use recycle coffee mugs which ultimately benefits the
environment. Cited company uses sustainable pulp in producing their coffee cups. Apart form
that, COSTA can look after their beans by providing them effective supplement which help I
their growing process.
COSTA are required to make advertisement which describes the importance of
conserving natural resources and environment. Also for their delivering purpose, they are using
the vehicles which are fuel efficient. Thus, helps in reducing the pollution.
STP APPROACH :
COSTA can use this approach in order to compete with its rivals effectively. With this approach
they COSTA can determine who all are their potential customer and what positioning techniques
they are required to use in order promote its product or services among Norway People. The
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main objective of STP process is escort the company effectively so that they can develop and
implement accurate marketing mix.
STP can be defined as dividing the entire market into small category with identical
product, which is aimed to design selective marketing target market. STP compromises of
Segmentation, Targeting and Positioning.
Segmentation: It refers to the process splitting the market as per the different needs, taste, wants
of consumer. COSTA are required to evaluate the different needs and choices of Norway people.
For instance, COSTA can provide Blueberry crusher to Norway people as they Norway local
residents likes this fruit a lot. COSTA focuses on Socio-economic class as their segment market,
as they believes that people working in office wanted to have coffee which relax them and
reduce their stress level (Mežinska and Mazais, 2015) COSTA can also consider various
geographical and demographic factors, on the basis of which they select right location. For
instance, they can open their restaurant at a place which can be easily accessible by the business
class.
Targeting: It can be defined as the process in which COSTA will target its potential buyers. For
choosing their target market, COSTA can analyse that from which factor they are attaining
maximum profitability. COSTA establish reputable relation with its customer which further help
them to add segment. In NORWAY COSTA are require to hit the business class or the people
who are working as their target market and gradually add more segment in terms of teenagers,
old people etc. When COSTA reaches to its maturity stage they can focus on adding more
segment in their current target market. For instance, initially they are require to open cafe in such
place which can be easily access by the business class. They become habitual of drinking coffee
after their working hours which relax them. COSTA can take the advantage of this by setting up
its restaurant in a place which automatically attracts the large number of business class.
Positioning: In this step, company chooses the effective positioning technique in which they
represent their product in front of the consumer in such a way that attracts them to buy the
particular product. COSTA are require to opt effective marketing mix techniques which attract
the customer and influence them to buy the product (Pavlovich and Krahnke, 2012) COSTA
have to make such business strategies which gives them competitive advantage from their rivals.
They need to have their own USP which apart them from their competitors. The USP of COSTA
is “come and experience the taste of best coffee”. This attracts the customer and generate
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curiosity among them so that they can come and taste the new flavours of coffee. COSTA is also
using the digital media platform where they can advertise their product. For their business class
segment they can provide utmost facility such as good lighting, light music, old furniture that
relates with the culture of Norway. COSTA are required to offer product or services that
generates value for money for Norway People. Constructive Positioning helps the COSTA to
gain higher competitive level as it helps to make respective product unique from their rivals.
Development Plan :
Stages Description Duration
Define Objectives and Goal: Initially COSTA are required set their target
market according to their defined segment.
Following are the objectives of COSTA :
 The primary objective of COSTA is to
expand their business operation in
Norway.
 Increase customer segment by 20%.
 Increase market share overseas.
 Increase revenue by 5%
 Increase Profit by 5.6% in the coming
years.
2 Months
Research Methodology At this stage, marketers conduct research by
applying STP model to its product. Also the
manager focus on analysing the impact of
external environment which adversely affect
their current business operations. By doing this
research, it become easier for COSTA to
expand its business operation in other countries
like Norway. Marketers have done critical
assessment of various factors that are liked with
2 Months
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opening new franchisee in Norway.
Establish strategies At this, stage COSTO develop strategies which
help in promoting their product effectively.
They initially target the business class people of
Norway and for them, they develop strategies
which satisfies their needs and want at
maximum level. For instance, they design the
interior which depicts relaxing environment as
business class people come there to relax
themselves (Picoto and Palma-dos-Reis., 2014)
Further they have also introduced new product
such as Stress Buster Coffee, which attracts the
potential buyer and influence them to buy the
product. Overall COSTA develop effective
strategies which results in increasing their sales
and revenue.
2 Months
Implementing strategies At this stage, the manager of the company start
implementing its strategies which they have
establish keeping in view the various internal
and external factors. While developing their
strategies, marketers has critically analyse the
impact of both micro and macro on the business
environment of COSTA Coffee. In order to
attain the goal and objectives of COSTA
coffee, it is highly required to implement the
strategies in an effective manner. Also it help
the COSTA to meet with future contingencies
in an effective and efficient way. After
considering all relevant factors, manager are
require to implement the plan which is
formulated to provide long term benefit to the
2 Months
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prescribed company (Ramadani and et. al.,
2015)
Control and Evaluation This is the last stage, in which manger monitor
the entire procedure which is being done on the
basis of various plan and strategies made. It is
the responsibility of the manager to seek out the
sections where there are high chances of error
and thus, take corrective measures in order to
avoid them.
1 Month
CONCLUSION
As per the given report, it can be concluded if a company wants to expand their business
operation in other country or overseas, they are required to critically assess the internal and
external factors that impacts adversely on their business operation. Both internal and external
factors influence the overall functions and profitability of firm in an effective way. COSTA
Coffee is doing expansion in order to build its relationship with Norway country. In this
assignment, the manager of COSTA coffee has evaluate the impact of external environment by
doing the PESTLE Analysis. By this, they are able to evaluate various factors such as political,
technical, social, legal and their influences on the COSTA expansion. In order to select
appropriate target market, COSTA has used the STP approach. With the help of this approach, it
become easier for them to establish their target segment and the positioning part which attracts
the large number of customer. COSTA has taken into consideration all important factor which
helps in expanding their business activities in Norway. Along with this, COSTA also taken into
account all essential laws and regulation in context with Norway country which help them to
achieve overall objective of the firm effectively and efficiently.
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