Strategic Impact of Digital Business Innovation on Costa Coffee

This report analyzes the strategic impact of digital business innovation on Costa Coffee, a major coffeehouse chain. It explores the nature of digital business, current innovations, digital connectivity, ecosystems, and cyber security, along with various digital business models like supplier, omni-channel, modular, and ecosystem driver models. The report provides recommendations for digital transformation, focusing on identifying value, organizational structure, talent, and a test-and-learn approach. Furthermore, it outlines project requirements for a digital transformation project, considering the competitive landscape and the need for digital innovation. The report emphasizes the importance of adapting to changing customer demands, leveraging digital technologies, and implementing effective project management strategies to drive growth and maintain a competitive edge in the market.

Project Management &
Digital Transformation

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Digital Business and Innovation..................................................................................................1
Digital Connectivity.....................................................................................................................2
Digital Ecosystems and Cyber Security......................................................................................2
Digital Business Models and Digital Business Strategy..............................................................3
Recommendations for Digital Transformation............................................................................5
Digital Transformation Project Requirements.............................................................................6
CONCLUSION................................................................................................................................6
REFERNCES...................................................................................................................................8

INTRODUCTION
Digital innovation within business will be very much remarkable, as it allows company to
meet new customers, invite huge amount of investments and then help to increase their profits.
There are number of innovation that is taking place within the organisation which helps in
developing and improving quality of work (9 Ways Digital Has Changed Business Forever,
2018). This research report will concentrate upon strategic impact of digital business innovation
on Costa Coffee. This is British multinational coffeehouse which is headquartered in
Bedfordshire this is the wholly owned subsidiary of Whitbread which is the largest chain of
hotels in UK. Costa Coffee is the 2nd largest coffeehouse chain in world and it is expected to be
purchased by Coca Cola till first half of 2019.
The report will study about digital transformation and innovation that is concern with
Costa Coffee and the business model or ecosystems with specification of digital project which
are to be implemented.
MAIN BODY
Digital Business and Innovation
Innovation and digitalisation within the business of coffeehouse like that of Costa Coffee
will help them to transform its operations and management as well. There are number of ways
which allows companies to grow and develop into market and this could be elaborated with use
of digital technology or innovation as well (Digital marketing for coffee shops: A modern way to
entice the coffee aficionados, 2018). The nature of today’s digital business is very much flexible
or dynamic as there are several innovations that are taking place on daily basis so it is required
that company is incorporating them into their business frequently which is the strategic impact of
digital business innovation. The company would not need to be very rigid in way of changing
their budget or implementing any changes that are necessary. Costa Coffee is very much flexible
into its operation as they are marketing or distributing their products to customers (Han, Lee and
Kim, 2018). Other than this nature of digital business will be that of having instant
communication which is very much essential within market helping company to interact with
potential customers.
There is surprisingly increase in number of coffee lovers around the world. People in
today’s time prefer to drink coffee more than tea due to its taste and their preference as well. So
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there is certain innovation within coffee industry or coffeehouse as well which is driving
business of Costa Coffee all over the world. Like there is increasing trend of innovation of
keeping the quality of product in stylish, unique and environmental friendly packaging
throughout all stages. The containers which they are using must be 100% recyclable which will
increase sale of coffee and would be innovative in its whole sense and is the strategic impact of
digital business innovation.
Digital Connectivity
As whole society in current time is wholly driven by digital technology and innovation
within all fields which means that people are more indulged into social media marketing
(Chiang, 2018). Digital marketing is more transforming and helping companies to connect and
communicate with their customers in way of knowing their feedback, allowing them to socially
interact with people on global level. Instant communication is very much required by company
which help them to daily or regularly react upon a matter or problem which their customers are
facing. In this manner social media is consider to be as the best tool for communicating with
clients and customers which allow Costa Coffee to interact with public at various venues,
messages are more transparent in nature and this provide channel for company to promote their
products.
In the current scenario of digital transformation, it is noticed that private chats, one-on-
one messages and groups chat are trending. This also enables companies to get instantly
connected with their customers in way to increase their market share and profits as well. This is
growing companies with their e-commerce business which means that they are selling their
products and service on online bases (Zaman, 2017). This includes customers is ordering their
cup of coffee using website, company’s application and through mobile phone as well.
Digital Ecosystems and Cyber Security
Most of the business and companies are having their strategies of digital transformation
which is dealing with improving quality and speed of service delivery. There are many firms
which operate or start their business by implementing digital technology so for them the next
step will be of digital ecosystem (What is a digital ecosystem, and how can your business benefit
from one? 2018). This model will help Costa Coffee to interact with customers and clients in
improving performance outside their business. In simple terms, digital ecosystem is defined as
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platform that enables Costa Coffee to interact with their customers, clients, partners, competitors
and complementary companies as well. It is the interdependent group of companies or people
who tend to share same digital platform and their aim or objective is the same like to gain profits
or innovation.
Costa coffee must be using this digital ecosystem which surely helps them to deliver
better service to their customers, interacting with clients and partners so that they could give
them opportunities of investment (Bowie, Möslein and Neely, 2018). Whereas cyber security
will be protection of internet systems of company comprising software, hardware and data of
company from the cyber-attacks or virus. There are mainly 2 type of security which Costa Coffee
must be keeping in mind which is physical and cyber security. The main aim of both these types
of securities will help company to protect them against unauthorised access or use of company’s
data and computerised system as well. So this is essential for Costa Coffee that they are securing
their data and information which is dealing with either customers’ detail partnership, books of
accounts and strategies of company as well.
Digital Business Models and Digital Business Strategy
The way in which corporates are doing their business is rapidly changing as they are
creating all new products, change in demand of customer is disrupting the traditional market as
well. With the help of implementing digital technology company is trying to increase their
revenue as per expenditure done in research and development and within implementation of
digital technology (Four digital business models and the capabilities they demand, 2018).. Costa
Coffee will trace their increase of demand among customers and then form or follow number of
models of business which help them to grow within markets. They need to define the need of
business model and then matching up with requirements of primary execution. There are majorly
4 types of digital business models which are used by companies so that they could generate
revenue and become leaders in digital economy.
Supplier model- Costa Coffee are using intermediaries or franchising as a way of distributing
products and services to their customers the main reason is that they are not having knowledge
about customers in various geographic areas (Four digital business models and the capabilities
they demand, 2018). So for Costa Coffee it is required that they are following this model of
supply chain which will help company to identify need and demand of customers with help of
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local coffee house situated in those respective area. They need to optimise their chain with
competing to cost and providing products on digital platform as well.
Omni channel model- This enable Costa Coffee to approach to their customers through
multichannel sales which will integrate with shopping experience. Like Costa Coffee offer their
customers to place their coffee order from anywhere using their desktop or mobile devices and
then it will provide them their product on door step (Becker, von Hoffen and Niemann, 2019).
This is most easy way for those customers who are employed at office and would like to have
cup of coffee while doing their daily job.
Modular digital model- Under this type of model companies believe that there are certain
technologies which is same for all business like all platform will be equal for the companies
operating into market. Costa Coffee is also using digital technologies which are common and
same for all types of business like the use of social media marketing including Facebook that is
used by other companies also. PayPal is another example which enables companies and
customers to make and receive payments directly from bank account which makes payment more
simple and easy.
Ecosystem driver- This is another type of digital business model which enable all partners and
customers to individually participate on single technology platform (Digital Business Ecosystems
& the Platform Economy, 2018). This will contain data and information of customers with every
transactions which they are doing. Like for example Amazon where many customers are
intended to purchase various types of products from different sellers or producers so it is one of
its kind of platform.
Costa Coffee must be following Omni-channel model of digital busyness so that they
could be able to get in touch with their regular customers which helps them to develop
relationships.
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Recommendations for Digital Transformation
Figure 1: McKinsey
[Source: Quintão, Brito and Belk, 2017]
If Costa Coffee wants to transform its business with effect of digital technology, then it is
required that they are successfully improving quality and service of company. As it was include
that coffeehouse sector is recently started to develop their digital products, process and service so
for Costa Coffee. So there are certain recommendations which are made of Costa Coffee
Digital strategy and targets- It is required by Costa Coffee to identify value which digital
technology is adding upon the strategy of company (Quintão, Brito and Belk, 2017). Like
suppliers are finding out new ways of linking or engaging with clients so that they are having
good connectivity and direct interactions as well. Identifying KPI of Costa Coffee and then using
it in most effective manner is best for Costa Coffee so that their strategy is formulated as
according to it. If Costa Coffee is making proper strategy and targets then this would help them
in digital transformation.
Organisational Structure- Involving the research and development segment within company
which will be looking forwards for laying down technologies and innovation into Costa Coffee
house will be correct. Embedding it into structure of organisation and then enabling them to
research upon market and various digital innovation is best suited.
Talent and capabilities- It is essential that Costa Coffee is incorporating talented and capable
employees within their business who are experts in field of providing maximum satisfaction of
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customers. Digital technology is that one platform which requires experts to identify changes and
modifications in trends and taste within markets.
Test and learn approach- This will another recommendation which is given to Costa Coffee that
they must be testing various types of innovation and technologies that are offered into markets
(Kardaras, Barbounaki and Kaperonis, 2019). Costa Coffee should be using digital ecosystems
so that they are getting in touch with customers and clients on regular basis.
Ecosystem- Recommending this factor should be most crucial for clients, partners and customers
to be able to support start up and new outlets of Costa Coffee in various other areas. Costa
Coffee should be considering ecosystem so that they are been able to implement their project of
digital transformation.
Culture change- Old conservative and traditional approaches and techniques should be avoided
by companies like Costa Coffee should be using modern strategies and methods of managing and
implementing digital technologies.
Digital Transformation Project Requirements
As one of toughest competitor of Costa Coffee which is Starbucks is presently known to
as Tech-Company as they are using digital innovation into their operations and investing heavily
within it (Cham, 2017). The retail giant Starbucks using their digital flywheel which helps to
focus within personalisation, payment, rewards and order so Costa Coffee should be using the
same. Currently Costa Coffee is not using digital transformation but it is rather highly
recommended that they must be using this digital flywheel.
So it was analysed that Costa Coffee is required have digital transformation model or
project that will help organisation to identify various factors (D’Souza and Lin, 2015). Costa
Coffee should also be using digital platform in way of enhancing experience of customers in
buying of coffee and then gain revenue and loyalty of customers.
CONCLUSION
From the above report on digital technology and innovation it is concluded that Costa
Coffee in way of improving experience of customers and their clients should be using latest
innovation within operation and selling of coffee. It is further concluded that firm must be using
digital platform and e-commerce so that they selling their cup of coffee on online bases. This
helps them to instantly connect with their customers and obtaining feedback.
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REFERNCES
Books and Journals:
Becker, J., von Hoffen, M. and Niemann, M., 2019. A Tale of Two Cities: How High Streets Can
Prevail in the Digital Age. In Collaboration in the Digital Age (pp. 291-307). Springer,
Cham.
Bowie, D., Möslein, K.M. and Neely, A., 2018. Digital Transformation in Service
Management. SMR-Journal of Service Management Research. 2(2). pp.3-21.
Cham, K., 2017. Consumer as Producer; Value Mechanics in Digital Transformation Design
Process, Practice and Outcomes. In Cultural Policy, Innovation and the Creative
Economy (pp. 61-81). Palgrave Macmillan, London.
Chiang, W.Y., 2018. Applying data mining for online CRM marketing strategy: An empirical
case of coffee shop industry in Taiwan. British Food Journal. 120(3). pp.665-675.
D’Souza, N. and Lin, Y.F., 2015. Places in the Virtual and Physical Continuum: Examining the
Impact of Virtual Behaviors on Place Attributes of Wireless Coffee Shops. The Handbook of
Interior Design. p.366.
Han, H., Lee, S. and Kim, W., 2018. Drivers of brand loyalty in the chain coffee shop
industry. International Journal of Hospitality Management. 72. pp.86-97.
Huang, Y. and Wood, B., 2017. Identify successful sales and Marketing strategies that affect
customer loyalty in a small coffee shop.
Kardaras, D.K., Barbounaki, S.G. and Kaperonis, S., 2019. A Framework for Analyzing the
Impact of Data Analytics and the Internet of Things on Digital Marketing. In Techno-Social
Systems for Modern Economical and Governmental Infrastructures (pp. 211-240). IGI
Global.
Quintão, R.T., Brito, E.P.Z. and Belk, R.W., 2017. The taste transformation ritual in the specialty
coffee market. Revista de Administração de Empresas. 57(5). pp.483-494.
Zaman, S., 2017. Exploring digital marketing in Bangladesh: content creation and visualization.
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9 Ways Digital Has Changed Business Forever. 2018. [Online]. Accessed through:
<https://digitalmarketinginstitute.com/the-insider/19-04-17-9-ways-digital-has-changed-
business-forever>.
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Digital Business Ecosystems & the Platform Economy. 2018. [Online]. Accessed through:
<https://www.gartner.com/technology/topics/business-ecosystems.jsp>.
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Project Management Methodologies to Implement. 2018. [Online]. Accessed through:
<https://www.clearpointstrategy.com/project-management-methodologies/>.
What is a digital ecosystem, and how can your business benefit from one? 2018. [Online].
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