Business Strategy of Lavazza Coffee Shop: Market and Industry Analysis

This report provides a comprehensive analysis of Lavazza coffee shop's business strategy, examining its market position, industry attractiveness, and competitive advantages. The report delves into the benefits and attractiveness of the coffee market, highlighting the stable political and econom...Read More

Running head: BUSINESS STRATEGY OF LAVAZZA COFFEE SHOP
Business Strategy of Lavazza coffee shop
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1BUSINESS STRATEGY OF LAVAZZA COFFEE SHOP
Introduction
Lavazza is an Italian manufacturer of coffee. It was founded in the year 1895. Initially it was
a small grocery store at Via San Tommaso 10. It is administered by the third and fourth
generation of the Lavazza family. Lavazza imports coffee from around the world including
Costa Rica, Uganda, Mexico, United States, Colombia, Indonesia, Honduras, Brazil and
Guatemala (Lavazza.com, 2019). Branded as the best coffee in Italy, 16 million people out
of 20 million choose Lavazza for purchasing coffee.
Sector Market Benefits and attractiveness:
Lavazza, an Italian based company, has no issues related to distribution in the EU as the
company does not call for tariffs among all its members. Overall, the company has a very
stable political environment. The main reason that could trouble to the trade initiative could
be political instability in form of war in the nations with which Lavazza indulges in trade
relations (Thurston, Morris and Steiman 2013). Another reason, which could be matter of
concern for Lavazza, is the imposition of excise duties both by the Italian government and by
the nations with which Lavazza has trade relations. The factors that influence the global
business of Lavazza’s products is the method of documentation and simplified procedures in
the international trade. The company aims at fulfilling the needs of the customer by providing
unique products from its competitors and in turn become the market leader. The market of
coffee in Italy has become stagnant. The market is too mature to major growth in volume by
any of the coffee shops. This growth is due to the increase in population and in turn income
of the people in Italy. Thus, Lavazza has a great opportunity is showcasing its unique
products in the market of Italy.
Industry Attractiveness

2BUSINESS STRATEGY OF LAVAZZA COFFEE SHOP
The economic factors in Italy are quite stable. The transportation cost are falling in
the country and thus, Lavazza can easily expand its businesses (Cerutti and Buchi 2018). The
company imports its products from various parts of the world, via overseas. It is imported
mainly for the retail coffee shops, which in turn enhances the revenue generation and profit of
the company Lavazza. Italy is the second largest importer of coffee beans (green) in
European market, which has been only surpassed by Germany. Coffee is a major part of
Italian culture. Italians value high-quality coffees, and are loyal to certain flavors and brands.
Italy on the other hand, is an essential supplier of both roasted coffee beans and green coffee
to all other places of Europe and United States. Thus, Lavazza has a great scope in exploring
this industry with more unique products and services than its competitors explore in order to
become the market leader. Italian espresso is very famous in the entire world, and the coffee
brands of Italy are exported to all parts of the world. Thus, Lavazza by producing the various
flavors can attract more customers worldwide. Italy is the best market place for Lavazza to
grow their brand and create a brand image in the minds of the customers.
Market Attractiveness
Lavazza is a very popular coffee company in the world. It is best at producing coffee
and other products like tea, mugs, paper cups, ashtrays, umbrellas, calendars, desserts and
coffee machines. Lavazza promotes its product using various methodologies. It portray the
fact that the products can be used anywhere like at home, workplace or even at the coffee
shops which is very alluring to the customers and mainly for the coffee lovers, coming from
different backgrounds (Cerutti and Buchi 2018). The company has taken an initiative called
‘Tierra’, which influences the customer and their choice of coffee shops. The customers get
the chance of tasting the flavors of the brand in local coffee shops. Lavazza uses the new
technology for cleaning the coffee beans and the tea leaves which helps Lavazza in producing
the end products faster and with better quality than its competitors in order to have an

3BUSINESS STRATEGY OF LAVAZZA COFFEE SHOP
competitive edge in the market of Italy and outside. Lavazza also uses certain new
technologies for providing coffee to the customers right to their doorstep which is carried out
through online transactions and online ordering by the customers residing in the country,
Italy. Thus, Lavazza offers better deals to its customers.
Differentiation, innovation and customer satisfaction:
Sustainable Advantage:
Lavazza has followed the competitive strategy in order to achieve competitive
advantage. This strategy mainly focused on the low price policy, differentiation and no-frills.
Lavazza has improved its quality of products over the years (Madsen and Walker 2015). It
has come up with unique products which are not easily available in the market. Lavazza’s
main aim was to satisfy the needs of the customer’s by providing them the best quality and
unique product. With the increasing competition in the market, Lavazza finds it difficult to
continue providing the variety. They, they provide the customers the similar products at a
lower price which is comparatively much lower than the other market players are (Cerutti and
Buchi 2018). Lavazza by their strategic approach caters to each of the markets overseas. The
company is looking forward to improve their rate of growth through international operations
by increasing its foreign sales by 60 percent. Lavazza has direct subsidiaries in markets of
Germany, France, United States and United kingdom. Lavazza in the market of Australia
distributes through its partner Valcorp. Thus, these strategies are helping the company to
expand its business and develop a vast industry for the coffee lovers around the world.

4BUSINESS STRATEGY OF LAVAZZA COFFEE SHOP
Conclusion:
Thus, Lavazza is doing business to be the market leader and grow a positive
reputation in the market. Lavazza is coming up with new, attractive and unique products in
order to make the products and services worth the value. The stable economic condition of
Italy has helped Lavazza to grow in the market. The company’s initiative called ‘Tierra’, had
influenced the customers and their choice of coffee shops and thus, increased the customer
base and in turns the profits of the company.

5BUSINESS STRATEGY OF LAVAZZA COFFEE SHOP
Reference
Cerutti, M. and Buchi, G., 2018. Sustainability and supply chain empowerment: The Lavazza
case. Symphonya. Emerging Issues in Management, (1), pp.39-47.
Lavazza.com (2019). English. [online] Lavazza.com. Available at:
https://www.lavazza.com/en.html [Accessed 9 Jul. 2019].
Madsen, T.L. and Walker, G., 2015. Modern competitive strategy. McGraw Hill.
Thurston, R.W., Morris, J. and Steiman, S. eds., 2013. Coffee: A comprehensive guide to the
bean, the beverage, and the industry. Rowman & Littlefield Publishers.