SBLC7008 MBA: New Business Start-up Report - Costa Coffee Analysis

This report provides a comprehensive analysis of a new business start-up, using Costa Coffee as a case study. It begins with an introduction to start-ups and the coffee industry, highlighting the business model of Costa Coffee. The report then delves into the sustainability of the business, examining the external environment through PESTLE and Porter's Five Forces analyses, specifically focusing on the Malaysian market. It evaluates political, legal, economic, social, technological, and environmental factors, as well as competitive forces. The report also explores the HR requirements and strategies necessary to support the business's sustainability, including an assessment of the business's HR strategy to ensure it aligns with the business's goals. The analysis covers market segmentation, competitor analysis, and the impact of various external factors on the business model and strategy. The report concludes with an overview of key success factors for the business and the role of HR in fostering long-term sustainability.

A new business
start up

INTRODUCTION
The term new business or start-up refers to an organisation which is explained as the first
stage of operations and it is founded by an individual which is totally new in the market. The
main motive for formulating and establishing a new start-up is to manufacture and offer a
product or service for which individual believe that there is demand for product is present in
market. This report is composed from point view of the Costa coffee which is a British based
organisation and offering its raw coffee materials in local and overseas market (Elder, Lister and
Dauvergne, 2014). Moreover, this report highlights on coffee industry and the model of business
related with business environment. Sustainability of business and external business environment
which influence on business model will also include in this report. In the last, key success factor
for business and HR strategy to support sustainability of business is focused in upcoming report.
TASK 1
Industry overview
From the perspective of George, 2017, with existence of globalisation among all over the
world it is identified that each organisation as well as industry is performing their work at
international level. From perspective of global coffee industry it is identified that private sector is
supporting with eight plus rating from ten for entering into coffee business. More than 70% of
over population of world are regular drinker of coffee. So it refers that the scope among coffee
industry is too wide which attracts entrepreneurs to make investment in coffee business.
Moreover, the probability of sustainability in coffee business among different countries such as
Malaysia is more because to survey results it is identified Malaysian drinks 2.38 coffee cups on
daily basis (Heath, 2018).
According to the John lewis, 2014 the industry life-cycle consists of four different stages
that is introduction, growth stage, maturity stage and decline stage. The first insight which is
faced by organisation relates with coffee business relates with low quality of coffee beans. It is
also impacting on business due to which products are not formulated as per customer desire.
Another insight that for new business it is complex for recruiting skilled and potential employees
to establish business in minimum period of time. From perspective of coffee business it is
analysed that introduction for new coffee business is easy to manage because of its regular

demands and another stage relates with growth and as per this stage new organisation enhance
quality of products for grow in market. Further, as per modern life-cycle it is analysed that
product life-cycle is becoming shorter so for new business maturity stage is complex for
organisation and it is impacting on product sell. So market segmentation is a method to achieve
distinct stage of product. Last stage is decline and for new business declining of business is a
complex stage which is impacting on all operations of business.
Company background
Costa coffee business is selected for the further study related with coffee business and the
respective business is a British coffee house and it was established in the year 1971 by the Bruno
and Sergio Costa (Maye, Kirwan and Brunori, 2019). The headquarter of costa coffee is situated
in Dunstable, England from where organisation offers its products among all over the world.
Coffee, sweet snacks, tea, sandwiches and many more are the products which are offered by
Costa. Moreover, the current operation and functions of business are formulated with the motive
of formulation of work that satisfies needs of customers in an appropriate manner and it is
controlled by Coca-Cola which refers now Costa is subsidiary of Coca-Cola from the year 2019.
Business model
Sole proprietorship model is adopted in initial period and after growth of business
franchisee are also provided by company to interested parties. Business model of Costa is
designed according to existing market conditions and it includes operation of business, sources
of revenue and the products in which organisation deal. In context of Costa management provide
it beans to specialist restaurants, coffee houses and also operates its stores among all over the
world to increase its market share and profits with rapid speed. Costa coffee also delivers its
products with good quality and along with this the time for delivery of products is also less so it
provides better experience to customers. Along with this it is also identify that marketing
strategy implemented by Costa coffee is more focused to engage technology because it helps to
attract customers at international level.

TASK 2
Sustainability of business with the analyses of external environment and its influence on business
model and strategy
Macro environment directly impacts on organisation and it is because the all external
business environment aspects are beyond control of management. Moreover, to management of
all tasks leads organisation for accomplishing sustainability in market (Pulido, 2017). From the
perspective of external business environment specifically of Malaysia monitoring of coffee
market with use of different tools such as Pestle, five force analyse is mention as follow:
PESTLE analysis
 Political aspect- Most of the coffee firms are making import of beans from different
countries. This also refers that each business is providing or purchasing products
according to the analysis of business environment and customer’s requirement. This also
defines as per international market scale, the change in political level such as immoral
relations between countries generate challenge to maintain regular quality of products. So
for new business management is focused to maintain better relations with supplier so if
relations are immoral than the supply for business is not impacted (Reed and Smith,
2015). This is also because organisation makes detail analysis of environment to
implement work with right model.
 Legal- From the legal front, it is analysed that new as well as existing both organisation
must complete their work with fulfilling all necessary requirements related with legal
formalities. This includes permits and assurance of FSA before purchasing raw-materials
from different countries. So business is able to make authorised business aspects and it is
also generating foreign challenge which is making permits for obtaining better results.
Tax policy, business entity and legal contracts are essential aspect to manage business
operations in an appropriate manner. Further, new business must adopt all legal aspect to
manage business in ethical manner.
 Economic- It is characterised with economic conditions that business is impacted due to
the changes in non-controllable business environment in which coffee industry operates.
Due to increase in medical emergency case because of Covid-19 all organisation faced
economic challenges which is impacting on their business. Moreover, due to this
operational cost for business is also increased which impacts on organisation products

price and its profit margin (Schnürer, Bohn and Moestedt, 2016). Business strategy of
business is influenced due to change in economic conditions.
 Social- According to the socio-culture environment elements it is analysed by consumers
that the external force also impact on business. Like, Starbucks, Costa and other local
organisation establish C.A.F.E (Coffee and Farmer equity) and with this program it is
easy for management to address the concern that relates with social responsibility. This
defines new organisation face challenges to develop effective and further it influence on
organisation strategy also because business farmers are facing challenges to grow coffee
beans.
 Technological- The current market conditions demonstrate that technology is included
among all business and its projects. This defines there are various task performed by
management which provides information related with business and leads organisation to
perform their work with more efficiency (Thangaraja and Sasikala, 2016). It is because
individuals are managing work with right aspect that makes impacts on technology
factor. So organisation strategy is influenced by management because it is creating
challenges related with business as the influence of technology is monitor among all
operations which increase customer experience.
 Environmental- With analysis of recent years it is identified that environment in an
important factor by which business is impacted and as per current conditions. Malaysia
government, local operated NGO and coffee organisation all consider that they must
manage environment conditions for business. This is because the existing environmental
conditions make success with environment factors which boost company policy for new
business. Thus, current business environment influence organisation model to perform its
business in an appropriate manner.
Porter’s five force model
Customers are more loyal towards those coffee shops which provide them good quality of
coffee and the relaxing environment. So costa coffee develop comfortable and positive internal
environment which satisfies needs and wants of customers properly. For new business it is
essential for organisation to make environment which relax them to generate right model and
strategy.

 Bargaining power of buyers- This refers that how strong is position of buyer in the
market and in context of coffee business it is more and customers has more option to
buy product (Verdin Filho and et. al., 2016). So the low switching cost impacts on new
business. Therefore, the new business mode is influenced to perform work according to
customer requirements. Low cost strategy is the method for business in completion of
work properly. This influence on model because buyers are more in power.
 Industry Competitors- The competition among industry is increasing with rapid speed
it is because there are different task is managed by business. This also defines
organisation is managing business appropriately. For example, Costa gives its clients a
differentiated environment via presenting excessive velocity Wi-Fi connections. While
Costa may lose some of the marketplace due to the competitors’ lower charges it is
difficult for organisation for completion of work properly. It influences on company
strategy due to change in industry competitor business because of industry requirements.
 Bargaining Power of Suppliers- Volatile raw material fee as basically the premium
coffee beans are imported from growing international locations, fee varies together with
the budget friendly and political scenario of the export coffee beans (Watson and
McGowan, 2017). This is also identified by management and it is essential for
organisation to complete all work with right suppliers and it influence on model to
complete work in proper manner. Retail rate range for dairy products that used for
uniqueness drinks in making effective strategy for business. This power is low due to so
there is moderate influence on business model of organisation.
 Threat of New Entrants- Barrier of access is low due to the fact the general funding
needed to begin-up a café business is low. Product differentiation is without problems
imitated by way of competitors. The power of new entrants is high because of the small
coffee shops cover more market area. Vending machines imparting espresso,
cappuccino and etc. are without difficulty to get with low charge and produce comfort
cost. Costa model is influenced to perform all work with right business models. It also
leads company for selection of business in right manner as power of new entrants is
more.
 Threat of Substitutes- Plenty opportunity liquids along with fruit juices, milk tea,
smoothies are to be had within the market. Consumer may additionally select the

alternative in place of espresso. Fast food chains enter into industry to offer cheaper
product is a hazard of substitutes. For example, McDonald introduces McCafe with a
inexpensive fee as examine to chain cafe marketplace. Further, most of the changes are
already formulated in organisation so model of business is directly impacted.
Competitor analysis
It is defined as the process that is used by organisation for performing work with
competitive framework. To minimise influence on business model management of Costa focus to
analyse market by selecting right competitor to manage all work that make better competitive
advantage for business (Wuepper, Clemm and Wree, 2019). From Malaysia it is analysed that
business in more competitive due to change in international market. Competition from the
challenges relates with international market to make right techniques. This also refers in
understanding work and completion of task as per strategy of business and international market
to work with right framework for making products that are high in quality.
TASK 3
Analyse of human resource requirements and HR strategies to support sustainability in business
Human resource requirements perform an important role which is used by management in
making efforts that leads to accomplish desired results. In the present scenario, employees or
individuals are most important asset which is leading business to complete work in an accurate
manner for making right results. With perspective of organisation HR strategy for the Costa
coffee and also in establishment for new start-up refers to complete work by recruiting effective
workforce (Zhou and et. al, 2019). Recruitment, selection, performance, training and motivation
are the key aspects which are used by organisation for implementing right business model.
Human resource requirement
New companies are snappy moving, unique organizations that would prefer not to get
hindered by pointless bureaucratic work and guidelines. Notwithstanding, neglecting to have a
HR technique set up for the start-up is setting self up for disappointment later on. With almost
50% of every independent venture fizzling in the initial four years, Costa and start-up may feel
that a HR division would just damage the organization's main concern before it ever gets off the
ground.
The Requirement for HR Methodologies for New companies

While there is a heap of reasons another start-up specifically for coffee come up short,
disregarding the significance of a human asset methodology is a significant fixing of new
companies. This is also required by organizations that 23 percent of the time since business don't
have the correct individuals generates complexity to manage organisation operations (Thangaraja
and Sasikala, 2016). A strong HR answer for new companies can take care of this issue.
Employing the opportune individuals to carry out the responsibility and actualizing strong
practices (like the absolute best organizations on the planet do) will assist management to hold
top stakeholders for longer period.
Learn Needs and Concerns
A fruitful HR office is established in important associations. Building these associations
implies having discussions with all degrees of staff to find out about their needs and concerns.
Meet with the official group first leads to trained all administrative staff. Approach the
executives and administrators for suggestions on whom to talk with among lower-level workers.
Talking with chiefs and standard workers is critical—they are the ones who truly comprehend
the everyday schedules and can give the knowledge for manufacturing a compelling HR plan.
Make a Significant and Reasonable HR Plan
In the wake of social occasion all the relevant data, new start-up develop right outline with a
practical arrangement. Employees are representative of a new plan and adjust the arrangement to
the business' way of life and qualities. All the more critically, give answers for the worries and
issues that pervade the work environment. So start-up's analyse way of life needs some adjusting
during this procedure (Verdin Filho and et. al., 2016). The passion for development of HR plan
and consider approaches to help further characterize the mission, qualities, and objectives of the
Costa coffee. Conversations with workers help new business in hardening these parts. They
might need to substance this out in a 30-60-multi day plan. Not exclusively will this assist coffee
business with keeping steady over completion of right duty. Thus, it leads start-up to give the
chance to intermittently match up with the official group and recruit individuals that work as
asset for organisation.
 Recruitment- The process for searching the prospective individuals and employees that
works as an asset for organisation in the future. It also considers that by encouraging
workforce it is easy for management to encourage all individuals to take participate in
Costa coffee selection process. In the context of recruitment stage HR department

provide job related information and human characteristic that are essential to complete
role and responsibilities. Job description is an effective technique which is used for
recruiting right individuals by analysing specific requirement of job.
 Selection- The first process of selecting candidate is to collect curriculum vitae or the
application letter of an individual. It is used by organisation for analysing about short
information related with selection process. Letter of applicant is another method and it is
also used by Costa coffee for selecting right person which helps to perform job role in an
accurate manner by giving job responsibility to selected candidate. Further, for finalising
candidate interview is last stage that is adopted by Costa coffee for recruiting employees.
 Training- The term training is defined as the deliberate process which is used by
organisation for enhancing performance of employees. This also defines organisation is
performing their work at global level so for Costa coffee it is essential that management
provide training to all employees. This leads that new business develop behaviour and
skills of employees by training them according to coffee shop requirements. It results all
work is performed in an organised manner.
 Performance management and motivation- The term performance management is an
essential aspect which work as a process that unites objectives and goals and leads all
employee efforts towards organisation goals. For Costa coffee performance management
work as a tool for setting goals that work as a tool for strategic planning. Performance
appraisal support new venture or company to achieve aim and objectives by analysing the
contribution of employee’s performance towards accomplishing company goals.
Moreover, motivation is an important tool because it encourage employees for
accomplish of company goals (Schnürer, Bohn and Moestedt, 2016).. Moreover, Costa
management adopts both types of motivation that is intrinsic and extrinsic in order to
motivate all employees for performing their job role with more efficiency and
effectiveness.
In the last, it is identified by management of Costa coffee that it is compulsory to manage
all workforce that is engaged in company operations because it is leading management for work
with decided plans. From point of new venture and Costa coffee both organisation formulate
plans which is leading management to obtain sustainability in an intense competitive market. HR

strategy plays an important role for completing task with managing perspective for business
which gains sustainability in market.
TASK 4
Key success factor for business including challenges and solution for this challenge
This is essential for an organisation to work with key success factors that is leading
management to complete all operations in an accurate manner. There are different challenges
faced by management of new venture which generates complexity in business. The first
challenge relates with calculation of profits and it is because fixed and variable expenses both are
managed by organisation due to which profits are hard to calculate. Another challenges which
generates problems is due to non-involvement of top management. It defines employees face
challenge to manage work for new organisation due to less guidance. For new venture some key
success factor are mention as follow:
 Sophisticated financial control- All entrepreneurs manage and control their finance in
order to ensure profits for business. From perspective of new venture it is identified by
management that the best practice for business is to implement accounting software that
is operated by trained bookkeeper. Further, it also leads help to overcome from challenge
of routine expenses due to which it is complex to manage profits for business. So with
use of software organisation is able to calculate cost and match both variable and fixed
expenses to analyse total expense.
 Top management involvement- Cash flow problems, employee’s conflicts, no-
interaction with customers, lack of time management and many more are the problems
that are faced by new venture to complete operations. For overcome from this all
problems top management perform an important role by guiding employees to perform
their role in an effective manner. This also defines top management monitor all
operations on regular basis so if managers recognise problems in its initial stage than it
easy to overcome from challenge by improving them.
CONCLUSION
With the all above report it is concluded that for establishing a new organisation it is
essential for management to develop an effective model which leads business to attain top
position in market. Along with this business model also helps to work with current business

environment. By analysing the external business environment aspects it is easy to analyse their
influence on business model and strategy. Human resources requirements and HR strategy is also
included in this report to analyse sustainability of business by focusing on steps of selection
process. In the last, with analyse of challenge in business along with their solution new business
is established appropriately in the organisation.