Paradiso Coffee Roaster: Innovation Process and Business Strategy

This report examines Paradiso Coffee Roaster (PCR), a boutique coffee roasting start-up, and its potential for growth. The report details the company's current operations, industry analysis, target market, and the innovation process used to identify new business opportunities, specifically focusing on retail outlet expansion and product customization. It analyzes the benefits and challenges of implementing these opportunities, including increased sales, brand presence, and customer satisfaction, as well as financial challenges and market competition. Furthermore, the report outlines strategies to move PCR from the new venture development stage to the growth stage, considering Australian government support for entrepreneurial activities. The report concludes with recommendations for PCR's future development.

Entrepreneurship
Paradiso Coffee Roaster

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Contents
Introduction......................................................................................................................................2
Overview of the Paradiso Coffee Roaster...................................................................................3
Industry........................................................................................................................................3
Products or services.....................................................................................................................3
Target market...............................................................................................................................3
Innovation process used to identify the business opportunity.........................................................4
Innovation....................................................................................................................................4
Innovation process.......................................................................................................................4
Benefits and challenges of implementing the new business opportunity........................................9
Benefits........................................................................................................................................9
Challenges..................................................................................................................................10
Strategies to move the business from the new venture development to the growth stage.............11
Australian government support entrepreneurial activities.............................................................12
Entrepreneurs program..............................................................................................................12
Entrepreneurs Infrastructure programme...................................................................................13
Recommendations......................................................................................................................14
Conclusion.....................................................................................................................................15
References......................................................................................................................................16

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Introduction
The aim of the report is to reflect the implementation of the innovation process on a new venture
that can be a stand-alone entity or part of an existing business. PCR (Paradiso Coffee Roaster) is
a boutique coffee roasting company and a small start-up. The company doesn’t have retail outlets
and wholesale presence. The operations of the PCR began since 2006 and the company is
focusing on whole bean sales which include the single origin and tailored coffee blends for
particular markets. The report includes the details related to the future business opportunities for
this new venture and the relevant strategies to move the business from the new venture
development stage to the growth stage.

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Overview of the Paradiso Coffee Roaster
Paradiso Coffee Roaster is a start-up whose objective is to open the retail outlets as the start-up is
in the development process as of now. The aim of an entrepreneur is to develop PCR brand in
Melbourne CBD and suburb as a quality distributor and the retailer of coffee. Along with this,
the objective is to establish a viable retail presence. Moreover, there are more than 60 other
boutique roasters in Australia some of them are Romeos of Balwyn, St Ali of South Melbourne,
The bean Barn, Kokoda Coffee.
Industry
The company deals in the sector of food and beverages that is expected to rise in the coming few
years. In the year 2018, revenue in the food and beverage segment is equal to the US $279
million in Australia. User penetration in the sector is predicted to result in the growth as current
it is 8.9% which will reach 11.8% in 2022 (Statista, 2018). Moreover, the Australian market for
the roasted coffee also reflects the growth due to which the competition in the market is
increasing.
Products or services
The company offer powered chocolate and distribute IZZO coffee machines to the customers and
the coffee makers respectively. The start-up provides roasted beans, blend samples, different sort
of beans on demand. The company ensures that they are proposing good quality in their products
and services.

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Target market
A target market is referred to as the particular group of customers who mostly like to buy the
products and services offered by the company (Wedel and Kamakura, 2012). PCR target market
includes: -
 Drip Coffee drinkers- The drip coffee drinkers include the people who like to consume
coffee on daily basis. The age of the coffee drinkers matters while talking about the
regular coffee drinks. It is the fact that most of the people who consume coffee on daily
basis fall under the age group of 18-24 years and 25-39 years. These buyers help the
company in achieving maximum sales with revenue (Wagner, 2018).
 Specialty coffee drinkers- These drinkers include the people who want to adjust their
coffee according to their requirement which makes them to add new ingredients in the
coffee that they are offering.
 Whole bean buyers- The primary target of the PCR include the people who are whole
bean buyers. These buyers buy beans in bulk for their home and office purpose which
helps the company in increasing sales. Moreover, these buyers can easily buy the
machines provided by the company which gives an opportunity to the company to
improve its phase from development to growth.

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Innovation process used to identify the business opportunity
Innovation
Innovation refers to as the new idea or concept. The innovation can take place in any business
being it a start-up or existing on (Frederick, Kuratko and O'Connor, 2015). It is taking an
existing concept or idea and bringing improvements in it with the use of step by step process.
Innovation process
Step 1- Identifying the goals or problems
The initial step in the innovation process is to clear the innovation goals of the business. The goal
of the company is to open the retail outlets where they can offer the facility of the takeaway. The
customer can easily take-away the coffee and the packaged fresh roasted beans. Along with this,
the company wants to deliver varied and extensive products in their retail outlets.
Step 2- Analysis
This step comprises of the analysis of the real world which include the current situation of the
markets, needs of the customers and the challenges faced by them (Center for process innovation

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2013). Along with this it also includes the analysis of the competitors. The local competition in
the takeaway and packaged coffee is increasing. The major competitors of the company include
Cyber coffee, kokoda coffee, the Bean Barn and many others. The competitors of the PCR have
opened its viable retail presence. The local competitors are present at a walking distance from
each other which shows that most of the people visit Clayton for buying coffee. The PCR retail
outlet is willing to make it differentiate from its competitors for whom they have to bring
innovation in their products and services. Though the company will offer an extensive range of
products, offering quality in its product, they believe in attracting the people towards their outlets
through their values (Chesbrough, 2010). In addition, the company believes in keeping the
environment welcoming for the customers that reflects the success and their passion for beans.
Step 3- Develop and design
Based on the details extracted from the analysis this step motivates the company to develop the
innovative ideas for achieving the goals and objectives of the company. Once the ideas have
been developed the initial evaluation and prioritization will lead to a portfolio of innovation that
you can test (Gassmann, Enkel and Chesbrough, 2010). PCR believes in being different from its
competitors present in the market and for this the company is bringing an extensive range of
products but to make it more effective the brand should bring customization in the takeaway
retail outlets. This is the fact that there are many take-away retail outlets but there is nothing
innovative in this. This is the idea for PCR to bring customization, in which the brand will
consider the customer preference of ingredients while making coffee and packaged beans for
take-away. There are different flavoured beans and milk (condensed, fresh and pressurized milk)
available in the market that can change the taste of the coffee.

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Apart from this, PCR should make use of different packing and presentation as attractive and
effective packing will help the company to attract the customers. Along with this, PCR should
offer the complimentary on order according to the quantity. The complementary product can
include donut and a cookie which is one of the ideas that makes the company differentiate from
its rivals. On the retail outlets, PCR can offer the welcome coffee to the customer that makes
them feel valued and also leads to the promotion of products and services. These are the few
innovative ideas that can be used by PCR in product and service to make strong customer base.
Step 4- Conversion
This step of innovation process defines the transformation of the ideas into the practical
innovated products which could be offered by the company into the targeted market. The main
innovation is the customization of the product according to the needs of the customers. PCR can
implement this which helps them in understanding the needs of the customers. The customization
of the product will be possible when the company will be able to source quality products from
the suppliers (Huizingh, 2011). The main suppliers from where the company can get the
unroasted beans include HA Bennett in Melbourne, Coif-Com in Sydney and the ARC in
Melbourne.
PCR has to ensure that they form more tie-ups with the suppliers for the different types of coffee
beans. The four main coffee beans which are available are Coffee Arabica, Coffee Liberica,
Coffee Excelsa and Coffee Robusta (Coffea canephora) (Atlas Coffee Club, 2016). The below
image shows the different types of beans that can be used by the PCR for the customization.

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(Source: Carlson, 2018)
PCR can make use of the below image as a template for the company which will be convenient
for the customer to identify the required coffee.
(Source: Baskerville, 2016)

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Apart from this, the ideas related to complementary, packaging and the welcome coffee will be
valued added services of the company. PCR will be able to differentiate with their competitors
when they will be able to bring innovation in both product and services. Therefore, the major
innovation in the product is customization in coffee which is hardly offered by any competitors
as it will be expensive to source raw material. Along with this, the minor innovation in the
services offered by the company.
Step 5- Commercialisation
This is the final step where the company test the innovation and develop it to accomplish the
operations. The commercialization includes the access of the production facilities, logistics and
routes to the market (Sheu and Lee, 2011). This is the step when the company actually
implement the customization at their retail outlets so that they can check the same with the
customers. This is a testing stage in which they can test that this facility is beneficial for them or
not. PCR will get to know the risk associated with this product with the innovation and along
with this they can analysis the success and the failure of the innovative plan. Currently, the PCR
employees include the two owners who manage the business but with this innovation, they need
to appoint the person who can help them in conducting the same.
This is the fact that PCR has to manage the risk and rewards at each stage because there is step
by step process of the innovation. The innovation process reflects that the company can fulfill the
objective of opening retail outlets with the innovation in it.

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Benefits and challenges of implementing the new business opportunity
There are numerous benefits and challenges which will be faced by the company while
implementing the new business opportunity that is customization in product and value added in
services.
Benefits
 Retail outlet (Take- away): - The benefit of implementing the take-away retail outlets
includes: -
a) Increase in the sales of the PCR which leads to the maximization of the profit.
b) Increase in the brand presence in the market.
c) Opportunity for the expansion of the products and services.
d) Opportunity for the conversion of the retail outlet into café in coming years.
e) A clear understanding regarding the expectations of the customers (Pearson, et.al,
2011).
 Customization: - The benefit of implementing the customization in the takeaway retail
outlets includes: -
a) The customer can consume the products of their choice which helps the
generating customer satisfaction.
b) The customer can select those products which will not create an impact on the
health of the customers.
c) The business will be able to generate customer loyalty which means repeated
sales and ultimately increases the profit (Trentin, Perin and Forza, 2014).
d) The business will be able to save their amount of marketing the product.

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 Other value-added services: - These services will make the customer feel valued for the
business along with his they will be able to get the delightful experience.
Challenges
 Retail outlet (Takeaway): - Some of the challenges are: -
a) The implementation of the retail outlet needs funds which might affect the PCR as
they have to procure the funds for achieving the objective.
b) There is numerous other take-away retail outlets are available due to which the
company might not be able to succeed in the market (Gereffi, Frederick, and
Gereffi, 2010).
 Customization: -
a) Most of the people are not aware of the fact that which coffee beans will be
perfect for their consumption so they rely on companies. This reflects the failure
of the customization innovation in retail outlets.
b) PCR need to form the tie-ups with different suppliers and they have to pay a high
cost for different beans which will increase the price if customer customizes the
product according to their need. Most of the customers don’t want to pay high
prices for the customization.
 Other value-added services: - This will enhance the cost of the company and will reduce
the profit of PCR. Strategies to move the business from the new venture development to
the growth stage
PCR can adopt different strategies to move the business from the new venture development to
the growth stage. Out of these some of the strategies are discussed below: -