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: -

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 Stay focused on what sells best: - Most of the start-ups fail when they try to expand
their business before reaching the growth stage. In order to achieve the growth and
expansion they try to fullfill all the demands of their customers. This strategy does not
work so it is recommended to the business owner to concentrate the core business
activities. The owner of PCR should follow the targeted growth step by step as this is the
only way through which the company will be able to reach the growth stage (Sappin,
2016). The resources are precious for the company so they should not waste it.
 Innovate and expand strategically: - At the growth stage, most of the owner directly get
involved in the innovation and expand they don’t make strategies (Rothaermel, 2015). It
is suggested to the owner to identify the relevant and irrelevant elements of the business.
According to that, PCR can keep the relevant elements on priority and can make the
strategy for the innovation considering those elements because these elements can
revenue for the company. Thus, this results in the movement of a new startup to the
growth stage.
 Let processes and products take center stage: - At the initial phase, the companies are
mostly depended on the skills of a small core team to grab the chance and amaze the
clients. But on the other hand, maintaining quality increase the difficulties for the
business due to which they will not be able to grab the upcoming opportunities. It is
recommended to PCR to always maintain the quality of the products which helps the
company to grab the opportunities associated with the coffee business. It is essential for
the PCR to standardize its business which helps them to take the business to the growth
stage.

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 Build your brand: - In the initial stage, brand tries to form the relationship with their
clients as well as focuses on forming a positive brand image. When the start-up enters
into the growth stage they try to make their customer loyalty towards their brand. PCR is
a small start-up after the implementation of the innovation the company will be able to
establish a strong customer base along with the brand presence. This shows that the
company has attained the growth stage now the company can take a step to expand the
business (Petch, 2016).
Australian government support entrepreneurial activities
The Australian government supports the entrepreneurs to facilitate entrepreneurial activities and
for the same, the government has introduced various programs some of them are discussed
below: -
Entrepreneurs program
The entrepreneur program is a suite of the facilities services that provide the assistance to the
small and medium business to grow and innovate (Australian Government, 2018). The program
is the Australian Government’s flagship initiative for the business productivity and the
competitiveness.
It emphases on opportunities to improve are: -
 Business capabilities for the innovation
 Business research collaboration
 Innovative entrepreneurship along with the commercialization
The program includes the 4 elements: -

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 Business Management: - Facility of the experienced business facilitators and advisor for
the business operations (Australian Government, 2018).
 Accelerating Commercialisation: - Helps the medium and small business for the new
product and services.
 Incubator support: - Helping the business to develop the capabilities that help in
improving the business of new and existing ones.
 Innovation connection: - The supports from the experiences innovation facilities who
work identify the knowledge gaps that are preventing the business to register growth.
Entrepreneurs Infrastructure programme
The program came into existence in the year 2014, October 31st and three new streams within the
Entrepreneurs Infrastructure programme were introduced by the Federal Government. The core
elements of the EIP includes: -
 Accelerating Commercialisation: - Up to $1 million matched 50:50 grant funding support
will be available from government side (PWC, 2018).
 Business Management: - Assistance and the services to enhance the business operations.
 Research Connections: - Assistance and support in collaborating with the research sector.
Recommendations
It is recommended to form the policies related to the entrepreneurial ecosystem. The formation
of the effective policy for the entrepreneurial ecosystem needs the active involvement of the
Government Ministers to empower the policies and program. Through this, PCR entrepreneurs
will not get affected by the social and economic environment.

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The government can introduce a contest in which the entrepreneurs can share their business plans
with the government and the winning entrepreneurs will be awarded with the help in the funding
of new venture. This contest will boost the morale of entrepreneurs and enhance the business
activities in the country.

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Conclusion
It can be concluded at the end that Paradiso Coffee Roaster can achieve success with its
innovative ways in the business. Innovation can lead to the success of the business but can also
lead to the failure of a business, so to make it favorable and effective the company should
analyze the market. As PCR made use of Innovation process used to identify the business
opportunity. Moreover, the report includes the suggestion related to the strategies that the PCR
should follow to move the business from the new venture development to the growth stage. In
the end, it reflects the numerous program introduced by the government to support the
entrepreneurs.

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