bus599 business plan

Company Description and SWOT Analysis

Assignment 1

Arabicana Coffee Company

Professor. Henry Kerich

Omar Alzyoud

Strayer University

Date:4-22- 2019

Coffee Company Description and Analysis

Company Overview and Significance

Arabicana is a NAB company dealing specifically in coffee beverages. The company offers high-demand coffee beverages including espresso, gourmet coffee, and ice cream. The main product offering is espresso, given the huge demand in the market. Espresso is a strong coffee made using ground coffee beans; it differs from other types of coffee in its thickness, which emerges from its method of manufacture. The name “Arabicana” is used to identify the company as an exclusive coffee retailer and is derived from the Arabica type of coffee.

Company Mission Statement

The company’s mission statement is “Healthy coffee to jazz up your life”. Arabicana’ mission to provide consumers with a healthy product that meets their needs such as good health and convenience. Arabicana’s coffee promises to “jazz up” the consumers’ lives meaning that it will be refreshing and provide a unique, ‘fun’ taste that would leave them excited. Additionally, the company aims to provide healthy coffee considering that modern consumers are increasingly concerned about their health (Kenyon, 2006). Again, the company views the community as its partner and is thus committed to its improvement. In this regard, the company strives to use only healthy ingredients in its products and approved production methods.

Trends in the Coffee Beverage Industry

Coffee is one of the products dominating the soft drink beverage industry today (Smith (2013). The coffee industry, in particular, is undergoing a transformation facilitated by changing customer values and corporate environment. The modern consumer is one who chooses a brand that caters to their needs, reflects their values and is innovative. While coffee producers are majorly developing countries, coffee is highly consumed in many developing countries. In the United States, it is the most consumed beverage (Loftfield et al., 2015). In addition, the global market for coffee has been forecasted to increase over the next years as it has done over the past years. A report by the U.S. National Coffee Association (NCA) established that 63 percent of Americans adult’s consumer coffee daily (NCA, 2019). Furthermore, a recent study found that the millennial generation accounts for 44 percent of the coffee demand in the U.S (MordorIntelligence, 2019). The coffee beverage industry has been chosen primarily for the following reasons:

i) Coffee is a healthy product with numerous health benefits

ii) Coffee products are easy to manufacture and are easily portable

iii) The market for coffee is on an upward trend projected to continue for the next several years

Strategic Positioning

The strategic position adopted by Arabicana is differentiation. Differentiation entails providing consumers with products that are distinct from competitors’ offerings in the market (Cristea, 2014). It enables companies to be competitive, which is necessary for the highly competitive coffee market that has been dominated by players such as Nestle and Lavazza. Arabicana can implement the differentiation strategy by providing innovative products with unique packaging. In addition, the products will be priced strategically – not too low to appear cheap and low quality, and not too high to turn customers off. The differentiation strategy would focus on the following elements:

i) Locally produced ingredients

ii) Personalized, specialized selections and alternatives

iii) Product selection directed by dieticians and oversight agencies

iv) Innovations in both products and manufacturing process

Company Distribution Channels

Arabicana will use the Direct to Consumer distribution approach. In this approach, the company will provide retail channels from which customers can purchase their desired products. This method is suitable because the products will be made onsite. Arabicana will also employ an e-commerce channel whereby consumers can order products online. A corporate website will be provided where the transaction will be conducted. Arabicana will use a chain of café restaurants as its retail channel. Stores will be located near or attached to the restaurant for easy management of supplies.

Risk Evaluation

There are several risks associated with Arabicana’s business as discussed below.

i) Financial risks – the major financial risk is that the business may fail to be profitable enough to reach the break-even point or facilitate growth, which may be induced by a low sales volume. Inadequate capital to run business operations is also another financial risks. These risks can be mitigated through capital efficiency which entails maintaining a balance between operating efficiently and operating strategically.

ii) Product risk – this is the risk of the product failing to satisfy the customers’ or stakeholders’ expectations. In the coffee industry, this risk may be induced by factors such as low-quality ingredients, flawed manufacturing process, and poor climatic conditions (Ingenbleek & Reinders, 2013). Product risks can be mitigated by developing a quality management system that coordinates quality enhancement and maintenance.

iii) Regulatory risks – these risks are concerned with the laws and regulations impacting business operations. One major risk facing Arabicana is FDA regulations: the products may fail to meet the quality assurance requirements of the FDA. To mitigate this risk, Arabicana should maintain and ensure compliance by integrating it in a regulatory adherence plan and company Code of Conduct.

SWOT Analysis

References

Cristea, A. (2014). Positioning Strategies for Obtaining and Sustaining Competitive Advantage. International Journal of Economic Practices and Theories, 4(5), 894-902.

Ingenbleek, P. T., & Reinders, M. J. (2013). The development of a market for sustainable coffee in the Netherlands: Rethinking the contribution of fair trade. Journal of Business Ethics, 113(3), 461-474.