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Green Mountain Coffee Roasters and Keurig Coffee Course Essay

Company Information
Company Name – Green Mountain Coffee Roasters and Keurig Coffee Website – http://www.greenmountaincoffee.com
Founded in- 1981
Background/History/Company Timeline

1981- Green Mountain Coffee Roasters was established with a small coffee shop. 1993- Green Mountain Coffee Roasters, started publicly traded on NASDAQ national stock market. 2006- Green Mountain Coffee Roasters, Inc., Acquire KEURIG Coffee Company and started manufacturing single cup coffee. 2010- Green Mountain Coffee Roasters, Inc. Acquired Diedrich coffee and also bought Van Houtte coffee services company. 2011- Green Mountain Coffee Roasters, Inc. sold Fresh Filter US coffee services potion of Van Houtte business to Aramark. Green Mountain Coffee Roasters, Inc. manages its operations through SCBU (Specialty coffee business), KBU (KEURIG business unit), CBU (Canadian business unit) operation units. SCBU makes and sell coffee, hot coco, tea and several other beverages. KBU focus on single cup brewing system which includes coffee, tea hot chocolates. CBU take cares of Canadian market. They sell coffee and tea with other beverages. Mission and Values of GMCR.

“PURPOSE: We create the ultimate beverage experience in every life we touch from source to cup – transforming the way the world understands business. Our MISSION: A Keurig® brewer on every counter and a beverage for every occasion. Our VALUES: We partner for mutual success. Our boundary less approach to collaboration creates benefits for all.” (www.keuriggreenmountain.com) SWOT ANALYSIS

Strong product portfolio and leader in the market.
Loyal customers.
All products contribute strong revenue growth. Gives a strong competitive advantage.

Corporate image built on strong sustainability initiatives.
Good financial strength.

Dependency on china for single cup brewer is a big draw back. 2
Dependency on some retailers companies which are the big potion of revenue. 3
Cost of the products is very high reference to single use at home. 4
Patents of all the sub companies are not so easy to maintain.

Have several opportunities in the field of different drinks. 2
Have further opportunities to expand to different part of world. 3.
Strategic agreements to bolster revenues.

Completion in the segments of Coffee is very high.
More acquisition there is more challenges to maintain brand value. 3
Demand of high quality coffee is very high. Shortage of coffee beans will be a task.

Analysis VIA Porter’s Five Forces Model

Porter’s five force model is a good analysis tool for examine the competitive environment. Competitive environment is describes in terms of 5 forces. The threat of new entrants- Customers has new choices day to day. To fulfill the requirement Green Mountain Coffee Roasters needs to be very competitive. They need to find out new products. There are several low cost products in the market which is attracting local public. This can be a threat and Green Mountain Coffee Roasters needs to find out a way to reduce the cost and maintain the quality. Single-cup brewing will have more competition. Some of the companies have good financial resources and good marketing than Keurig. Some of the competitors are Flavia Beverage Systems they are the manufacturer of Mars, Senso brewing system etc. The bargaining power of buyers- Loyal customer is very important for a successful business.

Green Mountain Coffee Roasters provides the customers the best they want and the way they want. So buyers are ready to pay the cost. There is less bargaining because of loyal customers. O customers. They may look at some alternate products. But still number of choices is fewer Buyers find very difficult to switch the company as they will not find what they need. So they try to stick with one. This is a competitive advantage to them. Competitors cannot provide what fresh direct can provide. Low dependency on distributors is an added advantage with Fresh Direct. This will reduce the bargaining power of buyers. Due to variety of range products buyers has less choice and this is good and positive for Green Mountain Coffee Roasters The bargaining power of suppliers-

The biggest problem is with Keurig, supplies are fully depended on outside supplier. They have only one supplier from China. They can rule GMCR and can affect deliveries and quality. This can over all affect the company performance and business. The threat of substitute product and services- Company has an advantage in their field. There is very less strong competition. They are the leader in the coffee segments. There are several companies who have lowered process cost and cost of the product. They may give strong competition to them. The intensity of rivalry among competitors in an industry- Other manufacturer started giving good offers with comparison to Keurig was offering. Market started to become overpower. This created confusion between customers. They don’t know what product is best. They were victim of competition.

Strategy Used

GMCR has strategically taken a good move to expand its business in broader way. The first strategy they used was acquisition of other coffee brand. They acquired Tully’s coffee brand and later they also acquired Timothy’s Coffee. GMCR focused on individual customer in home and offices. They have launched different products which can be used in offices and home. By doing this they have expanded there market share very broadly. “There were approximately 2.6 million coffee brewers in offices nationwide serviced by a network of approximately 1,700 distributors. Of those offices, GMCR estimated that 12 percent had single-cup brewers, and about half of those were Keurig brewers.8 While Keurig brewers were estimated to be in 30 percent of offices in New England, national penetration in the office channel was only about 6 percent.” (Dess C301)

GMCR has covered hotel industry in broader way. They have several hotels in North America which use GMCR products. This was one of the best strategies which worked for expansion of their product range. Issues and Challenges Facing this Company

Following issues and Challenges are being faced by GMCR.

a) Manufacturer and trade risk- GMCR products are manufacturer in China. They are under risk of delivery and cost. Fully depended on those companies. Any production delay will direct affect the profitability of GMCR.

b) Foreign exchange rates may affect the end product cost.

c) Government policies and relationship with both country may affect the business.

d) Product recall and product liability is a potential danger. Any quality compromise by manufacturer will directly impact GMCR.

e) Loosing competitive advantage of GMCR because the products are manufactured in China and possibility of losing technology secrets. f) Risk of Integrated Acquisitions- Lot of risk is there to manage acquisitions, because of company culture and business.

g) Risk of fluctuating commodity cost- Fluctuation in commodity will affect the price of Coffee. This can impact the price of products.

h) Risk of coffee availability- there are some very high quality coffee beans (Arabica coffee beans), unavailability of this beans may affect the business of GMCR.

Course of action recommended

a) Should be very careful while doing acquisitions. Need to look the country culture, company culture and past background.

b) Need to develop an alternative of China for manufacturing the products. It can be India. Dependency with china should not be there.

c) Need to add different products and expand their list of product based on customers’ requirements.

d) Keep closer look on competitors and there technology.

e) Keep on improving the products by doing research and development.

f) Cover every segment of people with something new for them.


“As a leader in specialty coffee, coffee makers, teas and other beverages, Keurig Green Mountain (Keurig) is recognized for its award-winning beverages, innovative Keurig® brewing technology, and socially responsible business practices. The Company has inspired consumer passion for its products by revolutionizing beverage preparation at home and in the workplace.” My opinion GMCR is one of the strongest companies. They have strong financial and strong management. They have a strong strategy which can kill all there competitors. They know how to manage Acquisitions. They have very strong backup with strong companies. They have very loyal customers and keep on adding day by day. They are in offices, house, hotels, restaurants and everybody’s heart. They need to work on their strengths and work in new products to surprise there loyal customers. (March 2014)

1) Keurig Green Mountain, Inc. Launches 2013 Sustainability Report with New 2020 Targets. March 2014. http://investor.keuriggreenmountain.com/releasedetail.cfm?ReleaseID=832189

2) Dess. Strategic Management text and cases, 6th Edition. McGraw-Hill Learning Solutions, 2012. VitalBook file.

3) http://www.keuriggreenmountain.com/en/OurCompany/OurValues.aspx

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