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According to the overview of Custom Coffee & Chocolate’s business, Bonnie Brewer and Stacy Kim run a small café where they serve unique coffee, chocolates and maintain a shop. The café is located near a university, where students, faculty, staff, and local residents are the main customers. They have run the business successfully, working together without any employees and selling their products only in the café. They have started to think about further development. The main question at this point is what strategies they should launch to achieve that aim.
The first step to answer on that question is analyzing the company’s internal environment and identifying it strengths and weaknesses. The greatest strength is undoubtedly knowledge acquired by the owners during business and marketing courses and there experience gained at work.
The owners also chose an interesting location with many students who they know and understand very well, which combined with the offer is strength of their business. Customers can sit in comfortable chairs, on couches, and at coffee tables, and chat or read newspapers between classes.
As we consider weaknesses, we can identify a few problematic things. The largest of these is the limited access to services due to the small space in the café. Moreover, lack of employees makes it impossible for the café to open longer, because the owners also have to handle the finances. There is also no possibility for customers to order goods over the phone or online, and for the café to deliver service to locations on campus, such as dorms and lounges where students are studying.
Another weakness is quite poor menu, which should be extended by new products. Additionally, too little attention is paid to social inclusion by organizing events such as poetry readings or discussion groups, and conducting a blog which could integrate students around the café. Lack of a wireless connection that customers could use is a significant drawback. The last weakness, which is really important, is a lack of financial reserve. The owners exhausted their savings and the initial small business loan, and their six-month lease is up. The second step is analyzing the company’s external environment and identifying it opportunities and threats.
The greatest opportunity for the development of the company is the ability to reach a wider range of customers who are potentially interested in using the service of the café. Custom Coffee & Chocolate’s business plan bases on purchasing only fair trade coffee and chocolates made by a few local suppliers. It is worth considering the possibility of obtaining a better price from producer in exchange for promoting their brands. It is also possible to extent the number of potential suppliers, which is likely to enable the café to purchase products at much better prices. An opportunity for the development of the company is the application of new technologies such as online shops, websites or blogs, to allow better contacts with customers on the Internet.
Unfortunately, threats also can appear in the company’s external environment. It could be a decrease in the number of students at the University or changed location of classes. The biggest threat may be the emergence of competitors offering similar services at lower prices or better quality. The strategy adopted by the company, which consists of buying products from local suppliers and ordering only fair trade coffee, may cause a risk of introduction of cheaper substitutes on the market by competitors. The last but not the least threat is connected with the need to increase the café’s debt by taking additional loans for further development.
After determining the strengths and weaknesses of the company’s internal environment as well as the opportunities and threats of the company’s external environment, it is necessary to propose some strategies that take into account the interdependencies between particular elements of SWOT analysis, which will help to develop the company in the right way. One of the ideas is to acquire new customers by increasing the availability of products. Arranging a sale of products through the online store and allowing customers to play orders by phone, organizing appropriate marketing campaigns on the website or in local media, gives opportunities to achieve that goal. Ordered goods would be delivered by courier.
At the initial stage, the range of delivery might be limited to locations on campus, such as dorms and lounges where students are studying. This strategy would be built on opportunities of using the Internet and growing the customer’s base without the necessity of looking for larger premises to run a café. It is necessary to hire employees to allow the owners to focus on strategic management activities in the café. It would give Bonnie Brewer and Stacy Kim opportunity to use their knowledge and experience and take over more of the finance and marketing activities. Another interesting strategy that can protect the company against the loss of customers is building social cohesion by turning the café into a cult meeting place for students, faculty and other staff of the University. Organizing poetry readings or discussion groups could be a great idea.
Moreover, those activities would be supported by a blog which would be moderated by the café’s owners. This way, drinking coffee or eating delicious chocolates would be only a natural addition and benefit during meetings. In that case, the main strength is the specific location with students, faculty and staff whose the owners of the cafe know and understand well. Having loyal customer groups may be particularly important when some competitors appear on the market. This way, the company could significantly reduce this kind of threat. A very effective strategy which could be used is building a recognizable brand of their own products.
They should be presented as unique and not available from other competitors. In addition, it might be possible to prepare a wider range of products which could be better suited to the local customers needs. This strategy should be based on the promotion of local products and suppliers of products and high quality fair trade coffee. It could be an opportunity to get additional money from sponsors of the cultural and community building mission carried out by the owners of the café. The above strategy is based on the strength connected with high quality products which take a niche place on the market and cannot be easily replaced. It protects the company from the threat of competition and improves its competitive advantage.
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