Full Strategic Analysis Of Caribou Coffee Company Inc Marketing Essay

Full Strategic summary Of Caribou Coffee ships company Inc Marketing EssayCaribou coffee berry Incl commonly known as CBOU.O is a company specializing in sell of teas, coffee bakery goods and former(a) related products. Since it inception in 1992, the slopped operates in respective(a) reportable shares which include commercial, sell and franchise traffices. Retail segment comprise of close to 400 of the total coffee establishment and focuses on the local marketplace. These key stores are based in Minnesota and over 20 some separate store in major states where CBOU.O operates. Commercial segment focuses on mass merchandisers while the franchise demarcation which comprises of more or less 19% of the total coffee houses targets the inter field market. Caribou Incl operates in international and local markets as come up with a bout 510 coffeehouses (Perry 2003, p. 46). Additionally, the regular supplies its products to diverse commercial enterprise groups such as groc ery stores, hotels, airlines, mass merchandisers, entertainment venues, offices and colleges among other clients. Caribou care main goal is directed towards providing high quality coffee blends and other related products to its clients.Key to their attractive scheme, CBOU.O has comfortably designed outlets which resemble ski lodges and even so Alaskan cabins, which offer the firms a range of coffee blends, or even specialty teas, coffee drinks and baked goods. In order to expand on its distribution chain CBOU.O sells both brewing supplies and whole bean coffee (Hall 2005, p. 76). In addition the firm has over 100 franchised outlets which are mostly founded in the greater Middle East part as well as conspiracy Korea. As per 2008 fiscal report, 60% of the Caribou Coffee firm is owned by Arcapita, a Bahrain-based investment faction. CBOU.O has recorded imperative growth in muniment of gourmet coffee perseverance amid competition from Kraft Foods Inc., Starbucks Corporation, Pro ctor Gamble and Nestle Inc.1.10 Company AnalysisCBOU.O is not immune to industry macro as well as micro factors influencing business performance levels. The wider business environment has created both opportunity and challenges to CBOU.Os performance in coffee industry. The volume of coffeehouse chains has increased in the youthful past with the new entrants in the renowned specialty product category. For instance, the external environment in the industry has been hit by high competition with greater impacts felt the period between fiscal 1998 and 2003 (Hoskisson Hitt 2008, p. 96). The industry has also presented a new wave of demographics teddy bear where young adults advantageously indentify with coffee products. With greater cultural influence in the foreign markets, decaffeinated coffee has easily being marketed in defined global market niche. Similarly, in coffee industry market issues have also forced leading firms to leverage their brand names into motley categories in an attempt to grow greater sales.1.11 PESTEL AnalysisSocial factorsSocial trends has impacted CBOU.Os merchandising, RD activities, rebranding procedure, market submission strategies, employees motivation and the firms business units performances. CBOU.O has been influenced by various factors including changing demographics, family changes, consumer expectations and various cultural changes (Perry 2003, p. 89). The firm has witnessed a shift in consumer habits in various markets where brand switching has been popularized by the existence of a variety of specialty products offered by similar players in the market. Due to the perceive change in consumer expectations CBOU.O has been constantly aspirateing their product-line to include various coffee versions in the market. For instance, decaffeinated coffee has been an entrant in various market niches as a tip over effort to forfend brand switch to other alternative beverages. This has been mainly instigated by cultural preference s. Similarly, the changing demographics in both global as well as local market have influenced CBOU.O business activities. For example, between fiscal 2003 and 2006, adults aged between 18 and 24 who alsok coffee daily doubled in percentage and crossed over 30 % mark as per the NCAs (i.e. National Coffee Association) data (Perry 2003, p. 193). The young adult drinking behavior/habits has and will stay influencing Caribou Coffee consumption since this age bracket constitute the long-life coffee drinkers as they enter early adulthood. The youngsters demographics are vital to CBOU.O since they are belike to favor coffee to other familiar soft drinks in future.Political forcesGovernment policy in terms of degree of economical intervention has greatly influenced CBOU.O in the greater Minnesota region. Various stakeholders such as regulators and politicians impacts any industry in terms of workforce safety issues, firms subsidies, quality infrastructure and business supports. For exam ple, Caribou has been continually influenced by various policies linked to NCA. Like other firms, Caribou has enjoyed government intervention during various difficulty economic seasons as well as on labor issue intervention. Trade barriers, among other government policies has influenced entry procedures across the 20 states stores. For instance, favorable trade policies have assisted the firm to expand and perhaps source for quality coffee (Grant 2005, p. 94).Economic factorsInflation, economic growth issues, interest rates and taxation changes has affected Caribou Coffee Company in terms of product performance, business lucrativeness, performance costs and firms overheads. For instance, in fiscal 2007/2008 the firm reported increase in production costs brought about by increase in related costs such as higher wage demands due to economic difficulties experienced globally. More positive in the trend in economic growth witnessed in early 2000 that saw CBOU.O report increase in dema nd for various coffee products. In addition, in fiscal 2006 Lower interest made more viable for investors such as Arcapita to invest in about 60% CBOU.O since the costs associated with borrowing was too low. Finally, economic difficulties witnessed in late 2000 saw CBOU.O resulting into franchise transcription for synergy reasons.Technological factorsTechnology has helped CBOU.O to remain ahead in business communication, production and innovation. For example, engineering science has boosted the firms move in online marketing and related business activities in CBOU.Os official website. Computer aided systems has assisted the firm in quality control and production regulations as a deliberate move in reducing related production costs. Online marketing as well as trading information support by the firms website has put CBOU.O ahead of competition.Legal ForcesCBOU.O has been influenced by the various consumer laws protecting clients against unfair price practices and any misleading bev erage description. Under the Caribou management practices, employment laws have affected the business approach in areas such as redundancy, minimum wage, working hours and dismissal issues.Environmental factorsFactors such as national weather and the perceived global climate change influence consumer patterns (Porter 1998, p.72). Changes in temperature, especially during winters increase the likelihood of coffee consumption and high profit mogul during this spell. CBOU.O has in the past recorded greater sales during winters than the case with summer performance. Currently, the global environmental issues as well as the growing desire on corporeal responsibility on the nature have influenced business opportunities in the new markets. Such environmental trends have influenced Caribous demand patterns and the global opportunities (Perry 2003, p. 103).1.12 Porters Five Forces aspirationRivalry intensity has been greatly increased by low switching costs where consumers can easily switch from particular specialty coffee product, thereof qualification it unspoken to capture greater market proportion. The ever growing moment of specialty coffee products has intensified rivalry. Recent maturation in terms of consumer habits in coffee industry has resulted into struggle for available market share. Similarly, industry shakeout influences rivalry witnessed in various industries (Porter 1998, p. 43). High level of products differentiation has resulted into greater rivalry forcing CBOU.O to extend its product-line. The firm up-to-the-minutely offers whole bean coffee and specialty teas, as a differentiate approach in competing in the market.Threats of substitutesCoffee products offered by other players such as Proctor Gamble or even Starbucks Corporation at a competing price offer a threat to CBOU.O specialty coffee products, thus making it hard for the firm to raise prices for profitability reasons. Health concerns have influenced the consumption levels of special ty coffee as a substitute to other highly priced soft beverages. For example, Starbucks Power Frappuccino has been a big threat to Caribous due to its price espresso-based beverages.Buyer PowerThe firms buyers have contributed to the Caribous performance by determining the firms profitability levels. The buyers have the ability to influence the business performance by affecting the business ability in offering quality specialty coffee. Similarly, the buyers power has influenced Caribous business strategy where the management has been concentrating in offering all-time coffee products to the consumers in anticipation.Supplier powerCoffee suppliers has been very influential on Caribous production ability where shortfall in coffee supplies to the coffeehouses is closely associated with declined ability of the firm to acquire the supplies as per the price offered. The suppliers are potentially able to exert influence on the firm since much of the raw materials as well as related supplie s are sourced at a price which directly affects the resulting business profitability (Porter 1998, p. 116).Barriers to entryThe possibility that the number of new entrants in the industry may increase poses a threat to Caribous competitiveness .Caribous has been constantly employing strategies such as franchise arrangement as a key measure to avert possible entry in the market. In possible situations Caribous has been employing entry-deterring pricing as a key strategy in preventing possible entrants in the industry. As a strategy to remain more competitive, Caribou enjoys the benefits associated with their production capacity (i.e. proprietary knowledge) in manufacture of various specialty coffee products (Daniel Lamb 2008, p. 125).Life Cycle Analysis (LCA)CBOU.O considers LCA in order to indentify areas area for vital improvements in environment, marketing as well as in support of how the coffeehouses products are environmental friendly. All coffee products have some noticeable i mpacts on our environmental and therefore CBOU.O uses LCA to manage issues such as pollution, in order to reduce environmental harm. In CBOU.O the LCA starts with raw material sourcing where quality coffee as the prime raw materials are bought from indentified suppliers. In the Manufacturing phase, CBOU.O ensures polish off procedures are used in order to minimize unnecessary pollution from. The packaging phase in the LCA is highly considered in order to reflect the marketing philosophy of Caribou firm by including the business logo or even the company brand name. The firm marketing is extensively do and thus places Caribou ahead of other players in product communication in all the three business units. In the use, maintenance and reuse phase, Caribou considers draw in policies on Coffee mugs or related packaging are used in order to reduce unnecessary costs associated with environmental impacts. Finally, in the recycle phase, Caribou uses clear policies that ensure that various packages are reused for intended purposes (Grant 2005, p. 278).SWOT Opportunities and ThreatsSome of the opportunities in the Caribou operations that give the firm segment a competitive advantage includes venture into international market and developing business arrangement such as franchise. The franchise arrangement has helped most Caribou to follow a competitive edge despite the unfavorable market forces brought about by hard-economic environment (Grimm 2006, p 233). Developing of Decaffeinated coffee has been one of the strongest opportunities well use by CBOU.O in the recent past. Similarly, CBOU.O faces greater threat from stiff competition witnessed from major competitors. Similarly, upcoming considerations by governments to tax the coffee industry poses as a key threat for most firms. degree IIGeneric strategiesCaribou firm has developed various generic strategies in order counteract the examine Porters forces at business unit level, corporate level as well as functional level. For competitive advantage reasons, Caribou has indentified various products namely focus, differentiated product and the cost leadership coffee products at business unit level. The firms business units which entails the retail chains, commercial segment and the franchise segment has placed products such as whole bean coffee and the specialty tea on the costs leadership level. Additionally, Caribou has been constantly included differentiated products such as espresso-based beverages in order to counteract the rivalry evidenced in early 2000s. Caribou has used the commercial segment as the sole focus in selling various products to hotels, entertainment venues, grocery stores, airlines or even to the offices in the major regional chains (Perry 2003, p. 136).Market segmentationInitially, adults were associated with Coffee drinking until the recent witnessed shifts in the consumer behaviors brought about by the Generation X and Y. The changes associated with this generations has forced to Caribou to redesign its product line in order to attract the growing number of young adults who have indicated interest in the firms coffee products. For example, Caribou resulted in single-serving system in mid 2000 in order to ensure that target consumer are able to access superior coffee at designated pods in hotels, entertainment venues or even in major stores in Minnesota (Perry 2003, p. 113). Baby boomers who usually switch to healthier coffee products forced Caribou to introduce decaffeinated coffee in the stores. This transition was enabled by the firms aided technological processes which usually improves decaffeinated coffee flavors to effort the various generations considerations.Core competencies and Generic Value ChainCore competencies help Caribou in retaining its competitive nature by ensuring that the bond between various units is strengthened thus offering coherent portfolio. Caribou core aptitude level is premised on the provision to access variety of p roduct in both retail markets or even at franchise level (Hoskisson Hitt 2008, p. 97). Caribou has been using procedures as well as practices in manufacturing which are basically hard to imitate in production of products such as specialty teas or even other brand merchandise. The firm has also exhibited strong capacity in RD where deliberate efforts has been made in strengthening the firms ability to understand and cater for upping interest in Coffee industry markets. As a core competency strategy, CBOU.O has ensured shared costs in business units in order to remain ever profitable. For instance, the firm increases the franchised business units under shared costs between the retail stores and the commercial business segment.CBOU.O value chain entails inbound logistics, outbound logistics, operations, marketing and sales processes, and the operations activities. For example, CBOU.O ensures that inbound activities such as Coffee sourcing, warehousing and division logistics are clear ly conducted. Caribou operation activities are normally aligned to the defined production formulas and processes during product preparation. The marketing and sales undertaking in the firm has been enhanced by greater innovations in meeting the ever changing demographic of necessity. Finally, the outbound activities has bee made possibly by the wider distribution scope done under retail stores, franchise segment or commercial units.Ansolffs Matrix and Porters DiamondCaribou market penetration procedures are used in securing market dominance, in restructuring markets, increase Coffee usage among consumers and in raising market share of core products in various chains. Caribou has enhanced its market development procedures by ensuring that the business able to effectively locate new geographical location for new stores, or new distribution channels or pricing strategies in order to enhance market growth on products such as baked goods. Product diversification has been used to modify v arious branded merchandise offered by the firm (Grant 2005, p. 423). Caribou has been diversifying its products in various segments by use of rebranding procedures.Porters diamond model has been employed by CBUO.O to enhance competitiveness by strengthening firms strategy, structure and effectively handling rivalry issues. The firms culture, lean structure and operation motivation boosts the firms competitive advantage. When handling demand conditions, Caribous RD ensures that local demand needs/capacity is satisfied by quality specialty coffee products prior to meeting other states demand. This gives local stores competitive advantage. Caribou create its factor conditions by having skilled workforce and improved technology in order to remain competitive. Similarly, factor combination during manufacturing has boosted Caribous performance as well. Under supporting and related industry considerations, Caribou operates in global chains under commercial and retail stores in order to sup port the franchise unit. Caribou uses the business units to organize and supply innovation in the structure value.Financial AnalysisCurrent ratio for CBOU.O eagle Incl is noted to be fall from a figure of 0.88in fiscal 2007 to lows of 0.72in 2008.This trend is alarming as it indicates decrease in ability of CBOU.O to cover its short-term debts using the available current assets. Gross-profit is increasing from lows of 47.0% in 2007 to 51.36 in 2008. The trend is positive as it indicates CBUO.O move in earnings increase. Return-on-assets ratio shows Caribous earnings in relation to all the economic resources owned by the company (Peterson Fabozzi, p. 146). Return-on equity is decreasing from fiscal 2007 ratio calculations. The trend is negative. The trend on Return-on-equity portrayed from 2007 to fiscal 2008 is negative indicating a decrease in returns for the ordinary and /or common stock-holders.Phase III RecommendationsCBOU.O should consider seeking global opportunities in orde r to counteract stiff competition and perhaps increase in profitability. In situations where Franchise fails in foreign market, CBOU.O should result into Mergers or acquisitions in order to enjoy currency benefits associated with global market thus averting economic effects on performance. To avert rivalry, CBOU.O ought to continuously improve on existing product chains and enhance brand extension procedures.CBOU.O ought to increase their investment in current assets to boost the companys financial position. A company should cover its short-term obligations at least twice from their investment in current assets. CBOU.O should increase the efficiency in the use of economic resources at their disposal to enhance the firm long-term profitability. Similarly, CBOU.O should also increase efficiency in the use of assets. Finally, more investment should be carried out in total assets to effectively cover the firms debts.Appendices A Caribou Coffee Company Important Trend Analysis RatiosRat io type20082007Current Ratio=(Current assets/current liabilities28,450,000/32,260,000 = 0.8826,620,000/36,820,000= 0.72Gross-profit ratio=(Gross -profit/sale)*100(119,460,000/253,900,000)* 100= 47.0%(131,910,000/256,830,000)* 100=51.36%Return-on- assets=(net-profit before interest/total assets)*100(15,460,000/89,570,000)* 100= (17.26)%(30,400,000/111,840,000)*100= (27.18)%Return-on-equity=(Net income/equity)*100(16,280,000/43,940,000)= (37.0)%(30,500,00/59,290,000)* 100=(51.44)%