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IBUS71-104: Business in the Global Economy | Costa Coffee

University: REGENT COLLEGE LONDON

  • Unit No: NA
  • Level: High school
  • Pages: 12 / Words 3009
  • Paper Type: Assignment
  • Course Code:

    IBUS71-104

  • Downloads: 26
Organization Selected : Costa Coffee
Question :

This assessment will demonstrate further questions which are like:

  • Give a brief analysis in relation to specific organisation and also the general ways for expansion of business practises.
  • Give an overview in relation to expansion of Costa coffee and also the business operations taken for contemplating the business functions.
Answer :

INTRODUCTION

Costa Coffee is one of the leading coffee house chains which are executing business all around the world. It is mainly established in Dunstable, Bedfordshire. The founder of it was the Costa family which was established in the year 1971 (Montero et.al., 2018). The company is looking for an FDI opportunity for business expansion in New Zealand. With the help of it, the organisation will be able to attract a large number of customers and increase profits. By expanding business in the country the company will also be able to increase its market share. For this purpose different topics are discussed in this report. These are background information about the enterprise and its business environment. Additionally, porter's five force model is also used to analyse the business scenario in this report.

BACKGROUND INFORMATION ON THE ORGANISATION

Overview of company

Costa Coffee is the largest organisation which is a coffee house chain of Coca-Cola. It was founded by Costa Family in the year 1971. Earlier roasted coffee is suppliers by it to coffee shops and caterers. Afterwards, it started its shops and sold varieties of coffees to the customers. The size of the company is very large as it is operating business at the global level. Revenues of it for the year 2016 were around 1.168 billion pounds and its net income for the same period was around 153 million pounds (Nguyen et.al., 2017). It is owned by Coca Cola which is a private company and the legal structure is followed by it is a limited company. There are various international operations of it which are as follows:

Sales: It is one of the main operations of Costa Coffee because it is selling a range of Coffees to customer in the international market. For this purpose, the quality of all the items is focused on so that they can meet the expectation level of consumers.

Marketing: It is also a major operation of Costa Coffee which is executed by marketing department of the company at international level. For large as well as small companies it is very important to market all the items sold by them so that large number of customers could be attracted towards it. This operation is highly focused by the business entity as it helps it to spread awareness about all the varieties of coffees which are sold by it to the customers. Different advertising campaigns are conducted by the organisation at global level to increase its sales. If the enterprise fails to market its products and services then it will result in bad market image and decreased profits.

Human resource: It is also an international operation of Costa Coffee. As it is operating business at global level so it recruit staff members from different countries to execute the operational activities properly. All the employees for effective performance are hired from the country where business is operated as it can help to analyse buying behaviour of customers and identify their demand.

All the above described international operations are performed by Costa Coffee at global level for the purpose of executing all the operational activities in systematic manner. With the help of all of them company try to reach all its long as well as short term business goals such as profit maximisation, customer satisfaction and attracting FDI for future.

BACKGROUND INFORMATION ON THE BUSINESS ENVIRONMENT

PESTLE analysis

Business environment can be defined as framework which guides companies to analyse all the external forces which are leaving impact upon business operations. In order to execute all the business activities appropriately it is very important for organisations to analyse it so that effective strategies for future could be formulated. As Costa Coffee is willing to expand its business in New Zealand so it is very important for the management to make sure that it gather detailed information of business environment of specific country. It will help to form organisational policies according to the external factors. For this purpose, appropriate analytical approach such as PESTLE analysis is required to be applied on the company.

PESTLE analysis: It is a strategic management technique which is used by organisations to analyse the impact of external business environment. There are six different elements of it which are required to be assessed by all the companies (Arrieta Castro and et.al., 2016). These are political, economic, social, technological, legal and environmental. In order to determine the business environment of New Zealand all these components are required to be analysed by Costa Coffee. Description of all of them is as follows:

  • Political: Trader restrictions, corruption, political conditions, governmental policies etc. are considered as these factors. As Costa is planning to open new coffee shops in New Zealand so it is very important for it to make sure that all these forces are analysed by it in detail. This nation is considered as one of the stable economies of world therefore it will not be difficult for Costa Coffee to expand its business there (Stability in democracy of New Zealand, 2019). Due to this, the restrictions for trade in the country are also very low which will be beneficial for the organisation to reach its objective of expanding business.
  • Economic: Exchange rates, inflation, deflation, rate of unemployment, disposable income, economic growth etc. are such factors which should be focused by the companies such as Costa Coffee which are planning to expand business in new country. It can help to analyse that the business will be able to grow there or not. The rate of unemployment in New Zealand is decreased in first quarter of 2019 as compare to last year which is leaving positive impact upon the economy (Unemployment rate in New Zealand, 2019).

(Source: The unemployment rate in New Zealand, 2019)

From the above chart it can be analysed that the unemployment rate in New Zealand is decreasing continuously which is growing the economy and creating opportunities for companies such as Costa Coffee to expand their business. Continuous reduction in such rates are resulting in economic growth which benefits the organisations which are operating business in the country.

  • Social: The combination of demographics, culture, lifestyle attitudes, age distribution etc. is known as social factor. In order to be the first choice of customers it is very important for companies to take all of them in to consideration so that their satisfaction level could be increased and they could be retained for long run. The culture which is followed in New Zealand is Western and it is influences by geographic isolation of islands. Due to this people prefer to have coffee as compare to other beverage items. As Costa Coffee has planned to expand its business there so it will be beneficial for it to generate higher profits as range of coffee is offered by it to clients. It will also help the company to reach the objective of expanding business successfully (Social factors of New Zealand, 2019).
  • Technological: It takes level of innovation, automation, technological awareness and incentives etc. in to consideration. For organisations such as Costa Coffee it is very important to use innovate ways to market all the products and services so that technological needs of customers could be fulfilled. Technological awareness in New Zealand is very high and this sector is booming continuously so it is a great opportunity for Costa Coffee to expand business there by using latest techniques (Technological awareness of New Zealand, 2019). If the management is not able to comply with innovative modes of business and marketing then it will be very difficult for it to expand business as it may affect the customer engagement and attraction.
  • Legal: Different types of laws such as discrimination, employment, consumer protection, health and safety, patent and copyright etc. are legal factors. As Costa Coffee is planning to expand its business in New Zealand so it is essential for it to make sure that it collects detailed information of all of them in context of the country. The law of the nation is based upon English Law so it will not be very difficult for Costa Coffee to comply with all the rules and regulations of it regarding expansion (Legal system of new Zealand, 2019). It is a great opportunity for the organisation as the efforts which were required to be made for analysing laws for expansion will be reduced and monetary resources will be saved by company.
  • Environmental: Climate change, weather, corporate social responsibility, environmental policies etc. are such factors which are required to be focused by business entities such as Costa Coffee while expanding business. Currently the organisation is willing to open more cafes in New Zealand so that its market share could be increased. For this purpose, the enterprise is required to pay attention towards environment related policies. The government of country has taken various steps to conserve the indigenous biodiversity which shows that environment protection laws in the country are very strict. In order to open more coffee shops in New Zealand it is very important for Costa Coffee to comply with all of them (Kinoshita and et.al., 2016). It will be beneficial to establish a good image in the mind of authorities and local public of nation.

By assessing all the above described aspects of business environment of New Zealand it has been determined that the decision of business expansion in the country will be favourable for Costa Coffee because all of them are creating opportunities for business.

ANALYSIS OF THE BUSINESS SCENARIO

Application of Porter's Five Forces Analysis

Business scenario is the analysis of competitive environment in the industry so that effective strategies to deal with issues which may leave negative impact upon business could be formulated. If an organisation is not able to analyse the scenario of its business then it will be very difficult for it to sustain in the market for a long period in future. As Costa Coffee has planned to expand business in New Zealand so it is vital for it to determine the competitive environment. For this purpose effective analytical approach is required to be used that can guide to analyse the actual situation of market (Auld, 2014). Porter's five forces model is the best suitable model which could be used for this purpose.

Porter's five forces model: It is a technique which is a combination of five different elements which are focused by companies for the purpose of determining the level of competition in the industry. For Costa Coffee it if vital to analyse all the elements of it so that it can help the company to take strategic decisions for betterment of business (Blechová, 2018). Description of all its elements in the context of Costa is as follows:

  • Competitive rivalry: It is the first element of analysis in which existing level of competition is analysed to form strategies to attain competitive advantage for business. Costa Coffee is currently operating business at global level and planning to open new cafes in New Zealand so it should determine the existing rivals in the industry. The major competitors for it in the country are Starbucks, Cafe Coffee Day, Lavazza, Nestlé Nespresso etc. It shows that level of competition for the company is very high so the management is required to make sure that it introduces unique coffee with new cafes so that it can help to deal with competition (Costa and Torkomian, 2015).
  • Bargaining power of suppliers: All the external parties which are delivering material to organisations to execute their operational activities are known as suppliers. The food and beverage industry of New Zealand is very large and the number of such parties who can supply items for coffee is very high. If one of them is selling the material on high price then Costa Coffee can switch to another one. It shows that the power of bargaining of suppliers for the organisation is low due to high number of them (Fiorani, Cavicchi and Angelini, 2016).
  • Bargaining power of customers: In order to operate business activities properly it is very important for organisations to meet expectation level of clients. There are end number of seller in the coffee industry of New Zealand so the bargaining power of customers is very high. For Costa Coffee it will be very difficult to deal with this issue while opening new cafes in the country. The organisation cannot afford to loose its customers as it may affect the market share of it (Gunawan, 2014).
  • Threat of new entry: If a new company is willing to be the part of coffee industry then it is very important for it to arrange funds and make efforts to perform operational activities in systematic manner. It shows that there are various barriers to enter in this sector so the threat of new entrant for Costa Coffee in New Zealand is low and it will not affect its expansion in the same country.
  • Threat of substitutes: The products which provides same benefits to the customers are known as substitutes. Costa Coffee is a big brand in the coffee industry and the price of all its items is very high so the customers prefer to go to local shops and have substitutes of it so that they can get it for lower price. In New Zealand and other locations all around the world people have same mentality and on the other hand there are various brand loyal customers which are retained by the organisation. Therefore, the threat of substitutes for the organisation in New Zealand is moderate (Porter and Magretta, 2014).

From the above-stated sample, it can be concluded that if an organisation is willing to expand its business in a country then it is very important for it to make sure that it is able to adopt the opportunity of foreign direct investment. With the help of it, the goals regarding expansion could be achieved. The same can be compared to the students, before getting to the point they must know what can be done better for the task given by the professors, writing an essay is not an easy task it takes a lot of deep knowledge and in-depth research to jot down the pain points to make the essay stand out from everyone. Often students seek how to write an economics essay because lack sufficient knowledge they cannot prepare and conclude the essay which requires deep research on the topic itself. But Instant assignment help Australia has a solution to all your problems, with the help of expert writers you will get 100% plagiarism-free essays with on-time delivery of the content.

CONCLUSION

From the above project report it has been concluded that if an organisation is willing to expand its business in a country then it is very important for it to make sure that it is able to adopt the opportunity of foreign direct investment. With the help of it the goals regarding expansion could be achieved. While formulating strategies for the successful attainment of all the objectives it is very important for companies to determine the business environment for which PESTLE analysis could be conducted. In order to analyse the business scenario Porter's five forces model can be used by companies. Both the tools can guide managers to form effective strategies for business. There are various issues which could be faced by companies while expansion. These are higher competition, bargaining of customers and substitutes. In order to deal with them business entities are recommended to launch unique items according to the buying behaviour of customers to be their first choice.

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REFERENCES

Books and Journals:

Arrieta Castro, G. and et.al., 2016. Diversity of Bacillus thuringiensis strains isolated from coffee plantations infested with the coffee berry borer Hypothenemus hampei.

Auld, G., 2014. Constructing private governance: The rise and evolution of forest, coffee, and fisheries certification. Yale University Press.

Blechová, J., 2018. Konkurenceschopnost vybraného podniku služeb v oblasti cestovního ruchu.

Costa, H. L. and Torkomian, A. L. V., 2015. The valley of electronics: Relations between the creation of a school and the building of a successful industrial cluster in Brazil.International Journal of Technology Management & Sustainable Development. 14(2). pp.125-139.

Fiorani, G., Cavicchi, A. and Angelini, E. C., 2016. Prospettive strategiche per il Made in Italy agroalimentare: un’analisi esplorativa del mercato delle macchine professionali da caffè espresso secondo le 5 forze competitive di Porter.Economia agro-alimentare.

Gunawan, I. H., 2014. BUSINESS PLAN CAFE LUDOS.CALYPTRA,3(1), pp.1-21.

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