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  • Published on: 14th September 2019
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   Strategic Management

Cover Page:

Introduction:

In this assignment we will discuss the different aspect of strategic management. In this report, we will choose an organization and then evaluate it on the basis of its strategy. For this report the organization that has been chosen is the Costa Coffee which is the leading brand of coffee in the UK and one of the major coffee brand in the whole world. In this report, we will first analyze Costa coffee, and find out that which type of organization is this. We will than discuss about which strategies the Costa Coffee is currently having and which strategies can it choose for the years to come. This report will have three clear sections; in the first section, we will discuss how strategic management and planning will benefit our organization. We will critically evaluate both the internal and the external environment that is associated with Costa Coffee by using different tools and relevant theories of strategic management available to us. In the second section, we will evaluate about what we have found out about the organization through different theories of the strategic management. In the third and the final part, we will give recommendations to the selected organization.  Overall this report will greatly help us to understand the role of strategic management within organizations and how strategies are made according to the environmental factors in order to maximize the profit and minimize the risk associated within an organization.

Costa Coffee:

The Costa Coffee was founded in 1971 by two brothers Sergio and Bruno costa. These two brothers wanted to introduce the Italian taste of coffee into the market of the United Kingdom UK. The first cup of coffee that was served by costa Coffee was on a grey day of 1971 in London. First Sergio and Bruno served their coffee to some of the local caterers and then gradually to different people. After sometime, the two brothers opened their first coffee shop named as the Costa coffee. The Costa Coffee spread like fire across England and soon Costa Coffee became one of the major Coffee brands in UK in fact it became the biggest coffee brand in the whole of UK. After its steep success, the Costa Coffee was acquired by Whitbread in 1995. Today Costa Coffee has 3006 outlets all around the world for which tons of coffee beans are imported to the UK and from their exported to the relevant franchises.   In 1999, Costa coffee became a global brand by opening its first international outlet at the Dubai aviation in 1999, in approximately 12 years, the costa coffee already had 79 outlets in the Emirates alone. There are 1882 outlets of Costa coffee in the UK and 4000 express coffee machines that are helping the organization to lead its way for its competitors.

  (Costacoffee.ae, 2018)

Evaluation:

The Costa company is a leading brand in its market. It is the leader of the coffee market. The Costa coffee operates mainly in UK and in this market, the costa Coffee is the leader. The costa Coffee has almost 2000 outlets of the Costa Coffee in UK beating every other single Coffee brand by a big margin. Also in terms of financial activities, the costa coffee has a turnover of over 1billion pounds which gives it a good lead over all of its competitors. The closest competitor of costa coffee is Starbucks which also in terms of the UK market is no way near the Costa coffee. The Costa coffee in the last fiscal year has seen 10.7% growth in the sales of its coffee beating every other competitor. The Costa Coffee opened approximately 250 new store all around the world in the last year. Also the number of costa express coffee machines have increased from 4000 to whooping 7000. This makes the Costa coffee the leader in the UK market. The Costa Coffee is loved by all the customers. They provide a blend of traditional history with the modern world. They are customer oriented, and make the customer feel special which is the reason that costa coffee is the leader in the coffee market of UK.

(Whitbread.co.uk, 2018)

Strategic Planning and costa Coffee:

Strategic planning can be defined as designated course of actions through which a strategy is determined for an organization. The strategic management is the management of planning and decision making that is done by an organization in order to achieve both its short term and long-term goals.  In simple words, strategic management or planning is the management and making of a strategy; while strategy can be defined as designed course of actions on the basis of which objectives, mission and vision of an organization can be achieved.

(Simply-strategic-planning.com, 2018)

 The strategic management can greatly help the Costa Coffee in achieving their objectives, missions and visions. The strategic planning or management is important for any organization because it give the organization a path or a course of actions that can be followed in order achieve both short term and long-term objectives. The strategy of the Costa coffee is determined mainly by its parent company the Whitbread. It makes the strategy of the Costa company according to the mission, vision and objectives of the Costa coffee brand. The Costa coffee in its strategy has the customers as the center of its focus. In Costa coffee, the customers are the heart of the brand. It is important that the strategic management or superficially strategic planning of the Costa coffee is according to the objectives of the Costa Coffee. For this reason the strategic planning should be customer oriented and focused. The strategic planning should include gradual growth, long term sustainability for the customers, and increased profits on capital for the shareholders. Thus the strategic planning and management can only help Costa coffee if its strategy is helping them to move towards the achievement of their objectives. For instance a useful strategic plan for the Costa Coffee will be the one that will help the brand to achieve customer sustainability, long term globalization and growth and increased profits for the share holders.

(Whitbread.co.uk, 2018)

Critically Discuss the role of business environmental analysis (internal & external – macro/micro), as part of the strategic planning process.

  Both micro and macro environment play a vital roll in the strategic management and making of strategic plan. The macro environmental factors are however not under the direct control of the organization while the micro environmental factors are can be controlled by the organization. Here we will discuss both the role of macro and micro environment one by one:

Macro Environment:

The macro environment is also known as the external environment of an organization. There are numerous external factors that can affect the strategic planning for an organization. The macro environmental factors can be defined as “All the environmental factors that are not under the direct control of the organization but can greatly affect the business are known as the macro environmental factors.” The macro environmental factors can greatly influence both the business ad its strategy. For Costa coffee and all the other major organizations the following factors are the most important to consider in macro environment:  

 (Studylecturenotes.com, 2018)

Here we will discuss how these factors affect the strategic management of Costa coffee:

Economic:

The economic factors in the large scale condition comprise of the economical quality and abundance of the nearby populace or market. The economy of both the nearby market and also worldwide economy can enormously influence any business. (Smallbusiness.chron.com, 2018) The economic conditions in which Costa Coffee is working are perfect for the business. The working nations of the Costa Coffee mark basically comprise of market fragments of UK, Europe and the Emirates. The economic states of UAE have dependably been great

(Whitbread 2014)

Social and cultural elements:

The social and cultural variables are likewise of key significance for any business that is attempting to plan a business strategy. It is viable that distinctive societies and social conditions have diverse tastes, interests and diverse customer purchasing practices. The Costa Coffee focuses on each culture gather in the areas that it is working in. The Costa Coffee provides the clients with a rich conventional Coffee.

(Smallbusiness.chron.com, 2018)

Demographic elements:

The demographic factors relate the markets with respect to the age gatherings of population present in a market segment. Or on the other hand in basic terms, demography is the evaluation of population their size, thickness, age , sexual orientation and race and so forth. (Studylecturenotes.com, 2018)

The Costa Coffee focuses on each sort of customers all over UK and the various nations in which the brand is working in. Generally the fundamental target csutomers of the Costa Coffee are the youthful age that need to have a social gathering.

(Groves, 2018)

Natural variables:

The natural powers are the parts of the macro environment conditions which are completely out of the control of the organizations or some other body. The Costa Coffee extraordinarily centres around the natural variables and the earth. In spite of the fact that it can't control the natural factors that are related with the earth, however Costa Coffee tries its best to help save the earth and conceivably maintain a strategic distance from any natural changes in the ecological conditions.

(Whitbread,2014.).

Technological elements:

The technological variables determine the technological level of the business technology with  the business is entitled to work in. It is vital to know for the business that nature has enough technological advancements to help their business strategy. The Costa Coffee has been improving technologically keeping in mind the end goal to compete with its real competitors particularly with Star bucks. Costa Coffee has begun its online site, and introduced Costa Coffee express machines which were the indication of its technological headways. As of now there are roughly 4000 express coffee machines of Costa coffee crosswise over UK.

(Oxford College, 2018)

Political components:

The political variables or the legitimate factors likewise have an incredible impact over the methodologies of business. Diverse showcasing conditions or sections have distinctive political impacts, lead and directions for organizations. The Costa Coffee takes after the principles and directions of every last market that it is working in.

(Smallbusiness.chron.com, 2018)

Micro environmental factors:

The micro environmental factors are the factors that are directly related to the organization. These factors can directly affect the business and are under the control of business as well.  The micro environmental factors include the following aspects:

1- Customers;

The customers of an organization can directly affect an organization and its operations. Without potential customers, no business can generate sales or have profits.

2- Employees:

The employees of an organization are its assets. These are the human resource that are responsible for making and implementing the business strategy and the operations of a business. The employees of an organization are a very important factor to consider when making strategic planning

3- Suppliers:

The suppliers are responsible for delivering your products from the manufacturing plants to the customers. The suppliers control most of the logistics of a business and are very important to consider when making a business strategy.

(Smallbusiness.chron.com, 2018)

Environmental Audit:

We will have environmental audit on the basis of different frameworks in order to identify the micro and macro environmental factors of Costa Coffee.

PESTEL analysis:

The PESTEL analysis is a strategic management tool that is used to evaluate the macroenvironmental factors. The PESTEL analysis consist of political, economical, social, technological, environmental and legal aspects of the business environment.

 Political: The political conditions in which Costa Coffee works are exceptionally steady and the brand keeps a steady connection with the administration.

Economic: The economic conditions are the financial aspects of an environment or business setting. The Costa Coffee today is being influenced by the monetary emergency of the Europe and Brexit which has caused some incredible increment in costs for Costa Coffee.

Social: It consist of the social and cultural conditions of a market. The Costa Coffee centers around each culture, race and ethnic gathering for their items. The primary focal point of the Costa Coffee is to serve the mankind.

Technological: The technological advancements in a market. The Costa Coffee has begun 4000 express machines crosswise over UK as technological headways.

Environmental: The environmental conditions of the area in which business is operating. The Costa Coffee centers around environmental conservation and change. The brand urges its clients to diminish the utilization of plastic materials.

Legal:

The legal aspects consist of the rules and regulations of market. The Costa coffee works in an exceptionally legal and completely clear way.

(Anon, 2018)

Porter’s five forces:

The Porter’s five forces is a framework that is used to determine the micro environmental factors that are associated with an organization. Here we will discuss the porter’s five forces according to the Costa Coffee business environment:

Threat of new entrants:

 The Costa Coffee is working in a worldwide domain in which there is great brand  rivalry. When you are a worldwide brand, there is a bigger threat of new entrants particularly in remote nations that the brand is set up in. For Costa Coffee, in significant nations like USA, China and Germany and so on there is an extensive threat of new entrants.

Purchasing powers of clients:

The Costa Coffee for the most part focuses on market fragments in which the clients have moderately high buying power. The Costa coffee works in the most parts in Europe and UK where customers have high purchasing power.

The bargaining power of suppliers:

There is high bargaining power in the portion that Costa coffee is working in. Along these lines, it is important that the brand dependably remain in front of its rivals.

The threat of substitutes:

In spite of the fact that in larger part of Europe, coffee has turned into a cultural perspective and can't be substituted as an item by any other product. Yet at the same time there are organizations that are starting to offer substitutes like hot chocolate, tea, green tea and so forth which can be a threat to Costa Coffee.

Competitive rivalry:

The real contender of the costa coffee is the Starbucks. It is the main real coffee mark that is giving Costa Coffee some intense time in UK hence, Costa Coffee needs to influence methodologies as per to the Starbucks.

Strategy of costa Coffee:

The Costa Coffee chooses the “focus” strategic planning for its organization. The Costa Coffee focuses on the customers as their prime importance when formulating a strategy for the organization. Since its inception, the Costa Coffee main strategy is focused on its customers. The brand wants to make longer relationships and sustainability for the customers.

SWOT analysis:

Strengths:

• Strategic planning gives a clear path

• It gives the employees and organization a way to move forward

• Through strategic management an organization can control both the macro and micro environmental conditions

Weaknesses:

• The strategic planning has no direct control over macro environment

• Natural occurrences cannot be controlled by strategic management.

 

Opportunities:

• Through strategic planning the microenvironmental factors can be controlled

• Strategic planning ca also help avoiding any threats of nature

Threats:

• The strategic planning can prove wrong in some cases

• The strategy should always have a second plan

Recommendations:

The recommendations that I will make to the Costa coffee is that it should focus on the strategic management and planning in order to control both the operations and all the factors that are associated with it. Through strategic management, the costa coffee can control the micro environmental factors. They can also avoid any unnecessary tensions from macroenvironmental factors through strategic planning. My other recommendation is that the Costa coffee should enhance their strategy they should now embrace a hybrid strategic choice which will focus on multiple aspects for their strategy. The Hybrid strategy will help them decrease cost, increase differentiation and focus on the customers as well.

References:

Costacoffee.ae. (2018). Page Not Found - Costa Coffee. [online] Available at: https://www.costacoffee.ae/costa-coffee/the-costa-way/history/ [Accessed 8 Apr. 2018].

Whitbread.co.uk. (2018). Costa. [online] Available at: https://www.whitbread.co.uk/our-brands/costa [Accessed 8 Apr. 2018].

Simply-strategic-planning.com. (2018). What is strategy?. [online] Available at: http://www.simply-strategic-planning.com/what-is-strategy.html [Accessed 8 Apr. 2018].

Whitbread.co.uk. (2018). Our strategy. [online] Available at: https://www.whitbread.co.uk/about-us/our-strategy.html [Accessed 8 Apr. 2018].

Studylecturenotes.com. (2018). How Marketing Macro Environmental Factors Affect Business Strategy | SLN. [online] Available at: http://www.studylecturenotes.com/mba-marketing/how-marketing-macro-environmental-factors-affect-business-strategy [Accessed 8 Apr. 2018].

Smallbusiness.chron.com. (2018). How Business Environmental Factors Influence Strategy. [online] Available at: http://smallbusiness.chron.com/business-environmental-factors-influence-strategy-65009.html [Accessed 9 Apr. 2018].

Oxford College of Marketing Blog. (2018). Micro and Macro Environment Factors | Oxford College of Marketing Blog. [online] Available at: https://blog.oxfordcollegeofmarketing.com/2014/11/04/the-impact-of-micro-and-macro-environment-factors-on-marketing/ [Accessed 9 Apr. 2018].

Groves, (2018). [online] Available at: http://www.managementparadise.com/forums/principles-management-p-o-m/208673-pest-analysis-costa-coffee.html [Accessed 9 Apr. 2018].

Smallbusiness.chron.com. (2018). Six Microenvironmental Factors That Affect Businesses. [online] Available at: http://smallbusiness.chron.com/six-microenvironmental-factors-affect-businesses-78023.html [Accessed 9 Apr. 2018].

Anon, (2018). [online] Available at: http://www.managementparadise.com/forums/principles-management-p-o-m/208673-pest-analysis-costa-coffee.html [Accessed 9 Apr. 2018].

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