Strategic Analysis of Pelicano Coffee Co.
Please take a look at all panopto recordings and slides before week 6 to write this essay.
The paper is 1500 words in total and the assessment guidance is attached in files.
The course's name is Strategy.
The link, account address, and password to view recordings and slides:
https://canvas(dot)sussex(dot)ac(dot)uk/courses/23923/pages/assessment-information
account: ASK SUPPORT
password: ASK SUPPORT
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Update from the Client
For the store you choose, please not be starbucks and try to avoid big chain brands, it would better be somewhere small, like a local small restaurant where you actually been there. The small business you choose is better to be in China, or US, or UK, or Canada.
Individual Project Report – 30% Word count: 1,500 words (+/- 10%, excluding tables, figures and bibliography) Project task: Do a strategic analysis of a local restaurant or pub from your town or neighborhood (no chain please!). Please cover the following points in your analysis: (1) Do an external analysis of the local industry environment your restaurant/pub is in. How lucrative is the local environment for running such a restaurant/pub? Please explain. (2) Do an internal analysis of the restaurant/pub’s resources and capabilities. How do they compare to some key success factors in the local industry environment? (3) Do an analysis of the social responsibility or environmental sustainability of your selected restaurant/pub. How would you change the business model to improve it? Please make use of analytical models we have discussed in class (but also others if applicable). You may use meaningful tables and figures in support of your analysis. They do not count against the word limit. Please structure your answers by question, i.e. (1), (2) and (3). You may also include a very brief introduction and conclusion, but be mindful of the word limit. To answer each question, please use observations, e.g. visits of restaurants/pubs, and secondary sources, e.g. websites and industry reports, all of which you can find online. Please reference these sources throughout the text wherever you use them. A bibliography must be provided at the end of the report (in any usual format). There is no need for formal interviews. However, if you pick up useful information through informal chats (e.g. customers), feel free to use that in your report. There is no need to add/reference academic papers or books in your report. Good luck with your project! Assessment criteria: Quality of answer to each question: 3 x 30% Overall presentation (structure, referencing, tables/figures): 10%
Pelicano Project Report
Student’s Name
Date
Professor’s Name
Program of Study
Table of Contents
QUESTION 1 ...................……………………………………………….………………………3
PORTER 5 FORCES………………………………………………………....…….……………..3
STEEP ANALYSIS…………………………………………………………...…………….…….4
CAN A COFFEE SHOP BE PROFITABLE IN THE LOCAL BUSINESS ENVIRONMENT?
………..............................................................................................................................................5
QUESTION 2.……………….…………………………………………………………………...5
INTERNAL FACTORS AT PELICANO…………………….……………………………..........5
VALUE CHAIN EXPLAINING PELICANO’s OPERATIONS………………………………...8
QUESTION 3....……………………….......……….…………………………………………….8
PELICANO’S BUSINESS MODEL……………………………………………………………...9
APPLICATION OF THE TRIPLE BOTTOM LINE MODEL…………………...…………......11
CHANGES THAT PELICANO CAN INCORPORATE INTO THEIR OPERATIONS…………………………………………………………………….......................13
REFERENCE LIST………………………………….………………………………….……...14
Pelicano Project Report
Question 1
Based in Brighton, Pelicano Coffee Co. is a micro-roastery enterprise with four coffee outlets. Founded in 2014, Pelicano hand roasts all its coffee at its flagship store on Sydney Street. Therefore, this report focuses on Pelicano’s most recent store on Lewes Road.
Porters 5 Forces
I employed Porter’s 5 Forces model when analysing the local industry environment, as illustrated in Figure 1.1. Applying this model helped me make crucial observations about the industrial environment around the coffee shop.
Figure 1.1: Porter’s 5 Forces model
Although there are several coffee shops in Brighton, research illustrates that more farms worldwide are willing to sell their coffee, which makes coffee shop suppliers have low bargaining power. Dom, the manager at Pelicano, informed me that he does not search for farms to get products from; instead, they come looking for him for business, which gives him an added advantage of buying the coffee at a lower price. From our conversation, I understood that coffee shops do not have an advantage with customers as they do with suppliers because of competition. Research illustrates that consumers have various coffee shops they can visit. Therefore, their only way of survival or success is by giving customers the best service, which helps them increase their returning customer base. The threat of new entrants is another affecting coffee shops. Research illustrates that the capital required to set up a coffee shop is low, which is why there are many in Brighton. Brighton ranks second as the ideal place to set up a business in the United Kingdom (UK) (Lock, 2020). The outbreak of Covid-19 led to an increase in the number of substitutes, a threat to coffee shops. For instance, because of Covid-19, most coffee enthusiasts purchase coffee-making machines for home use. Most customers who purchased coffee-making machines used to buy coffee at the shops. However, with this substitution, most consumers prefer to make the coffee at home, reducing sales and revenue. To survive, coffee shops have to gain a competitive advantage by being more than just a place that sells coffee.
Steep Analysis
I conducted a ‘steep’ analysis to help me understand the external environment, as illustrated in Figure 1.2.
Figure 1.2: Steep Analysis
Pelicano’s recent coffee shop is on Lewes road, between the city centre and within the geographical area of Brighton and Sussex universities. Because of its strategic position, Pelicano’s new shop is ideal for business. Besides, most coffee shops located in the area target young people. Brighton’s public cares about sustainability and proper trading activities. The community’s concern stems from the perception that Brighton has two universities and is home to the only Green Party community in the United Kingdom. In their policy, climate change is the party’s main focus, coupled with being fair to everyone (Green Party, 2019). Research illustrates that any coffee shop vendor who intends to thrive and succeed in Brighton must consider the party’s focus in their operations, as consumers tend to purchase products based on their beliefs. Coffee shops within Brighton ought to consider the uncertainty around Brexit. Research illustrates that introducing new importation laws could adversely influence the operations of the coffee shops within the area, leading to the recording of low profits. Although the higher number of students studying in Brighton could signify a readily available market, research illustrates that it is detrimental for business entities. For instance, the high number of students leads to the availability of cheap labour because most of them do not require experience to work. Figure 1.3 below contains a graphical illustration of Brighton’s unemployment rate left1713865(Plumplot, 2019).
Figure 1.3: Graphical illustration of Brighton’s unemployment rate
Can A Coffee Shop Be Profitable in The Local Business Environment?
Each day, Brighton’s economy continues to grow, making it a strategic geographical area for the growth of any business (Regeneris, 2018). In Brighton, economic growth signifies that consumers are capable of purchasing luxurious beverages, such as coffee. Conversely, research illustrates that fast food restaurants and pubs selling coffee are likely to adversely influence the growth of the business (IBISWorld, 2022). The mentioned ventures on Lewes road (where the new coffee shop is) could be detrimental for the Pelicano. Therefore, with these considerations in mind, a coffee shop can only become successful if it manages to meet the needs of its target audience. In Brighton, coffee shops can become profitable if they meet the expectations of young people who value sustainable processes.
Question 2
Internal Factors at Pelicano
Pelicano’s success as a coffee shop stems from various factors. In this segment, I will analyse and compare their resources and capabilities with their rivals.
Design
In the business world, impression matters a lot. Therefore, guided by this assertion, Pelicano’s first primary selling point is its artistic and creative design. The shop has a rustic, urban touch because it uses natural plants, neon lights, and stone walls. Figure 1.4 below shows the shop’s appearance. The shop has large windows at the front, which are crucial in allowing the passage of natural light (Image from Google).
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Figure 1.4: Pelicano’s shop appearance
Pelicano plays jazz music at a recommendable volume on its background speakers to appeal to and entice passersby and customers visiting the shop. The music and the coffee shop’s open space create a calming atmosphere that appeals to its guests. Pelicano’s other shops have a similar aesthetic, which makes them unique compared to other coffee shops, such as Costa. The red colour resonates well with the shop’s branding and portraits, another factor that make...