Anual Report Coffee Bean
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Cofee Bean Bea n and Tea Lea Lea Strategic Strat egic Analysis Conor, Enrique, Maria, Grou
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2 C"##EE BEA$ A$% TEA LEA#
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2 C"##EE BEA$ A$% TEA LEA#
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Executi&e Su''ary This report comprises comprises of information information regarding regarding Coee Bean and Tea Leaf, a coee retailer founded in the US. The report will begin with an introduction of the compan, discussing the origins, !alues and mission of the coee retailer. retailer. This will be followed b a business can!as model, a detailed stud of nine essential elements that create an idealistic portfolio of the compan"s operational bac#ground and relationships. $ further analsis will ta#e the form of a %orter analsis, which de&nes the competition the compan must face as well as e'ternal e'ternal factors aecting the companies performance, such as the threat of substitutes, new entrants to the mar#et, and the powers held b suppliers and buers. The e'ternal analsis continues in the form of a %(ST(L analsis, which focuses on the US and factors within the US that can eect Coee Bean and Tea Tea Leaf"s course course of business. )inall, )inall, a S*+T analsis will bring bring to realit the strengths, wea#nesses, threats and opportunities faced b the compan. The report will will begin to discuss Coee Bean and Tea Tea Leafs strateg, bringing focus to the areas the emphasie to be critical to their success. The strateg will then be plotted on a strateg map to outline the steps to be made to achie!e their &nancial goals. The map comprises of - perspecti!es, starting from Learning Learning /rowth, then 0nternal %rocesses, Customers, and &nall the )inancial. (ach of these stages are analed indi!iduall, where the obecti!es of each stage are recognied and a means of measurement for each obecti!e are made. Lastl, before the conclusion, a balance scorecard scorecard will be presented to portra a strateg map, obecti!es and measures that summarie the perspecti!es into a strateg.
- C"##EE BEA$ A$% TEA LEA#
Ta(le o Contents )ntroduction**********************************************************************+ Business Model Can&as***************************************************** -ey .artners************************************************************************** -ey Acti&ities************************************************************************* -ey Resources********************************** Resources********************************************************************** ************************************** ** Cost Structure************************************************************************ /alue .roosition******************************************************************* Custo'er Relations0is********************************************************** C0annels********************************************************************************1 Re&enue strea's******************************************************************!2
.orter3s #i&e #orces o Cofee Bean and Tea Lea***************!4 T0reat o ne5 entrants************************************************* entrants**********************************************************! *********!4 4 T0e (argaining o5er o suliers*****************************************!4 T0reat o su(stitute**************************************************************!4 Bargaining o5er o (uyers***************************************************! (uyers***************************************************!6 6 Ri&alry a'ong existing co'etitors***************************************!6
.ESTEL 7SA C"##EE )$%7STR8****************************************!9 S:"T Analysis****************************************************************!+ Strengt0s*****************************************************************************!+ :ea;nesses*********************** :ea;nesses************************************************* ***************************************************! *************************! "ortunities***********************************************************************! T0reats********************************************************************************!
S:"T Matrix*******************************************************************!1 S"****************************************************************************************!1 ST****************************************************************************************!< :"***************************************************************************************!< :T***************************************************************************************!<
Cofee Bean and Tea Lea3s Strategy********************************=2 .roduct "riented Strategy******************* Strategy********************************************* **********************************=2 ********=2 Custo'er "riented Strategy**************************************************=2 #inancial oriented strategy****************** strategy******************************************** **********************************=! ********=! T0e Critical Success actors***************************************************=!
Strategy Ma******************************************************************=4 Learning and Gro5t0*******************************************************=6 -no5ledgea(le E'loyees****************************************************=6 $ature o "rgani>ational Culture*******************************************=6 E'loyee .roducti&ity**********************************************************=9 E'loyee Retention**************************************************************=9 #ranc0ising #ranc0ising Suort************************************************************ Suort**************************************************************= **=9 9 Social Resonsi(ility .rocess*************************************************= .rocess*************************************************=9 9
)nternal**************************************************************************=+
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7se t0e Best )ngredients*******************************************************= %eli&er t0e Best Taste and Aro'a******************************************= )ncrease Loyalty*******************************************************************= #ranc0ising "ortunities and .rocess***********************************= Business to Business .rocesses*********************************************=
Custo'er************************************************************************=1 Maintain and )ncrease Custo'er Satisaction Le&el****************=1 )ncrease Custo'er Relations0is*******************************************=< To )ncrease Brand )'age and Reutation********************************=< To )ncrease Custo'er .ro?ta(ility*****************************************=<
#inancial*************************************************************************42 )ncrease .ro?ta(ility*************************************************************42 Re&enue Gro5t0*******************************************************************4!
Balanced Scorecard*********************************************************4= Conclusion**********************************************************************44 Bi(liogra0y*******************************************************************44 )ndex******************************************************************************4+ Business Model Can&as*********************************************************4+
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)ntroduction Coee Bean and Tea Leaf was &rst formed in 154 in Los $ngeles, California. This ear mar#s their 36th anni!ersar in selling high 7ualit coee and tea around the US and $sia. Coee Bean and Tea Leaf stri!e to deli!er the ma'imum satisfaction to their customers, and do so b handcrafting their be!erages to the customer"s preference 8)ranchisepool, 26169. :uch of their success is due to their well;#nown customer ser!ice. Their compan !ision and mission re!ol!e around this fact. Their !ision is to be “simply the best roaster and global retailer of coee and tea”, and their mission is “to create a spirit within our Company that inspires our Team Members to provide our customers with a Total Quality Eperience! Quality of "roduct, #ervice and Environment” 8)ranchisepool, 26169. Coee Bean and Tea Leaf currentl ha!e o!er 566 stores around the US and $sia. 0t is the largest and oldest pri!atel held specialt coee and tea retailer in the US with compan owned stores in California, $riona, Singapore and :alasia. Their franchises are spread across the US and $sia, with new stores in $ustralia, (gpt, 0ndia and :e'ico. Coee Bean and Tea Leaf ser!e o!er 166 million coee and tea be!erages e!er ear worldwide 8)ranchisepool, 26169.
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Business Model Can&as -ey .artners The #e partners of Coee Bean and Tea Leaf consists of farms from Latin $merica, $sia %aci&c and (ast $frica who suppl the raw ingredients to Coee Bean and Tea Leaf stores across the US and $sia 8)ranchisepool, 26169. $nother #e partner would be the franchises across the US and $sia. These stores collecti!el build the brands reputation and create re!enue for the brand.
-ey Acti&ities Coee Bean and Tea Leaf sell their products through stores owned b franchisers. The also ha!e an online store, where customers can purchase coee beans and coee machines to eno high 7ualit hot be!erages in their own homes 8Coee Bean Tea Leaf, 2619.
-ey Resources Coee Bean and Tea Leaf oer high 7ualit products made from the best ingredients the can ac7uire. Their #e partners suppl them with the best coee beans for the best tasting coee, and the best tea leafs from Sri Lan#a, Thailand, 0ndia and ; -6 ear old consumers. Customers in this segmentation are most li#el students, teenagers, the wor#ing class and wor#ing parents. The !alue coee and tea as a part of their li!es and ma feel under pressure from wor#ing, li!ing and studing. Duppies are li!ing a free life stle, in which casual coee drin#ing is fre7uent. Eegular coee drin#ers can be wor#ing people who need coee for stress relief, and elderl people drin# for social gatherings and leisure. $nother segmentation is the business;to;business mar#et 8B2B9, in which there is a high potential growth. Coee Bean and Tea Leaf e'pressed that their products are not onl oered in stores, but in B2B mar#ets? @>ou can 0nd The Coee %ean . Tea /eaf products in grocery stores, restaurants and o?ces” 8coeebean, 2619$
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1 C"##EE BEA$ A$% TEA LEA# 6 )igure 1? Segmentation 8*ordpress, 2619
)igure 2? ('pected growth 8*ordpress, 2619
Re&enue strea's The general re!enues come from sales and franchising. The total re!enue in 2612 is 8wi#ipedia, 2619
)igure ? :onthl re!enue in Singapore. 8*ordpress, 2619
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)igure -? (stimated Coee Bean and Tea Leaf 80nternational Coee Tea LLC9 pro&t in Singapore 8*ordpress, 2619
#igure@ percentage ranking of brand value globally 8*ordpress, 2619 +riginal sourceF (uromonitor 0nternational
$s seen abo!e, the brand !alue of Coee Bean and Tea Leaf is ran#ed at third place with 1-G. Starbuc#s as its biggest competitor ran#s at the second place with 13.-G. 0n general, Coee Bean and
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1 C"##EE BEA$ A$% TEA LEA# 2 Tea Leaf is building up brand !alue and generating re!enue sustainabl.
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.orter3s #i&e #orces o Cofee Bean and Tea Lea
T0reat o ne5 entrants Coee is popular among dierent tpes of people from dierent age groups, so coee retailers tend to appear regularl in the industr due to a lac# of barriers of entr. The primar barrier is competing against well;established brands and funding the opening of a store, but coee can be sold in small stores, or e!en through machines that re7uire little space. *ell;established brands dominate the mar#et through ears of operation, as well has successful mar#eting eorts. (!en a brand such as :cHonalds can enter the industr and dominate b adding coee to their menu.
T0e (argaining o5er o suliers Suppliers ha!e medium bargaining power since the usuall come from de!eloping countries and because of the !ast competition between suppliers. The product is standardied, ma#ing dependenc on one supplier non;e'istent. There is also an increasing demand for eco;friendl coee, organic coee and gourmet specialt coee, increasing the selling price for coee. The bargaining power of suppliers depends on the economic situation of the countr.
T0reat o su(stitute :an products such as sodas and soft drin#s that contain caeine are in competition coee and tea. $s coee and tea are also morning drin#s, be!erages consumed such as uices and smoothies as part of a balanced brea#fast can substitute the consumption of hot be!erages.
Bargaining o5er o (uyers The buer power for Coee Bean and Tea Leaf customers is high as there are man other coee retailers to choose from, such as Starbuc#s and Costa Coee, and since the prices of these retailers are uni!ersal, the customers face no opportunit cost in price when choosing one coee retailer o!er the other. Thus, product dierentiation is #e to inuence the customers" decisions.
Ri&alry a'ong existing co'etitors The ri!alr among e'isting competitors is high. Competitors include Starbuc#s, :cHonald"s, Burger
S:"T Analysis
Strengths
S * + T
* ea #ne ses
+ p p o r ttu u n it ie s
T h re a t s Strengt0s •
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.rice o5er Coee Bean and Tea Leaf has the abilit to charge premium prices whilst retain customers because of the 7ualit of their products and ser!ices. Co'any3s 'ar;eting strategyF Coee Bean and Tea Leaf prefer to own the whole unit instead of sub;franchising it because as the C(+ saidF “The reason is attributed largely to be limited size of the marketplace as the products are targeted at a specic niche rather than the general public… coupled with the high cost of rent, franchisees will not to be nancially viable if the ownership is limited to one or two stores.” Recruit'ent and trainingF Coee Bean and Tea Leaf want their emploees to assist their customer with total 7ualit e'perience based on the compan"s core !aluesF friendliness, respect, ownership, teamwor# and honest. )nno&ati&e culture 0n!ented the trademar# J0ce Blended" Kew drin# categories, e.g. froen drin#s )irst specialt coee e'tract producer
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:ea;nesses •
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#ranc0ise3s olicyF it is not possible for the head franchise to sub;franchise their outlets. :ea; 'anage'entF )ranchises can ha!e wea# management sstems in some franchises located in countries where wor# ethics aren"t the same as in the US. Target 'ar;etF $s Coee Bean and Tea Leaf charge a premium price for their products, it will be dicult for them to ser!e customers who are within their target mar#et but ma be price sensiti!e, e.g. students on a budget.
"ortunities •
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Tec0nological ad&ancesF as well as impro!ing their products and ser!ices, new technolog builds competiti!e barriers against ri!als. $e5 roducts and ser&ices Coee Bean and Tea Leaf recentl began to sell coee machines online, allowing customers to bring the high 7ualit taste of the compan"s coee to their homes. E'erging international 'ar;etsF Coee and tea are increasing in distribution around the world and is growing in popularit because of successful coee retailers such as Coee Bean and Tea Leaf.
T0reats •
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•
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)ntense co'etitionF The Coee retailing industr is !er competiti!e due to the emergence of highl successful brands such as Starbuc#s, Costa Coee, :cCafe 8:cHonald"s9 and man more. Su(stitute roductsF Hrin#ing coee at home, or other caeinated be!erages can ser!e as a substitute to buing Coee Bean and Tea Leaf be!erages. Econo'ic issuesF Specialt coee and tea are considered to be lu'ur goods, therefore ma reduce in demand when the disposable income of household decline due to problems with the econom. .olitical c0angesF %olitical changes can aect Coee Bean and Tea Leaf"s business. )or e'ample, Coee Bean and Tea Leaf must pa import ta'es when shipping in their raw ingredients from regions such as South $merica and (ast $frica. 0f the ta'es increase, the ma ha!e to increase the cost of their products to absorb the higher import cost.
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S:"T Matrix
Strengths
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+pportunitie s
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Threats
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Coee :achines 0ntroduce new be!erages to a new mar#et
Customer ser!ice 0ncrease product line
*ea#nesse s
•
•
Malue for price sensiti!e consumers
0ncrease training
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S" •
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The inno!ation of introducing coee machines to their product line means that Coee Bean and Tea Leaf can now bring the great taste and 7ualit of their products to the consumers home. This can help them e'ceed their competition. The introduction of new be!erages, such as J0ce Blended" allow Coee Bean and Tea Leaf to enter into emerging international mar#ets with a stronger product line, ma#ing a bigger impacto on the mar#et.
ST •
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To o!ercome the competition in the industr, Coee Bean and Tea Leaf need to ta#e their strongest aspects and use them to their full ad!antage. Their customer ser!ice is a uni7ue selling point and can be a dri!ing force to win customers o!er their competitors B increasing their product lines, Coee Bean and Tea Leaf can a!oid being subect to substitutions ta#ing their business. )or e'ample, a substitute to coee in the Summer would be cold, refreshing drin#s. B introducing be!erages such as J0ce Blended", Coee Bean and Tea Leaf can continue to satisf their customers and a!oid losing sales to substitutes.
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$s Coee Bean and Tea Leaf sell their products at a premium price due to the high 7ualit of the products, sales can be lost b price sensiti!e consumers. Aowe!er, through the use of promotions, such as a loalt scheme that rewards return purchases, Coee Bean and Tea Leaf can attract price sensiti!e customers as the are creating !alue for them.
:T •
Hierent countires carr dierent wor# ethics. )or Coee Bean and Tea Leaf, customer ser!ice is a #e factor that distinguishes their compan o!er others in the industr. The compan, howe!er, cannot monitor all franchises on a dail basis, and therefore will be obli!ious to an indications of poor ser!ice or management until a re!iew period. Training must be completed b all managers to ensure that the !ision and mission of the compan are translated onto the emploees correctl, and to a!oid poor ser!ice.
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Cofee Bean and Tea Lea3s Strategy The strateg of the Coee Bean Tea Leaf will be analed in dierent aspects, such as customer aspects, product aspects and &nancial aspects.
.roduct "riented Strategy Coee Bean Tea Leaf is considered as the second largest coee, and other related products, producer and retailer. Aigher than standard 7ualit of products is what the compan is #nown for. The compan commits to its customers to bring dierent tastes of coees and teas disco!ered all around the world to them in the best 7uali&ed products ; ust as the said on their websiteF “)ind your )lavor” isn@t Aust wordsB it=s a commitment to our customers and the foundation upon which we operate$ To assure the best 7ualit, Coee Bean Tea Leaf has a clear strateg for selecting suppliers and purchasing? @:e select only the top one percent of 2rabica beans and 0rst hand1 pluc(ed, whole leaf teas” and @+n the road to tea perfection, we insist on staying connected to the harvest by purchasing directly from the growers 1 without middlemen, wholesalers, or importer1eporter” 8www.coeebean.com, 2619$ The compan builds up a good relationship with pri!ate and small farms so that the best conditioned materials can be deli!ered without an intermediate interference. Compared with the most popular coee drin# retailers, Starbuc#s, the !ariet of products are not that high? howe!er the compan uses competiti!e pricing strategies which de&nitel ta#e prices of competitors into account. The competiti!e pricing strateg shows that Coee Bean Tea Leaf are aiming at gaining mar#et shares with a high standardNlow price product approach. )or raw material deli!er, both downstream and upstream, the compan ma#es sure that e!er step is under control. The strateg can be described as integrated suppl chain management. The e'press on their website, “we have an integrated supply chain with worldwide distribution capabilities, owning the process from seed to cup” 8www.coeebean.com, 2619$ This guarantees a good le!el of e'ibilit and ecienc, which increases deli!er reliabilit.
Custo'er "riented Strategy The Coee Bean Tea Leaf !alues its customers in a great degree. The compan commits to bring customers best taste of coee and tea. $s the ha!e saidF @since opening our 0rst caf in %rentwood, California, we have always been passionate about connecting loyal customers with carefully handcrafted 2
2 C"##EE BEA$ A$% TEA LEA# product” 8www.coeebean.com, 2619 , customer loalt has alwas been considered as an important aspect. The compan aims to #eep satisfing loal customers and increase general customer loalt.
Local store deli!er and home deli!er is a core strateg in their distributing channel, this assures that the compan can be closer to customers and alwas on trac# with dierent demands. Customers will also bene&t from a bonus of online ordering and free shipping if the total amount reaches =3 8www.coeebean.com, 2619. 0t is also possible to order b phone for a home deli!er, which de&nitel bene&ts customers who lac# access to the 0nternet. $nother distribution strateg is franchising? @ :e partner with 5uali0ed developers who share our passion and enthusiasm for the brand” 8www.coeebean.com, 2619. Together, franchising support will be oered? “+ur real estate and development team assists in store design, stores speci0cations and construction” 8www.coeebean.com, 2619. This franchising strateg will ta#e ad!antage of local eects and capacities of partners and generate better re!enue? howe!er franchiser e!aluation and selection shall also be ta#en into account if the compan would li#e to maintain a good image. Customer care management is another strateg when dealing with complaints, #eeping trac# of new demands and build up good relationships? @:e are dedicated to providing you with the ecellence in the products we sell, the services we provide and the environments where you shop$ :e care about what you have to say about your relationship with us, the 5uality of our products and your eperience as a customer” 8www.coeebean.com, 2619. The mar#eting strateg used can be described as glocaliation; think globally and act locally. The compan has global products, which are planted world wide, and to satisf local customers in the best wa se!eral products are adapted to local demands, some new inno!ated tastes are e!en established. The sale acti!ities also adapt to local en!ironments. 0n (urope, Christmas is a good period when sale increases, howe!er in $sian sales onl increase according to local holidas, !acations and festi!als. To gi!e customers moti!ation and inspiration in modifing and customiing their own drin#s, the compan has inno!ated a self O ser!ed sstem for their coee called CBLT. @C%T/ was launched in the Dnited #tates, #ingapore, Malaysia, "hilippines and 3orea in, 977 and was referred to by CE+ Mel Elias as the company=s “biggest innovation to date$” The #ystem is available in department stores and retail outlets in the 2-
Dnited #tates, 3orea, Malaysia, "hilippines and #ingapore$ C%T/ is additionally distributed in Thailand, Dnited 2rab Emirates and %runei” 8www.coeebean.com, 2619.
#inancial oriented strategy Coee Bean Tea Leaf is a pri!ate Limited Liabilit Compan? their &nancial goals will be to generate pro&t for in!estors and sta#eholders. Thus, Coee Bean Tea Leaf is positioning customers and products at a high le!el, but not forgetting its shareholders and in!estors. The general strateg of the compan can be phrased as @to generate revenue and reali;e potential pro0ts for our sta(eholders by satisfying customers with the best 5uali0ed and innovative product and services” 8www.coeebean.com, 2619$
T0e Critical Success actors $s showed in the chart, se!eral aspects need to be reached before realiing long;term goals. *hat needs to be mentioned is that these factors are not onl directl related to success, but also related to each other? thus achie!ing success is not onl an inside;out process but also an internal;internal related goal;approaching program.
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)ncrease and Maintain Custo'ers3 Loyalty Loal customer bonus Customer beha!ior management
Relia(le .artners0i ig0 Custo'ersD Satisaction Le&
)ranchisers relationship Histributor"s relationship +utsourcing strateg
Customer complaints management %roduct 7ualit and inno!ation
Adati&e Mar;et Entry Strategy
.roduct )nno&atio
0mplementation of glocaliation Usage of franchisers )oreign mar#et entr
%roduct modi&c Localiatio Team inspirati
Success
.recise .roduct uality
Social Resonsi(ility
Supplier manageme )ranchiser e!aluatio reliabilit Histribution reliabilit
/ood brand image ('tending networ#
#inancial Bene?ts Eeasonable %ro&tabilit Ee!enue Shareholder bene&ts
Relia(le %istri(ution /ood Heli!er reliabilit +n time deli!er 0ntegrated suppl chain
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Strategy Ma
The following strateg map outlines the obecti!es within perspecti!es that must be considered when formulating a strateg. 0t wor#s on an JifNthen" basis, for e'ample, if Coee Bean and Tea Leaf emplo highl s#illed wor#ers and train them to become #nowledgeable and producti!e emploees, then the will be capable of deli!ering the best tastes and aroma in stores. This capabilit will increase customer satisfaction, and thus increase the compan"s re!enue.
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2 C"##EE BEA$ A$% TEA LEA# >
Learning and Gro5t0 Objectives
Measure (PIs)
Target (1 year)
Initiatives
Knowledgeable employees
% Of time spent on training
Employees spend 10% of their time training at work
Regular assessments
% Of higher positions filled internally
Employees spend 10% of their time training at work
Mentoring and continuous learning
Organizational Culture Questionnaire Increase in revenue per employee % Of attrition rate
Identify where changes are desirable Increase employee output by 20% Reduce attrition rate by 20%
Create an OCQ for employees
Franchiser satisfaction level Franchiser profitability Company reputation score
Above 90% Above 15% 80 from scale 1 to 100
Nature of organizational culture Employee productivity Employee retention Franchising support Social responsibility process (brand image)
Time management, Multi-skill development Incentives & Perks, Talent management interviews By understanding franchiser demands Charity participation (Caring Cup)
-no5ledgea(le E'loyees (mploees are a #e asset to an organiation. Their input into dail operations generate the output of the organiation, thus the 7uantit and 7ualit of the outputs are dependent on the s#ills and #nowledge of the emploees. $s part of the Learning /rowth of an organiation, a #e obecti!e is to ensure a #nowledgeable wor#force. This can be achie!ed during the hiring process, that is, assessing indi!iduals from a large pool of potential emploees and ac7uiring the best for the ob. Coee Bean and Tea Leaf hire for their core !alues, and identif candidates who match the characteristics of their !ision and mission. *ith Coee Bean"s growth and e'pansion, the oer their emploees opportunities of career ad!ancement through continuous de!elopment 8Coee Bean Tea Leaf, 2619. The #nowledge of the emploees can be measured b the percentage of time that is spent training them regularl, and b the percentage of higher positions in the organiation &lled internall, that is, b emploees who started wor#ing from the bottom of the hierarch to higher positions.
$ature o "rgani>ational Culture +rganiational culture is the personalit of the organiation, comprising the assumptions, !alues, and norms of organiational members and their beha!iors 8:cKamara, 2619. This has a direct lin# to how an organiation operates on a dail basis. Aow emploees beha!e and react to one another determines how well the wor# together and communicate. Aow an emploee !alues the organiation determines his loalt to the compan and his le!el of producti!it. Through an +rganiational Culture Puestionnaire 2>
8+CP9, an organiation can distinguish and measure what #ind of organiation the operate under 8Clan, $dhocrac, Aierarch, or :ar#et9, and identif where changes ma be desirable. +rganiational change is a dicult process, especiall for well; established organiations 8Tharp, 26659. Coee Bean follow a Clan organiation. This is e!ident because of their open and friendl en!ironment where wor#ers share a lot of themsel!es. The leaders are percei!ed as mentors, and group loalt is strong. There is an emphasis on long;term human resource de!elopment 8Tharp, 26659.
E'loyee .roducti&ity $ strong determinant for an organiations success is the le!el of producti!it from its emploees. $ high rate of producti!it means high le!els of output, thus an increase in re!enue. $s producti!it can be a collecti!e eort, it is !ital to measure the producti!it of an indi!idual emploee rather than the organiation as a whole. Coee Bean pro!ides training for their emploees in time management and multi;s#ill de!elopment to ensure a producti!e wor#force, and can measure the progress of each emploee"s de!elopment through the re!enue the ma#e for the organiation.
E'loyee Retention The management of an organiation must pro!ide for their emploees" &nancial and social needs if the wish to #eep them, as well as other needs e!er indi!idual can ful&ll in the wor#place. Coee Bean ha!e a generous bene&t plan for their emploees to reduce attrition and increase retention. 0ncluded in the bene&t plan are medical, dental and !ision insurance, e'ible spending accounts, disabilit protection, life insurance, a retirement plan, and a pre;paid legal ser!ice plan. $s well as this are team member per#s and wor#;life programs. These are programs and ser!ices for emploees to help them achie!e a balance between their wor# and home li!es 8Coee Bean Tea Leaf, 2619. The emploee retention rate can be measured b analing the attrition rate regularl. $ low attrition rate means that less emploees lea!e Coee Bean Tea Leaf to &nd new wor#.
#ranc0ising Suort There are o!er 566 Coee Bean and Tea Leafs operating in the US and $sia. 0n order to #eep these stores in line with the mission and !alues, as well as ensuring that each store is supplied with the correct ingredients and e7uipment needed to function, Coee Bean and Tea Leaf regularl monitor the progress of the stores and recei!e feedbac# from the franchisers. This feedbac# can measure the satisfaction and pro&tabilit of the stores, and indicate where impro!ements need to be made and if the demands of a store are not met. )ranchisers pro&tabilit will be measured b the gross margins of the franchisers, and then dierent franchisers in dierent 25
C"##EE BEA$ A$% TEA LEA# 6 mar#ets shall be analed based on the margin or growth, thus an adapti!e compan strateg and franchising strateg can be established.
Social Resonsi(ility .rocess Brand image is a maor concern for all brands. The want to be percei!ed as a contributor to a positi!e mo!ement rather than the source of a problem. The reputation score of a compan can be conducted in the form of 7uestionnaires. $ high score can be earned b showing the public a constant attempt to being charitable, or b creating a charit. The correlation between social responsibilit, charit and reputation can be found b appling this %0. Caring Cup is a scheme run b Coee Bean and Tea Leaf with their suppliers from third world countries. This scheme ensures the farms used to grow their raw materials use en!ironmentall safe methods of culti!ation, and fair wages for the labor put into the farms 8)ranchisepool, 26169.
)nternal Objectives
Measures (PIs)
Targets (1 year)
Initiatives
To keep the best quality of product (use the best ingredients)
Supplier reliability
Maintain 99.9%
By assuring the quality of material (Quality control)
Purchase reliability
Maintain 99.9%
By assuring the condition of transportation
Distribution reliability
Maintain 99.9%
By applying quality control to purchasing process
Supplier reliability
Maintain 99.9%
By assuring the quality of material
Purchase reliability
Maintain 99.9%
By assuring the condition of transportation
Distribution reliability
Maintain 99.9%
Delivery reliability
Maintain 95%
By applying quality control to purchasing process By understanding customer and deliver correct products
Customer complaints
Below 5% of Feedback
To keep the best quality of tea (use the best ingredients)
To maintain and increase customer satisfaction level (deliver the best taste and aroma)
Customer satisfaction to different products
Maintain 90% positive feedback
By dealing with customer complaints By understanding customer and deliver correct products
6
To increase loyal customers and generate more revenue
To expend local network and increase revenue (franchising opportunities & process)
To extend B2B market (business to business processes)
Repeat business percent
Franchisers evaluation score
80%
By giving loyalty bonus
70 (from scale 1 to 100)
By offering customer membership By offering full angle franchising opportunities
Franchisers retention rate Above 95%
By understanding franchiser demands
Above 90%
By building up good franchisers relationship By understanding B2B market demands
Customers satisfaction of franchisers
B2B market growth
10% growth
Gross margin in B2B
15% growth
By being adaptive to different demands By building up strategic partnership in B2B market
0t shall be mentioned that since there are !er limited &nancial data directl related to Coee Bean and Tea Leaf, the general data of coee drin#s and hot drin#s industr are used. :eanwhile, competiti!e strateg is used in which the &nancial data of Starbuc#s is also ta#en into account.
7se t0e Best )ngredients B using the best ingredients for their products, Coee Bean and Tea leaf can ensure high 7ualit products for e!er sale made, but its isn"t enough to ensure the 7ualit of the &nal product. The ingredients must be supplied b a reliable source, purchased to the correct speci&cations, and deli!ered on time. Supplier reliabilit is measured b the percentage of 7uali&ed products in total purchased from suppliers. %urchasing reliabilit is measured b the percentage of correct purchasing orders made. Heli!er reliabilit measures the on;time and correct deli!eries to customers in total of all deli!eries.
%eli&er t0e Best Taste and Aro'a Coee Bean and Tea Leaf are constantl de!eloping their products, and rel on customer feedbac# to e!aluate whether their products need impro!ements or not. B the rate of positi!e feedbac# from customers, the can measure the rate of customer satisfaction. Kegati!e feedbac# and complaints are ta#en into account to ma#e impro!ements to the products or ser!ice.
)ncrease Loyalty Loal customers will alwas bene&t a compan for the will not onl are the a strong source of re!enue, but a free means of promotion for the compan. Eepeat business rate is measured b the percentage of fre7uentl repeated buing acti!ities from customers in total of the whole sales. 0t will gi!e a better !iew of how customer loalt inuences the buing acti!ities. 1
C"##EE BEA$ A$% TEA LEA# 2
#ranc0ising "ortunities and .rocess 0t is important for Coee Bean and Tea Leaf to monitor the franchises that carr their name across the US and $sia. This can be done through an annual e!aluation of the franchises. $ )ranchiser e!aluation form will be distributed earl based on dierent rele!ant factors, then an e!aluation score will be gi!en. Aigh performance franchisers will be rewarded. $s for maintaining franchises, a retention rate must be monitored. $ )ranchiser retention rate is the percentage of remaining franchisers in total since the beginning of the ear. This should be monitored annuall.
Business to Business .rocesses $s the process of Coee Bean and Tea Leaf"s products must pass through dierent stages operated b dierent bodies, such as from the suppl of raw ingredients to the &nal product made in stores, the business to business process must be ecient and reliable. B2B mar#et growth and gross margins will be analed, which then can be used to establish a B2B mar#et strateg.
Custo'er Objectives
Measures (PIs)
Targets (1 year)
Initiatives
Increase and maintain customer satisfaction
Satisfied-customer index (%)
Increase it by 21%
Improve performance accor to customer suggestions
No. of customer complaints
Reduce in 2% the number of complaints
Customer-loyalty index (%)
Increase it by 7%
Number of customers per year (52.000.000)
Increase this number to 60.000.000
Customer retention
Increase this ratio to 15%
Customer acquisition
Increase this ratio to 25%
Customers lost (9 %) Market Share (11%*)
Reduce it to 4% Increase this ratio to 13%
Brand-image index
Increase this ratio by 4%
Marketing cost as a % of sales (%)
Increase this ratio to 7%
Increase customer relationships
Promote brand image and reputation
Increase online activity thro the official web page and so media Increase franchising
Participate in local commun events, promote healthy livi
2
Increase customer profitability
Sales volume (1$ Billion)
Increase to 1.3$ Billion
Sales per channel
Increase store sales by 2% and delivery by 6%
Increase return purchases through promotions
Q:ar#et share le!el has been established b the interpretation of the coee retailers industr data
Maintain and )ncrease Custo'er Satisaction Le&el Coee Bean and Tea Leaf dri!e to ma'imie customer satisfaction, and do so through their high 7ualit products and ser!ice. To record customer satisfaction, an inde' is established to bring the collecti!e feedbac# from all stores. This inde' is #e to bringing impro!ements to their product line and in;store ser!ices. 0t isn"t uncommon to recei!e complaints from customers, which is wh it is important for Coee Bean managers to recognie an dissatisfactions within the stores and deal with them promptl. $s a performance indicator, the complaints can indicate where there is room for impro!ement to a!oid future dissatisfaction from the same cause. $s for customer loalt, a loalt inde' can show regular purchasing trends and return purchases, which can ser!e as a performance indicator showing !arious strengths and wea#nesses of the franchises and how the gain loal customers.
)ncrease Custo'er Relations0is 0n order to attract new customers and create !alue for Coee Bean and Tea Leaf customers, it is necessar to impro!e the relationship between the brand and its customers. $ strong relationship will create loal customers, and it is easier to #eep loal customers than to ac7uire new customers. The number of customers Coee Bean and Tea Leaf ser!e annuall is a performance indicator that can portra the popularit and progress of the compan. The annual number can be increased b opening additional stores, or else b impro!ing their relationships with customers through the media and online. $s for customer retention and ac7uisition, Coee Bean and Tea Leaf stri!e to maintain their customers and attract new ones. $s a performance indicator, customer retention and ac7uisition can portra whether Coee Bean and Tea Leaf"s eorts in mar#eting and promotion are eecti!e or not
To )ncrease Brand )'age and Reutation Aow the public !iew Coee Bean and Tea Leaf as a brand is !ital towards their long;term sales. This is because the public will not want to associate themsel!es with something negati!e to their health or the communit. B stores participating in the local
C"##EE BEA$ A$% TEA LEA# communit, and b promoting a health lifestle, Coee Bean and Tea Leaf can create a positi!e brand image and fa!orable reputation. Coee Bean and Tea Leaf"s mar#et share in the US mar#et is a good indicator of their performance. Coee Bean and Tea Leaf are ran#ed second in the US behind Starbuc#s 8Coee Bean Tea Leaf, 2619. $nother indicator would be a brand image inde', which could show how indi!iduals portra the brand, and then their collecti!e opinions form a more uni!ersal opinion. :ar#eting costs as a percentage of sales is an important indicator to measure whether the mar#eting eorts contribute to the sales being made annuall.
To )ncrease Custo'er .ro?ta(ility B increasing sales !olumes, Coee Bean and Tea Leaf can increase their pro&ts substantiall, but this is easier said than done. Aow the can increase their sales from an indi!idual customer can translate to an increase in customer pro&tabilit, which can be achie!ed b increasing their return purchases from customers. Eeturn purchases can be achie!ed through promotions and loalt schemes, bringing !alue to the customers and continuous sales to Coee Bean and Tea Leaf. The sales !olume in a ear can ser!e as an indicator of Coee Bean and Tea Leaf"s performance in increasing customer pro&tabilit. 0f sales increase rapidl, but customer numbers increase at a slower pace, it would become e!ident that return purchases from alread ac7uired customers are increasing, ma#ing these customers more pro&table.
#inancial Objectives Profitability
Revenue Growth
Measures (PIs) Gross Margin (55.9%)
Targets (1 Year) 56.9%
Net Profit Margin (12%)
14%
ROCE (22%)
26%
ROI (12%)
14%
Cash flow from operations ($ 830,000) Comparable stores growth (4%)
$ 900,000 (+8.43%)
Net Revenues (450$ million)
480$ million (+6.7%)
Revenues from new products
20%
Revenue per employee ($ 39,500)
$ 42,000 (+6.33%)
7%
-
Price earnings ratio (1$ for every 2.81$ of earnings)
1$ for every 3.48$ of earnings
*PI’s and targets are estimates taken from the financials of the coffee industry (Starbucks, Costa Coffee, Dunkin Coffee, etc.). There isn’t public financial information of “Coffee Bean and Tea l eaf”.
)ncrease .ro?ta(ility The future growth of Coee Bean and Tea Leaf relies on increasing their pro&tabilit. The following are performance indicators for increasing pro&tabilit? Gross Margin This ratio measures how much pro&t the compan can ma#e on each dollar of sales before e'penses. Coee Bean and Tea Leaf has a gross margin of 33.5G, and the target is to impro!e it to 34.5G in a ear. $ high gross margin means that companIs situation is going well because it indicates that either the sales prices are high or that production costs are #ept under control. $et .ro?t Margin This ratio measures how eecti!e the compan is at generating pro&t on each dollar of re!enue it brings in. $s well as the gross margin, a high net margin means that the companIs situation is going well as it indicates that either the sales prices are high, or that all costs are being #ept well under control. Coee Bean and Tea Leaf has a net margin of 12G, and the target is to impro!e it to 1-G in a ear. Return on Caital E'loyed This ratio measures the companIs success and ecienc in generating satisfactor pro&t on capital in!ested and emploed. $ high ratio shows more ecient use of capital, and a low ratio shows less ecient use of capital. /enerall, E+C( should be higher than the capital cost? if not, it shows that the compan is not emploing the capital eecti!el. Currentl, Coee Bean and Tea Leaf"s E+C( is about 22G and the target is to increase it to 24G. Return on )n&est'ents 0s the !alue that measures the performance of an in!estment, to assess how ecient Coee Bean and Tea Leaf are spending or are planning to perform. The higher the !alue of the E+0, the better. $ negati!e E+0 means Coee Bean and Tea Leaf are losing mone. The target is to impro!e Coee Bean and Tea Leaf"s actuall E+0 b 2G in a ear. "erating Cas0 #lo5F This ratio is the cash !ersion of net income, namel, the cash ow after adusting for operating dierences such as depreciation and before adusting for in!estments or &nancing. TargetF from >6,666 to 566,666 in a ear 8an increase of >.-G9.
Re&enue Gro5t0 The following are performance indicators for re!enue growth?
3
C"##EE BEA$ A$% TEA LEA# 4 Re&enue ro' ne5 roducts The general strateg is to generate re!enue and realie potential pro&ts for sta#eholders b satisfing customers with the best;7uali&ed and inno!ati!e products. 0nno!ation is one of Coee bean and Tea Leaf"s main strengths, so the compan should impro!e its re!enue b oering new products to its customers. To get a 26G increase in re!enue from new products would be a good target for the compan. $et re&enue 0s the dierence between total re!enue and total cost, and it refers to accounting pro&t rather than economic pro&t. Their target is to increase net re!enue from -36 million to ->6 million in one ear 8an increase of 4.=G9. Co'ara(le stores sales gro5t0 This compares sales of retail stores that ha!e been open for a ear or more. This ratio allows the compan to measure the producti!it in re!enue and whether the companRs sales are increasing or decreasing o!er time. Their target is growing from -G to =G. Re&enue er e'loyee This ratio measures the amount of sales generated b one emploee, namel, it shows the companRs sales in relation to the number of emploees it has. Currentl, Coee Bean and Tea Leaf"s re!enue per emploee is 5,366 and the target is to get -2,666 8increase it b 4.G9. .rice earnings ratio this ratio shows how much in!estors are paing for each dollar or earnings. *e can calculate it b di!iding the compan"s mar#et !alue b its net pro&t. Coee Bean and Tea Leaf Js in!estors are paing 1 for e!er 2.>1 dollars of earnings and our target is that in!estors will pa 1 for e!er .-> dollars of earnings. Strategy 'a o o(ecti&es
"(ecti&es
Measures
%ro&tabilit
)inancial
"ro0tability
Customer Eelationship
Customer
0mage
Customer *elationship
Gross Margin $et .ro?t Margin R"CE R") Cas0 Fo5 ro' oerations $et Re&enues Re&enue er e'loyee Satis?edcusto'er index HI $o o Custo'er Co'laints Custo'erloyalty
Fmage
4
index HI Custo'er retention Custo'er acquisition Mar;et S0are Brandi'age index
Sulier relia(ility .urc0ase relia(ility %istri(ution relia(ility Sulier relia(ility .urc0ase relia(ility %istri(ution relia(ility B=B 'ar;et gro5t0 Gross 'argin in B=B
I " ti'e sent on training I " 0ig0er ositions ?lled internally "rgani>ational Culture uestionnaire I " attrition rate
Heli!er best ser!ice
"rocess
8eliver best service
*elationship with Employees and "artners
/earning . Growth
Eelationship with (mploees and %artners
Balanced Scorecard
Conclusion $fter 36 ears, Coee Bean and Tea Leaf ha!e grown to be the oldest and largest pri!atel held specialt coee and tea retailer in the US 8)ranchisepool, 26169. Their focus on customer ser!ice and 7ualit within their products ha!e led to the growth of the compan at a rate of 1 new store e!er - das, and currentl ser!ing 1,666,666 customers around the world each wee# 8)ranchisepool, 26169. B proceeding with their current strateg based on ma'imiing customer satisfaction, ma'imiing product 7ualit, inno!ating their product line, and maintaining their reliable deli!er, Coee Bean and Tea Leaf can continue to grow in hopes of becoming the mar#et leader. $reas Coee Bean and Tea Leaf should pa particular attention to is to further promote their brand image and reputation. This can aid the process of customer ac7uisitions, and in turn increase their re!enue.
=
C"##EE BEA$ A$% TEA LEA# >
Bi(liogra0y $d!ent 0nternational. 82619. Eetrie!ed from httpFNNwww.ad!entinternational.comF httpFNNwww.ad!entinternational.comNnewsNpressreleasesNpagesN%ress Eelease261651(nglish.asp' BasicCollege$ccounting. 826659. Eetrie!ed from httpFNNbasiccollegeaccounting.comF httpFNNbasiccollegeaccounting.comN2665N63Ne'amples;of;customer; perspecti!es;#e;performance;indicators;in;a;balanced;scorecardN Board Bia. 826119. o!ee onsumer "esearch "etail # $oodservice hannels "epublic of %reland &arket.
Cae1>=6. 82619. Eetrie!ed from httpFNNwww.cae1>=6.comF httpFNNwww.cae1>=6.comNthe;coee;industrN Coee Bean Tea Leaf. 82619. Eetrie!ed from httpFNNwww.coeebean.comF httpFNNwww.coeebean.comNcareers 0C0Hcfbncareersholida1 Ha!id Aillier, 0. C. 826119. $undamentals of orporate $inance '(uropean (dition). :c/raw Aill. Hudo!s#i, V. 826129. Eetrie!ed from httpFNNresearch; methodolog.netF httpFNNresearch;methodolog.netNstarbuc#s; porters;&!e;forces;analsisN (conguru. 82619. Eetrie!ed from www.econguru.comF httpFNNglossar.econguru.comNeconomic;termNnetWre!enue (the'. 82619. Eetrie!ed from httpsFNNwww.ethe'.org.u#F httpsFNNwww.ethe'.org.u#Nshare;and;asset;!alue;-.html (uromonitor. 82619. Eetrie!ed from httpFNNwww.euromonitor.comF httpFNNwww.euromonitor.comNcoee;in;germanNreport )ranchisepool. 826169. http*++www.franchisepool.org . Eetrie!ed from httpFNNwww.franchisepool.orgNwcmsNClientsN15266=--121221NHocu mentsN5NBrochure;Coee;Bean;Tea;Leaf;brand.pdf Aoo!ers. 82619. Eetrie!ed from httpFNNwww.hoo!ers.comF httpFNNwww.hoo!ers.comNcompan;informationNcsNre!enue; &nancial.C+))((B($KT($L($)0KTL0KC.-ba4f5cd3a1534a.ht ml
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0n!estorwords. 82619. Eetrie!ed from httpFNNwww.in!estorwords.comF httpFNNwww.in!estorwords.comN1-4Ndilutedearningspershare.htm l
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