Consider an SME of your choice. Describe and discuss the company's Industry Structure by applying Porters Five Forces framework Describe and evaluate the Strategic Position of that company by...

Introduction to Strategic Management
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Table of contents
1. Introduction ......................................................................................................................... 3
1.1 Objective target ..................................................................................................................... 3
1.2 The course of action .............................................................................................................. 3
2. The model of the five competitive forces ............................................................................... 4
3. The Strategic Position ............................................................................................................. 6
3.1 The SWOT Analysis ............................................................................................................. 6
3.2 The external Factors .............................................................................................................. 7
3.3. The internal Factors ........................................................... Error! Bookmark not defined.
4. The Core Competences...........................................................................................................9
5. Strategic choice: Generic strategies.........................................................................................9
6. Theclassicalperspective – a “world of tools”.........................................................................10
6.1 Value Chain Analysis...........................................................................................................10
6.2 Life Cycle Analysis..............................................................................................................11
7. Implementation of strategy: Balanced score card..................................................................11
Bibliography...............................................................................................................................14
Appendix....................................................................................................................................16
1. Introduction
1.1 Objective target
The coffee consumed world -wide is the second most traded commodity after petroleum,
the annul market earnings from coffee is nearly 60 billion . Germany is the second largest
exporter of roasted coffee in the world and it ranks only second to Brazil. Statistics shows that in
2010 Germany had imported 18 million bags of coffee beans, primarily from Africa (Coffee in
Germany, 2012). One of the world‟s biggest coffee processing and decaffeinating industry is
based in Germany (European Coffee Market with focus on Germany, n.d.). The majority of the
domestic coffee consumption in Germany is through bakeries and diners followed by cafes and
coffee shops (Refer Apendix 1).
The company considered for the purpose of the assignment is Godshot, The Future Urban
Coffee Club. The cafe is located in Prenzlauer Berg (Official website of Godshot, n.d.). This
region of Berlin is known for its excellent coffee. Godshot differentiates and positions itself on
the basis of the excellence of the quality of coffee it offers and the subtle falvours of the coffee.
Godshot provides a relaxing coffee shop atmosphere for the customers whith interiors designed
as a retro set up and well lit. Misic adds to the atmoisphere. Along with coffee beverages, the
menu at Godshot also offers snacks and other non coffee beverages. The company does not only
serve coffee to customers but focuses on the art of making coffee beverages (Official website of
Godshot, n.d.).
The objective of the assignment is to conduct a strategic marketing analysis of Godshot.
1.2 The course of action
The assignment conducts an industry analysis and an analysis using Porter‟s five forces
model to understand the competitive environment in the coffee industry. The assignment
identifies Godshot‟s startegic position by conducting an internal analysis using SWOT analysis,
and external environmental analsis using PESTEL analysis. It also reflects on the factors internal
to the organization. It discusses the core competencies and generic strategy of the company. In
the end based on the present situation of the company, strategy implementation is discussed
using balanced score card.
2. The model of the five competitive forces
Porter‟s five forces model analyses the competitive position and competitive advantages
of a company based on threat of new entrant, bargaining power of buyer, bargaining power of
supplier, substitutes and competitive rivalry (Porter, 2008). Based on these parameters Godshot
is assessed below.
2.1 The risk of entry by potential competitors
The threat of new entrants in coffee industry is medium. This is because the switching
cost of the customer to another brand is very low. The new companies can also leverage in the
existing supply chain in the industry. The existing firms in the industry have high customer
loyalty, high product innovation and leverage on the economies of scale which would be difficult
for new firms to achieve initially (Datamonitor, 2010).
2.2 The intensity of rivalry among established companies within the industry
The major competitors of Godshot in Germany are Oliv Cafe, Café Einstein, and
DoubleEye (Weiss, 2011). The major international competitor is Starbucks. Product innovation
and product differentiation based on the quality of coffee, ambience of the shop and customer
service helps Godshot remain ahead of competition. The competition increased further with
declining sales of high end products at high end stores (Moreno, 2008). The companies in this
industry face stiff competition to gain market share. So, competitive rivalry in coffee industry is
high.
2.3 The bargaining power of buyers
The restaurants and cafes account for majority of the business of the coffee industry in
Germany. Being a medium sized coffee shop, the bargaining power of Godshot is not very high.
The customers come to Godshot for its quality of brew that differentiates this cafe from the other
cafes in the area. The differentiated products based on quality, and taste even though they are
costly. Switching costs for the customers is low. In such case the the buyer‟s bargaining power is
medium.
2.4 The bargaining power of suppliers
The coffee industry gets its primary supply of coffee beans from Africa, South
America, and Asia (Wheeler, n.d.). The cultivation of coffee beans requires certain climatic
conditions which are available in these parts of the world. The countries in these areas are
usually poor economies or emerging economies and their agriculture sector is unorganized and
the quality of their produce is not distinguished. This reduces the bargaining power...