Competitive environment is describes in terms of 5 forces. The threat of new entrants- Customers has new choices day to day. To fulfill the requirement Green Mountain Coffee Roasters needs to be very competitive. They deed to find out new products. There are several low cost products in the market which is attracting local public. This can be a threat and Green Mountain Coffee Roasters needs to find out a way to reduce the cost and maintain the quality. Single-cup brewing will have more competition. Some of the companies have good financial resources and good marketing than Kerri.
Some of the competitors are Fluvial Beverage Systems they are the manufacturer of Mars, Sense brewing system etc. The bargaining power of buyers- Loyal customer is very important for a successful business. Green Mountain Coffee Roasters revised the customers the best they want and the way they want. So buyers are ready to pay the cost. There is less bargaining because of loyal customers.
They may look at some alternate products. But still number of choices is fewer Buyers find very difficult to switch the company as they will not find what they need. So they try to stick with one. This is a competitive advantage to them. Competitors cannot provide what fresh direct can provide. Low dependency on distributors is an added advantage with Fresh Direct. This will reduce the bargaining power of buyers. Due to variety of range products errs has less choice and this is good and positive for Green Mountain Coffee Roasters The bargaining power of suppliers- The biggest problem is with Kerri, supplies are fully depended on outside supplier. They have only one supplier from China. They can rule CACM and can affect deliveries and quality.
This can over all affect the company performance and business. The threat of substitute product and services- Company has an advantage in their field. There is very less strong competition. They are the leader in the coffee segments. There are several companies who have lowered process cost and cost of the product. They may eve strong competition to them. The intensity of rivalry among competitors in an industry- Other manufacturer started giving good offers with comparison to Kerri was offering. Market started to become overpower. This created confusion between customers.
They don’t know what product is best. They were victim of competition. Strategy Used CACM has strategically taken a good move to expand its business in broader way. The first strategy they used was acquisition of other coffee brand. They acquired Tally’s coffee brand and later they also acquired Timothy’s Coffee. CACM focused on individual customer in home and offices. They have launched different products which can be used in offices and home. By doing this they have expanded there market share very broadly.
There were approximately Million coffee brewers in offices nationwide serviced by a network of approximately 1 , 700 distributors. Of those offices, CACM estimated that 12 percent had single-cup brewers, and about half of those were Kerri brewers. While Kerri brewers were estimated to be in 30 percent of offices in New England, national penetration in the office channel was only about 6 percent. ” (Deeds CHIC) CACM has covered hotel industry in broader way. They have several hotels in North America which use CACM products. This was one of the best strategies which worked for expansion of their product range.
Issues and Challenges Facing this Company Following issues and Challenges are being faced by CACM. Manufacturer and trade risk- CACM products are manufacturer in China. They are under risk of delivery and cost. Fully depended on those companies. Any production delay will direct affect the profitability of CACM. Foreign exchange rates may affect the end product cost. Government policies and relationship with both country may affect the business.
Product recall and product liability is a potential danger. Any quality compromise by manufacturer will directly impact CACM. Loosing competitive advantage of CACM because the products are manufactured in China and possibility of losing technology secrets. Risk of Integrated Acquisitions- Lot of risk is there to manage acquisitions, because of company culture and business. Risk of fluctuating commodity cost- Fluctuation in commodity will affect the price of Coffee. This can impact the price of products. Risk of coffee availability- there are some very high quality coffee beans (Arabica coffee beans), unavailability of this beans may affect the business of CACM.
Course of action recommended
- Should be very careful while doing acquisitions. Need to look the country culture, company culture and past background.
- Need to develop an alternative of China for manufacturing the products. It can be India. Dependency with china should not be there.
- Need to add different products and expand their list of product based on customers’ requirements.
- Keep closer look on competitors and there technology.
- Keep on improving the products by doing research and development.
- Cover every segment of people with something new for them.
Opinion “As a leader in specialty coffee, coffee makers, teas and other beverages, Kerri Green Mountain (Kerri) is recognized for its award-winning beverages, innovative Kerri@ brewing technology, and socially responsible business practices. The Company has inspired consumer passion for its products by revolutionize beverage preparation at home and in the workplace. ” My opinion CACM is one of the strongest companies. They have strong financial and strong management. They have a strong strategy which can kill all there competitors. They know how to manage Acquisitions.
