排版后的小红烤炉战略管理案例.docx

排版后的小红烤炉战略管理案例.docx

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排版后的小红烤炉战略管理案例

THELITTLEREDROASTER

NikiHealeypreparedthiscaseunderthesupervisionofElizabethM.A.Grasbysolelytoprovidematerialforclassdiscussion.Theauthorsdonotintendtoillustrateeithereffectiveorineffectivehandlingofamanagerialsituation.Theauthorsmayhavedisguisedcertainnamesandotheridentifyinginformationtoprotectconfidentiality.

IveyManagementServicesprohibitsanyformofreproduction,storageortransmittalwithoutitswrittenpermission.Reproductionofthismaterialisnotcoveredunderauthorizationbyanyreproductionrightsorganization.Toordercopiesorrequestpermissiontoreproducematerials,contactIveyPublishing,IveyManagementServices,c/oRichardIveySchoolofBusiness,TheUniversityofWesternOntario,London,Ontario,Canada,N6A3K7;phone（519）661-3208;fax（519）661-3882;e-mailcases@ivey.uwo.ca.

ItwaslateMarch2003,andKendraGordon-Green,owneroftheLittleRedRoaster（LRR）,wasreviewingtheproposalshehadjustreceivedfromastudentconsultantteamfromtheRichardIveySchoolofBusinessatTheUniversityofWesternOntario.TheLRRhadrecentlybeenapproachedtoexpandbothitswholesaleanditscateringoperations,andGordon-Greenwasunsureastowhichstrategicdirectiontotakethecompany.TheLRRhaddevelopedstrongbrandawarenesswithtwoprominentretailcoffeelocationsinLondon,andGordon-Greenwantedtocontinuetobuildonthisreputation.SincesheknewpotentialwholesaleandcateringcustomerswouldnotwaitfortheLRRmuchlonger,Gordon-Greenwasanxioustoreviewtheproposalandmakeadecision.

COMPANYBACKGROUND

TheLRRwasaretailcoffeeshopthatofferedamenuofcoffees,teas,gourmetbeverages,breakfasts,lightlunchesandsnacks.TheLRRwasknownforitscozyatmosphere,goodfoodandexcellentservice.Establishedin1995,thecompanyhaddevelopedastrongreputationforgoodfoodandcoffeeduringtheeightyearsithadbeeninoperationinLondon.Gordon-GreenhadworkedfortheLRRforsevenyearspriortopurchasingthecafefromitsoriginalownerinearly2003.UnderGordon-Green'sleadership,theLRRhadexpandedfrombeingasoleretailbusinessintowholesalingandcatering;however,theretailsideremainedthecoreofthebusiness,withtwoLondonretaillocations（seeExhibit1）oneinWortleyVillage（Wortley）andtheotherintheCoventGardenMarket（Market）.

WortleyVillage

WortleyVillagewasthebusinessandretailareawithintheLondondistrictknownas"OldSouth."Therewereover80smallbusinessesandestablishmentsinWortley,manyoftheminbuildingsover100yearsold.TheWortleycommunitywastheonlypartofLondontooffersuchauniqueblendofhistory,shoppingandnature（parks）withinafewsquarekilometers.TheLRRinWortleywasestablishedin1995andwastheLRR'sfirstretaillocation.

CoventGardenMarket

TheCoventGardenMarketwaslocatedindowntownLondon.Ithadnumerousvendorsofferingthecity'sbestselectionoforganicfoods,award-winningmeats,ethnicfoods,dairyproducts,varietiesofsweets,freshflowersandelegantrestaurants.TheCoventGardenMarketalsohadanoutdoorskatingrinkandregularlyhostedlocalartandculturaleventsindoors.TheLRRestablisheditssecondretailoperationinthemarketin1999.

THECOFFEEINDUSTRY

Theretailcoffeeindustry,ingeneral,wasnotexperiencingsignificantgrowth.However,themarketforspecialtycoffeeswasestimatedtogrowatapproximately10percentperyear,overthenextseveralyears.1Althoughthedefinitionofspecialtycoffeeswassomewhatsubjective,thepreparationandprocessrequirementswereclear.Thehighestqualitygreencoffeebeansmustberoastedtotheirgreatestflavorpotentialbyskilledcraftspeopleandthenbrewedtowell-establishedindustrystandards.Specialtycoffeescommandedapremiumpriceinthemarketduetotheirsuperiorquality,andmanyspecialtycoffeesalsoprovidedenvironmental,socialandeconomicbenefitstocoffeeproducers.2Coffeeretailersoperatedinanindustrythatreliedupontheimportationofacommodity.3Coffeewasthesecondlargestglobalcommodity-basedproduct,afteroil,andwassubjecttouncertaintyandpricevolatility.Canadasourcedcoffeefromfivemajorcountries:

Colombia,Brazil,Guatemala,MexicoandPeru.4CoffeeconsumptiontrendsinCanadawerestriking.Theaveragecoffeedrinkerconsumedthreecupseachday,and67percentofadultCanadiansdrankcoffeeeveryday.5Themostimportantattributetoconsumerswascoffeewithaconsistentflavor.Consistentflavorwasachievedwhenroastingoperationshadsecuredasteadysupplyofgreenbeans.Companieswerealsocontinuouslyreinvestinginroastingtechnologytoimprovetheroastingprocess,resultinginahigherqualityfinalproduct.Itwaspredictedthatthecomplexityandpowerofroastingequipmentwouldcontinuetoevolve.

Canadianconsumerslivedbusylifestyleswithlessandlessleisuretime.Infact,approximately12percentofthecoffeewaspurchasedinrestaurantortake-outsettings.6Thecoffeeindustrydiscernedthistrendandestablishedmanydrive-throughoperationswhereconsumerscouldmakequickpurchasesfromtheconvenienceoftheirvehicle.

RetailMarket

Coffeeshopshadevolvedfrombeingsimplyoutletswherecustomersboughtaquickdrink"onthego"totrendysocial/entertainmentmeetingplaces.Retailerscreatedatmospheresthatcateredtotheir1DanielleGiovannucci,"SustainableCoffeeSurveyoftheNorthAmericanCoffeeIndustry,July2001,"www.cec.org/files/pdf/ECONOMY/CoffeeSurvey_EN.pdf,accessedMay31,2004.2Manyspecialtycoffeeswerepurchaseddirectlyfromfarmers'co-opsinThirdWorldcountries,asopposedtobuyingfromlocaldistributors,effectivelyleavingmoremoneyinthehandsofgrowersandtheircommunities.3Acommodityisatradearticle,typicallyamineralorfarmproduct,thathasnearlyidenticalpropertiesregardlessofwhereitisproduced.4CoffeeAssociationofCanada,accessedJune5,20045Ibid.6Ibid.

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consumers'needs.Attentiontodetailwascriticalsinceeverydecision,rangingfromd¨¦cortostaffing,affectedtheshop'satmosphere.

Consequently,theretailmarketwascomposedofawidespectrumofcompetitors,frommultinationalcorporationstofamily-runbusinesses,andcompetitionformarketsharewasfierce.Formany,establishinganichemarketandbuildingstrongcustomerloyaltywastheonlysurvivalstrategyavailable.

Withintheretailmarket,salesofcoffeeandotherproductsweregenerallyhigherduringthewintermonths.Majorfranchisesandnicheplayersintheindustryhadstartedtodiversifytheirproductofferingsbeyondthesolefocusoncoffeetodealwiththebusiness'sseasonality.Thisresultedinmoreproductchoiceforcustomersduringwarmermonths,whichwasreceivedasawelcomeadditionbycustomers.

WholesaleMarket

Thewholesalemarketincludedoffices,schools,restaurantsandotherinstitutionsthatpurchasedcoffeefromathirdpartybutbrewedthiscoffeeonsite.Nearly13percentofallcoffeewasconsumedinaworkorschoolenvironment.7Buyersinthismarketwereprimarilyconcernedwithreliableandflexibledelivery.Areasonablepricewasalsoofbenefit,sincethistypeofexpenditurewasnotanecessityandwouldbeamongthefirsttobecutwhenbudgetsweretrimmed.Itwasalsoimportantforwholesalerstocultivaterelationshipswithcustomersinordertoretainthebusinessandtostrengthenword-of-mouthsales.

Thewholesalemarketalsoexperiencedslightseasonalityinthedemandforcoffee,withlowerpricesduringwarmermonths.Unliketheretailmarket,wholesalecustomersrarelyswitchedtoothersupplierswhendemanddeclined.

CateringMarket

Thecateringmarketincludedoffices,privatehomesorotherinstitutionsthatrequiredmealstobeprepared,servedanddeliveredtogroups.Severalcatererswereavailableforthismarket,providingtheconsumerwithavarietyofcateringoptions.

Typically,thecateringindustrydidminimaladvertisingandcountedonword-of-mouthsincethemajorityofcateringcustomerswereoftenexistingretailcustomers.Thiscreatedagreatdealofloyaltytowardstherelatedrestaurant.

Overall,priceswerecompetitive.Thecateringmarketcouldbeviewedasanextensionoftheretailmarket,butduetothevarietyofitemsoffered,itdidnotexperiencetheretailmarket'sseasonality.Rather,itwasdirectlyrelatedtospecialeventslikeretirements,birthdays,etc.andfluctuatedaccordingly.

LONDONANDITSECONOMY

London,Ontario,hadapopulationofapproximately335,000.ItwasCanada's11thlargestcityand,locatedbetweentheeasternandmidwesternurbanareasofCanada,thecitywasanexcellentlocationforbusinessandindustry.Londonwasfamousforitstree-linedboulevardsandgreenparks.Londonwasthe7CoffeeAssociationofCanada,,accessedJune5,2004.

Canadianheadquartersormajorproductioncentreformanyprominentcompanies,including3MCanada,EllisDon,KelloggCanada,DiamondAircraft,SiemensElectricandTrojanTechnologies.IthadsomeofthefinestmedicalfacilitiesinCanada,andLondonwasalsoknownasoneoftheleadingeducationcentresinthecountry,withbothTheUniversityofWesternOntarioandFanshaweCollegelocatedinthecity.

London'seconomywaspredictedtobeoneofthetopperformingCanadianmetropolitaneconomiesin2003.8Theaverageannualgrowthratefor2003wasexpectedtobe3.6percent,asignificantreboundfromthe0.3percentgrowthrateexperiencedinthethreeprioryears.Additionally,theemploymentratehadimproved,andmoreLondonerscouldrelyonasteadyincome.