排版后的小红烤炉战略管理案例.docx

1、排版后的小红烤炉战略管理案例THE LITTLE RED ROASTER Niki Healey prepared this case under the supervision of Elizabeth M.A. Grasby solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguis

2、ed certain names and other identifying information to protect confidentiality. Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization.

3、 To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail casesivey.uwo.ca. It was late M

4、arch 2003, and Kendra Gordon-Green, owner of the Little Red Roaster (LRR), was reviewing the proposal she had just received from a student consultant team from the Richard Ivey School of Business at The University of Western Ontario. The LRR had recently been approached to expand both its wholesale

5、and its catering operations, and Gordon-Green was unsure as to which strategic direction to take the company. The LRR had developed strong brand awareness with two prominent retail coffee locations in London, and Gordon-Green wanted to continue to build on this reputation. Since she knew potential w

6、holesale and catering customers would not wait for the LRR much longer, Gordon-Green was anxious to review the proposal and make a decision. COMPANY BACKGROUND The LRR was a retail coffee shop that offered a menu of coffees, teas, gourmet beverages, breakfasts, light lunches and snacks. The LRR was

7、known for its cozy atmosphere, good food and excellent service. Established in 1995, the company had developed a strong reputation for good food and coffee during the eight years it had been in operation in London. Gordon-Green had worked for the LRR for seven years prior to purchasing the cafe from

8、 its original owner in early 2003. Under Gordon-Greens leadership, the LRR had expanded from being a sole retail business into wholesaling and catering; however, the retail side remained the core of the business, with two London retail locations (see Exhibit 1) one in Wortley Village (Wortley) and t

9、he other in the Covent Garden Market (Market). Wortley Village Wortley Village was the business and retail area within the London district known as Old South. There were over 80 small businesses and establishments in Wortley, many of them in buildings over 100 years old. The Wortley community was th

10、e only part of London to offer such a unique blend of history, shopping and nature (parks) within a few square kilometers. The LRR in Wortley was established in 1995 and was the LRRs first retail location. Covent Garden Market The Covent Garden Market was located in downtown London. It had numerous

11、vendors offering the citys best selection of organic foods, award-winning meats, ethnic foods, dairy products, varieties of sweets, fresh flowers and elegant restaurants. The Covent Garden Market also had an outdoor skating rink and regularly hosted local art and cultural events indoors. The LRR est

12、ablished its second retail operation in the market in 1999. THE COFFEE INDUSTRY The retail coffee industry, in general, was not experiencing significant growth. However, the market for specialty coffees was estimated to grow at approximately 10 per cent per year, over the next several years.1 Althou

13、gh the definition of specialty coffees was somewhat subjective, the preparation and process requirements were clear. The highest quality green coffee beans must be roasted to their greatest flavor potential by skilled craftspeople and then brewed to well-established industry standards. Specialty cof

14、fees commanded a premium price in the market due to thei r superior quality, and many specialty coffees also provided environmental, social and economic benefits to coffee producers.2 Coffee retailers operated in an industry that relied upon the importation of a commodity.3 Coffee was the second lar

15、gest global commodity-based product, after oil, and was subject to uncertainty and price volatility. Canada sourced coffee from five major countries: Colombia, Brazil, Guatemala, Mexico and Peru.4 Coffee consumption trends in Canada were striking. The average coffee drinker consumed three cups each

16、day, and 67 per cent of adult Canadians drank coffee every day.5 The most important attribute to consumers was coffee with a consistent flavor. Consistent flavor was achieved when roasting operations had secured a steady supply of green beans. Companies were also continuously reinvesting in roasting

17、 technology to improve the roasting process, resulting in a higher quality final product. It was predicted that the complexity and power of roasting equipment would continue to evolve. Canadian consumers lived busy lifestyles with less and less leisure time. In fact, approximately 12 per cent of the

18、 coffee was purchased in restaurant or take-out settings.6 The coffee industry discerned this trend and established many drive-through operations where consumers could make quick purchases from the convenience of their vehicle. Retail Market Coffee shops had evolved from being simply outlets where c

19、ustomers bought a quick drink on the go to trendy social/entertainment meeting places. Retailers created atmospheres that catered to their 1Danielle Giovannucci, Sustainable Coffee Survey of the North American Coffee Industry, July 2001, www.cec.org/files/pdf/ECONOMY/CoffeeSurvey_EN.pdf, accessed Ma

20、y 31, 2004. 2Many specialty coffees were purchased directly from farmers co-ops in Third World countries, as opposed to buying from local distributors, effectively leaving more money in the hands of growers and their communities. 3A commodity is a trade article, typically a mineral or farm product,

21、that has nearly identical properties regardless of where it is produced. 4Coffee Association of Canada, accessed June 5, 2004 5Ibid. 6Ibid. Page 3 consumers needs. Attention to detail was critical since every decision, ranging from dcor to staffing, affected the shops atmosphere. Consequently, the r

22、etail market was composed of a wide spectrum of competitors, from multinational corporations to family-run businesses, and competition for market share was fierce. For many, establishing a niche market and building strong customer loyalty was the only survival strategy available. Within the retail m

23、arket, sales of coffee and other products were generally higher during the winter months. Major franchises and niche players in the industry had started to diversify their product offerings beyond the sole focus on coffee to deal with the businesss seasonality. This resulted in more product choice f

24、or customers during warmer months, which was received as a welcome addition by customers. Wholesale Market The wholesale market included offices, schools, restaurants and other institutions that purchased coffee from a third party but brewed this coffee onsite. Nearly 13 per cent of all coffee was c

25、onsumed in a work or school environment.7 Buyers in this market were primarily concerned with reliable and flexible delivery. A reasonable price was also of benefit, since this type of expenditure was not a necessity and would be among the first to be cut when budgets were trimmed. It was also impor

26、tant for wholesalers to cultivate relationships with customers in order to retain the business and to strengthen word-of-mouth sales. The wholesale market also experienced slight seasonality in the demand for coffee, with lower prices during warmer months. Unlike the retail market, wholesale custome

27、rs rarely switched to other suppliers when demand declined. Catering Market The catering market included offices, private homes or other institutions that required meals to be prepared, served and delivered to groups. Several caterers were available for this market, providing the consumer with a var

28、iety of catering options. Typically, the catering industry did minimal advertising and counted on word-of-mouth since the majority of catering customers were often existing retail customers. This created a great deal of loyalty towards the related restaurant. Overall, prices were competitive. The ca

29、tering market could be viewed as an extension of the retail market, but due to the variety of items offered, it did not experience the retail markets seasonality. Rather, it was directly related to special events like retirements, birthdays, etc. and fluctuated accordingly. LONDON AND ITS ECONOMY Lo

30、ndon, Ontario, had a population of approximately 335,000. It was Canadas 11th largest city and, located between the eastern and midwestern urban areas of Canada, the city was an excellent location for business and industry. London was famous for its tree-lined boulevards and green parks. London was

31、the 7Coffee Association of Canada, , accessed June 5, 2004. Canadian headquarters or major production centre for many prominent companies, including 3M Canada, EllisDon, Kellogg Canada, Diamond Aircraft, Siemens Electric and Trojan Technologies. It had some of the finest medical facilities in Canada

32、, and London was also known as one of the leading education centres in the country, with both The University of Western Ontario and Fanshawe College located in the city. Londons economy was predicted to be one of the top performing Canadian metropolitan economies in 2003.8 The average annual growth rate for 2003 was expected to be 3.6 per cent, a significant rebound from the 0.3 per cent growth rate experienced in the three prior years. Additionally, the employment rate had improved, and more Londoners could rely on a steady income.