Georgeta Visan

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University of West London *

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MISC

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Management

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Nov 24, 2024

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INTROD UCTION TO BUSINES S ASSIGN MENT NUMBE R 2 GEORGE TA VISAN

Executive Summary A successful business requires very good business planning and very good decision making. To highlight the importance of these things, we made a report, in which we presented what is the most important information we need to get as a start-up business for opening a cafe, but we also analyzed the microeconomic and macroeconomic environment through the two analyzes, respectively the analysis of Porter and that of Pestle, through which we identified the main threats that exist on the market regarding customers, competitors or suppliers, but also external factors that leave their mark on a business. Introduction The business idea I chose was to open a cafe in London called HappyHour. We will run the business in the form of a partnership and we want to offer customers a relaxing environment with products made by us. We want to conclude a contract with suppliers who grow the best quality coffee so that we can have somewhat average prices. We need start-up information, both internally and externally, and through market research and SWOT analysis, we will get the information we need to plan our financing, organization, and marketing elements. Coffee shops come in a variety of shapes and sizes, but traditionally, they are establishments that sell ready-to-drink coffee, tea, and other hot beverages. Recently, many coffee shops have begun to compete with restaurants in the quick-service category by offering baked goods, sandwiches, salads, and other snacks. In 2020/2021, global coffee consumption was estimated to be 166.63 million 60kg bags of coffee (Aqua Cure, n.d.). Body Our business idea is to open a coffee brewing location and serve it to our potential customers. We want to have a very good position in life and, because we are at the beginning, we will need information from an internal point of view, but also from an external point of view, in order to know what are the most important things to plan, but and what decisions we need to make about our business. First of all, we were interested in the start-up costs for such a business. We will need a place to rent to open the store, we will need raw materials and for that, we need to conclude a contract with certain suppliers, we will need to pay our taxes and duties, but also licenses and permits. . We've estimated start-up costs at £ 150,000 and unfortunately we don't have these resources yet. However, with the help of this information, we were able to find out that we can apply for a bank loan for beginners, which we have to repay after a longer period of time. In this way, we managed to make the best decisions and determine how we would invest the money. Next, I needed details about the market. This external information has helped us to establish who the customers are, but also what the active competition is in the market. We were also able to plan certain promotion strategies and decide that we need to invest in this part of the business as well. The information obtained from the market research, helped us to effectively

control the activities and to establish a very diverse menu, with affordable prices for all income categories. Our potential customers are people of all ages, who are delighted with the idea of consuming a quality drink. We focus a lot on the tourists who visit the area, because most of the cafes and restaurants are visited by them, but also on the people who like to go out with friends and play certain group games. All this information allowed the owner to establish a work schedule, to choose certain offers to attract customers and managed to decide what will be the ways in which it will gain advantages over the competition. Pestle Due to the pandemic, unemployment has risen sharply and people's incomes have fallen, which has a negative effect on us, as we will no longer have sales. Because of this, people spend less on essentials and don't consider it important to buy coffee from our store. Unfortunately, we have to adjust our prices according to this change. Coffee consumption has been on the rise for years, as coffee production has increased, but unfortunately, exports have also fallen. From an economic point of view, we should focus on reducing the cost of operations and reducing labour. When the state decides to adopt higher taxes, then our raw material will be more expensive, but we should also have some menu changes and we will be at a constant disadvantage. Next, I will discuss the social factors that influence our business (Aleš Groznik et al., 2011). We consider our cafe to be a good place for most people and we need to focus on the things that attract customers. We believe that the location we have chosen is very beneficial because it will attract many customers who like walks and vacations. We also want to focus on changing lifestyle trends and working conditions. From a social point of view, the urban population has a great influence on us, because they are people who like to spend time in cafes, but people in rural areas, who do not have a highly developed education and culture, will not prefer to and they spend their time here, and they will choose to make their own coffee at home. Also from a social point of view, we will try to focus on changes and spending disposable income in an efficient way for our customers. The technological factors in this analysis have perhaps the greatest impact on a business (Team, n.d.). It is important to innovate all the time in our menu because it offers the possibility to attract new customers. We want to change our menu according to the occasions and seasons and to introduce specific drinks for each season. We will try to introduce a web platform for orders and delivery, to ensure greater comfort to our customers, because most reviews show that customers need comfort and prefer not to travel, but to order at home, and if we achieve this we will have a large number of orders and automatically our sales will increase. Porter’s five forces Rivalry is a big threat to us as a new company in the market because there are many sellers who charge lower prices than us or have certain offers that better attract customers. The main

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competitors are Starbucks, Costa, McDonald's and other specialty coffee companies. The demand for coffee is very high and this makes us have much lower prices than we would like. The entry of new competitors is not a big threat for us, I could say that it is moderate because the new entrants do not have many resources from the beginning and it will be difficult for them to compete with us, who are already on the market and we started to have experience. However, the entry costs are as low as possible and the raw materials are cheap and this allows them to enter the market easily. The threat of bargaining power of customers I consider to be the biggest threat we can face as a new company entering the market because there are already many customers who have certain favourite cafes and will always look for the place that benefits them most from in terms of price (Porter, 1992). We are at a disadvantage because we cannot negotiate with them because they have a choice, and sometimes we have to accept the request they have and have a relatively low price offer. At the other end of the spectrum is the bargaining power of suppliers, which is quite small, because this time we are the customers and we have the opportunity to choose from several places. Suppliers cannot afford to negotiate with us, because they need people to buy their raw material and we have the right to choose those suppliers that benefit us the most. The fifth force refers to the power of replacing our products with other substitutable products and unfortunately, it is quite large and disadvantages us a lot, because there are a lot of options for customers to choose from and here I do not just mean at competitors' cafes, but I mean instant coffees in supermarkets or coffee machines and especially the fact that most customers make their own coffee at home. Conclusion In conclusion, following the above, we highlighted the importance of research methods for a potential owner, how he can make effective decisions and ways to manage and control the activities of a company. In my example, referring to a cafe that I am going to put on the market, I have established which are the factors that influence me the most and which I have to make sure that I turn them into advantages for my business, but also the main threats that I discovered with the help of Porter's analysis and through which I managed to understand what position I would have on the market and what would be the chances of success.

Reference Aleš Groznik, KrapežJ., Miha Škerlavaj and European Union. Programme (2011). National innovation system study : PESTLE & SWOT analysis Slovenia. S. L.: Forsee Partnership. Aqua Cure. (n.d.). Aqua Cure. [online] Available at: https://www.aquacure.co.uk/knowledge-base/independent-coffee-shops- continue-to-grow-in-the-uk/ . Porter, R.I. (1992). Further elementary analysis. London: Collins Educational. Team, M.S. (n.d.). Café Coffee Day PESTLE Analysis. [online] MBA Skool. Available at: https://www.mbaskool.com/pestle-analysis/companies/18141- cafe-coffee-day.html.

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