Coffee Roastery Focused on keeping its entire supply chain green, the roastery carefully selects the suppliers from whom it sources coffee beans. It works directly with farms and farm cooperatives, who are accredited as treating their farmers and employees fairly and ethically. Approximately 50% of the roastery’s output is used by BB’s academy and coffee bars, ensuring a continued green chain across its businesses. In 2020, the coffee roasting unit produced 4500 tonnes and contributed 15% of BB’s total revenue. The sustainability positioning has differentiated BB from its peers, and helped it earn collaborations with socially responsible corporates. Best of all, there is now capacity to expand production to around 18,000 tonnes at the roastery and start exporting roasted coffee beans to other countries. At present, the roastery is roasting 100% Arabica beans. The average wholesale price BB is able to sell the Arabica beans for in 2021 is US$3.10, down from US$4.42 in 2014. However, projections are that the wholesale price of roasted Arabica coffee beans will increase 5% every year for the next 10 years and beyond. By contrast, on average, Robusta beans are selling for US$1.94, but the wholesale price of Robusta beans is projected to increase by 11% every year for the next 10 years and beyond. Chng believes a move to Robusta beans might be a viable option in the future, because they can be grown in a much wider range of climates and altitudes. Importantly, because of their established relationships with coffee bean farmers around the world, BB would be able to source raw ‘green’ Arabica and Robusta beans at the same price, which they would then use in the roastery. Thus, the cost of raw beans will be the same, whether they use Arabica or Robusta beans in the roastery. This is unlikely to change in future. Looking to The Future Chng is optimistic that an overseas expansion could be a good move. Despite that, she wants to prioritise the longterm financial well-being of the organisation. As a result, she feels some research is necessary. She has asked you to source relevant data and report to her the best course of action. To do that, you will need to answer the following questions. 3. Chng is considering expanding to the top country you identified in question two (i.e., the world’s number one country for per capita coffee consumption). In planning for the potential expansion, Chng wants you to: c. Identify two (2) preventable (internal) risks that, in your judgement, are the most critical and explain why. Use appropriate sources/references to support your answer. d. Identify two (2) external risks that, in your judgement, are the most critical and explain why. Use appropriate sources/references to support your answer.
Coffee Roastery
Focused on keeping its entire supply chain green, the roastery carefully selects the suppliers from whom it sources
coffee beans. It works directly with farms and farm cooperatives, who are accredited as treating their farmers and
employees fairly and ethically. Approximately 50% of the roastery’s output is used by BB’s academy and coffee bars,
ensuring a continued green chain across its businesses. In 2020, the coffee roasting unit produced 4500 tonnes and
contributed 15% of BB’s total revenue. The sustainability positioning has differentiated BB from its peers, and helped
it earn collaborations with socially responsible corporates. Best of all, there is now capacity to expand production to
around 18,000 tonnes at the roastery and start exporting roasted coffee beans to other countries.
At present, the roastery is roasting 100% Arabica beans. The average wholesale price BB is able to sell the Arabica
beans for in 2021 is US$3.10, down from US$4.42 in 2014. However, projections are that the wholesale price of
roasted Arabica coffee beans will increase 5% every year for the next 10 years and beyond. By contrast, on average,
Robusta beans are selling for US$1.94, but the wholesale price of Robusta beans is projected to increase by 11% every
year for the next 10 years and beyond.
Chng believes a move to Robusta beans might be a viable option in the future, because they can be grown in a much
wider range of climates and altitudes. Importantly, because of their established relationships with coffee bean farmers
around the world, BB would be able to source raw ‘green’ Arabica and Robusta beans at the same price, which they
would then use in the roastery. Thus, the cost of raw beans will be the same, whether they use Arabica or Robusta
beans in the roastery. This is unlikely to change in future.
Looking to The Future
Chng is optimistic that an overseas expansion could be a good move. Despite that, she wants to prioritise the longterm financial well-being of the organisation. As a result, she feels some research is necessary. She has asked you to
source relevant data and report to her the best course of action. To do that, you will need to answer the following
questions.
3. Chng is considering expanding to the top country you identified in question two (i.e., the world’s number one
country for per capita coffee consumption). In planning for the potential expansion, Chng wants you to:
c. Identify two (2) preventable (internal) risks that, in your judgement, are the most critical and explain
why. Use appropriate sources/references to support your answer.
d. Identify two (2) external risks that, in your judgement, are the most critical and explain why. Use
appropriate sources/references to support your answer.
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