Devry BUSN 412 Week 6 Case study: Green Mountain Coffee and Keurig.....
Question # 00035565
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Updated on: 12/10/2014 07:05 AM Due on: 05/31/2015
Green Mountain Coffee Roasters is a company that makes the K- cups, which are used ina single dispenser coffee maker, and takes around 60 seconds to make. This allows for consumersto enjoy their favorite coffees at home. Green Mountain Coffee Roasters teamed up withStarbucks and Dunkin Donuts coffee to provide the consumers their favorite brand of coffee inthe K-cup. This is something that is a great opportunity to Starbucks because the K- cups arevery popular and easy to use amongst coffee lovers and now easily available at most stores. TheCEO, president, and chairman of Starbucks Corporation is Howard Schultz and the President andCEO of GMCR is Lawrence Blanford. Dunkin Brands CEO and President Nigel Travis believescustomers will be delighted to learn that Americas Favorite Coffee will soon be able to beprepared in Americas fastest-growing single-cup brewing system (Dess, 2004 pp. C296). Theteaming up of Green Mountain Coffee Roasters, Starbucks and Dunkin has enough variety forany of their loyal customers. This is a great opportunity for the company since this will helprevenue increase since the availability for Starbucks coffee will be available to everyone whouses the K-cups.
SWOT ANALYSISStrengths
Keuring Inc. can easily enter into at home market before competition.
Customer confusion will be decreased.
There is no need for roasters to keep two different cup inventories like one inventory forOCS market and one for at-home market.
Case analysis
3
Due to the increase in demand of at-home market including KADs and at-homeconsumers, probably Roasters production levels will be increase.
Leading market position built on strong product portfolio
KEURIG unit contributes to strong revenue growth
Corporate image built on sustainability initiatives
Customer loyalty
Decreased availability of high-quality Arabica coffee beans could jeopardize GMCRsability to maintain or expand their business (Dess C308).
Weaknesses
Due to single cup with brewer, alienation of the OCS K-Cup channel will happen.
Pricing with the KADs will be out of control.
Reliance on a single manufacturer in China for single cup brewers
Dependence on certain retailer for a substantial portion of revenues
Opportunities
Keurig has opportunity to enter in the market quickly then they can come with smallerand cheaper brewers.
Keuring has opportunity to enter in the retail market in future due to the less overallcosts.
Strategic agreements to bolster revenues
4
Entry into functional drinks market in the US
Threats
Keurig can be suffering in the loss of market share due to not decrease the prices ofBrewer and competition can be enter in the lower pricing strategy.
Lack of resources to market and sell brewers and cups through retail outlets at time oflaunch.
Competition in specialty coffee is intense
Increased demand for high-quality Arabica coffee beans coupled with possible supplyshortages
ANALYSIS VIA PORTERS FIVE-FORCE MODELThe Green mountain company is the company that has a threat of medium range.About 54% of Americans over age of 18 years old drink coffee on daily basis that itbecomes a big population of coffee lover growth. Otherwise, they have many competitorsbecause most coffee company are also release the k-cup that provide more verities.Below is the summary of Five-force model of Green Mountain Company.Threat of Substitutes: Medium
54% of Americans over age of 18 drink coffee on a daily basis
Competitive Rivalry: High
Expiration of K-Cup pack patent in September 2012
Threat of New Entrants: Medium
Lower entrance barrier to existing competitors
Case analysis
5
Higher entrance barrier to new entrants
Buyer Power: High
Increase in consumers option Lower command power in terms of
pricingSupplier Power: High
Heavy dependency on specialty coffee farms (Dress, 2012).
STRATEGY USEDThe Green Mountain Coffee Roasters and Keurig Coffee contain their competitiveadvantage due to the fact that they bring company into their company. The strategy they haveundertaken is using Porters differentiation strategy, being different. A way to be unique is bygetting popular coffee products and tastes into their product. The coffee pods are flavors ofcoffee as those in Starbucks and Dunkin Donuts some of the popular coffee trendsetters also inhot beverages; being hot tea, hot chocolate and coffee, (Eisner, 2012). They are successful onadding Starbucks flavors and Dunkin Donuts to their line of pods which makes every personchoice of flavor possible. The majority of consumers are the millennial that consume an averageof four cups and a half a day, (Eisner, 2012). People do not consume them for energy but as adaily concentration of addiction and to have their favorite coffee available in their home at alltimes. They were able to add to the mix the flavors most popular are in the pods of the advancedcoffee brewer. The companys differentiation strategy is also evident since the system is makingthem well known among young adults.
6
THE ISSUES AND CHALLENGES FACING THIS COMPANYThe companys competitive advantage may be sustained because they have come up withan idea not even Starbucks can come up with. They are getting major coffee companies tocontribute and get their own products within their market. Starbuck and Dunkin Donuts havecontributed by having their popular flavor added to the line of pods used in the Keurig coffeebrewing machinery, (Eisner, 2012). However, a downfall to this amazing idea is that the price ofthe machine is pricey, and one would have to only pay that amount once and still put aside forthe pods of choice. Some of the pods come in a mix variety while others are individuallypackaged. The Green Mountain Coffee Roasters are in the growth cycle of the business. Thereason is that no one thought of a similar idea; their products are great for an office, dealership,and other place of people gatherings.
COURSE OF ACTION RECOMENDEDIf I were in the position to advise the company on a more strategic recommendation Ithink that something that would provide growth would be to open the door to many other largecompanies that offer specialty coffee. There is a large variety of coffee flavors for the K-cupsavailable today however the idea that many customers are very loyal to specific brands of coffeemakes a very huge difference in the overall buying process for the customers. It is very importantfor companies such as GMCR to look out for the bestseller coffee brands that the owners of thesesingle cup makers like.
Case analysis
7
OPINIONThe case study was very interesting as well as important because it helps give a scope ofvery large international companies that are creating partners and working together to bring theircustomers their favorite products in a more simple solution and a more simple way. This helpsthe learning process more interesting for us and gives us more detail regards to the real lifecompanies that we may be dealing with one day.
8
ReferencesDess. Strategic Management text and cases, 6th Edition. McGraw-Hill Learning Solutions, 2012.
SWOT ANALYSISStrengths
Keuring Inc. can easily enter into at home market before competition.
Customer confusion will be decreased.
There is no need for roasters to keep two different cup inventories like one inventory forOCS market and one for at-home market.
Case analysis
3
Due to the increase in demand of at-home market including KADs and at-homeconsumers, probably Roasters production levels will be increase.
Leading market position built on strong product portfolio
KEURIG unit contributes to strong revenue growth
Corporate image built on sustainability initiatives
Customer loyalty
Decreased availability of high-quality Arabica coffee beans could jeopardize GMCRsability to maintain or expand their business (Dess C308).
Weaknesses
Due to single cup with brewer, alienation of the OCS K-Cup channel will happen.
Pricing with the KADs will be out of control.
Reliance on a single manufacturer in China for single cup brewers
Dependence on certain retailer for a substantial portion of revenues
Opportunities
Keurig has opportunity to enter in the market quickly then they can come with smallerand cheaper brewers.
Keuring has opportunity to enter in the retail market in future due to the less overallcosts.
Strategic agreements to bolster revenues
4
Entry into functional drinks market in the US
Threats
Keurig can be suffering in the loss of market share due to not decrease the prices ofBrewer and competition can be enter in the lower pricing strategy.
Lack of resources to market and sell brewers and cups through retail outlets at time oflaunch.
Competition in specialty coffee is intense
Increased demand for high-quality Arabica coffee beans coupled with possible supplyshortages
ANALYSIS VIA PORTERS FIVE-FORCE MODELThe Green mountain company is the company that has a threat of medium range.About 54% of Americans over age of 18 years old drink coffee on daily basis that itbecomes a big population of coffee lover growth. Otherwise, they have many competitorsbecause most coffee company are also release the k-cup that provide more verities.Below is the summary of Five-force model of Green Mountain Company.Threat of Substitutes: Medium
54% of Americans over age of 18 drink coffee on a daily basis
Competitive Rivalry: High
Expiration of K-Cup pack patent in September 2012
Threat of New Entrants: Medium
Lower entrance barrier to existing competitors
Case analysis
5
Higher entrance barrier to new entrants
Buyer Power: High
Increase in consumers option Lower command power in terms of
pricingSupplier Power: High
Heavy dependency on specialty coffee farms (Dress, 2012).
STRATEGY USEDThe Green Mountain Coffee Roasters and Keurig Coffee contain their competitiveadvantage due to the fact that they bring company into their company. The strategy they haveundertaken is using Porters differentiation strategy, being different. A way to be unique is bygetting popular coffee products and tastes into their product. The coffee pods are flavors ofcoffee as those in Starbucks and Dunkin Donuts some of the popular coffee trendsetters also inhot beverages; being hot tea, hot chocolate and coffee, (Eisner, 2012). They are successful onadding Starbucks flavors and Dunkin Donuts to their line of pods which makes every personchoice of flavor possible. The majority of consumers are the millennial that consume an averageof four cups and a half a day, (Eisner, 2012). People do not consume them for energy but as adaily concentration of addiction and to have their favorite coffee available in their home at alltimes. They were able to add to the mix the flavors most popular are in the pods of the advancedcoffee brewer. The companys differentiation strategy is also evident since the system is makingthem well known among young adults.
6
THE ISSUES AND CHALLENGES FACING THIS COMPANYThe companys competitive advantage may be sustained because they have come up withan idea not even Starbucks can come up with. They are getting major coffee companies tocontribute and get their own products within their market. Starbuck and Dunkin Donuts havecontributed by having their popular flavor added to the line of pods used in the Keurig coffeebrewing machinery, (Eisner, 2012). However, a downfall to this amazing idea is that the price ofthe machine is pricey, and one would have to only pay that amount once and still put aside forthe pods of choice. Some of the pods come in a mix variety while others are individuallypackaged. The Green Mountain Coffee Roasters are in the growth cycle of the business. Thereason is that no one thought of a similar idea; their products are great for an office, dealership,and other place of people gatherings.
COURSE OF ACTION RECOMENDEDIf I were in the position to advise the company on a more strategic recommendation Ithink that something that would provide growth would be to open the door to many other largecompanies that offer specialty coffee. There is a large variety of coffee flavors for the K-cupsavailable today however the idea that many customers are very loyal to specific brands of coffeemakes a very huge difference in the overall buying process for the customers. It is very importantfor companies such as GMCR to look out for the bestseller coffee brands that the owners of thesesingle cup makers like.
Case analysis
7
OPINIONThe case study was very interesting as well as important because it helps give a scope ofvery large international companies that are creating partners and working together to bring theircustomers their favorite products in a more simple solution and a more simple way. This helpsthe learning process more interesting for us and gives us more detail regards to the real lifecompanies that we may be dealing with one day.
8
ReferencesDess. Strategic Management text and cases, 6th Edition. McGraw-Hill Learning Solutions, 2012.
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Solution: Devry BUSN 412 Week 6 Case study: Green Mountain Coffee and Keurig.....