Devry University BUSN 412 Week 6 Case study: Green Mountain Coffee and Keurig

Green Mountain Coffee Roasters is a company that makes the K- cups, which are used in
a single dispenser coffee maker, and takes around 60 seconds to make. This allows for consumers
to enjoy their favorite coffees at home. Green Mountain Coffee Roasters teamed up with
Starbucks and Dunkin Donuts coffee to provide the consumers their favorite brand of coffee in
the K-cup. This is something that is a great opportunity to Starbucks because the K- cups are
very popular and easy to use amongst coffee lovers and now easily available at most stores. The
CEO, president, and chairman of Starbucks Corporation is Howard Schultz and the President and
CEO of GMCR is Lawrence Blanford. Dunkin Brands CEO and President Nigel Travis believes
customers will be delighted to learn that Americas Favorite Coffee will soon be able to be
prepared in Americas fastest-growing single-cup brewing system (Dess, 2004 pp. C296). The
teaming up of Green Mountain Coffee Roasters, Starbucks and Dunkin has enough variety for
any of their loyal customers. This is a great opportunity for the company since this will help
revenue increase since the availability for Starbucks coffee will be available to everyone who
uses the K-cups.

SWOT ANALYSIS
Strengths


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 for
OCS market and one for at-home market.

Case analysis


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Due to the increase in demand of at-home market including KADs and at-home
consumers, 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 GMCRs
ability 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 smaller
and cheaper brewers.



Keuring has opportunity to enter in the retail market in future due to the less overall
costs.



Strategic agreements to bolster revenues

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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 of
Brewer 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 of
launch.



Competition in specialty coffee is intense



Increased demand for high-quality Arabica coffee beans coupled with possible supply
shortages

ANALYSIS VIA PORTERS FIVE-FORCE MODEL
The 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 it
becomes a big population of coffee lover growth. Otherwise, they have many competitors
because 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

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Higher entrance barrier to new entrants

Buyer Power: High


Increase in consumers option Lower command power in terms of

pricing
Supplier Power: High


Heavy dependency on specialty coffee farms (Dress, 2012).

STRATEGY USED
The Green Mountain Coffee Roasters and Keurig Coffee contain their competitive
advantage due to the fact that they bring company into their company. The strategy they have
undertaken is using Porters differentiation strategy, being different. A way to be unique is by
getting popular coffee products and tastes into their product. The coffee pods are flavors of
coffee as those in Starbucks and Dunkin Donuts some of the popular coffee trendsetters also in
hot beverages; being hot tea, hot chocolate and coffee, (Eisner, 2012). They are successful on
adding Starbucks flavors and Dunkin Donuts to their line of pods which makes every person
choice of flavor possible. The majority of consumers are the millennial that consume an average
of four cups and a half a day, (Eisner, 2012). People do not consume them for energy but as a
daily concentration of addiction and to have their favorite coffee available in their home at all
times. They were able to add to the mix the flavors most popular are in the pods of the advanced
coffee brewer. The companys differentiation strategy is also evident since the system is making
them well known among young adults.

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THE ISSUES AND CHALLENGES FACING THIS COMPANY
The companys competitive advantage may be sustained because they have come up with
an idea not even Starbucks can come up with. They are getting major coffee companies to
contribute and get their own products within their market. Starbuck and Dunkin Donuts have
contributed by having their popular flavor added to the line of pods used in the Keurig coffee
brewing machinery, (Eisner, 2012). However, a downfall to this amazing idea is that the price of
the machine is pricey, and one would have to only pay that amount once and still put aside for
the pods of choice. Some of the pods come in a mix variety while others are individually
packaged. The Green Mountain Coffee Roasters are in the growth cycle of the business. The
reason 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 RECOMENDED
If I were in the position to advise the company on a more strategic recommendation I
think that something that would provide growth would be to open the door to many other large
companies that offer specialty coffee. There is a large variety of coffee flavors for the K-cups
available today however the idea that many customers are very loyal to specific brands of coffee
makes a very huge difference in the overall buying process for the customers. It is very important
for companies such as GMCR to look out for the bestseller coffee brands that the owners of these
single cup makers like.

Case analysis

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OPINION
The case study was very interesting as well as important because it helps give a scope of
very large international companies that are creating partners and working together to bring their
customers their favorite products in a more simple solution and a more simple way. This helps
the learning process more interesting for us and gives us more detail regards to the real life
companies that we may be dealing with one day.

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References
Dess. Strategic Management text and cases, 6th Edition. McGraw-Hill Learning Solutions, 2012.