Case Study Description of Kaffeine: The Nepalese Cafe Opportunity
In early 2013, three young Nepalese entrepreneurs were deciding whether to launch Kaffeine, the first of a large chain of coffee shops, in Kathmandu, the capital city of Nepal. As experienced entrepreneurs, the partners were interested in a recently vacated location near Durbar Marg, a major street and shopping destination in Kathmandu that represented a unique opportunity to build a highly successful coffee chain. Coupled with the increasing trend in Nepal toward coffee drinking rather than tea, this was an opportunity the trio felt they could not pass up. The entrepreneurs had many things to consider, such as location, competition, target market, and how to measure the feasibility of this new venture.
Swot Analysis of "Kaffeine: The Nepalese Cafe Opportunity" written by Kevin Xo, Zach Hamel, Eric A. Morse includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kaffeine Kathmandu facing as an external strategic factors. Some of the topics covered in Kaffeine: The Nepalese Cafe Opportunity case study are - Strategic Management Strategies, Emerging markets, Marketing and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Kaffeine: The Nepalese Cafe Opportunity casestudy better are - – talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization,
central banks are concerned over increasing inflation, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Kaffeine: The Nepalese Cafe Opportunity
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Kaffeine: The Nepalese Cafe Opportunity case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kaffeine Kathmandu, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kaffeine Kathmandu operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Kaffeine: The Nepalese Cafe Opportunity can be done for the following purposes –
1. Strategic planning using facts provided in Kaffeine: The Nepalese Cafe Opportunity case study
2. Improving business portfolio management of Kaffeine Kathmandu
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kaffeine Kathmandu
Strengths Kaffeine: The Nepalese Cafe Opportunity | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kaffeine Kathmandu in Kaffeine: The Nepalese Cafe Opportunity Harvard Business Review case study are -
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Kaffeine Kathmandu digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Kaffeine Kathmandu has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Low bargaining power of suppliers
– Suppliers of Kaffeine Kathmandu in the sector have low bargaining power. Kaffeine: The Nepalese Cafe Opportunity has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Kaffeine Kathmandu to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Strategy & Execution field
– Kaffeine Kathmandu is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Kaffeine Kathmandu in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Kaffeine Kathmandu has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Sustainable margins compare to other players in Strategy & Execution industry
– Kaffeine: The Nepalese Cafe Opportunity firm has clearly differentiated products in the market place. This has enabled Kaffeine Kathmandu to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Kaffeine Kathmandu to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Kaffeine Kathmandu has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kaffeine Kathmandu has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Diverse revenue streams
– Kaffeine Kathmandu is present in almost all the verticals within the industry. This has provided firm in Kaffeine: The Nepalese Cafe Opportunity case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Strong track record of project management
– Kaffeine Kathmandu is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Kaffeine Kathmandu are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
High brand equity
– Kaffeine Kathmandu has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kaffeine Kathmandu to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Kaffeine Kathmandu is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Kevin Xo, Zach Hamel, Eric A. Morse can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Learning organization
- Kaffeine Kathmandu is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Kaffeine Kathmandu is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Kaffeine: The Nepalese Cafe Opportunity Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Kaffeine: The Nepalese Cafe Opportunity | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Kaffeine: The Nepalese Cafe Opportunity are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Kaffeine Kathmandu is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Kaffeine: The Nepalese Cafe Opportunity can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Kaffeine: The Nepalese Cafe Opportunity HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Kaffeine Kathmandu has relatively successful track record of launching new products.
Products dominated business model
– Even though Kaffeine Kathmandu has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Kaffeine: The Nepalese Cafe Opportunity should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– It come across in the case study Kaffeine: The Nepalese Cafe Opportunity that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Kaffeine: The Nepalese Cafe Opportunity can leverage the sales team experience to cultivate customer relationships as Kaffeine Kathmandu is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Kaffeine Kathmandu has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
No frontier risks strategy
– After analyzing the HBR case study Kaffeine: The Nepalese Cafe Opportunity, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Kaffeine: The Nepalese Cafe Opportunity, is just above the industry average. Kaffeine Kathmandu needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow to strategic competitive environment developments
– As Kaffeine: The Nepalese Cafe Opportunity HBR case study mentions - Kaffeine Kathmandu takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High cash cycle compare to competitors
Kaffeine Kathmandu has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Need for greater diversity
– Kaffeine Kathmandu has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Kaffeine: The Nepalese Cafe Opportunity, it seems that the employees of Kaffeine Kathmandu don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Opportunities Kaffeine: The Nepalese Cafe Opportunity | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Kaffeine: The Nepalese Cafe Opportunity are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Kaffeine Kathmandu can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Kaffeine: The Nepalese Cafe Opportunity, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Kaffeine Kathmandu can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Kaffeine Kathmandu can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Learning at scale
– Online learning technologies has now opened space for Kaffeine Kathmandu to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Better consumer reach
– The expansion of the 5G network will help Kaffeine Kathmandu to increase its market reach. Kaffeine Kathmandu will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Kaffeine Kathmandu can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Kaffeine Kathmandu can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Kaffeine: The Nepalese Cafe Opportunity suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Kaffeine Kathmandu to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kaffeine Kathmandu can use these opportunities to build new business models that can help the communities that Kaffeine Kathmandu operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Kaffeine Kathmandu can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Using analytics as competitive advantage
– Kaffeine Kathmandu has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Kaffeine: The Nepalese Cafe Opportunity - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kaffeine Kathmandu to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Kaffeine Kathmandu is facing challenges because of the dominance of functional experts in the organization. Kaffeine: The Nepalese Cafe Opportunity case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Kaffeine Kathmandu in the consumer business. Now Kaffeine Kathmandu can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Kaffeine: The Nepalese Cafe Opportunity External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Kaffeine: The Nepalese Cafe Opportunity are -
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Kaffeine Kathmandu in the Strategy & Execution sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Kaffeine: The Nepalese Cafe Opportunity, Kaffeine Kathmandu may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
High dependence on third party suppliers
– Kaffeine Kathmandu high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing wage structure of Kaffeine Kathmandu
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Kaffeine Kathmandu.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Technology acceleration in Forth Industrial Revolution
– Kaffeine Kathmandu has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Kaffeine Kathmandu needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Kaffeine Kathmandu will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Environmental challenges
– Kaffeine Kathmandu needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Kaffeine Kathmandu can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Kaffeine Kathmandu needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Kaffeine Kathmandu with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Kaffeine Kathmandu can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Shortening product life cycle
– it is one of the major threat that Kaffeine Kathmandu is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Kaffeine: The Nepalese Cafe Opportunity Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Kaffeine: The Nepalese Cafe Opportunity needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Kaffeine: The Nepalese Cafe Opportunity is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Kaffeine: The Nepalese Cafe Opportunity is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Kaffeine: The Nepalese Cafe Opportunity is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Kaffeine Kathmandu needs to make to build a sustainable competitive advantage.