Nespresso Swot

II. Business Model and Strategic Plan Part I: Existing Business or New Business Division; Vision, Mission, and Value Proposition ………………………………6

Within the coffee industry Starbucks Corporations has grown from a small shop to a leading coffee distributor, proving to have financial strength and determination to continue growth. With the weakening economy the continued success of Starbucks

Nespresso's goal is to build a super-premium brand in the world, the perfect coffee icon. Their design characteristics is the world of the privilege to meet customer

With coffee consumption being transformed into a habit, with active market growth, with Starbucks being a North America market leader the distance between company and its competitors was reduced.

By 2003, the number of retail specialty coffee shops, cafes, kiosks, coffee carts, and roasters in the United States reached over 17,000, equating to nearly $9 billion in sales. According to the Specialty Coffee Association of America, 16 percent of adults in the United States drink coffee from one of these specialty outlets daily. (“Organo Gold”, 2008).

To further develop, produce and market the Nespresso system, a separate company was created. The new business involved selling coffee, something Nestle were already the market leader. The company’s top management decided early on that the similarities between the two businesses were more illusory than real. Nestle were selling instant coffee to the mass market but Nespresso specifically targeted wealthy and young urban professionals, positioning itself as an upmarket brand. Nespresso adopted a business model more akin to a luxury goods manufacturer, not only were the two business models different, they potentially conflicted as Nespresso could be cannibalizing the sales of Nescafe, while the values and attitudes of the Nespresso organization were the exact opposite of those in the traditional Nestle organization.

The foundational principle of a company is its business model. A business model defines the aspects associated with the business, such as the focus, values, strategy, innovations and both the traditional and non-traditions system accompanying the lean internal and external factors that set the company apart from others. These are the suggested external factors of a business model, which defines the roles of external factors of demand.

Coffee beans as become one of the most require and actively commodities in the world. The massive sales of the known coffee retail outlets such as the Seattle’s Best and Starbucks over the last decades proved the great demand of coffee all over the world (Frank, 2004).

In this report we are going to discuss about I) what is a business model? II) what is a business process and III) How business process and business model are connected?

Any business majorly focuses on 4 major models these are marketing, financial, operational and competitive. For an organisation to succeed

“Business Modeling is often seen as process to rearrange the building blocks to an innovative business model. What people forget is that a business model is not just the building plan of your business but also should give answer to the question “Why should your business exist from a customer perspective?” So a business model is not just a building plan but also how you give meaning to your customers and your employees” ( blog- business model,2016).

However, Nescafe’s product involvement strategy goes even further; it wants consumers to experience the aesthetic perception of the nice packaging and hedonically enjoy various tastes and preparing options it offers (Montgomery, 2014). By carefully paying attention to the latest changes in consumer preferences, Nescafe was successful in making its consumers feel highly involved with its products. Due to its presence all over the world, the brand learned that acculturation is a much better strategy than global standardization. Thus, when it comes to Nescafe there is no global mass customization, but rather a regional-based mass customization. Nescafe has an almost aggressive worldwide strategy when it comes to consumers experiencing the product. The consumer is supposed to be able to consume Nescafe products everywhere, whenever possible and the way she/he wants to consume it. Nescafe is present in most of the Croatian bars/coffee shops in either coffee-to-go or in a regular consuming option . Nescafe is also present in most vending machines allowing the consumer to choose from various tastes and choices to satisfy her/his needs. All things

In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.

Although it has fallen behind globally, the strong branding of Starbucks makes it an excellent candidate for expansion in new markets. The success of in home brewing machines such as Keurig is another great opportunity for the company. Starbucks has recently had success offering new products, although they should be cautious of deviating too much from its core product, this is a great source of also can use economies of scale to purchase. Starbucks is known for its high-quality coffee, and that quality comes with a price (David Campbell, 2011).

Business model has been referred to as an architecture (Osterwalder 2004), a structural template (Amitt & Zott 2011), a method (Afuah & Tucci 2011) and a pattern (Brousseau & Penard 2006). Saul Kaplan (2012, p.18) defines business model as a ‘story about how an organization creates, delivers and captures value’. Every viable organization is built on a business model as a foundation. Although commonly used interchangeably, business model are not business strategy. Business model is an internal system that is made up of components, linkage between component and dynamics in pursuit of identifying the problem to be solved (customer need) and how it will profit through addressing such need (Newth 2013). In contrast, strategy is an external competitive approach to differentiate business and offer competitive advantage using capabilities developed in your business model (Newth 2013). In essence, business model embodies the organization financial and architecture of business, which becomes the foundation for business strategy (Teece 2010).