To Build Or To Buy

To Build Or To Buy

Contents

TOC o “1-3” h z u Business strategy PAGEREF _Toc381191861 h 1Strategy for creating a competitive advantage PAGEREF _Toc381191862 h 1Cost leadership strategy PAGEREF _Toc381191863 h 2Differentiation strategy PAGEREF _Toc381191864 h 2Focus strategy PAGEREF _Toc381191865 h 3To buy or build PAGEREF _Toc381191866 h 3Form of ownership for the new coffee shop PAGEREF _Toc381191867 h 4Business plan for the coffee shop PAGEREF _Toc381191868 h 4Executive summary PAGEREF _Toc381191869 h 4Company description PAGEREF _Toc381191870 h 4Market analysis PAGEREF _Toc381191871 h 5Organization and Management PAGEREF _Toc381191872 h 5Marketing and Sales PAGEREF _Toc381191873 h 5

Today’s world of business is quite competitive as there is emergence of businesses that come up to compete with those that are already in existence and are well established. The paper explains the strategy that would be used when opening up a small business in this case a coffee shop that would compete with Starbucks which is known. It will also look at if opening a new coffee shop is more sensible than purchasing Starbucks which is already established. It will further look at the most appropriate form of ownership of the coffee shop that will be created. There will also be a small business plan for the coffee shop to be established.

Business strategy

To effectively compete with Starbucks, there has to be a clear business strategy that will be developed, and implemented for the new coffee shop to be opened. The strategy is important as it will help the coffee shop achieve its goals and eventually put Starbuck off the market. The attractiveness of the coffee shop in the beverage industry is what will primarily determine its profitability and presence in the market (Porter, 2008).

Strategy for creating a competitive advantageThe strategic business plan for the coffee shop will include; the competitive advantage that the business has to gain. A competitive advantage is usually gained by the coffee shop over Starbucks which is its competitor through offering the consumers better value .The competitive advantage will be achieved through offering lower prices as compared to the process of similar products in Starbucks. There will also be benefits such as giving some accompaniments with the coffee such as biscuits, cookies which can be used to justify any price on the products that consumers will feel is high compared to a similar product in Starbuck .in the real sense this is cheaper as in Starbucks the cookies and biscuits will be bought separately with the coffee and hence the overall price will be higher compared to that at the new coffee shop (Griffin, 2012).

Cost leadership strategyCost leadership strategy will be used for the establishment of a competitive advantage on a scale that is broader. This strategy is aimed at the new shop competing to command the greatest share of the market. This is through having the largest number of customers by offering fair prices for their products. This is because the coffee shop will be offering coffee which is of high standards at prices that are both affordable and fair to the customers. The shop will ensure that it minimizes its costs for making coffee as much as possible .This will be carried down to the customers by offering coffee at low prices. All these will be achieved without a decrease in profits that the shop intends to make. Since the shop is new and it seeks to establish itself in the market it will sell its products at prices that are below those ones at Starbucks through this it is aiming at gaining the market share which is dominated by Starbucks which is already established (Farquhar, 2012).

Differentiation strategyThis strategy to be applied by the coffee shop aims at offering the customers with products that are distinct in quality which the customers will value. The coffee shop will attract customers through production of coffee that is distinct from that produced by Starbucks. in the shop there will be a great variety of coffee to be offered such as espresso, Americano, Cappuccino, black coffee, Dry cappuccino, flavored coffee, white coffee, café latte, Cafe Macchiato, Cafe Latte Fredo, Turkish Coffee, instant coffee and so on. All these types of coffee will be available in the shop, and made in such a way that they taste better than those at Starbucks. There will also be some light snacks available in the shop to betaken with the coffee. There will also be a team that is dedicated to making the best coffee for customers

Focus strategyThis will aim at concentrating on particular customers in this case coffee lovers .it will also identify the most popular coffee product and make sure that they offer the best of it. The idea behind this strategy is serving a limited number of customers better as compared to Starbucks.

The rationale behind using a combination of strategies is to ensure that it will be able to please many customers who are focusing on factors such as price, quality, variety and convenience. The shop should therefore ensure that it is consistent when it comes to the products it is offering. The shop will also be a centre for interaction where customers will have an opportunity to talk, entertain each other or even pass time as they take their favorite drink (Griffin, 2012).

To buy or buildIt is better to start a new coffee shop rather than buying Starbucks since the owner can make the shop their own. It can be run according to how the owner wants it without necessarily need to conform to expectations of the customer base that exists or employees. It is also cheaper to start the coffee shop, and grow it into something successful as compared to buying Starbucks which is already established. There is also less risk of encountering problems which are not expected such as debts when a new coffee shop is established. There is also the choice of the business brand that the owner wants as they will pick a logo that is suitable come up with principles that will be used as a guide for the business. Incase Starbucks is bought all these things would have been decided and well established (Adrian, 2011).

Form of ownership for the new coffee shopThe most appropriate form of ownership of the new coffee shop to be opened would be partnership. This is because on my own I can not be able to raise the required funds for the establishment of the shop. The people who will be part of the partnership will raise funds that will be used to establish the business which I could otherwise not raise on my own. The business will be a partnership whose terms will be laid down in a written agreement between the partners. Profits and losses from the business as well as the management and operations required in the coffee shop will be clearly indicated in the agreement.

Business plan for the coffee shopExecutive summaryThe business is going to be a partnership between me and four other shareholders. It is a coffee shop will aim at commanding establishing itself in the area and creating a competitive advantage against a more established business Starbucks. The main goal of the establishment is to become a leader when it comes to providing the best coffee. It also aims at being consistent with its products and giving the customers what they want at prices they can afford.

Company descriptionThis is a coffee shop that will be established to provide a wide variety of coffee products as well as light snacks that can be taken together with the coffee. The coffee shop will be made distinct in that there will be ample space set aside for the customers to use for socializing as they take coffee within the shop. The business aims at serving a wide market range of coffee lovers both young and old.

Market analysisAn extensive research will be done concerning the coffee shop business. It will focus on the variety of coffee products that are offered by coffee shops. It will also look at the products that our competitor Starbucks offers and at what prices. It will also look at anything that the business can incorporate so that it can establish itself within the market (U.S small business Administration, 2013).

Organization and ManagementThe form of ownership of the business is partnership with all the partners having equal rights of ownership in the business. The employees who will be working in the coffee shop will be required to have previously worked in a coffee shop before. Any decisions to be in the business are agreed upon by the partners.

Marketing and SalesThe business will be marketed through extensive advertising through posters showing what the business has to offer and at what prices. the shop aims at increasing sales through offering discounts on purchases, use of loyalty cards ,promotion of multiple sales and target take away sales. All these sales strategies are aimed at increasing the number of sales in the shop.

References

Griffin, D. (2012). Four Generic Strategies That Strategic Business Units Use. Retrieved May 4, 2013 from http://smallbusiness.chron.com/four-generic-strategies-strategic-business-units-use-496.htmlPorter, M.(2008). The Five Competitive Forces That Shape Strategy. Retrieved May 4,2013 from http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/

Baskerville, P. (2012). What’s The Secret To A Successful Coffee Shop? Retrieved May 4, 2013 from http://www.forbes.com/sites/quora/2012/12/20/whats-the-secret-to-a-successful-coffee-shop/Adrian, W. (2011).Buy an Existing Business or start your own company? Retrieved May 4, 2013 from http://blog.thecompanywarehouse.co.uk/2011/01/04/buy-an-existing-business-or-start-your-own-company/Farquhar, E. (2012). How small firms can compete with big companies through better pricing. Retrieved May 4, 2013 from http://www.businesszone.co.uk/topic/sales/how-small-businesses-can-compete-big-companies-through-better-pricing/43528U.S small business Administration. (2013).Create your Business plan. Retrieved May 4,2013 from http://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business/how-write-business-plan