Coffee Pot Case Analysis

Background of Case 1: Coffee Pot

Coffee Pot is a company whose business is selling coffee drinks to consumers. Balkis, the daughter of Coffee Pot late president, takes over his job as the new president of the company after the death of her father. The company has been making losses in recent years. Since the company cannot compete with Starbucks, based on the quick strategic analysis, the company needs to come up with new strategy to attract customers. By using her knowledge in bio-chemical engineering, she manages to come up with the new technology of coffee brewing which enables higher productivity and lower cost of production.

Therefore, with lower cost assured, Balkis chooses a strategy of targeting price-sensitive drinkers to improve the company's profitability. However, the latest quarterly financial report, still reporting loss. In addition the company is also unable to pay the monthly loan. She seeks help from her bookkeeper, auntie Sofiah who only finishes secondary school. She noticed that the quarterly report lacks detail and there is decreasing pattern of earnings from the previous reports. She decides to get help from her friend, Jannah to look into the company's problems.

Meanwhile, Johari, the manager of the Administration, Purchasing and Human Resource division manages to earn his quarterly bonus by beating the previous quarter number. He often changes the suppliers to get the lowest prices. He also managed to reduce purchasing and training costs. However, higher staff turnover compared to last year is a source of concern. After conducting investigation into the company's business matters, Jannah points out some irregularities of the company business operation, among others are overpayment of lease rentals, the company's business has never been audited, and unauthorized expansion of shop which involves taking over the lease of the adjacent space has been done by one of the manager of the outlet at Shah Alam without her prior permission or knowledge.

Major Issue:

The major issue is the company's declining profit. Despite the introduction of new technology that increase productivity and lower cost, the company is still making losses mainly due to management control problem which leads to poor management of resources. As a result, inefficiency in operation occurs such as high staff turnover from lack of training, unauthorized expansion of shop, overpayment of expenses which will eventually affect revenues and profit.

a. Perform SWOT analysis of the Coffee Pot by describing two strengths, weaknesses, opportunities and strengths. Based on analysis, provide an assessment of its future suspects and sustainability:

Strength:

1. New coffee brewing technology provides competitive advantage to the company as it reduces set up

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