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second cup

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G Man

on 10 February 2014

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Transcript of second cup

Second Cup Ltd. Strategic Recommendation

Competitor Analysis
Tim Horton’s: largest coffee shop in Canada
Market share of 42%
3295 stores in 2012
Starbucks: biggest and most successful coffee shop chain in the world
Revenues of $10,534,500,00 (2012): $1,322,833,014 in Canada
Timothy’s: more than 100 branches in Canada
Important competitor
Porters Five
Company Analysis
Describe the desired state
Implement Second Cup fully automatic coffee vending machines
More efficient with the same quality
Create YouTube Ad to reach our target market and get create awareness of our new strategy
“A little love in every cup”
Franchisees are required to contribute 3% of revenues towards marketing
Print ads (Magazines, and Newspapers), Billboards, radio, TV, and internet marketing
Affiliation with Canadian charity “Free the Children"
Human Resources
Workforce comprises of 79 employees in head office and 108 employees in company owned cafes
Training for our employees is based online and in-store
Specific requirements for employees are “Positive attitudes, confidence, flexibility, team player, and passion for coffee”
Operations and Logistics
Making sure our company operations and logistics are well maintained
Efficiently making arrangement for completing any company orders
Important part of the company to avoid any mishandled transactions and negligence
Financial Analysis
PESTLE Analysis
Implementation Plan
Financials for Proposed Strategy
0-3 Months: Most essential stage of our implementation
4-7 Months: Finalizing details with our Strategy team
8-12 Months: Reaching an agreement with management of both parties
13-15 Months: Finalizing marketing strategies
16-20 Months: Evaluation and Control
21-24: Gaining Feedback and future planning

Based on Jim Harvey's speech structures
Provide customers with the best quality and top service
Continue to make sales and earn profits
Use the company’s resources to reach out to all our customers and make them convenient
Corporate Objective
Information Systems
Mission and Vision
Our mission is to provide the best quality products and best services in order to prove to be the finest in the industry
The vision is to “be recognized and rewarded as a leading Premium Café Brand” (Mysecondcup.com)

Strategic Recommendation Plan
for the year 2014-2015
Firas Ghadban
Munir Warsama
Avneet Kohli
Zain Ghadai
SWOT Analysis
High competition
Loyalty customers in the coffee industry difficult to influence
Increase of high premium coffee
Economic Factors
International Expansion
International supply chain
Social Factors
Coffee drinking trends and preferences in Canada
Technological Factors
Technology used in coffee production and retail
Legal Factors
Food and Drug Regulations
Consumer Packaging and Labeling Act
Nutrition labeling
Environmental Factors
Rain Forrest Alliance
Fair Trade
Competitive Rivalry
Supplier Power
Supplier power is relatively low
Various suppliers
Suppliers spread through different continents
Long relationship with farmers
No long term contract with these farmers
Coffee selection is Limited
Buyer Power
Buyer power is very high
Buyers have more choices
Different brands appeal to different customers
Threat of Substitution
Threat of substitution is relatively low
Power drinks
There is more to coffee than caffeine
Threat of New Entrants
The threat of new entrants is very high
Entry barriers are low
Regional cafes make up %50 of specialty café
Competition is high
Competition is categories into Three
1-Café specialty brand names
2-Regional specialty cafés
3-Mainstream coffee retail chains

The Ask
To implement coin operated coffee vending machines.
Alternative #2
• Pros:
o Allows us to monitor customers
o We can offer members newsletters, discounts, and promotions
o Offer consumers free coffee after two purchases within the store with the “Perks” card

Alternative #1
Expand on social media channels (YouTube, Facebook, and Twitter)
Alternative #3
Implement newly Designed Second Cup outlets in bigger cities in Canada (Montreal, Ottawa, Halifax, Vancouver, and Winnipeg)
Contingency Plan
Continue marketing through social media
To find a better locations for the machines
If the project has proven a failure then
Machines will no longer be bought or leased
Minimize expenses until the contract is over
Ethically and socially responsible products
Largest Canadian based franchisor
Expanded into international markets

Weak financial status
Weak marketing strategy
Shortage of corporate owned stores
Modernize brand to increase market share
Loyalty program
Renovate major Second Cup stores
Current Position
Started from Kiosk in shopping mall in 1975
5,000 franchisee operators with 360 cafes in Canada
Kraft partnership in 2012
“Free the children” Canadian Charity
Newly designed Café in 2013
Renting/buying the machines
Marketing research
Advertising campaign
Sample promotion
Maintenance team
Financing the Strategy:
Rental: From the companies cash account
Purchasing: $200,000 from the companies cash account
$300,000 financed or through loan

Implementations cont
Study of complementary networks of hardware and software
Very important for us to organize our data and records and transactions
Has to be well maintained to support operations management and decision making of the company

Political Factors

International Expansion
International Supply chain
• Pros:
o Advertise second cup’s contributions in social responsibility
o Low expense and wide reach
o Easy to get feedback (learn how to improve our products by learning consumer comments and likes)

• Cons:
o No control over the response of customers (negative feedback)
o The return on investment is delayed due to time. The advertisement on social media channels will take a lot of dedication and time
o Due to the frequent responses given to our customers chances giving wrong information is higher

Expand on the “Perks” Loyalty Program in the rest of the GTA
• Cons:
o External software needed to monitor the effectiveness of the program
o Program needs to be par with other coffee loyalty programs in the industry

• Pros:
o Modernization of our cafes will attract more potential and make our loyalty customers feel comfortable
o Will include laptop-friendly zones
o Digital signage will allow us to advertise within store efficiently

• Cons:
o High cost to initiate complete renovations
o Uncertain of how customers will react to this change

Alternative #4
• Pros:
o Can reach our target market easily and more efficiently
o Consumer can gain access to our coffee on the go
o Eliminates long line ups
o Same taste of coffee like the café

• Cons:
o Perceived as lower quality coffee
o Risk of vandalism
o Technical difficulties leading to high maintenance cost
o Limited production capacity (700 cups)
o Only takes one order time


Expand into implementing coffee vending machines
Full transcript