Contents

I. Introduction.......................................................................................................................... 2

II. Strategic position...............................................................................................................2

1. PESTEL analysis...............................................................................................................2

2. Porter’s analysis................................................................................................................4

3. VRIO..................................................................................................................................7

4. SWOT................................................................................................................................ 8

III. Strategic choice............................................................................................................... 10

1. Ansoff’s matrix................................................................................................................10

2. International market entry modes strategy..................................................................10

IV. Strategy in action............................................................................................................ 11

V. Conclusion...........................................................................................................................13

VI. Reference......................................................................................................................... 14
I. Introduction
The case study revolves around Mad Koffee, a Bangladeshi F-commerce brand
specializing in trendy T-shirts, leveraging Facebook for viral marketing and strong
customer connections. Despite initial success, the brand faces challenges including
negative social media feedback and a saturated e-commerce market, prompting
considerations for international expansion. This scenario underscores the strategic
dilemmas in selecting the appropriate market entry strategy and navigating global
expansion complexities from a developing country's F-commerce perspective.

II. Strategic position

1. PESTEL analysis

Political
- Labour law: not strictly
followed
- Intellectual property right:
getting more serious and being
put in place
- Export and import regulation:
being more open
Social
- Increasing online shopping
- Increase purchasing power of
Millennials and Gen Z
- Preference for social
interaction before buying
- Preference for buying from
social media
- Preference for cash on delivery
and try on before pay
Economic
- Growing economy and
customer spending
- Young workforce, cheap
labour
- Economic stabability
- Higher customer income ->
higher customer purchasing
power
Technological
- Higher smartphone penetration
rate and internet penetration
rate
- Easiness for starting up F-
commerce store
- Lack of presence of
ecommerce websites and
platforms like Shopify
 Environment
- Global requirements for
environment-friendly
production
- Lack of environment
procedure in operations in
Bangladesh
Legal
- Compliance with international
laws: ILO, IFC, etc.
- Licensed merchandise and
intellectual property rights
(with Disney and with local
artists)
- International deals: royalty,
possessions of brands,
productions…

The PESTEL analysis for Mad Koffee reveals a multifaceted external

environment that shapes its operational and strategic framework, particularly as it
navigates the complexities of international expansion.

(1) Political Factors: The landscape is marked by lax enforcement of labor laws,
offering cost advantages but also necessitating ethical considerations.
Strengthening intellectual property rights and more open export-import
regulations reflect a conducive environment for businesses aiming to expand
internationally, yet demand rigorous compliance efforts.

(2) Economic Factors: Bangladesh's economic landscape, characterized by

growth, stability, and an increase in consumer spending, presents fertile
ground for Mad Koffee's expansion. The young, inexpensive labor force
coupled with rising customer incomes enhances both production capacities
and market opportunities for new and innovative products.

(3) Social Trends: The surge in online shopping, driven by the digital-savvy
Millennials and Gen Z, alongside a preference for social media-based
purchases, positions Mad Koffee's F-commerce model advantageously. The
social inclination towards cash on delivery and the option to try before
 payment underline the unique consumer behavior in the region, tailoring Mad
Koffee's approach to customer engagement and sales.

(4) Technological Advancements: High smartphone and internet penetration

rates significantly ease the initiation and growth of F-commerce ventures like
Mad Koffee. However, the absence of major e-commerce platforms
underscores a potential area for digital market development and expansion.

(5) Environmental Considerations: Global demands for environmentally

friendly production juxtapose the local lack of stringent environmental
procedures, presenting a challenge for Mad Koffee as it seeks to align its
operations with international sustainability standards.

(6) Legal Requirements: Navigating international laws, including compliance

with organizations like the ILO and IFC, alongside managing licensed
merchandise and intellectual property rights, is crucial. This legal landscape
necessitates a careful approach to partnerships, product development, and
international market entry strategies.

In essence, the PESTEL analysis underscores the dynamic interplay of external

factors influencing Mad Koffee's business strategies. The political, economic,
social, technological, environmental, and legal dimensions collectively offer both
opportunities and challenges, guiding the company's strategic decisions,
especially in its pursuit of international expansion.

2. Porter’s analysis

Threat of new entrant (High) Threat of substitutes (High)

- Easy to set up F-commerce - Customers want to purchase
stores with no cost and no prior low-prices products on the
experience streets instead of costly
 designer goods
Bargaining power of suppliers Bargaining power of customers
(Medium) (High)
- Work with many suppliers to - High since they have many
diversify the sources and costs other options: other
(positive) international brands or street
- New suppliers do not meet shirts
quality control (negative) - Low cost of switching: none
- Factories started their own
ecommerce business (negative)
Competition rivalry (High)
- High competition
- High cost of operation and increasing cost for advertising

(1) Threat of New Entrants (High)

The ease of establishing F-commerce stores, as evidenced by Mad Koffee's
journey, underscores a high threat of new entrants. The case study elucidates,
"Since the barriers to enter F-commerce were low given that anyone with a
Facebook account could start a business, the market where Amin operated was
becoming saturated" (Mad Koffee Case Study). This saturation enhances
competitive pressures and necessitates innovative differentiation strategies for
Mad Koffee.

(2) Threat of Substitutes (High)

Mad Koffee faces a significant threat from substitutes, notably from consumers'
preference for lower-priced street products over designer goods. This predilection
challenges Mad Koffee to maintain competitive pricing while offering unique
value through design and quality, a balance that's critical to sustaining customer
interest in a price-sensitive market.

(3) Bargaining Power of Suppliers (Medium)

While Mad Koffee's strategy of diversifying suppliers mitigates risk and
potentially secures better prices, challenges in maintaining quality standards and
suppliers entering the F-commerce space themselves introduce complexities. The
case details, "the factory from where Mad Koffee used to outsource their products
had also started their own Facebook page where it sold the products at the cost
price" (Mad Koffee Case Study). This development not only affects the
bargaining power balance but also necessitates stringent quality control and
supplier relationship management strategies.

(4) Bargaining Power of Customers (High)

Given the array of alternatives and the negligible cost of switching, customers
wield considerable power. This dynamic is compounded by the F-commerce
model, which, as the case study suggests, enables customers to easily compare
prices and quality, thereby increasing Mad Koffee's imperative to distinguish
itself through product quality, customer service, and unique value propositions.

(5) Competition Rivalry (High)

Mad Koffee operates in an intensely competitive environment, accentuated by
high operational costs and advertising expenses. The case study notes, "A major
problem Mad Koffee faced was new players selling at a comparatively cheaper
price in order to capture the market" (Mad Koffee Case Study). This situation
mandates that Mad Koffee continually innovates, not only in its product offerings
but also in marketing strategies and customer engagement to maintain a
competitive edge.

The Porter's Five Forces analysis elucidates the competitive pressures Mad
Koffee confronts in the F-commerce arena. To navigate these challenges, strategic
imperatives for Mad Koffee include differentiating through unique product
designs, enhancing customer experience, leveraging technology for efficiency and
engagement, and exploring strategic partnerships or diversification avenues.
Additionally, addressing quality control issues and building a resilient supply
 chain are crucial for sustaining growth and competitiveness. This analysis
underscores the importance of strategic agility and customer-centric innovation in
thriving amidst the dynamic and competitive landscape of F-commerce in
Bangladesh.

3. VRIO

Resources Valuabl Rare Inimitabl Supported Competitive

and e e by the implications
Capabilities organisation

Unique YES YES NO Temporary

product competitive
offerings advantage

Collaboration YES YES YES YES Sustained

with local competitive
artists advantage

Custom and YES YES NO Temporary

licensed competitive
merchandise advantage

Employ YES NO Competitive

young parity
employees

In analyzing Mad Koffee through the VRIO framework, it's evident that its
collaboration with local artists offers a sustained competitive advantage due to its
unique, rare, and inimitable contributions, well-integrated into the company's
 operations. This contrasts with its unique product offerings and custom, licensed
merchandise, which, although valuable and rare, are susceptible to imitation,
categorizing them as temporary advantages. The practice of employing young
talent, common in the industry, results in competitive parity, underscoring the
necessity of innovative strategies to harness this asset. Strategically, Mad Koffee
should focus on bolstering its unique collaborations and differentiating its product
line to maintain and enhance its competitive positioning in the market.

4. SWOT

Strengths
- Unique product offerings
- Strong presence on social
media, strong brand awareness
- High customer satisfaction (in
the past)
- Low cost of production and
operation
Opportunities
- Market expansion rate due to
technology development and
traffic restrictions (70% from
2016)
- Global company investing into
the local market
- Global expansion
Weaknesses
- Quality control procedure
- PR and crisis management
- Reliance on one ecommerce
platform (Facebook)
- Reliance on domestic market
- Lack of new qualified
suppliers
- Legal issue with current
suppliers
- Lack of environment-friendly
and labour-friendly production
practices
Threats
- Lack of consumer trust
- Increasing cost for advertising
- Increasing competition in
domestic market
(1) Strengths: Mad Koffee's unique product offerings and robust social media
presence underscore its ability to engage customers and create strong brand
awareness. Historically high customer satisfaction and low production costs
further cement its competitive edge in the market. "Mad Koffee thrives on its
creative product designs and effective social media strategies, contributing to
a loyal customer base."
(2) Weaknesses: However, the company grapples with significant internal
challenges, including inconsistent quality control and inadequate PR and crisis
management. Its reliance on a single e-commerce platform and the domestic
market, combined with difficulties in sourcing new qualified suppliers and
ongoing legal issues, underscore vulnerabilities. Additionally, the lack of
environmentally and labor-friendly production practices could impede long-
term sustainability. "These weaknesses highlight areas where Mad Koffee
must improve to sustain its market position and consumer trust."
(3) Opportunities: The market presents lucrative opportunities for expansion,
driven by technological advancements and changing consumer behaviors. The
70% market expansion rate since 2016, interest from global companies in the
local market, and potential for international growth offer promising avenues
for Mad Koffee's expansion. "Leveraging these opportunities could propel
Mad Koffee into new markets, diversifying its revenue streams."
(4) Threats: Conversely, the company faces external pressures, including eroding
consumer trust, rising advertising costs, and intensifying competition within
the domestic market. These threats necessitate strategic adjustments to
maintain Mad Koffee's market presence and profitability. "Navigating these
threats will be crucial for Mad Koffee to protect its market share and ensure
continued growth."

Mad Koffee's SWOT analysis reveals a dynamic interplay of strengths,

weaknesses, opportunities, and threats that shape its strategic landscape. The
company's unique products and strong brand presence, juxtaposed with challenges
in quality control and market diversification, underscore the need for strategic
 refinement. Capitalizing on opportunities for technological adoption and market
expansion can offset the threats posed by increasing competition and fluctuating
consumer trust. Addressing these internal and external factors holistically will be
pivotal for Mad Koffee's sustained growth and competitive positioning in the
evolving F-commerce sector.

III. Strategic choice

1. Ansoff’s matrix

Since the company has already tried product development (existing products,
existing market) to a wide range or product in domestic market (pillows, phone
cases, gifts…), market development and market penetration would be more
suitable:
 Market penetration (existing products, existing market): increase product
quality through find new partners (can be oversea factories from China),
lowering cost through increasing organic traffic instead of paid
advertising, increase personalization: print on demand.
 Market development (existing products, new market): selling existing
products in new market: through partnership with international brands.
Market penetration and market development strategies provide significant
advantages for businesses like Mad Coffee, as detailed in Ansoff's Matrix. Market
penetration can enhance Mad Coffee's market share and customer loyalty through
effective marketing and competitive pricing, leveraging existing market
knowledge for cost-effective growth (Kotler & Keller, 2016). Market
 development enables Mad Coffee to access new customer segments and
geographic areas, diversifying its market base and opening up opportunities in
less saturated markets (Ansoff, 1957). These strategies support revenue growth,
market expansion, and improved competitive positioning for Mad Coffee in the
global market.

2. International market entry modes strategy

Given the company's current financial constraints and the myriad of risks it
confronts, prioritizing the minimization of investment risk becomes paramount.
Consequently, opting for a strategic alliance emerges as a prudent course of
action. Among the proposals received, accepting the offer from the second party,
Aadi, is deemed preferable. This decision is grounded in a strategic evaluation of
the potential for mutual benefit and risk mitigation, underscoring the imperative
of adopting a cautious yet forward-looking approach to navigate the company's
challenging landscape.
Strategic alliances offer a multitude of advantages, including access to new
markets, shared resources and expertise, risk mitigation, and accelerated
innovation. These collaborations enable companies to leverage each other's
strengths, such as technology, distribution networks, and customer bases,
facilitating market entry and expansion (Das & Teng, 2000). Furthermore,
 alliances can lead to cost efficiencies through shared investment in research and
development, marketing, and infrastructure (Yoshino & Rangan, 1995). By
combining resources and capabilities, partners can innovate more rapidly,
responding to market changes and customer needs more effectively (Kogut,
1988). Ultimately, strategic alliances can enhance competitiveness and create
value for all partners involved.

IV. Strategy in action

TOWS analysis:

Strategy Description
SO (Strength- Leverage strong brand awareness and unique product offerings to
Opportunity) increase market share through improved product quality and
personalization in existing markets.
WO Address the reliance on a single e-commerce platform by expanding
(Weakness- into new markets through partnerships with international brands,
Opportunity) utilizing existing products.
ST (Strength- Utilize strong social media presence to counteract increasing
Threat) competition and advertising costs by enhancing organic traffic and
reducing reliance on paid advertising.
WT Mitigate risks associated with financial constraints and market
(Weakness- saturation by forming strategic alliances, like the partnership with
Threat) Aadi, for market development and penetration.

The SO strategy aims to capitalize on Mad Koffee's existing strengths to exploit

opportunities within the current market, focusing on quality and customization to
enhance customer loyalty and market presence. The WO strategy directly addresses
operational weaknesses by leveraging market expansion opportunities, using strategic
partnerships to enter new markets without significant upfront investment. The ST
strategy proposes using existing strengths, such as a robust social media presence, to
navigate through external threats like competition and high advertising costs,
emphasizing cost-effective organic growth. Finally, the WT strategy acknowledges
the need to confront both internal vulnerabilities and external pressures by seeking
strategic alliances, offering a pathway to growth and stability amid financial and
competitive challenges.
 SAFe analysis:

Strategies Strategic Acceptable Feasibl Executable

e
SO - Market Penetration ✓ ✓ ✓ ✓
WO - Market Development ✓ ✓ ✓ ✓
ST - Counteract Threats ✓ ✓
WT - Minimize Weaknesses ✓

The SAFe analysis reveals that Market Penetration (SO) and Market Development
(WO) strategies align well across all criteria, demonstrating their comprehensive fit
for Mad Koffee's growth and internationalization. These strategies are both strategic
and practical, leveraging the company’s strengths to exploit market opportunities and
expand its reach.

However, the Counteract Threats (ST) strategy, despite being strategic, falls short on
feasibility and executability, indicating potential challenges in implementation due to
operational limitations. The Minimize Weaknesses (WT) strategy is strategic but
raises concerns about stakeholder acceptability and practical implementation,
highlighting the need for more detailed planning to address internal weaknesses and
external threats effectively.

1. Strategic action for growth

To enhance market penetration, it is imperative to refine the online engagement
strategy alongside investments in product quality and customization. Partnering
with new manufacturers can diversify and enhance product lines (Kotler & Keller,
2016). Additionally, leveraging data analytics to augment organic traffic can
significantly reduce advertising expenses, making the approach cost-effective
(Chaffey & Ellis-Chadwick, 2019).
2. Strategic action for internationalization
 Embarking on market development through forging alliances with global brands
can strategically position Mad Koffee in untapped markets, utilizing the
established market presence of these partners (Hill, Jones, & Schilling, 2020).
Such collaborations aim at broadening the company's market spectrum, mitigating
risks associated with over-reliance on local markets, and simplifying the
intricacies of global market entry (Johnson, Whittington, & Scholes, 2011).

V. Conclusion
The Mad Koffee case study encapsulates the strategic dilemmas of a burgeoning F-
commerce brand within Bangladesh, facing significant operational and competitive
challenges. Initial success, driven by novel product offerings and social media savvy,
gave way to issues such as quality control, overreliance on Facebook, and escalating
market competition. These hurdles highlight the critical balance between growth and
sustainability in a rapidly evolving digital marketplace. As Mad Koffee considers
strategic alliances and international expansion, the case underscores the imperative
for adaptive strategies and prudent risk management to navigate the complexities of
global e-commerce.

VI. Reference
Amin, R. (2023). Mad Koffee: Navigating F-commerce challenges in Bangladesh.
[PDF document].

Ansoff, H.I. (1957). Strategies for Diversification. Harvard Business Review, 35(5),
113-124.

Chaffey, D., & Ellis-Chadwick, F. (2019). Digital Marketing (7th ed.). Pearson
Education.
Das, T.K., & Teng, B.S. (2000). A resource-based theory of strategic alliances.
Journal of Management, 26(1), 31-61.

Hill, C. W., Jones, G. R., & Schilling, M. A. (2020). Strategic Management: An

Integrated Approach (12th ed.). Cengage Learning.

Hollensen, S. (2015). Marketing Management: A Relationship Approach. Pearson

Education.

Johnson, G., Whittington, R., & Scholes, K. (2011). Exploring Strategy. Pearson.

Johnson, G., Whittington, R., & Scholes, K. (2011). Exploring Strategy: Text &
Cases (10th ed.). Pearson.

Kogut, B. (1988). Joint ventures: Theoretical and empirical perspectives. Strategic

Management Journal, 9(4), 319-332.

Kotler, P., & Keller, K.L. (2016). Marketing Management. Pearson.

Yoshino, M.Y., & Rangan, U.S. (1995). Strategic Alliances: An Entrepreneurial

Approach to Globalization. Harvard Business School Press.