I.

Introduction

Mad Koffee is a high-end clothing startup that has achieved great success in Bangladesh's e-commerce
market. Its proprietor, Amir, is a young man of great brilliance who has hired artistic graduates to help
with the creation of fashionable T-shirts. The company has grown quickly both offline and online since its
founding, mostly through word of mouth. Its profit margin is being squeezed by a number of obstacles,
including fierce competition from both new and established garment businesses. Additionally, when one
of its upstream suppliers produced subpar goods, Mad Koffee's reputation as a brand suffered a serious
blow. The company's word-of-mouth marketing approach, which had been crucial to its quick growth,
backfired as social media influencers disseminated details about the faulty product. Also, the COVID-19
Pandemic dealt a significant blow to the company. The paper provides a strategic analysis of Mad Koffee
through tools such as SWOT, PESTEL, Porter's Five Forces, and VRIO analysis to discover the company's
current position. Additionally, it will analyze the company's strategic choices and potential future
choices. The COVID-19 Pandemic also caused the corporation great harm. Using methodologies like
Porter's Five Forces, PESTEL, SWOT, and VRIO analysis, the study conducts a strategic analysis of Mad
Koffee to determine its current position. It will also examine the company's possible future decisions as
well as its strategic decisions.

II. Strategic Position

The corporate study of Mad Koffee to ascertain its strategic positions is presented in this part. Its
external environment, which consists of industrial and environmental elements, will be described using
PESTLE analysis and Porter's Five Forces. Mad Koffee's resource situation and internal capabilities will be
described by the VRIO study. The company's strengths, weaknesses, opportunities, and external threats
will all be detailed in a SWOT analysis.

1. PESTLE analysis

Political

Bangladesh is a politically stable country where the majority of firm operations take place. According to
Sweidan (2016), political stability fosters economic expansion and, consequently, the success of
businesses. The nation's stability offers the firm a favorable atmosphere in which to operate.

Economic

Bangladesh's economy is growing quickly thanks to its exports of textile goods. Due to its cheap labor
costs, foreign companies choose to outsource their manufacturing operations to the nation, which spurs
swift economic expansion.

Social

People from different cultures interact in this diversified nation. The majority of worldwide trends are
rapidly adopted by the stylish populace. Additionally, the success of numerous companies in the nation
can be attributed to the people's openness to fresh and creative ideas.
Technology

The population uses and consumes technology at a high rate. One of the Asian nations with the highest
rates of smartphone and social media usage is Bangladesh. The nation has very advanced F and E-
commerce.

Legal

The legal system supports the activities of businesses. The nation's legal system is quite adaptable to
both local and international circumstances. For instance, in response to widespread worries about the
treatment of workers in sweatshops, where the majority of textile manufacturing occurs, the nation has
strengthened its rules in this area.

Environmental

Bangladesh boasts a moderate subtropical climate. Its varied geography includes hills to break up the
monotony of the flat lowlands. Porter's Five Forces is a method for examining the variables influencing a
company within its sector. Five forces are essential for economic success in any industry, according to
Porter (1979). The company leader can obtain crucial information from the analysis of the factors to
guide their plans.

2. Competition

Startups and established clothing firms compete fiercely with Mad Koffee. Due to lower sales, intense
competition has an impact on the company's profitability (Krisnadewi et al., 2020). Consequently, Mad
Koffee's intense industry competition results in low sales and decreased revenues.

The potential of new entrants

Mad Koffee works in the clothing industry, which provides easy access. It has a comparatively low
startup cost. The market is seeing a large influx of new players, which is intensifying competition. A
number of businesses that provide inexpensive goods have surfaced in Bangladesh, according to Zaman
et al. (2022). They are posing a serious threat to the business and gaining substantial market share.

Power of Suppliers

For the manufacture of its clothing, the company is dependent upon upstream suppliers. For suppliers, it
faces competition from both local and foreign businesses. Because there are fewer suppliers than there
is a need for their goods, suppliers have more clout and can set pricing.

Power of customers

The intense rivalry in the clothing industry suggests that supply is nearly greater than demand. As a
result, the buyer has more influence and can negotiate a cheaper price for the item.
Threats of Substitutes

Products made by Mad Koffee firm are available on the e-commerce industry. Consumers have the
option to switch from supporting the company's products to supporting those of its rivals. There is a
significant threat from substitutes.

The industry presents certain obstacles for the company, as indicated by the PESTLE and Porter's Five
Forces analyses. Despite the favorable environmental circumstances, the operations and profitability of
Mad Koffee are significantly impacted by the forces of the industry. An atmosphere that is favorable for
business is created by elements like a nation's rapid economic growth, political and legal stability, and
technical advancements (Radu, 2015). The company's revenues are adversely affected by the abundance
of replacements, low entry barriers, and numerous competitors in the industry.

3. VRIO

Value

T-shirts with trendy designs: The company manufactures trendy t-shirts that a large number of people
buy.

Diversity

The company has expanded the range of products it offers by creating pillows and phone cases with
similar designs. Fast fashion model: Mad Koffee's committed design staff makes sure that cutting-edge
designs are created and released as soon as feasible. Weekly designs incorporating the newest social
media trends were generated by the team.

Word of mouth: Customers' imaginations and tastes have been piqued by the fashionable designs, and
word of the designs has quickly spread among their friends and acquaintances.

Rarity

Diversification, fast-fashion models, and contemporary T-shirt designs are uncommon commercial
advantages. Word-of-mouth marketing is another uncommon factor for the Mad Koffee brand.

Imitability

Viral word-of-mouth marketing and trendy T-shirts are difficult to replicate.

Organization

The business is able to create fashionable T-shirts because of its strong organizational and corporate
culture. It can quickly make and market the T-shirts because to its effective organizational structure.

VRIO Criteria Trendy Design T-shirts Word-of-mouth Fast-fashion model

advertising
Value Yes Yes Yes
Rarity Yes No Yes
Imitability Yes No No
Organization Yes Yes Yes
Figure 1: Table of VRIO

4. SWOT analysis

Strengths Weaknesses
- Cutting-edge and fashionable product designs - High prices
- A well-known and strong brand - Restricted target demographics
- Substantial financial resources - Recent problems with the quality of the
- Highly skilled and imaginative staff product

Opportunities Threats
- The act of diversification - Competition
- Growth in the global marketplaces - Covid-19 pandemic
- Expansion digitally - Fake goods

Figure 2: Table of SWOT

The company may grow its market share by utilizing its many advantages, such as well-known brand
awareness and fashionable t-shirt designs. Mad Koffee can increase company competitiveness by
utilizing market opportunities like diversification. A crucial competitive advantage is the possession of
uncommon, precious, and distinctive goods or processes that are difficult to replicate (Ferreira et al.,
2022). The organization may face a difficulty that needs to be handled due to its internal shortcomings
and external threats. In view of its current circumstances, the company's strategic decisions are
discussed in the part that follows.
 III. Strategic Choices

The strategic choices that the Mad Koffee corporation has are covered in this section. The outcomes of
the Threats, Opportunities, Weaknesses, and Strengths (TOWS) analysis will determine the strategic
options. The outcomes will guide the suggestions for likely tactics the business should employ to
maintain profitability.

TOWS analysis

SO

1. S201- Brand recognition and diversification.

2. Mad Koffee already has a significant brandpresence. It can leverage its brand equity tosupport its
diversification strategies. It can startby advertising the new products to existingcustomers who will
spread the word. Porter'sgeneric strategies indicate that diversificationstrategies can support a
business's growth as itenables it to enter into new markets (Islami,2020). Therefore, the company will
gain morecustomers and enhance its sales and revenues.Regarding Ansoff's Matrix, the
company'sdiversification will involve product and marketdevelopment (Ansoff, 2007). Mad Koffee
willdevelop and sell novel products to existing andnew markets.

3. The limitation of the chosen strategy is that thediversification may be in dissimilar products,which
might not appeal to current customers.The company must choose closely related products for the
market option to work.

WO

1. W2O2O3

2. The market option available for Mad Koffee is expanding its operations in the international market
and deepening its digital expansion. Such strategies will overcome the weakness of a limited target
market. Internationalization is a viable business strategy, allowing a firm to enjoy an expanded product
market (Johnson et al., 2015). Mad Koffee needs to exploit the internationalization strategy for growth.

3. However, the strategy will only work when its digital and offline operations are appropriately
integrated.

Threat

TS

1. T1S1

2. The market option uses its expertise indeveloping innovative and trendy products toreduce the threat
of competition. Focus (marketpenetration) is one of Porter's generic growthstrategies (Islami, 2020). It
allows the firm toavoid price wars by producing unique and highlyvaluable products for its client base.
3. The focus strategy works in a rapidly expandingmiddle-class market.

WT

1. W1T1

2. High prices are not bad per se; they can be a firm's competitive advantage. Charging a premium for a
company's products may create the impression of high quality and exclusivity, enabling a company to
escape price competition (Ashraf, 2017).

3. The market option has limitations as it may limit the company's market.

More content Ansoff matrix

Strategic management regards the company's decision-making models that leverage its internal
resources and capabilities to take advantage of external opportunities to spur growth. Ansoff's
product/market growth matrix provides a strategy model that companies can apply to expand their
operations domestically and internationally (Ansoff, 2007). The matrix has four components. In the
market penetration component, a firm grows by increasing the sales of its products to its existing market
through enhanced marketing efforts or lowering prices. The market development component is a growth
strategy where a firm captures a different market with its existing products. The third component is
product development, where the company creates new goods or services and sells them to loyal
customers. Finally, the company may seek growth through diversification, creating novel products and
delivering them to new markets (Hussain et al., 2013). Mad Koffee plans to grow through product and
market development and diversification.

International entry mode strategies that they may pursue to expand internationally

A company's growth may be domestic or involve international expansion. Setting operations in a foreign
company is a complex undertaking. According to Brouthers (2013), the success or failure of
internationalization hinges upon the choice of entry mode. Therefore, Mad Koffee must carefully select
an appropriate entrance mode to enhance its success prospects. Scholars categorize modes of entry
(MEM) into the international markets based on different criteria, with some recognizing 17 while others
proposing three (Schellenberg et al., 2017). The three common MEM include Licensing/Franchising, Joint
Venture, and wholly-owned subsidiary. Mad Koffee's management must carefully select the mode of
entry that suits its needs and guarantees success in its expansion endeavors.

The company has two viable options for international entrance. It could partner with the Freight-
Forwarding company to distribute its product abroad or agree to Conan CK's deal. While the deal with
the Freight-Forwarding company gives Amin more control rights over his products, it exposes the Mad
Koffee company to risks in the international market. The company needs to gain experience in marketing
and customer acquisition in foreign countries. Therefore, the most viable option is a partnership with
Conan CK. Amin might lose control of his brand, but he benefits from royalties, and the partner will do all
the marketing and customer acquisition.

Mad Koffee's strengths lie in its ability to rapidly produce high-quality, creative, and trendy designs.
Customers are willing to pay a premium price for valuable products. However, the local market is
saturated, and Amin needs to take his brand to the international arena. However, the company lacks
experience in marketing and customer acquisition abroad, necessitating partnerships with multinational
companies. A partnership with Conan CK will enable the company to penetrate the international markets
and grow its production capacity and revenues. Entry into the international arena will enable it to
overcome the weakness of a limited target market and threats from local competitors. The next section
identifies the options most favorable to the company's growth using the SAFe tool.

Strategy in Action

SAFE tool

Main Strategic Issues Facing Mad Koffee

Key strategicissues SuitableAcceptableFeasibleTotal 1. SO StrategicChoice 3238 2. WO StrategicChoice

34411 3. ST Strategicchoice 2316 4. WT strategicchoice 1315

Suitability

While options 1, 2 and 3 have similar values, their acceptability and risks differ. In the first option, Mad
Koffee can leverage its brand recognition to diversify into new markets. However, diversification is a
high- risk strategy as it involves product and market development. A company will need to develop novel
products for new markets. Option 2 involves internationalization, which is suitable for the company
despite the few challenges of deciding on the entry mode. Option three is suitable but may have limited
value, as there is a limit to the extent a company can improve its product's quality. Option four is the
least suitable as it involves premium pricing models, which may lower sales.

Acceptability

While option Options 1, 2, and 3 are suitable, their acceptance levels are low. Option 1, which regards
diversification, may have low acceptability from the stakeholders due to the inherent risks involved. The
new products may not perform as well as the current ones, lowering brand equity. While the potential
rate of returns is high, it may also fail to deliver expectations, especially in unrelated diversification. The
second option's low acceptance regards the risks involved in the international markets. Also,
international market entrance through some partnerships may mean losing control of the company and
its products. However, the potential for high returns in the international market may favor acceptability.
The third and fourth options may be acceptable to stakeholders as they do not involve significant risks.

Feasibility

Options 1, 2, 3, and 4 vary in their feasibility. The company has the skills and resources to diversify into
different markets, making option one reasonably feasible. However, the cost may be higher than the
other options. Option 2 is also feasible, primarily through joint ventures or partnerships, reducing entry
costs. The personnel are capable of producing qualitative products for the international market. Option 3
and 4 on Market penetration are feasible as they involve incremental changes to existing products and
services. They involve relatively lower costs, and the personnel are readily available.

The best strategic choice for growth is diversification, and the one for internationalization is franchising.
Diversification will enable Mad Koffee to grow its product portfolio and increase its sales as it ventures
into different markets with new products. On the international front, the company will benefit by
entering into a Franchise partnership with Conan CK. The partner will own the company copyrights and
intellectual property in exchange for 30% royalties. Amin will deal with all the production aspects, while
Conan CK sources the customers and markets the products internationally. Mad Koffee will not incur any
costs, raising its revenue base.

Conclusion

Mad Koffee deals with trendy printed T-shirts, and it is seeking to expand its operations. Its online
advertising and word of mouth drive most of its sales. The company seeks growth opportunities locally
and internationally. A situational analysis has identified several strengths and weaknesses. Also, the
company has several exploitable opportunities amidst external threats. The paper identified several
options for growth using the TOWS and SAFe tools. Mad Koffee can diversify domestically or enter
international markets through Franchise partnerships.
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