The Strategy Formulation Analytical Framework

Café Coffee Day

Team - 11

Name Roll No
Abhijeet Kumar  215121003 
Harini K  215121031 
Madhan M  215121046 
 Shefali Joshi 215121073 
Shetty Ayappa Ganesh  215121074 
Shiva C  215121075 
Sweta Aishwarya Xess  215121085 
Rana Aditya Pratap Singh  215121097 
Hiremath Amit S   215120043 
 Introduction
• V. G. Siddhartha started the café chain in 1996.
• Café Coffee Day (CCD) is an Indian multinational chain of coffeehouses headquartered
in Bengaluru, Karnataka.
• Largest producer of arabica beans in Asia, exporting to various countries
including U.S., Europe, and Japan.
• Cafe chain Cafe Coffee Day has about 572 cafes across various cities in India and present
in about 165 cities in the country.
• It operates highly optimized and vertically integrated coffee business which ranges from
procuring, processing and roasting of coffee beans to retailing of coffee products across
various formats.
• Outlets set up are based on the three formats- café, lounge, square and value express.
• Menu range from signature hot coffee and cold coffees, tea, desserts, pastries, hot
chocolate and exciting.
• The company also in the business segment of Hospitality, Investment operations, Coffee &
Related Business.
 The Strategy Formulation Analytical Framework

• Strategy formulation is the way in which you take your business and
the best practices of that industry, see what has worked in the past, and
decide how to proceed.
• An analytical framework is a set of tools for evaluating data, including
information about customers, products, and competition. These tools
range from spreadsheets to marketing analytics software. The purpose
is to look at all the information available and determine how best to
move forward.
• Important strategy-formulation techniques can be integrated into a
three-stage decision-making framework
 The Input Stage – IFE Matrix
S.no Strengths Weight Rating Weighted Score
1 Brand Name and Brand Visibility(52.83% of equity share) 0.1 4 0.4
2 Inventory Turnover (34.80%) 0.05 2 0.1
3 Service provided to the Customer(Rated 4.1/5 ) 0.06 3 0.18
4 Over (200) visitors per day 0.05 3 0.15
5 Produces coffee which reduces the cost(Owns 375 Coffee Bean) 0.04 3 0.12
6 Correct site selection 0.1 4 0.4
7 Ambience and comfort (Rated 4.0) 0.1 2 0.2
  Total 0.5   1.55
         
S.no Weakness Weight Rating Weighted Score
1 Rate is on higher side ( 120 s on average) 0.01 3 0.03
2 Number of complaints regarding payment and delivery(713) 0.05 1 0.05
3 Not investing in promotions 0.04 3 0.12
4 Taste and Quality 0.05 3 0.15
5 Lacks power and strength expected to maintain brand loyalty 0.2 2 0.4
6 Implementation of technology in process(10-15%) 0.05 4 0.2
7 Easy replication of business model (gets only 35% of it's business from food) 0.1 3 0.3
  Total 0.5   1.25
Grand Total 1 2.80
 STRENGTH

• Brand name and brand visibility - CCD is a brand which has tried to
innovate their services in due course of time
• Inventory turnover - They grow their own coffee bean, as for other
eatables it is catered by different vendors
• Over 200 visitors per day -  it has a tremendous opportunity because
40% of the people joining the CCD are young.
• Produces coffee which reduces the cost - this is a crucial point for
Coffee Day, and backward integration saves a lot of money
 STRENGTH

• Taste and quality – They used to check on quality all the time and in
several aspects and every bean in the powder used, originated from a
single geographical region and not a mixture of beans from all over as
is the case with most varieties of beans or powder we purchase
• Affordability with comfort - you can stay in a Cafe for the entire day,
and no one can ask you to leave. This warmth is the biggest USP of
Cafe Coffee Day. Around the same time, the menu is inexpensive
enough that people come to CCD from time to time and have a nice
time
 WEAKNESS

• Service provided to the customer

• Number of complaints regarding payment and delivery - CCD employee
never gave bill for purchased items. When requested of a bill then demanded
for extra money to get a bill that include GST 5%. Also when paid extra by
customer to get a bill, customer was charged for the wrong items which he
never ordered
• Not investing in promotions - The brand has lost its charm at the outset,
mainly because it does not invest in promotions and Starbucks’ entry, as well
as various local competitions, has affected the image of the brand
• Wrong site selection -  this has hurt CCD over time as many CCD brand
stores have been opened on the wrong site and not on the main roads. As a
retail establishment, this also affects turnover and brand name
 WEAKNESS

• Lacks power and strength expected to maintain brand loyalty -  it’s been a
local coffee shop, but it’s not something people remain loyal
• Implementation of technology in process -  is suffering from lack of critical
talent especially in the field of technology & digital transformation. CCD
Coffee is struggling to restructure processes in light of developments in the
field of Artificial Intelligence (AI) and machine learning.
• Easy replication of business model - replicated even with the number of
patents and copyrights the company possess. The intellectual property
rights are very difficult to implement in the industry that CCD operates in.
But it is difficult to stop start ups disrupting markets at various other levels.
 INFERENCE

The total score is 2.80 which is above the average but the weakness can
be reduced and strength can be improved and it shows that still there is
scope for improvement in CCD.
 The Input Stage – EFE Matrix
S.No Opportunities Weight Rating Score
1 Introducing more products and better items in the menu to eat along with 0.10 2 0.2
the coffee.
2 Offering discounts on weekends. 0.05 3 0.15
3 Introduce cheaper version of coffee to enhance customer base. 0.10 3 0.3
4 Tie-ups with other companies for promotion. 0.05 1 0.05
5 Expanding coffee market in India. 0.05 1 0.05
6 New products/flavors. 0.10 2 0.2
7 More personalized guest experience. 0.05 2 0.1
  Total 0.50 1.05
         
S.No Threats Weight Rating Score
1 Internal Competition like local tea and coffee shops. 0.10 2 0.20
2 Substitute products available from various competitors 0.05 2 0.10
3 Financials are weak. 0.10 4 0.40
4 Competitors providing home delivery. 0.05 3 0.15
5 Government Regulations can be a major threat to Cafe Coffee Day. 0.05 3 0.15
6 Poor ambience in few stores. 0.05 1 0.05
7 Location is too far from the hostels. 0.10 3 0.30
  Total 0.50 1.35
  Final Score 1.00 2.40
 OPPORTUNITIES
• Can come up with more products which were in lassi shop, classic foods.
• Introduce a cheaper version of coffee to enhance the customer base as most of the
customers are students and are looking for affordable options.
• Offering discounts on weekends.
• Tie-ups with other EdTech companies for promotion.
• Expanding coffee market in India as consumers are being more health conscious and
preferring coffee over tea.
 THREATS
• Internal Competition like local tea and coffee shops.

• Competitors providing home delivery.

• Large unorganized market.

• Substitute products available from various competitors.

• Competitors providing home delivery.

 INFERENCE

We are getting a Grand total weighted score of 2.40

which suggests that there is a lot of scope for
improvement as there are a lot of opportunities lying
ahead that CCD can work upon.
Input Stage – Competitor Profile Matrix
 CAFÉ COFFEE DAY STARBUCKS COSTA COFFEE

S.No Weights Rating Score Weights Ratings Scores Weight Ratings Scores
Factors s s

1 0.2 3 0.6 0.25 4 1 0.1 1 0.1

Investing in promotions
2 0.1 1 0.1 0.2 3 0.6 0.2 2 0.4
Site selection
3 0.6 3 1.8 0.05 2 0.1 0.2 2 0.4

Produces coffee which

reduces the cost
4 0.1 2 0.2 0.5 4 2 0.5 3 1.5

Service provided to the

customer
Total 1 2.7 1 3.7 1 2.4
 Inference
• CCD looks much better than Costa Coffee but not as compared to
Starbucks
• So what CCD needs to do in order to gain competitive advantage is
• To invest in promotions
• To do appropriate site selection
• To improve the customer service
 Matching Stage - Swot Matrix for CCD
SO Strategies WO Strategies
i-Reducing the price for few items(W1,O3)
i-Can bring more new Items.(S4,O6) . ii- Investing in promotions like advertisement and
ii-More specialized and exclusive comfort Discounts(W3,O2)
zones(S7,O7). iii. Can share the cost for promotion which will
iii- More promotions will yield more save money.(W3,O4)
people(S4,O2). iv. Can keep bringing in new different product to
iv)(Can try to reduce the cost and give cheaper avoid replication(W7,O6)
coffee.(S5,O3)

ST Strategies WT Strategies
i- Can Reduce the inventory costs(S2,T3) i- Better to bring in more variety and
ii- Placing small vendor machines at multiple taste(W4,T2)
locations (S6,T7) ii-Rate can be reduced before competitors take
iii - Customer will loose their loyalty , so uniform full control (W1,T1)
ambience required.(S7,T6) iii-Cheap substitutes products are
iv- New product development required emerging(W1,T2)
otherwise brand name will be lost to Iv-Technology can be used to improve ambience.
competitors. (S1,T2) (W6,T6)
 Grand Strategy Matrix

               

  Grand Strategy Matrix  

               
1 The Grand Strategy Matrix allows for entry of your firm and up to 5 divisions            
               
Rank the X axis from 1 (Extremely Weak Competitive Position) to 9
2 (Extremely Strong Competitive Position)            
               

3
Rank the Y axis from 1 (Extremely Slow Market Growth) to 9 (Extremely X-axis Y-axis
Rapid Market Growth)   score   score    
               
  Coffee   7   7    
  Breads   3   6    
  Chocolates   6   6    
  Pastry   4   6    
  Beverages   6   6    
  Sandwich   4   7    
 Grand Strategy Matrix

Rapid Market Growth

Quadrant II Quadrant I

Coffee
Sandwich

Breads Pastrry Chocolates

Beverages

Weak Competitive Strong Competitive

Position Position

Quadrant III
Quadrant IV
I

Slow Market Growth

Grand Strategy Matrix
 Quadrant 1 and 2
• CCD can be positioned in Quadrant 1 and 2 as they need to evaluate
seriously their present approach to the marketplace. Although their
industry is growing, they are unable to compete effectively. The most
appropriate strategies are market penetration, market development,
product development, horizontal integration, divestiture, and
liquidation.
• In simple terms If your business is in this quadrant then you have a
relatively weak competitive situation as a business, but there's a lot of
opportunity to go for and a lot of success to be had within the market.
The strategies in this position are all about why you're not taking
advantage of the position. If you’re placed in this quadrant, then you
know you can change to improve results.
 SOLUTION
DIVERSIFICATION
MARKET DEVELOPMENT
i- They can go for related
Diversification like bringing in
i-Opening of café chains . different food items(Like Biriyani from
ii-Introducing more variety of snacks KFC).
such as samosa, Vada, French fries , ii- Unrelated Diversification of getting
burgers etc. into Clothing – A CCD specialized
Clothing.

PRODUCT DEVELOPMENT
MARKET PENETRATION
i-Introducing more variety of snacks
such as samosa, Vada, French fries ,
i- Café chains burgers etc.
ii- Sponsorship of events ii-Introducing healthful cuisine for
(Promotions) those who are health-conscious.
iii-Home Delivery Service.
 Decision Stage – Quantitative Strategic Planning Matrix
(QSPM)
      Product Market
Development Development
     
Strengths Weight AS TAS AS TAS
1

2 0.20 4 0.40
Brand Name and Brand Visibility(52.83% of equity share) 0.1
2
Inventory Turnover (34.80%) 0.05 2 0.10 3 0.15
3

3 0.18 3 0.18
Service provided to the Customer(Rated 4.1/5 ) 0.06
4
Over (200) visitors per day 0.05 4 0.20 3 0.15
5

Produces coffee which reduces the cost(Owns 375 Coffee 2 0.08 1 0.04
Bean) 0.04
6
Correct site selection 0.1 1 0.10 1 0.10
7
Ambience and comfort (Rated 4.0) 0.1 1 0.10 1 0.10
 Decision Stage – Quantitative Strategic Planning Matrix
(QSPM)
      Product Market
Development Development
     
Weaknesses Weight AS TAS AS TAS
1 4 0.04 4 0.04
Rate is on higher side ( 120 s on average) 0.01
2
1 0.05 2 0.10
Number of complaints regarding payment and delivery(713) 0.05
3 2 0.08 4 0.16
Not investing in promotions 0.04
4 3 0.15 4 0.20
Taste and Quality 0.05
5
3 0.60 3 0.60
Lacks power and strength expected to maintain brand loyalty 0.2
6 3 0.15 3 0.15
Implementation of technology in process(10-15%) 0.05
7
Easy replication of business model (gets only 35% of it's 4 0.40 2 0.20
business from food) 0.1
 Decision Stage – Quantitative Strategic Planning Matrix
(QSPM)
      Product Market
Development Development
     
Opportunities Weight AS TAS AS TAS
1
Introducing more products and better items in the menu to eat 0.10 4 0.40 4 0.40
along with the coffee.
2 Offering discounts on weekends. 0.05 4 0.20 4 0.20
3 Introduce cheaper version of coffee to enhance customer base. 0.10 4 0.40 4 0.40
4 Tie-ups with other companies for promotion.
0.05 3 0.15 4 0.20

5 Expanding coffee market in India.

0.05 3 0.15 4 0.20

6 New products/flavors. 0.10 4 0.40 4 0.40

7 More personalized guest experience. 0.05 1 0.05 3 0.15
 Decision Stage – Quantitative Strategic Planning Matrix
(QSPM)

      Product Market
Development Development
     
Threats Weight AS TAS AS TAS
1 Internal Competition like local tea and coffee shops. 0.10 1 0.10 1 0.10
2 Substitute products available from various compititors 0.05 4 0.20 3 0.15
3 Financials are weak. 0.10 3 0.30 2 0.20
4 Competitors providing home delivery. 0.05 3 0.15 3 0.15
5 Government Regulations can be a major threat to Cafe Coffee Day.
0.05 3 0.15 3 0.15

6 Poor Ambience in few stores. 0.05 3 0.15 2 0.10

7 0.10 1 0.10 3 0.30
Location is too far from the hostels.

  TOTALS     5.33 5.67  

 INFERENCE

From this we can see that both the values are almost similar so Café
Coffee Day needs to concentrate on both Product Development and
Market Development to achieve much greater success in future.
Conclusion
By carefully studying and analyzing all the matrices
in the given data it is found that CCD, NIT Trichy is
doing business below the mark due to a lot of threat
factors like:
(1) Internal competition within the campus like
various eating outlets providing cheap eating
and beverage options.
(2) Coffee already being provided in the various
messes of hostels.
(3) Below the mark ambience of the restaurant.
(4) Expensive menu for the student category
customers.
(5) Far away location for the local population.
Through careful analysis of working of various other eateries
who are doing good business we identified various key
elements by which CCD, NIT Trichy could do better in its
business:
1. Redesigning of its menu by including various other meals
especially North Indian snacks and beverages.
2. Carefully advertising its menu and services among
students and community living nearby.
3. Introduction of various coupons and discounts during
weekends and festivals.
4. Placing its product stalls at the various college events and
fests.
5. Improving ambience to appear more calming and
comfortable by including background music, improving
seating, etc.
6. Relocating its position inside the campus or opening new
branch in order to be near the student section.
7. Providing deliveries inside the campus.