The Handcrafted Taste
External Environmental Factors
April 14, 2011
The remote environment comprises factors that originate beyond and usually irrespective and out of Costa Coffee's control. Economic factors
Since Costa Coffee is a multinational business, top-level managers must consider the economic situations on both the National (Egypt) and International levels.
Currencies exchange rate (Forex) affects Costa Coffee's final products' prices as well as operation costs. Costa Coffee imports high quality coffee beans from rainforest farms where it pays for in local currency, and sells as coffee in another country with its local country. Hence, when the Egyptian Pound depreciates, the cost of beans relatively increases; therefore, causing a fall in profit margin and vice versa. If depreciation is too much, then Costa might increase its selling prices.
Moreover, interest rate is vital for a business considering expansion as Costa Coffee. As interest rates increase, Costa Coffee’s ability and willingness to expand or open new branches decreases; due to the high cost of capital.
Furthermore, the stock market plays a significant role in encouraging investors to invest in Costa Coffee due to the increasing profits and the good reputation.
Finally, high economic growth rate of a country leads people to increase their consumption of Costa Coffee's products; since they have more income.
Egyptians’ culture and lifestyle has dramatically changed in the last 10 years. People are more willing to go to cafés for lunch, dinner or simply a snack. Considering the Egyptian demographics of lifestyle and age groups, most of the Egyptian population falls in the youth age group. Hence, Costa Coffee plays music and offers an atmosphere that is convenient for all ages with special attention to youth.
Costa Coffee respects the religion of each nation in which it operates. To clarify, Costa Coffee neither sells alcoholic drinks nor pork-containing food. In addition, Costa Coffee's menu is written in both English and Arabic languages. English is the most widely spoken language, and Egypt is known as a touristic attraction. Plus, Egyptians like to come across a menu written in their own language for simplicity and showing cultural respect.
Also, many people nowadays are concerned with their health; Costa Coffee is providing low-calorie food, a variety of fresh salads, sandwiches, and fresh fruit juice.
Governmental rules and regulations could affect the firm's suppliers and the price of the raw materials. Imposed taxes or tariffs on the imported coffee beans add to raw materials cost. Rules regarding social insurance add to labor costs. Political instability and strikes do affect labor and consumers of Costa Coffee.
Advanced machines affect the firm's performance and efficiency through producing tasty coffee as quick as possible. High quality and speed of service affects customer satisfaction and loyalty. Costa Coffee uses highly advanced brewers and coffee makers for the best coffee cup.
Besides, the use of the Internet to facilitate transactions between Costa and its suppliers lowers transaction costs and decreases lead time. As a result, stakeholders are more satisfied with increased profits and lower costs.
Costa Coffee uses recyclable paper bags and paper cups. And, it tries to reduce its energy consumption as steps towards a greener environment.
It also ensures adherence to responsible farming practices, so that natural habitats are protected thereby reducing deforestation and carbon emissions.
Furthermore, Costa is working to deliver green...
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