Strategic Management - Green Mountain Coffee Roasters

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1. QUESTION ONE
Undertake a SWOT analysis of the organization in the case.

A SWOT analysis of Green Mountain Coffee Roasters reveals the following :

1.1 Strengths

i. Product Consistency

By utilizing state-of-the-art roasting software, GMCR is therefore able to maintain their level of product consistency,

ii. Unique Products

Its key success is in differentiating its coffees. The coffee beans have been carefully selected and then roasting them in small batches to ensure consistency and to maximize their taste and flavor differences. This one of the reason why are the Green Mountain coffees is different from those of other specialty coffee companies. On the other hand, Keurig also gives Green Mountain access to the office and one-cup segment.

iii. High Distribution

GMCR flushes nitrogen into its packaged coffee and employ one-way value bag packaging technology that provides a minimum shelf life of six months for the company coffee as customer is able to retain the freshness of the coffee in the package.This in turn, allows GMCR to expand it’s distribution, without any worries about compromised quality.

iv. Socially Responsible Business Practices

GMCR is a supporter of social and environmental causes, and being listed in the “100 Best Corporate Citizens” and “The World’s Most Socially Responsible Companies” lists. This acts as a bonus to the company’s outlook and reputation.

v. Widely Available

GMCR’s products are widely available in the market. By targeting various distribution channels and customer categories, GMCR is confident that consumer trial at one point of the distribution level will lead to a subsequent purchase at another.

vi. Flagships

Flagship customers such as Amtrack, Exxon-Mobile, JetBlue Airways and American Skiing Company are key to the company’s geographic expansion strategy as they provide visibility and sampling opportunities

1.2 Weaknesses

i. Single Product Line

GMCR deals with specialty coffee solely, putting it at a serious disadvantage in bargaining with supermarket chains for favorable shelf space.

ii. Own Distribution and Sales Force

GMCR relied on its own distribution and sales forces to expand the Green Mountain brand in the grocery channel.

1.3 Opportunities

i. Increased consumption

Increased coffee consumption in Europe, Asia and Brazil has just expanded GMCR’s distribution opportunities. By targeting and influencing more of the above mentioned countries’ coffee drinkers, GMCR can hope to influence most of the consumers before its rivals do so.

ii. Specialty Coffee Market

Gourmet, specialty coffee is the bread-and-butter of GMCR’s establishment. A growing increase in consumers seeking specialty coffee will mean brighter prospects for GMCR.

iii. Keurig Acquisition

Green Mountain acquired 42 percent ownership in Keurig Inc. The appeal of the Keurig K-cup perfectly brewing just one cup of coffee from a variety of coffee selections has contributed to GMCR success in the office coffee services.

1.4 Threats

i. Decrease in coffee consumption

The U.S coffee market now only accounts for 20% of world coffee consumption, compared to the 80% during World War II. The coffee market is now moving on to Europe, Asia (particularly Japan).

ii. Commercial coffee roasters

There is higher competition as major companies seek to enter the specialty coffee industry. Such names include but are not limited to : Phillip Morris’ Gevalia, Procter & Gamble’s Millstone and Nescafe. The major coffee marketers make a big push to make their premium coffee brands dominant in the wholesale channel.

iii. Starbucks Partnerships

Starbucks, seen as a long time competitor to GMCR, upon entering into a long-term licensing with Kraft, will expect to generate extra sales 20-40 pounds of coffee per store per week. This is seen as a threat to GMCR, which has an average sales of 100 pounds of coffee per store per week. Starbucks,...
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