NESPRESSO COMPANY INTRODUCTION
Internal and External Analyses
Introduction of the model
The methodogy used to analyse Nespresso Business Model is ‘Business Model Generation’ by Osterwater and Pigneur 2009. The methodology uses a model named Canvas, which divides the business model into 9 segments. The concept is simple, relevant, and understandable to analyse a company. This concept has been applied and tested around the world and is already used in organizations such as IBM, Ericsson and Deloitte.
The nine basic building blocks are shown in the logic of how a company intends to make money. The nine blocks cover the four main areas of a business: customers, offer, infrastructure, and financial viability.
The business model environment of the company is analyzed in the external analyses using a mythology designed by Osterwater eg. The four main area of the environment are; Industry forces, key trends, market forces and macroeconomical forces.
In this section the external environment influences on a company such as Nespresso are analysed into a treat or an opportunity depending on the implication on the E-business strategy of Nespresso.
1.1.Global coffee consumption is growing
World consumption has been growing at an average of 2.5% annually since 2000. This development indicates an opportunity for Nespresso as consumers will purchase more coffee.
1.2.Sustainability in the coffee market is a must
An article on podia, food industry trends, stated that the current buzz words in the coffee industry are ‘organic’, ‘shade grown’, ‘sustainable and fair-trade certified’. According to the Organic Trade association, the organic coffee market is now a billion dollar industry. Research of UTZ certified indicated an increase in the first quarter 2010 of 35% in fair trade coffee consumption compared to the same period last year. The below figures show that growth started already in 2006.
This trend can be an opportunity for Nespresso as long as they stay ahead of the competition.
2. Industry forces
2.1 ‘Industry brothers’ are making moves
Sara Lee makes coffee under the "Maison de Café" brand launched L'OR Espresso, which uses plastic capsule, retails at the equivalent of about USD 0.37 in supermarkets. It fits the personal espresso machines from Sara Lee and the Nespresso system. The rising competition with a similar product is a major treat for Nespresso competitive position.
3. Key trends
Social – Cultural trends
3.1 Consumers want more status
According to trendwatching.com sources of status in mature consumer societies are moving beyond the BIGGER, FASTER, HARDER sphere. The vast mass of increasingly sophisticated, increasingly wealthy, increasingly urban consumers are ever more try-out-prone, more demanding and more daring as they search for the next big thing or the next big STATUS STORY to dazzle or discuss with people (online). The implication on the Coffee market is that coffee drinkers have become increasingly sophisticated and are encouraged to expand their coffee palate by trying out specific blends and brews. This can be a major opportunity to build customer relationship for company as Nespresso.
3.2 ‘Living’ and spending online
According to CIA factbook 2008 the internet use of The Netherlands is located on the 26th place of world ranking list. According to research of The Next Web 2009, 16% of the Dutch people find it easier to buy online. 55% prefer a real life shop and 24% is neutral. This trend has major implication on the buying behavior of consumer and business therefore every business needs to focus on online development. Nespresso has adapted this trend into its business model and therefore it can be seen as an opportunity.
4. Macro economical forces
4.1 US coffee market is changing
Due to the current economical situation Starbucks faced a drop down in location in urban blocks. Home...