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Opportunity Analysis

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Report on Opportunity analysis

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Introduction

There are different type of issues that being faced by customers. Those firms which are able to understand the requirements and develop innovations are able to develop strong customers base. It is important to make sure that proper analysis is conducted so that they will be able to understand the taste and preference of customers and deliver their products and services accordingly (Alsos, Carter and Ljunggren, 2014). Present report is on establishing a business and that is coffee shop at Northampton. This report covers analysis made for this particular market so that problems can be identified that will act as barrier to business to be established. Lastly, it also includes strategies that should be implemented with the help of which business can be developed.

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Business idea

To open coffee shop in Northampton

The new business idea is based on opening coffee shop in Northampton which would provide variety of services or products in accordance with requirement of the public. It will be more focused on hygiene as currently people are more conscious about their health and they prefer to have healthy food to stay fit. Owing to this, drinks and snacks will be offered accordingly. The major uniqueness of the project is hygiene and variety of products whereby more number of customers will be attracted. Furthermore, reasonable prices will be set for the drinks and snacks in order to keep them satisfied and retained. In this report proper evaluation will be made with the help of which effectiveness of this market will be determined.

Opportunities

There are many organizations that deliver their customers with similar products and services. They make use of different set of strategies that enable them to attract more and more customers. In order to develop coffee shop at Northampton, it will be an effective idea as this will help to achieve the desired goals and objectives (Gustafsson, Herrmann and Huber, 2013). With this respect, one of the opportunities that prevail in this market is related with preference of customers. In accordance with the culture that are followed at this particular place, people prefer to spend their time also or with friends in coffee shops. Further, there are different type of dishes that are preferred by them and they love to try new type of dishes. In this context, the type of idea for establishing coffee shop at Northampton will be effective.

Market analysis

In order to establish business in a market, it is essential to make sure that there is proper analysis made so that the areas in which it lacks and preference that can be identified. With his respect, one of the effective tool that is helpful to make analysis of market is with the help of PESTLE analysis. Below given are the PEST analysis done for Northampton:

Political factor: This can be determined as the extent to which government involves in order to make changes in the interest rates, monitory and fiscal policies (Wyatt, Kiers and West, 2014). When there are changes in these policies, then the firm also need to make changes ion the prices strategies. In case there are frequent change, then it has negative impact over the business.

Economic factor: There are conditions in which there are recession or inflation. In such type of condition the rate of money spend by customers is affected negatively. In this context, it is important to make sure that firm understand the situations and take appropriate steps with the help of which the issues that are faced can be solved.

Social factors: Changes in taste and preference of customers take place frequently. It is important that firm understand these changes and take appropriate steps so that they will be able to develop products and services as per requirements of customers (Warnick, Bojanic and Xu, 2015). This way the rate of profitability and sales can be raised.

Technological factor: With time there are changes that take place in technology. It is important to make sure that firm update or make use of new technology so that they will be able to make sure that they deliver customers with high quality services. Ultimate aim of any firm is to gain maximum profit. This is only possible when they will be able to understand the customers requirements. In order to satisfy them use of updated or new technology is an effective aspect that need to be considered.

Legal factors: There are different type of laws that are fallowed at this particular country. It is essential that all the laws should be considered by the firm. When these are not followed, then people develop negative perception over the services that are delivered to them.

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Environmental factors: All the services and products that are delivered should not any type if negative impact over the society or environment (Li, Wang and Ragland, 2013). For this purpose all type of consideration should be made by the organization before the business is established.

Competitors analysis

There are many coffee shops that they deliver their customers with similar products and services. It is important that to understand the strategies that are used by these firms so that appropriate steps can be considered that will help to attain competitive advantages. With this respect, below given are the Porter's five forces done:

This is an effective tool that enables to shape industry and to know the strengths and weaknesses. There are five forces that are involved and they are :

Competition in the industry: There coffee shops like Dreams Coffee Lounge, Academy Coffee Haus and Magee Street Bakery which can be considered to be the main competitors. There are different type of strategies that are used through which they get to attract more and more customers.

Potential to new entrants: The type of cost and the policies that are followed in Northampton is favourable in order to establish the business (Brida, Pulina and Aguirre, 2013). Further, the time consumed to develop the market will also be less than the business will be able to have enough financial support and the raw materials to develop it will enable to establish the business.

Power of suppliers: This is the availability of raw materials that will be make available by suppliers. In this context, the rate of supplier are high. Business will be able to make sure that they get proper materials so that they will be able to make it finished goods. This way they will be able to meet up the demand of customers.

Power of customers: This shows the capability of customers to make purchases. As per the analysis made, it can be stated that the rate of capability that customers have is high. More specifically, firm will be able to get in return for the products and services that are delivered by them.

Threat of substitute products: There are condition in which individuals get to develop prefer other type of services that are provided by other firm. In this context, the rate of threat of substitute product is low. This shows, when the coffee show will be established, then they will be able to achieved the desired goals and objectives.

Target market

The target market will be the university students and the people visiting the mall for shopping purpose because there is substantial demand of coffee shop identified in the Northampton market. But if the demand is increasing gradually in the market then the decision of starting new coffee shop venture is beneficial as it would help in gaining high profitability and sales (Bulut, Demirbas and Ferhatosmanoglu, 2015).

Market potential

Through carrying out the analysis, opportunity for opening Coffee shop is attractive because of following-

Strengths- Idea of opening coffee shop in Northampton is very attractive because in the neary by area there is no such coffee shop who is offering unique blends of coffee and snacks to its customers (Leschke, 2013). Thus, main strength of starting such coffee shop is to offer variety of drinks and snacks and retain satisfied customers within business. It also helps in improving the profitability of firm in market.

Opportunities- Opening such coffee shop business in Northampton obtains varied opportunity as it helps in expanding the business in other parts of country. Thus, due to such rise in market share it helps in enhancing the capabilities and thus offer variety of coffee and snacks so that large number of consumers could be attracted (Alsos, Carter and Ljunggren, 2014).

Threats- Coffee shop might face threat from other restaurants running nearby therefore they need to speed up and make brand loyalty through offering quality products or services. Another threat might be faced in the form of implementing low level of automation and thus it impacts the preparation of coffee as well as its taste. Entry of new players within the market also impacts upon the operations of firm (Coles, 2014).

Location and site

Location of Coffee Shop needs to be selected in crowded place i.e. near by corporate offices, colleges etc. Main reason behind starting the venture at such place is that it is the best place where target customers could be found who prefer to spend time within coffee shop. Large area would not be required by entrepreneur as in small area also coffee shop could be opened. Therefore, selection of location and site is the most appropriate part and thus starting the venture so that it could attract more number of target consumers towards firm (Green, 2014). However, the chosen area is crowded place i.e. nearby corporate offices and college so that youth could be attracted towards business.

Current and Projected Demand Analysis for Coffee Shop

It has been assessed that there is a developing business sector for coffee shop in the current era as it is being preferred by every age group and thus it is being considered of high demand product in market. There are different coffee products being offered by venture and thus it helps in meeting the projected demand in the Northampton market. It has been identified that demand of coffee and snacks is highest in that particular location so that it would help in maximizing the profits (Beuchelt and Zeller, 2013).

Thus, it has been identified that potential of opening new coffee shop in Northampton that helps in evaluating the region to be the most demanded place to have coffee consumption. Therefore, it is essential for entrepreneur to provide quality products or services and thus become the significant player in coffee shop market. It has been identified that average consumers spend approximately 5.2% of their annual household expenditure upon food and beverages when they are away from home (Koester, 2016). However, when the disposable income increases, consumers are more willing to spend money at coffee shops. Thus, combining all such figures, industry is well positioned for growth till 2021 it is expected to reach Pound 46.2 billion.

Results based on Questionnaire

Questionnaire results showcases that there are varied factors such as ambience, pricing and varied of products offered in regard to attract people towards the coffee shop. Thus, it helps in identifying the buyer's choice whether they prefer to consume the coffee provided by your venture or not. However, price sensitivity is considered as the most important factor that helps in influencing their choices in regard to which coffee is being consumed by most of the people (Bulut, Demirbas and Ferhatosmanoglu, 2015). Also, it could be evaluated from the questionnaire that near university or in the shopping mall are the most happening places which is being preferred by consumers. Producers are required to offer variety of products or services in the form of various snacks and beverages are being provided to target consumers. Respondents are also in favour of employing skilled staff so that it could be beneficial for coffee shop and thus they could operate in an effective way.

Technology

Technology plays a crucial role and thus it helps in fulfilling the demand of coffee among buyers. Thus, entrepreneur need to introduce automatic espresso machine that would provide good quality coffee to consumers. Also, they need to own different machines tht would make cappuccinos in less than a minute and that too at lower price than other competitors (Leschke, 2013).

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Financial model

Cost of the project

Factors

 

Amount (GBP)

Rent of the building

 

90000

Furniture and fittings

Sofa, counter, table & chairs

4000

Equipments

Coffee vending machine, Air condition, Stereo, water filter etc.

2000

Kitchen supplies

Napkin, cups and plates for coffee and snacks, forks, knives etc.

1500

Marketing and promotion

 

800

Legal cost

Registration and consultation

700

Insurance

 

1000

   

100000

Means of finance

Particulars

Amount (IN GBP)

Owner's capital contribution

40000

External borrowing from bank @ 4% p.a.

60000

 

100000

Estimation of annual profit

Particulars

Estimation (In GBP)

Sales

466287.5

Less: Cost of sales (60%)

279773

Gross profit

186515

Operating cost

 

Utility (fuel, electricity, water etc.)

12000

Building rent/year

90000

Salary (see working note 1)

49944

Supply cost (coffee, napkin, snacks, cups etc.)

800

Advertisement & marketing

500

Insurance

1000

Total operating expenditures

154244

Earnings before interest and tax

32271

Less: Interest

2400

Earnings before taxes

29871

Less: Taxes @ 20%

5974

Net profitability

23897

Working note: 1.

Employee pay

 

Amount

Waiter and waitress

6 GBP/hour

14976

Manager

8 GBP/hour

19968

Accountant

 

15000

   

49944

References

  • Alsos, G.A., Carter, S. and Ljunggren, E., 2014. Kinship and business: how entrepreneurial households facilitate business growth.Entrepreneurship & Regional Development. 26(1-2). pp.97-122.
  • Beuchelt, T.D. and Zeller, M., 2013. The role of cooperative business models for the success of smallholder coffee certification in Nicaragua: A comparison of conventional, organic and Organic-Fairtrade certified cooperatives.Renewable Agriculture and Food Systems. 28(03). pp.195-211.
  • Brida, J. G., Pulina, M. and Aguirre, S. Z., 2013. Cruise passengers in a homeport: A market analysis.Tourism Geographies. 15(1). pp.68-87.
  • Bulut, M.F., Demirbas, M. and Ferhatosmanoglu, H., 2015. Lineking: Coffee shop wait-time monitoring using smartphones.IEEE Transactions on Mobile Computing. 14(10). pp.2045-2058.
  • Coles, L., 2014.Marketing with social media: 10 easy steps to success for business. John Wiley & Sons.
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