Question
Read the case study below and answer the questions that follow. You might need to do some additional reading (e.g. about Illycaffè, South Africa Coffee Market, Specialty coffee shops, and SPAR.
Case Study: Illycaffè by Francesco Illy.
Illycaffè was founded in 1933 in Trieste by Francesco Illy.
While illycaffè originated in Italy, its presence has expanded to many countries around the world, including South Africa. Illy's journey in South Africa reflects the company's global expansion and commitment to offering exceptional coffee experiences.
Illy's introduction to the South African market likely took place in response to the country's growing interest in coffee culture and the demand for premium coffee products.
South Africa's evolving coffee scene, characterised by a burgeoning coffee culture, the rise of Specialty coffee shops, and a discerning clientele, provided fertile ground for Illy to establish a presence. Over the years, Illy has likely formed partnerships with local distributors, coffee shops, and hospitality establishments in South Africa to make its coffee products available to a broader audience. Illy has partnered with SPAR to distribute affordable, ready-to-drink coffee.
Today, it is led by the third generation of the family. Andrea Illy is the Chairman, and Cristina Scocchia is the CEO. Anna Rossi Illy, Ernesto's wife (the founder's son passed away in 2008), is honorary Chairman. Anna Illy jr continues her father's work and handles relations with coffee growers. Andrea Illy is the CEO of the global premium coffee company that bears his family's name.
As one might expect, he is passionate about coffee - its science, its health benefits, its taste, and its beauty. Illy also has a dream that someday soon, the coffee market might be transformed into something approaching the market for wine.
Where connoisseurs discuss the fine points of various origin coffees and blends, where customers are willing to pay a premium for the finest examples of the coffee-making art, and where the growers, roasters and baristas will be compensated fairly for the expertise they contribute to every cup..Unfortunately, the current coffee market differs from such an ideal. Coffee growers in most parts of the globe work at a bare subsistence level.
One bad harvest (made all the more likely by the ravages of climate change) or a sudden decline in the commodity price of coffee can drop them below subsistence to hunger. Even in good times, growers have little incentive to improve their operation - they have minor contact with the roasters or customers and no knowledge of how their crops get translated into the cup. This disadvantages not only the grower but also the consumer - coffee sourced from good quality beans is hard to find.
Illy believes that the solution to the sad state of affairs is to initiate a "virtuous circle" that draws the grower, the roaster, the barista, and the customer together. Growers with better knowledge of the market will work to improve their crops or experiment with new varieties.
Roasters and preparers will educate their customers as to the qualities of various beans, roasts, and preparations. Customers, in turn, will be willing to pay more for the best beans, and that premium will be sent back up the chain to pay for even more quality and variety. And so on.
Certainly, there have been some positive signs. Indeed, many observers argued that a "third wave" of transformation in the coffee market was already starting. (The first wave is said to have occurred when Maxwell House and Folgers made coffee a mass commodity, and the second wave was when Starbucks initiated a move to quality and higher prices.) Specialty coffee roasters had worked to build cafes and brands around origin-based beans sold directly to the roasters without reference to the commodity prices of coffee. With these third-wave roasters, every coffee came with a story of its origins, and growers could count on occasionally eye-popping premiums for their beans.
As yet, Specialty coffee represented a small slice of the overall market, and there were other signs that it might not ever grow beyond a small circle. New trends like coffee-based drinks and single-portion coffee in pods (e.g. K-cups, Nespresso) shifted more of the value-added towards roasters without a premium for growers. A consolidation was taking place among mass roasters that were even sweeping up third-wave roasters in its wake.
Observers argued that this could lead to greater uniformity with even less emphasis on origin-based, direct-traded coffee..Illy hopes that someone would come up with an innovation that would solidify the beginnings of the third wave and help reshape the market. Such a change would not necessarily have to involve Illycaffe; Andrea Illy believes as the world's premium brand, an increased emphasis on quality in the market would only help his company. The most important thing was to make the coffee supply chain more equitable and coffee better-tasting..In Learning Unit 1 to Learning Unit 4, you examined the concept of business analysis; in doing so, you encountered the concept of business analysis origins, the scope of the business analysis, and the role and responsibility of a business analyst as a strategy analyst in an organisation. Using the above scenario, the guidance of the prescribed book, as well as at least two (2) other credible sources, you have been asked as a business analyst to establish an innovation strategy that would solidify the beginnings of the third wave and help reshape the market.
In your strategy analysis for illycaffè, you must answer the following questions.
Q.1.1
Identify and research five (5) contextual issues that you, as a business analyst, would need to consider in executing the new strategy for illycaffe.Give me an lengthy answer for 5 marks
Case Study: Illycaffè by Francesco Illy.
Illycaffè was founded in 1933 in Trieste by Francesco Illy.
While illycaffè originated in Italy, its presence has expanded to many countries around the world, including South Africa. Illy's journey in South Africa reflects the company's global expansion and commitment to offering exceptional coffee experiences.
Illy's introduction to the South African market likely took place in response to the country's growing interest in coffee culture and the demand for premium coffee products.
South Africa's evolving coffee scene, characterised by a burgeoning coffee culture, the rise of Specialty coffee shops, and a discerning clientele, provided fertile ground for Illy to establish a presence. Over the years, Illy has likely formed partnerships with local distributors, coffee shops, and hospitality establishments in South Africa to make its coffee products available to a broader audience. Illy has partnered with SPAR to distribute affordable, ready-to-drink coffee.
Today, it is led by the third generation of the family. Andrea Illy is the Chairman, and Cristina Scocchia is the CEO. Anna Rossi Illy, Ernesto's wife (the founder's son passed away in 2008), is honorary Chairman. Anna Illy jr continues her father's work and handles relations with coffee growers. Andrea Illy is the CEO of the global premium coffee company that bears his family's name.
As one might expect, he is passionate about coffee - its science, its health benefits, its taste, and its beauty. Illy also has a dream that someday soon, the coffee market might be transformed into something approaching the market for wine.
Where connoisseurs discuss the fine points of various origin coffees and blends, where customers are willing to pay a premium for the finest examples of the coffee-making art, and where the growers, roasters and baristas will be compensated fairly for the expertise they contribute to every cup..Unfortunately, the current coffee market differs from such an ideal. Coffee growers in most parts of the globe work at a bare subsistence level.
One bad harvest (made all the more likely by the ravages of climate change) or a sudden decline in the commodity price of coffee can drop them below subsistence to hunger. Even in good times, growers have little incentive to improve their operation - they have minor contact with the roasters or customers and no knowledge of how their crops get translated into the cup. This disadvantages not only the grower but also the consumer - coffee sourced from good quality beans is hard to find.
Illy believes that the solution to the sad state of affairs is to initiate a "virtuous circle" that draws the grower, the roaster, the barista, and the customer together. Growers with better knowledge of the market will work to improve their crops or experiment with new varieties.
Roasters and preparers will educate their customers as to the qualities of various beans, roasts, and preparations. Customers, in turn, will be willing to pay more for the best beans, and that premium will be sent back up the chain to pay for even more quality and variety. And so on.
Certainly, there have been some positive signs. Indeed, many observers argued that a "third wave" of transformation in the coffee market was already starting. (The first wave is said to have occurred when Maxwell House and Folgers made coffee a mass commodity, and the second wave was when Starbucks initiated a move to quality and higher prices.) Specialty coffee roasters had worked to build cafes and brands around origin-based beans sold directly to the roasters without reference to the commodity prices of coffee. With these third-wave roasters, every coffee came with a story of its origins, and growers could count on occasionally eye-popping premiums for their beans.
As yet, Specialty coffee represented a small slice of the overall market, and there were other signs that it might not ever grow beyond a small circle. New trends like coffee-based drinks and single-portion coffee in pods (e.g. K-cups, Nespresso) shifted more of the value-added towards roasters without a premium for growers. A consolidation was taking place among mass roasters that were even sweeping up third-wave roasters in its wake.
Observers argued that this could lead to greater uniformity with even less emphasis on origin-based, direct-traded coffee..Illy hopes that someone would come up with an innovation that would solidify the beginnings of the third wave and help reshape the market. Such a change would not necessarily have to involve Illycaffe; Andrea Illy believes as the world's premium brand, an increased emphasis on quality in the market would only help his company. The most important thing was to make the coffee supply chain more equitable and coffee better-tasting..In Learning Unit 1 to Learning Unit 4, you examined the concept of business analysis; in doing so, you encountered the concept of business analysis origins, the scope of the business analysis, and the role and responsibility of a business analyst as a strategy analyst in an organisation. Using the above scenario, the guidance of the prescribed book, as well as at least two (2) other credible sources, you have been asked as a business analyst to establish an innovation strategy that would solidify the beginnings of the third wave and help reshape the market.
In your strategy analysis for illycaffè, you must answer the following questions.
Q.1.1
Identify and research five (5) contextual issues that you, as a business analyst, would need to consider in executing the new strategy for illycaffe.Give me an lengthy answer for 5 marks
Answers
Answered by
GPT 3.5
1. Market Trends: As a business analyst working on a strategy for Illycaffè, it is essential to research and analyze current market trends in the coffee industry. This includes understanding the demand for specialty coffee, growth of coffee culture in different regions, the popularity of coffee-based drinks, and emerging trends such as single-portion coffee in pods. By understanding market trends, Illycaffè can tailor its new strategy to capitalize on existing opportunities and address potential threats.
2. Consumer Preferences: Consumer preferences play a crucial role in shaping the success of any business strategy. As a business analyst, it is important to research and analyze consumer preferences in the coffee market. This includes understanding what drives consumers to choose specialty coffee, their willingness to pay a premium for high-quality coffee, and their interest in the origin and story behind the coffee they consume. By gaining insights into consumer preferences, Illycaffè can develop products and experiences that resonate with its target audience.
3. Competition Analysis: Competition in the coffee industry is intense, with various players vying for market share. As a business analyst, it is important to conduct a thorough analysis of competitors, including both traditional coffee companies and emerging specialty coffee shops. By understanding the strengths and weaknesses of competitors, Illycaffè can identify gaps in the market and differentiate its offerings effectively.
4. Supply Chain Management: The coffee supply chain is complex, involving multiple stakeholders from growers to roasters to consumers. As a business analyst, it is crucial to assess the efficiency and equity of the supply chain, particularly in relation to the compensation and support provided to coffee growers. By improving relationships and communication along the supply chain, Illycaffè can enhance the quality and sustainability of its coffee products.
5. Innovation and Technology: In an increasingly digital and tech-driven world, innovation and technology play a critical role in shaping business strategies. As a business analyst, it is important to explore innovative solutions that can help Illycaffè solidify its position in the market and reshape the industry. This could involve leveraging new technologies for coffee production, distribution, or customer engagement, as well as exploring opportunities for sustainable practices and ethical sourcing. By staying at the forefront of innovation, Illycaffè can differentiate itself and drive growth in a competitive market.
2. Consumer Preferences: Consumer preferences play a crucial role in shaping the success of any business strategy. As a business analyst, it is important to research and analyze consumer preferences in the coffee market. This includes understanding what drives consumers to choose specialty coffee, their willingness to pay a premium for high-quality coffee, and their interest in the origin and story behind the coffee they consume. By gaining insights into consumer preferences, Illycaffè can develop products and experiences that resonate with its target audience.
3. Competition Analysis: Competition in the coffee industry is intense, with various players vying for market share. As a business analyst, it is important to conduct a thorough analysis of competitors, including both traditional coffee companies and emerging specialty coffee shops. By understanding the strengths and weaknesses of competitors, Illycaffè can identify gaps in the market and differentiate its offerings effectively.
4. Supply Chain Management: The coffee supply chain is complex, involving multiple stakeholders from growers to roasters to consumers. As a business analyst, it is crucial to assess the efficiency and equity of the supply chain, particularly in relation to the compensation and support provided to coffee growers. By improving relationships and communication along the supply chain, Illycaffè can enhance the quality and sustainability of its coffee products.
5. Innovation and Technology: In an increasingly digital and tech-driven world, innovation and technology play a critical role in shaping business strategies. As a business analyst, it is important to explore innovative solutions that can help Illycaffè solidify its position in the market and reshape the industry. This could involve leveraging new technologies for coffee production, distribution, or customer engagement, as well as exploring opportunities for sustainable practices and ethical sourcing. By staying at the forefront of innovation, Illycaffè can differentiate itself and drive growth in a competitive market.
There are no human answers yet. A form for humans to post answers is coming very soon!