Case Study Guided Answers
Read and Complete case study “Struck and MacAfee – a David vs.
. Goliath Battle? ” on pages 350 – 352 of your text. 1 . If you were the manager of or an adviser to Struck Australia, how could you use a SOOT analysis In deciding your strategy for the chain’s future In Australia? In order to compete effectively In the Australian café© market, Struck must be alert to: changes In opportunities and threats In the external environment; be equipped to take advantage of internal strengths: and be aware and realistic about its own internal weaknesses.
Conducting a SOOT analysis is a valuable tool in achieving these objectives.
Examples of issues in a SOOT analysis of Struck Australia: Strengths Strong financial and brand backing from the world’s leading retailer and roaster for specialist coffee in the world. Company-owned and operated stores. Operated in the Australian market more than 10 years, which means better understanding of It. Loyal customers. Consistent high quality of product and service.
The Struck atmosphere In stores.
Weaknesses Still suffering some Image problems due to It being perceived to be a us-based organization and because of the closure of many stores in Australia. High pricing. Global expansion of Struck has slowed down. Opportunities Strong and still increasing specialist coffee market in Australia. Increasing consumer interest towards specialist tea segments such as green tea and herbal tea.
Growing interest for premium roast coffee at home instead of instant coffee. Potential to expand into other high-density areas outside the current concentration along the eastern seaboard of Australia.
Threats Intense and Increasing competition In a relatively saturated and maturing café© specialist market. Change In economic environment (I. E. SGF) affecting consumer spending.
Increasing cost of raw materials and currency fluctuations. 2. What competitive advantage(s) do you think Struck and Mecca© each have? Do you think, given your answer, that each chain’s strategy is appropriate? STRUCK: In Struck’ case it seems like Struck was aiming for having a competitive advantage by utilizing a differentiation strategy.
Struck saw itself as not only selling coffee, but offering an experience?a café© as a social hub (with comfortable chairs, music and Wi-If internet access) as well as highly personalized service, with giggly trained baristas?which was going to set the Struck brand apart from the competition and allow It to charge a premium price. Struck aimed to utilities what had worked well In the US market, such as high customer loyalty, premium quality coffee and the ‘homey atmosphere’ of Its stores, to gain a competitive advantage and fend off competition.
MacAfee: In the Mecca© case McDonald’s aimed to have a competitive advantage based more Militantly on a cost learning strategy. I en McCabe Introduction was seen as a way to provide McDonald’s with the opportunity to create new revenue opportunities by sing the McDonald’s corporation’s existing strengths in location and fast-food operations by growing the business through related diversification. Mecca© was a coffee bar, located within the premises of a McDonald’s restaurant as an extension or as a stand-alone restaurant.
It generally priced its coffee offerings 20 per cent below Struck. However, over time Mecca© has adopted for more of a differentiation strategy (together with McDonald’s itself) with the introduction of premium coffee, cakes and muffins, as well as premium burgers and healthy salads to have broader nonuser appeal. McDonald’s has also opted to refurbish many stores to appeal more to modern tastes and allow consumers to be more comfortable and to linger.
Ten years ago Struck and McDonald’s were at completely opposite ends of the restaurant industry. However, since then they have gradually moved closer. First with McDonald’s refining its Mecca© concept by upgrading the quality of the coffee, introducing ‘baristas’ and widening its coffee choices and cafe products, as well as improving its ambiance and atmosphere in many stores through refurbishing, Second with Struck introducing drive through windows and numerous breakfast and fast-food snacks similar to those McDonald’s offer in their stores.
Struck Australia has also gradually been trying to engage more with the local communities where its stores are situated by initiating community projects and volunteering in the way that McDonald’s has been doing for many years. 3.
If you were asked to explain Struck’ strategy, how would you describe it? Struck’ global strategy is focused on a growth strategy, Struck’ Australian strategy has changed from an initial Roth strategy (when Struck entered the Australian market it rapidly opened up more than 80 stores) to a retrenchment strategy in 2008 when they were forced to close 61 of 84 outlets.
Struck has scaled back its operations, but it has not withdrawn completely from the Australian market. It has downsized and consolidated its remaining Australian outlets. Its differentiation strategy was not successful enough to make it highly successful in Australia and it opted to pursue more of a focus strategy by concentrating on its outlets along the eastern seaboard of Australia and in particular on major cities such as Brisbane, the Gold Coast, the Sunshine Coast, Sydney and Melbourne.
It could also be argued that Struck Australia has been, and still is to some degree, what Porter would define as ‘stuck in the middle.
‘ While this may sound like criticism, it should be remembered that it is possible for a company to operate successfully following this strategy. 4. If you were asked to explain Mecca©’s strategy, how would you describe it? Mecca©’s strategy has been focused on growth and it is now the largest coffee chain in Australia with more than 650 stores None 2010) nationally.
With its Mecca© strategy McDonald’s has yet again proved it is capable of innovation and bringing in new ideas to address the needs, tastes and preferences of customers. Adding Mecca© has allowed it to expand into and successfully compete in the specialist coffee market, as well as expand its appeal too wider range of consumers.
The Mecca©s draw customers into restaurants during off peak times and bring them in more frequently as ten Diverge menu takes over winner ten Drudger menu ones (wanly NAS resulted in 15 per cent higher revenues in such stores).
A further step in McDonald’s ambitions to grab more of the lucrative coffee market with Mecca© was its unveiling in June 2011 of a major campaign announcing plans to improve the quality and consistency of the coffee at its Mecca© outlets by introducing a new blend and a national training program to turn its crew into dedicated baristas across more than 650 stores. The roll of Mecca©s around the world is also proceeding rapidly. While Struck is still the leading global retailer of coffee with more than 15 000 stores in 50 countries, McDonald’s is quickly catching up.