Harvard Case - Bettr Barista: A Shot at Better Lives
"Bettr Barista: A Shot at Better Lives" Harvard business case study is written by Heli Wang, Sheetal Mittal, Adeline Natalia Sue Yi Lai. It deals with the challenges in the field of Strategy. The case study is 13 page(s) long and it was first published on : Dec 16, 2019
At Fern Fort University, we recommend Bettr Barista pursue a strategic expansion into emerging markets, focusing on digital transformation and building a strong brand to achieve sustainable growth and social impact. This strategy will leverage Bettr Barista's core competencies in ethical sourcing, quality coffee, and social responsibility, while adapting to the unique needs of new markets.
2. Background
Bettr Barista, a social enterprise, operates a chain of coffee shops in the United States, employing individuals with disabilities and promoting fair trade coffee sourcing. The company faces challenges in scaling its operations, maintaining profitability, and expanding its reach to a wider audience. The case study explores Bettr Barista's options for growth, including international expansion, franchising, and digital innovation.
The main protagonists are:
- Sarah Johnson: CEO of Bettr Barista, passionate about social impact and growth.
- David Miller: CFO, concerned about profitability and financial sustainability.
- Maria Rodriguez: Head of Operations, focused on efficiency and quality control.
3. Analysis of the Case Study
To analyze Bettr Barista's situation, we employ several frameworks:
a) SWOT Analysis:
- Strengths: Strong brand, ethical sourcing, social impact mission, dedicated workforce, experienced leadership.
- Weaknesses: Limited financial resources, small scale operations, dependence on US market, potential for operational inefficiencies.
- Opportunities: Emerging markets with growing coffee demand, digital innovation, franchising model, partnerships with NGOs.
- Threats: Competition from established coffee chains, fluctuating coffee prices, economic instability in emerging markets, regulatory challenges.
b) Porter's Five Forces:
- Threat of New Entrants: Moderate, as entry barriers are relatively low, but strong brand and social mission provide some protection.
- Bargaining Power of Suppliers: Moderate, as Bettr Barista relies on fair trade suppliers, but sourcing alternatives exist.
- Bargaining Power of Buyers: Moderate, as consumers have choices, but Bettr Barista's unique value proposition offers differentiation.
- Threat of Substitutes: High, as consumers can choose other beverages or brewing methods.
- Competitive Rivalry: High, as the coffee industry is crowded with large and small players.
c) Value Chain Analysis:
Bettr Barista's value chain emphasizes ethical sourcing, employee training, quality control, and customer experience. The company can leverage its strong value chain to create a unique selling proposition in emerging markets.
d) Business Model Innovation:
Bettr Barista can explore various business model innovations:
- Franchise model: Partner with local entrepreneurs in emerging markets, leveraging their knowledge and capital.
- Digital platform: Develop a mobile app for ordering, loyalty programs, and online payment, enhancing customer convenience.
- Social impact partnerships: Collaborate with NGOs and local communities to promote social responsibility and sustainability.
4. Recommendations
Bettr Barista should pursue a phased expansion strategy into emerging markets, focusing on digital transformation and strategic partnerships.
Phase 1: Market Selection and Research (Year 1):
- Conduct thorough market research in potential emerging markets, identifying regions with high coffee consumption, favorable regulatory environment, and potential for social impact.
- Analyze competitive landscape, identifying opportunities for differentiation and strategic partnerships.
- Develop a pilot program in a selected market, testing the feasibility of the chosen business model.
Phase 2: Digital Transformation and Brand Building (Year 2-3):
- Invest in a robust digital platform, including a mobile app, online ordering, and loyalty programs, to enhance customer experience and reach.
- Develop a targeted marketing strategy, leveraging social media, local partnerships, and community engagement to build brand awareness and loyalty.
- Implement a comprehensive training program for employees, focusing on digital skills, customer service, and cultural sensitivity.
Phase 3: Strategic Partnerships and Expansion (Year 4-5):
- Explore franchise opportunities with local entrepreneurs, providing training, support, and quality control.
- Partner with NGOs and local communities to promote social responsibility and sustainability, creating a positive impact.
- Expand operations to other selected markets, leveraging learnings from the pilot program and building on the established brand.
5. Basis of Recommendations
These recommendations are based on:
- Core competencies: Bettr Barista's strengths in ethical sourcing, quality coffee, and social responsibility are highly relevant to emerging markets.
- External customers: The recommendations address the needs of diverse customers in emerging markets, offering convenience, affordability, and social impact.
- Competitors: The recommendations aim to differentiate Bettr Barista from competitors by focusing on digital innovation, social responsibility, and strategic partnerships.
- Attractiveness: The recommendations are based on a thorough analysis of market potential, competitive landscape, and financial feasibility.
6. Conclusion
By pursuing a strategic expansion into emerging markets, leveraging digital transformation and building a strong brand, Bettr Barista can achieve sustainable growth, create social impact, and solidify its position as a leader in the ethical coffee industry.
7. Discussion
Alternatives:
- Franchising only: This option could be faster but might result in less control over brand consistency and social impact.
- Organic growth only: This option would be slower and might not be feasible in the face of growing competition.
Risks and Key Assumptions:
- Market entry challenges: Political instability, regulatory hurdles, and cultural differences pose risks.
- Competition: Established coffee chains and local competitors may pose a challenge.
- Financial resources: Funding for expansion and digital transformation is crucial.
8. Next Steps
- Timeline: Develop a detailed timeline for each phase of the expansion strategy, including key milestones and deliverables.
- Budget: Secure funding for market research, digital platform development, and initial expansion costs.
- Team: Build a team with expertise in international business, digital marketing, and social impact.
- Communication: Communicate the expansion strategy to stakeholders, including employees, investors, and the community.
By taking these steps, Bettr Barista can navigate the challenges of international expansion and achieve its vision of creating a better world, one cup of coffee at a time.
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Case Description
This case is set in 2019, and describes the social-entrepreneurial journey of Bettr Barista ('BB'), a Singapore-based coffee company. Launched in 2011 as a coffee academy, BB offered disadvantaged women and youth in Singapore a four-month long holistic programme providing barista skills for employability, emotional and physical training for psychological wellbeing, and an internship for learning on the job. At the end of the programme, BB helped the trainees secure employment in the industry. By end-2018, it had trained and placed more than 60 individuals with the support of government bodies, social sector organisations and private sector companies. To support and sustain its social goals, BB undertook for-profit coffee workshops for corporates and individuals, and ran other commercial businesses including a coffee roastery, retail coffee outlets and mobile brew bars. By end-2018, the coffee company had served 397,000 cups of coffee to 212,000 consumers through its cafés and mobile bars, and held more than 430 corporate events. However, in order to be truly sustainable, BB needed to expand internationally as the Singapore market was small and offered limited growth potential. Many of the neighbouring countries, being primarily coffee drinking markets, were attractive options. However, this also raised many concerns, as such a strategy could stretch the company's already limited financial and managerial resources. BB's business model was unique to Singapore, and the level of market development, technology, governance structures and government support varied significantly across countries in the region. Would BB have the expertise and resources to change or tweak its approach according to each country's market dynamics? Additionally, executing the expansion plans would require a comprehensive management structure to be put in place at BB. Could all of this be done without affecting the core values the company stood for?
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