The paper 'Тhе Еvоlutiоn of thе Glоbаl Тrаdе Distributiоn Рrосеssеs of Costa' is a wonderful example of a Management Case Study. The industry of brewing coffee has been experiencing many changes over the last two decades especially in the operations of the coffee brewing companies. There have been mergers and acquisitions taking place and varying branding strategies have emerged (Allegra Strategies, 2009; p. 2). These changes have resulted in increased competition among companies. The two leading global players coffee houses in the world are the Starbucks of the United States of America (USA) and Costa of the United Kingdom (UK).
This paper will analyze Costa Company and explore the reasons behind its success in gaining a big share of the global market and remaining to be a leading global distributor of coffee. Costa Costa is a multinational company; it is a renowned coffee house worldwide. The company is based in the United Kingdom and it is a subsidiary of Whitbread (Martin, 2011; p. 39). The company boasts of being the largest coffee chain in the UK and it ranks second in the world, after the USA based Starbucks.
Costa came into existence in 1971; its founders were two Italian brothers Sergio and Bruno Costa. Its main activity was to the supply of roasted coffee to caterers and people who specialized in Italian coffee shops. It came to be a subsidiary of Whitbread in 1975 through acquisition (Allegra Strategies 2004, p. 4). Since then, the company has grown tremendously in the UK and internationally. Costa coffee company has its presence in over 35 countries across the world. Currently, it has 1375 restaurants in the UK, 2500 express vending facilities, and 800 outlets world. Risks and risk management Just like any other business venture, there are many risk challenges facing Costa Coffee.
The main risk Costa faces being the market risk that is brought about by the competitors. For instance, according to the global arena, Starbucks is the main competitor and its prices are cheaper compared to those of Costa Coffee. Coffee is classified as a food product. This means in the handling and distribution of the product, the set health and food handling procedures should be followed. Thus in handling the coffee, Costa is faced with the risk of health and safety (Financial Times 2007, p. 4).
This calls for continuous monitoring and inspection of the beans from harvest to the time they become a cup of coffee. There are also legal risks that affect their operations. Different states have different legislation on the use of fresh ingredients, this is in relation to a moisture content of the beans and how they are handled. In addition, there are risks that relate to intellectual property (IP). The risk of copying design, product, and concept of other companies has been a great issue for many multinationals.
For instance, a legal challenge can occur between Starbucks and Costa if they copy from one another. Reputational risk is also a major concern for Costa Coffee. The fact that the main method of operation is through the franchise, a failure in one shop can damage its reputation and consequently lose a big market share (Sullivan, 2011). To mitigate the risks Costa has a risk management process that is carried out through risk matrices that are aligned to the business model of the company.
Costa has set strategic goals, the matrices are used to analyze risks of each strategic goal. After identification and analysis of the risks, prioritization is done depending on either the risk is low, medium or high, the prioritization is depended on the probable impact of the risk (Rodenberg 2013, p. 14, 16). The matrices together with the set control normally undergo regular reviews. The management of the company carries out a regular review. The process of risk management that applied by Costa involves:
Allegra Strategies. (2004). UK Coffee Bar Market, retrieved
Allegra Strategies. (2009). UK Coffee Bar Market Still Growing despite Recession retrieved http://www.foodbev.com/report/uk-coffee-bar-market-still-growing-despite-recession 29/3/2014
Financial Times. 2007. Costa Tops Table of Coffee Outlets, retrieved http://www.allegra.co.uk/pdf-files, pp.2-5 29/3/2014.
Ivana, M.and Sanja, N. (2010). Costa coffee.The Guardian, 4 March, p.13.
Luiselli, K. (2005). Costa Coffee: Self Serve Coffee Machines. Circle Pines MN:AGS publishing, pp31-46
Martin, G.S. (2011). Costa Express: Growing Business Success. Bristol: Morton Grove, pp. 38-45.
Sunday Times. (2008). How Starbucks colonised the world. Retrieved
Sullivan, A. (2011). Costa launches heritage branding in UK. Marketing magazine
Rodenberg, J. (2013). Costa Coffee Verses Starbucks. London: Business Intelligence, pp. 4-24.