University of California Berkeley Coffee Shops Financial Forecast Model Check out Luckin’s business model (China) and imagine opening coffee shops like this business model in Manhattan.The name of the new coffee shop is “Smart Coffee”, please read the uploaded class file then finish following questions.List out your Value Proposition + Beachhead Market + End-User Profile at the top of the Word document. (already in document)Build your financial forecast model for your startup’s marketing plan and return calculations in Excel per example shown below. Make sure you have every possible assumption accounted for in your Assumptions sheet as well as our Forecast sheet. Format the spreadsheet to look professional as this will eventually be shown on your final powerpoint presentation.(uploaded an example of excel, Please complete the same as the example) we could imagine to open 5 stores in manhattan firstly, each store with 2 staffs.Copy and paste your spreadsheet model into the Word document as picture or PDF format. Then document and footnote the source of every assumption you make so that it is clear for (mostly) you and equally me to track your thought process and calculations. Beachhead Market
The viable market segment for the Smart Coffee firm will be the individuals from the middle and highincome social class. This segment comprises of the people who love coffee and require convenient
service. The target business segment will again get divided into age, gender, and location.
The customers’ profile will include the following;
Male and Female
High school, Undergraduates, Postgraduate and PHD
Optimization of well-being
Hanging out and traveling
Reason for purchasing the product
Help them in blood moving and also make
them feel energized.
Decision making unit
Consumers or Buyers
The coffee store brand would be called “Smart Coffee.” The smart coffee business will help in
addressing the customers’ satisfaction, performance, and convenience towards accessing the refreshment shops.
The company aims to provide quality products that keep the customers’ well-being and performance within the
public domain. It will also increase the consumers’ convenience towards accessing the refreshment shops by
making the products available near the social, learning, and refreshment areas. Excellent coffee products,
favorable prices, convenient service, and excellent locations will be the reasons for customers to choose smart
II). Industry Analysis
Based on the Life Cycle Model analysis, Smart Coffee firm is playing in a growth stage with regards to
the available market size alongside the conventional business forces. According to the market size available for
the company performance, the firm experiences a low rivalry since most businesses having the same product
majors their operations within the commercial surroundings. The little competition experienced by the Smart
Coffee firm is due to its establishment within the local settings such as near to the learning institutions, and
social places. The firm is also experiencing high growth since it has several branches within the strategic areas
where the targeted customers can get accessed to the product. However, the buyers of the company product still
get considered weak since the targeted clients are always of low income. They cannot, therefore, purchase the
products in large quantities.
Furthermore, the customers only buy the product for refreshment and brain activation; hence, they
cannot make their purchase frequently. The firm also enjoys low entry barriers to the market since it targets
small and middle-income individuals. It is also because the company product is for refreshment and brain
stimulation; therefore, no restriction provided there is capital available for the start-up. The smart Coffee firm
considers growth ability as the key objective for its performance. Consequently, it gets dedicated to addressing
the customers’ needs and achieving a competitive advantage.
Porter’s 5 Competitive Forces
Porter’s 5 Competitive Forces include industry rivalry, threats of the substitutes, potential entrants,
suppliers, and buyers’ power. Apart from Porter’s 5 Competitive Forces, quality production is another factor to
be considered by the firm. Based on the rivalry among the existing competitors, Smart Coffee firm experiences
a low competition. It is because several companies have not reviewed their establishment within the learning
institutions or social places. Various companies selling coffee products consider their operations within
commercial areas to attract a large group of customers. Based on the threat of new entrants, Smart Coffee firm
is likely to experience higher threats from the new entrants in the long-run. The more top risk gets expected to
occur since there are low entry barriers for the organizations operating within the social and learning
environments. The requirement is only starting capital and a small amount for the government tax.
The smart Coffee firm is likely to experience a threat from the substitute products. Most targeted
customers might consider consuming tea or cocoa as a substitute for coffee, depending on the cost and quality
provided. Therefore, the firm should incorporate both products in the long-run to maintain its customers and
attract more consumers as well. The firm can also experience a threat from the bargaining buyers more so when
coffee substitutes are available within the market. This aspect can force the firm to reduce its product prizes to
maintain the customers.
The bargaining power of the suppliers can also directly influence the firm, especially when the costs of
inputs get increased. The increment can force the firm also to increase the value of its products, which cannot be
well taken by regular clients. However, when Smart Coffee firm maintains its prices despite the increased cost
of inputs, it might experience higher risks of losses on its revenues. Nevertheless, Smart Coffee firm operations
can also become influenced by the quality of products produced for the customers. The competition feature that
is installed by the other market peers determines the quality of the product that the firm should provide.
Two Key Criteria
The two primary criteria to assist Smart Coffee firm in maintaining its beachhead customers are overall
cost leadership and focus. Based on the total cost leadership strategy, the firm practices cost minimization on
product sales and frequent customers. Reducing the cost of coffee products to regular customers helps the firm
in keeping them despite the rising competition and commodity substitutes. The strategy also defends the
company against potential buyers who might consider becoming clients of other competitors. The focus criteria
enable Smart Coffee firm to target low and middle-income individuals within the social and learning places.
The strategy allows the firm to serve its target group more efficiently than the competitors operating broadly
within the commercial settings.
Key Potential and Future Competitors
The critical potential and future competitors of Smart Coffee firm include Starbucks, McDonald’s,
Dunkin’ Donuts, Caribou Coffee, and Peet’s Coffee firm. Starbucks’ company is the next competitor for Smart
Coffee Company due to its established brand and strategies involved in product development. McDonald’s is
also a potential threat to the firm due to its improved coffee quality and growth strategy penetration within the
market. Dunkin’ Donuts’ firm poses a strategical threat based on product differentiation and cost reduction to
attract more customers. The Caribou Coffee firm is a future threat for Smart Coffee Company due to its fresh
and quality coffee products in the market. Peet’s Coffee is also a potential and next competitor for Smart Coffee
firm based on its dedication to maintaining a product-price-value equation for the market improvement.
Competitors’ position graph
6 represent Starbucks Company
2 represent McDonald’s
1.8 represents Caribou Coffee
-4 represent Smart Coffee firm
-6 represent Peets’ Coffee firm
-4 represent Dunkin’ Donuts coffee firm
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Cost of Goods Sold
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