Coffee Delights aim is to grow, therefore they have to different options to develop their Brand. One of this is to expand further in the UK This would be a good idea because the y already have a strong brand with 6% market share in the UK. That means that they have already knowledge about the Market in the UK and because of the high rate of market research. This leads to the knowledge that the company know how the have to do promotions. Also they are competitive because of there very low prices, which is in Porters strategy the Price leader. That means that their prices are highly competitive Like in 2006 their price of a cup of espresso were 7.62% lower than the competition. The ARR would be 11.6% if they would invest into new shops in the UK. That means quite a high return of their invested money over a period of 4 years. Like the Payback would be 2 years and 11 months, this could lead to a small range where this profit would not be so high and this leads to that they can invest into the high wages from the management team. This causes more motivation within the management team.
However it would nit be a good idea to invest into new shops in UK because the labour turnover is quite high which means they already have to spend a lot of money on recruitment and training of workers from the existing shops. Also the HR is high which means that they workers are getting low wages, which causes demotivation of the worker, like there are always a lot of strikes in an Outlet in London. And this could also effect the costumer service and the products. This leads to a bad brand reputation a really high competitive market. Which causes decreasing of the 6% market share even when they would open 20 new stores in the UK.
The second opportunity would be to develop into a new market in Romania. So they would open 20 new shops into a not established market. That means that they could establish their brand early in this fast growing market where is limited competition, 25% in retail sales but only 5.9% for coffee shops. Therefore they would get financial support From the EU. They want to invest 17.000 mil pounds over the next 7 years. That means that they would have a high cash flow when they would set up the shops in Rumania. The ARR would be with 17.55% higher than
