Report
Report
Report
Table of Figures
Figure 1. PESTLE analysis ..................................................................................... 3
Figure 2. Porter's Five Forces model (Grundy, 2006) .............................................. 4
Figure 3. Resources and Capabilities ..................................................................... 5
Figure 4. VRIO analysis ........................................................................................ 6
Figure 5. SWOT analysis ....................................................................................... 7
Figure 6. TOWS analysis ....................................................................................... 7
Figure 7. SAFe evaluation ..................................................................................... 9
I. Introduction
Mad Koffee, a Bangladeshi apparel brand founded in 2017, initially focused on T-shirts
with relatable quotes. Despite early success, it faced challenges like quality control issues,
intense competition, and platform dependency risks. This report will discuss the strategic
position of the company by using tools to identify external and internal factors, and then
conducting a SWOT analysis. Based on it, four strategies will be provided as the TOWS
matrix and evaluated by SAFe tool.
This section will analyse the strategic position for Mad Koffee by using several
frameworks such as PESTLE, Porter’s Five Forces, VRIO and SWOT.
1. External factors
1.1. PESTLE analysis
a) Political
Government policies regarding labour rights and environmental standards influence the
company's supplier selection process, as highlighted by the difficulty in finding eco-friendly
suppliers due to regulatory constraints. Additionally, changes in international trade policies
impact companies' ability to secure international deals, particularly concerning the
requirement for eco-friendly production practices (Zaman and Chowdhury, 2022).
b) Economic
Since 2016, the e-commerce market in Bangladesh has experienced significant growth,
presenting numerous opportunities for Mad Koffee to penetrate the market. However, this
growth also poses challenges for the company as both domestic and international
competitors are entering the market and heavily investing in social media channels. Mad
Koffee's primary sales channel, F-commerce, has also seen increased competition (Zaman
and Chowdhury, 2022).
c) Social
Bangladesh has young population with 43% of its population under the age of 25 (CIA,
2018). The populace exhibits a preference for shopping via social media platforms, such as
Facebook. In terms of shopping behaviour, consumers in Bangladesh prefer to interact with
products before making a purchase, and cash transactions are prevalent due to the limited
popularity of bank accounts. Additionally, they are significantly influenced by social media
(Zaman and Chowdhury, 2022).
d) Technology
The rise in smartphone and internet usage in Bangladesh has boosted F-commerce
growth, expanding businesses' customer base on platforms like Facebook (GSM Association,
2018). However, Facebook's algorithm changes have made visibility a paid feature, forcing
businesses to allocate budgets to sponsored content.
e) Legal
Businesses finds it difficult to close foreign contracts because they are all stipulating that
clothing be produced in an environmentally sustainable manner. International firms placed a
strong emphasis on adhering to environmental rules and labour norms, such as those set
forth by the International Finance Corporation and the International Labor Organization.
f) Ecological
The difficulty in finding suppliers that ensure environmental friendliness and safety,
meeting international standards in Bangladesh is great, affecting supply chain and
operational sustainability and the ability to maintain brand reputation and long-term viability.
1.3. Conclusion
Mad Koffee has potential growth opportunities in Bangladesh's e-commerce market and
partnerships with international brands. However, fierce competition, new entrants, market
saturation, and the struggle to find eco-friendly suppliers pose threats to its market share,
profitability, and supply chain sustainability.
2. Internal factors
This section will point out the resources and capabilities of Mad Koffee, then provide the
VRIO analysis to assess the possibility of achieving sustainable competitive advantage for
Mad Koffee.
iii. Stakeholders
Customers, staff members, suppliers, investors, and the Bangladeshi community are all
considered to be stakeholders in Mad Koffee. Consumers are important stakeholders
because they influence the company's reputation by influencing income through
merchandise sales and by expressing satisfaction or discontent with the goods and services
provided (Nguyen & Leblanc, 2001). The success of the company also depends on its
employees, especially the in-house artists and social media managers, who are crucial
stakeholders with innovative ideas and unwavering commitment. Suppliers also have a big
impact on Mad Koffee's operational effectiveness by making sure that goods are produced
on time and that resources are procured.
iv. Governance
Mad Koffee's governance structure when startup is informal, with decision-making driven
by Amin, the founder. However, as the company grows and faces increasing complexity in
its operations, establishing formal governance practices becomes essential for ensuring
transparency, accountability, and compliance with legal and regulatory requirements (Bui &
Krajcsák, 2023). This may involve the formation of a board of directors or advisory board,
the development of corporate policies and procedures, and the implementation of internal
controls to mitigate risks and safeguard the interests of stakeholders.
v. Organisational culture
The culture at Mad Koffee is fosters a culture of creativity, innovation, and customer-
centricity, evident in its emphasis on unique designs, engaging social media presence, and
personalized customer experiences. Additionally, Mad Koffee values teamwork, collaboration,
and inclusivity, fostering a supportive and dynamic work environment where employees are
encouraged to share ideas and contribute to the company's success. As the company
evolves, maintaining and nurturing its culture becomes crucial for preserving its identity,
attracting, and retaining talent, and sustaining its competitive advantage in the apparel
market (Hector & Cameron, 2023).
vi. Conclusion
Mad Koffee has strengths in physical and human resources, financial management, and
stable revenue. However, weaknesses in supplier sustainability, negative brand reputation,
and increased competition and algorithm changes hinder its growth. A strong culture of
innovation, customer-centricity, and effective governance can help overcome these
challenges.
3. SWOT analysis
Based on PESTLE, Porter's Five Forces and VRIO analysis above, the SWOT analysis is
presented in the following table.
Based on the PESTLE, Porter's Five Forces, and VRIO analysis above, the SWOT analysis
is presented in the following table.
The cooperation strategy with CK Conan takes advantage of the strengths of strong
brand, reputation, and talented personnel along with the opportunity to expand into
international markets to capitalize on growing demand for trendy lifestyle merchandise in
new regions. Mad Koffee can apply market development direction, which refers to offering
existing products to new markets (Scholes, Johnson, & Whittington, 2002). The company
will sell existing products to new international markets where CK Conan already has a
presence. Regarding cost level, Mad Koffee should consider applying Differentiation
strategy. According to Wang, Lin, and Chu (2011), differentiation is about offering
consumers convincing arguments for choosing the product over less distinctive alternatives
while maintaining a premium pricing that more than offsets the higher production expenses
(Wang, Lin, & Chu, 2011). Mad Koffee may distinguish itself apart from competitors in the
global market by providing distinctive and fashionable products. The company also can
establish itself as a luxury brand and charge more for its goods by focusing on design,
quality, and brand reputation. The collaboration requires careful consideration of several
factors. Cultural adaptation is crucial to ensure the brand resonates with local consumers,
requiring tailored marketing efforts and product offerings to suit each target market's
preferences and cultural nuances (Magnani, 2022). Market research is vital to understand
consumer preferences, competitive landscapes, and regulatory requirements, with
inadequate research potentially leading to misalignment with market demands and
ineffective market penetration (Morgan et al., 2019). Finally, Amin should weigh the
potential benefits of collaborating with CK Conan, such as accessing new markets and
resources, against the loss of ownership, because he concerns about his retaining about full
right over Mad Koffee.
Mad Koffee applies this strategy by forming partnerships with physical stores, pop-up
shops, and small retailers to have a real-world presence in important markets. By having
more ways to sell its products, the company can overcome its reliance on online platforms
and reach more potential customers. Even though online shopping is growing rapidly,
there's still a lot of potential for Mad Koffee in the offline market. This is based on
customers' preference to interact with products before buying and their preference for
paying in cash. The company will use a market development strategy to sell its existing
products in this new offline retail market. As for pricing strategy, Mad Koffee might use a
differentiation focus strategy, which involves making specialized products for a niche market
segment (Wang, Lin, & Chu, 2011). The main customer groups that Mad Koffee plans to
target as it expands into the offline market are millennials and Gen Z consumers. While the
strategic alliance with retail partners can mitigate the initial capital investment, it may result
in a lower overall profitability compared to direct retail operations. The collaboration with
multiple retailers in the same market could potentially lead to channel conflicts and
competition among the retailers (Aithal & Maurya, 2017). Therefore, a judicious selection of
partners and clear distribution agreements are important. Moreover, delegating inventory
management to retailers could result in stockouts or overstocking (Bouti, Boukallal, & El
Khoukhi, 2023). Hence, it is crucial for Mad Koffee to establish transparent communication
channels and implement robust inventory tracking systems to prevent lost sales
opportunities.
Mad Koffee can enhance its supply chain by instituting a stringent supplier
assessment process, advocating for transparency and sustainability, and aligning with
environmentally friendly suppliers. This strategy is designed to tackle supply chain issues,
source sustainable suppliers, and minimize the risk of quality control problems, product
defects, and adverse publicity. By prioritizing ethical sourcing and sustainable production
practices, Mad Koffee can position itself as a socially responsible brand, appealing to
consumers who prioritize ethical consumption and high-quality products. In addition, by
diversifying its customer base and targeting segments interested in sustainable and ethical
consumption in new markets, Mad Koffee can adopt a market development strategy,
potentially reducing competition in its current market. However, Mad Koffee's sustainability
initiatives may necessitate higher production costs, which could affect profitability. According
to Veltri et al. (2023), transparent communication is essential for fostering consumer trust
and credibility (Veltri et al., 2023).
The strategic options drawn from the above TOWS analysis for Mad Koffee include a
range of approaches that aim to leverage internal strengths and address weaknesses while
capitalizing on external opportunities and minimizing weaknesses. threat. To evaluate each
option to determine the best option to recommend for adoption, the SAFe tool will be used.
Suitability: The SO strategy (Collaboration with CK Conan) received the highest score of 5,
indicating its strong alignment with Mad Koffee's strengths and opportunities. This strategy
leverages the company's strong brand reputation and talented personnel to tap into new
international markets. In comparison, the ST strategy (Launch New Products) scored a 3, as
while it capitalizes on Mad Koffee's strengths in human resources, it may face challenges in
new product development maintaining cooperation with influencers. The WT strategy
(Improve Product Quality Control) also scored a 3, recognizing its potential to address
threats related to product quality issues but acknowledging the complexity of supply chain
management. The WO strategy (Expansion into Offline Retail Channels) scored the lowest at
2, as while it may offer opportunities for market expansion, it presents challenges in terms
of offline retail operations.
From the analysis and evaluation above, the SO-internationalization strategy by cooperating
with CK Conan is the most recommended option for Mad Koffee. The ST is also an option
worth considering, but it requires effective market research capabilities and a source of
investment capital for development, marketing, and promotion.
V. Conclusion
In short, the report discussed the strategic position of Mad Koffee using different tools to
indicate external and internal factors, thereby conducting a SWOT analysis, and providing 4
strategies based on the TOWS matrix. The SAFe tool was used to evaluate the proposed
strategies and concluded that cooperation with CK Conan was the most suitable choice for
Mad Koffee.
VI. References
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