The Coffee Bean & Tea Leaf Swot Analysis Mohd Rizal Kismath Batcha 2007

SWOT ANALYSIS

STRENGTH

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Recruitment, training and recognition program

The Coffee Bean & Tea Leaf

has established a regional office in Singapore to provide training andrecruitment support for the region. The previous owner provides no assistance in recruitment of keymanagers. They were recruited with the assistance of a local consultant.Then each outlet of

The Coffee Bean & Tea Leaf

can lead and control by the manager who issuitable enough and have knowledge and experience about the region. Then they always have thegreatest ability to find suitable adaptable strategies. In additional, special training is provided to staff to be more forward in greeting and helping the customers.

The Coffee Bean & Tea Leaf

has managed to maintain several traditions assecrets of their success, one of which is having their Team Members provide eachcustomer with a Total Quality Experience inspired from the company’s CoreValues, F.R.O.T.H: Friendly, Respect, Ownership, Teamwork and Honesty. When

TheCoffee Bean & Tea Leaf

(The Coffee Bean) stores open their doors, they aren’t justopening them to customers—they are opening them to new Team Members, too.

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Company’s marketing strategy

All the stores of

The Coffee Bean and Tea Leaf

were located at high traffic, high visible locations ineach Asian market. That the market entry strategies have found to be used by

The Coffee Bean and Tea Leaf

in managing their foreign franchisees when expanding into Asia include master franchising andcompany owned-stores. The marketing approach is essential to gain a competitive advantage for

TheCoffee Bean & Tea Leaf

in the foreign market. The construct included market entry, site location, andmarket positioning. The reason for

The Coffee Bean & Tea Leaf

to choose master franchise as its formof franchising is because of that the master franchising was the most popular mode of entry into distantand cultural dissimilar market such as Asia.

The Coffee Bean & Tea Leaf

found that the sale of a master franchise as a quick “off the peg”method of establishing a franchise operation has often encountered problems related to differences inthe social, economical and cultural environment of the two countries which have necessitated

The Coffee Bean & Tea Leaf Swot Analysis Mohd Rizal Kismath Batcha 2007

substantial adaptations and modifications to the original product, systems and marketing.Instead of sub-franchising the units, the master franchisees prefer to own and run the entire unit.When the CEO of

The Coffee Bean & Tea Leaf

was asked why, he said: “The reason is attributedlargely to be limited size of the marketplace as the products are targeted at specific niche rather than thegeneral public…coupled with the high cost of rent, franchisees will not to be financially viable if theownership is limited to one or two stores.” It entered Singapore, Malaysia, and Taiwan by master franchising. In the other hand,

The Coffee Bean & Tea Leaf

prefers to use company-owned stores inHong Kong, Australia and United States. Whereas for complex markets such as Japan, Philippines andthe Middle East, franchising is more favored.

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Company’s franchise practice

The Coffee Bean & Tea Leaf

encourage information exchange between franchisor and franchisee to geta better understanding about the environment and problems which faced by the franchisee. Regular communications were made between the franchisor and franchisees during early stages of expansioninto a region.

The Coffee Bean & Tea Leaf

also provides franchise training to the franchisees and keymanager. For example, the first master franchisee and key managers spent 6 weeks training in theUnited States.Overall

The Coffee Bean & Tea Leaf

appears to be making few modifications for their international franchise agreement, which is the template used for domestic franchising. These smallfirms rely heavily on the professional expertise and advice of their solicitors who specialize in domesticand international franchising. Therefore, having an appropriate solicitor who specializes in internationalfranchising will compensate for the lack of the ability to negotiate the contractual modifications andhandle contract enforcement to help

The Coffee Bean & Tea Leaf

build a good and long-termrelationship with its franchisees.

The Coffee Bean & Tea Leaf Swot Analysis Mohd Rizal Kismath Batcha 2007

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Intelligence of the leader

The Coffee Bean & Tea Leaf

was established by Hyman in 1963 opening its first store in Brentwood,California which continues to operate today as one of our highest volume and highest profile stores.This achievement comes from the intelligence of the franchisor; Hyman awarded Sunvic the master franchise rights for Singapore, Malaysia, Taiwan and Australia for 20 years. Over the next threemonths, a six-weeks training was provided in the U.S. to key managers in product knowledge such ascoffee and tea but nothing management in stores.The decision of Hyman to identify the master franchisee characteristics that is required for success in Asia. However, no research has hitherto been done, especially in Asia, in determiningdesired master franchisee characteristics. The master franchisee characteristics associated with successin Asia are financial strength, entrepreneurial and like-mindedness. The master franchisee owns ahighly successful luxury watch distributorship and regional entertainment company in Asia, owns andoperates 63 outlets in Singapore, Malaysia and Taiwan.Hyman came to Singapore for a couple of weeks to assist in the opening of the inaugural store.This was the first time they had ever set foot in Singapore. Victor recalled that early battles that werefought the Hyman over changing menu and operational procedures. As Victor’s recalled: “I wanted toexpand the menu to include sandwiches as Singaporeans need to have food with their coffee. I felt thedrinks were too sweet for Asians, so I proposed some change. The negotiations were not easy becauseto tell them it was like an insult- ‘You are a franchisee and you’re telling me what to do?’”For the current owner, Victor undertakes evaluation of government policies on an ad hocmanner because he believes in unsolicited enquires only. He has extensive knowledge of operating inAsia. Victor cautions that although the Asian youth market is highly brand conscious, they are very perceptive when it comes to food. Victor admits that those

The Coffee Bean and Tea Leaf

outlets insuburbs of middle to high socio economic groups are performing financially better than those of low