CAFÉ BEAM

EXECUTIVE SUMMARY

Café Beam is a privately owned coffee house with the purpose of musing specialty coffee
in the coffee shop industry in Bulacan. The operation of the café commenced at the Province of
Bulacan through the leadership of the Ms. Analyn Cundangan as a coffee stall/booth in 2019. It
has been registered at the Securities and Exchange Comission (SEC) on June 2021 as a coffee
house.
Currently, the company operates at Unit 1-2 Pointy A Bldg, DRT High Way, Tarcan,
Baliwag, Bulacan 3006. Up to this date, the sole ownership of the café is with Ms. Analyn
Cundangan.
The target customer of Café Beam are the general public of Bulacan. It has a generic
strategy of being different in the coffee industry through being the first to introduce and offer
specialty coffee in the locality.
The major concern for Café Beam is the inventory management and marketing strategy
of the company.
At present, the inventory management of the business practices safety stock strategy
where a bulk of inventory materials are maintained by the company. This strategy, though may
cause efficiency issues in the resource allocation of the business, is still effective for the
business.
Also, the organizational management and market penetration of the business has also
caused major concerns. With the tough competition in the market, the marketing approach of
Café Beam has low presence in the social media aspect. Furthermore, the micromanaged system
of organization, however effective it is, causes some concerns as well especially concerning
urgency in addressing problems.
To fully assess the business’ competitive position in the market, the researchers utilized a
variety of tools to grasp the external and internal environment of the company. Through the
Internal-External Factor Evaluation Matrix, the researchers were able to extract the ideal strategy
to implement for the business which is the Grow and Build Strategy through market
penetration, market development and product development.

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 As a result of the strategy matching tools, the researcher recommended Café Beam to
intensify its marketing strategies and activities through establishing a social media marketing
roadmap and curating effective advertisement materials to promote specialty coffee in
consumers’ consciousness.
Second, to invest in the procurement of production equipment and machineries that will
further enhance their food and beverage quality and foster more profound coffee shop experience
for customers.
Third, to strengthen good public relationship credibility through different CSR activities.
It has been discovered that part of the values that Café Beam upholds is corporate social
responsibility. Managing this activity and maximizing its potential will eventually help the
marketing and image of the business.
Fourth, to increase branding, customer relations, and customer loyalty through rewards,
memberships and other offerings. Customers are fond of having many avenue to interact or be
part of the business. It has been identified that Café Beam has no other offerings apartvfrom food
and beverage.
Lastly, the management must invest on an Enterprise Resource Planning System that will
aid the business in the monitoring and management of business’s finances and operation aspect,
which includes the inventory management. Instead of allocation a large portion of the business’
resources towards inventory stocking, the company must apportion the resources towards the
ultimate goal of profit maximization for the stockholders.
Overall, the researchers can ascertain that with the proper implementation and effective
execution, the proposed strategies for Café Beam will reap maximum rewards for the
stockholders.

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 TABLE OF CONTENTS

EXECUTIVE SUMMARY.......................................................................................................................ii
CHAPTER I...............................................................................................................................................1
INDUSTRY ANALYSIS............................................................................................................................1
1.1 Definition of Industry....................................................................................................................1
1.1.2 Coffee Shop Industry in Bulacan.....................................................................................................4
1.2 PESTLE Analysis..........................................................................................................................4
1.2.1 POLITICAL...............................................................................................................................4
1.2.2 ECONOMIC..............................................................................................................................5
1.2.4 TECHNOLOGICAL.................................................................................................................4
1.2.5 LEGAL.......................................................................................................................................6
1.2.6 ENVIRONMENTAL.................................................................................................................6
1.4 Major Industry Players...........................................................................................................11
1.5 Competitive Profile Matrix.....................................................................................................17
CHAPTER II...........................................................................................................................................29
COMPANY ANALYSIS.........................................................................................................................29
2.1 Company Background.............................................................................................................29
2.3 Customer History.....................................................................................................................31
2.4 Organizational Diagnosis and Value Chain Analysis............................................................32
2.4.1 Organizational Diagnosis................................................................................................32
2.4.2 Value Chain Analysis.......................................................................................................34
2.5 Financial Analysis and Conclusion.........................................................................................36
2.5.1 Statement of Financial Position/ Balance Sheet....................................................................37
2.6 Strengths and Weaknesses of Café Beam...............................................................................40
2.6.1 Strengths...........................................................................................................................40
2.6.2 Weaknesses.......................................................................................................................42
2.7 Internal Factor Evaluation Matrix and Conclusion..............................................................43
2.8 Strategic Issues facing the firm...............................................................................................44
CHAPTER III..........................................................................................................................................46
STRATEGY FORMULATION..............................................................................................................46
3.1 Strategic Option: SWOT Matrix............................................................................................46
3.1.1 S-T Strategies..........................................................................................................................47

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 3.1.2 S-O Strategies..........................................................................................................................48
3.1.3 W-T Strategies........................................................................................................................49
3.1.4 W-O Strategies........................................................................................................................49
3.2 Strategic Option: Internal and External (IE) Matrix...........................................................50
3.3 Vision and Mission of Café Beam...........................................................................................51
3.3.1 Proposed Vision Statement....................................................................................................52
3.3.2 Proposed Mission Statement:.................................................................................................52
3.4 Generic Strategy......................................................................................................................53
3.5 Present Strategy.......................................................................................................................54
3.6 Objectives.................................................................................................................................54
3.6.1 Strategic Objectives................................................................................................................55
3.6.1 Financial Objectives...............................................................................................................55
3.7 Proposed Strategy....................................................................................................................55
CHAPTER IV..........................................................................................................................................60
IMPLEMENTATION.............................................................................................................................60
4.1 McKinsey 7S Framework..............................................................................................................60
4.1.1. Hard Elements.................................................................................................................60
4.1.2. Soft Elements....................................................................................................................62
5.2 Balanced Scorecard.................................................................................................................65
5.1 Summary Results...........................................................................................................................69
5.2 Attainment of Objectives...............................................................................................................70
5.3 Financial Projection Assumptions................................................................................................70
5.4 Projected Financial Statements....................................................................................................71
5.5 Projected Financial Ratios............................................................................................................73
REFERENCES........................................................................................................................................74

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 CHAPTER I
INDUSTRY ANALYSIS

The industry analysis section of strategic management is a mechanism to understand the

competitive dynamics of the industry. It is a tool that helps identify key external factors essential
in the assessment of the potential opportunities and imminent threats relative to the business
operation.

1.1 Definition of Industry

Coffee Shop Industry are establishments that promote and sell easy and accessible food
and beverages specializing in coffees, and other drinks such as smoothies and juices, light food
menus (e.g., sandwiches, salads, desserts, cakes, pastries), and other coffee related products
such as ground coffee beans, coffee mix, tumblers, mugs, and alike.
There are 3 different kinds of coffee shops in the coffee world. They are called “waves.”
The term Wave of coffee refers to a period in time or stage in the coffee industry, there have
been 3 in total. These waves represent big changes in the industry and also the changes in the
global culture brought by coffee itself (Rothgeb, 2002).
Each wave initiates with a big change, to make a clear example one would compare
these changes to the ones produced by the first or the second industrial revolutions, after these
changes the world of industry was changed permanently, so as coffee has had disruptive
changes after each wave.

a. First Wave
The first wave dates back to the 1800s when the consumption of coffee started to
grow at exponential levels, this happened because finally people started to realize the
potential behind this beverage and started buying it regularly. This brought a big
opportunity for coffee entrepreneurs who saw a big opportunity and had exponential
growth in their coffee sales.
The most important point of this wave was to make coffee a basic item that
could be found in every household. In this period people cared only about getting the
“caffeine kick” more than the quality, the origins of the coffee were not important as
well as the flavor. The key factors were the convenience and accessibility of this

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product. Some of the important figures/companies in this wave are: Folgers, Maxwell
House, Mr. Coffee, Nescafé, Hill Bros Coffee, Satori Kato.

b. Second Wave
The second wave started in the 1970s, around the time that Starbucks started
growing and having more influence in the coffee industry. This wave happened mostly
because coffee consumers started to appreciate coffee more and consequently wanted to
taste better qualities and get to know the origins of their coffees.
This wave transformed the coffee culture into a more relaxed one. Starting with
the change in the architecture and interior design of coffee shops, this was made so
people felt more comfortable and also to justify the prices which started to rise mostly
because the coffee sold in the second wave coffee shops was of higher quality.
Another characteristic of this wave is that coffee shops started creating more
coffee-based drinks, such as frappuccinos and other inventions to appeal to the more
general public and not just adults. Some important figures/companies for this wave are:
Starbucks, SCAA, Peet’s Coffee & Tea, George Howell, Howard Schultz.

c. Third Wave
Consumers in this wave are much more interested in having a great cup of coffee
that suits the different tastes. Coffee starts to have more and more similarities with wine,
people care much more about the origins of the coffee, the processes involved and the
way coffee is brewed.
An important feature of this wave is that of the Specialty Coffee which was a
turning point on the coffee industry. The quality of the coffee became very important,
and with it, a lot of other aspects of the coffee such as the formation and professionality
of the barista, the traceability of the coffee beans, micro roasters and fair-trade coffee
just to mention a few.
Baristas in this wave have earned a lot of respect because finally their
knowledge is being put to use, they are responsible behind the creation of a great cup of
coffee that could make coffee lovers’ day better. They know the whole process, from the
selection of the green beans to the roasting, to the brewing and some times the

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 preparation of a great drink.
Another important characteristic of the third wave is the industry’s focus on
sustainability on the whole supply chain. With initiatives such as fair trade coffee which
protects the coffee farmers by paying them a fair price, the usage of agricultural
products that won’t be harmful to the consumers and the collaboration between all of the
involved in the coffee industry to make it a more sustainable one, make the third wave
more of a global stage that affects in a positive manner everyone involved in the coffee
world from the farmer to the consumer, from the seed to the cup.

1.1.1 Coffee Industry in the Philippines

Just like its flavor, Philippine coffee has a rich history. The first coffee tree was
introduced in Lipa, Batangas in 1740 by a Spanish Franciscan monk. From there, coffee
growing spread to other parts of Batangas, allowing the province to grow in wealth over the
decades. Lipa eventually became the coffee capital of the Philippines.
The Philippine coffee industry is finally getting a big boost from the government as the
Department of Trade & Industry and the Dept of Agriculture are set to work hand in hand for its
development. Both agencies are aiming to keep the Philippine coffee industry at par with
Brazil, Colombia, Vietnam, the Honduras and Indonesia.
The Philippines aims to be one of the top producers of top-grade coffee. With the
Philippine Coffee Industry Roadmap 2017-2022 now signed by President Duterte. With the
roadmap, the Philippines will have a coffee industry that is cost-competitive, reliable and
environment-friendly. It will also be aligned with global quality standards and will provide
sustainable benefits to farmers, processors, traders and exporters as well. Not to be missed is the
fact that a much-improved coffee industry will help alleviate poverty and help us attain food
security.
Filipinos have a love of coffee and while the country has long been renowned for its
love of instant coffees, there is a growing number of coffee shops and an increased love of
specialty and brewed coffee. Covid saw the country’s love and purchase of coffee stall
somewhat in 2020, but it is expected not only to return to pre-pandemic levels but to surge
above them by 2025.

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 On the succeeding parts in this chapter, the researchers focus now on the second and
third wave coffee industry scenario in Bulacan where Café Beam, the subject of this strategic
paper, is located and being marketed. This delimitation of the scope is done in order to provide
a clearer and more accurate study for the business.

1.1.2 Coffee Shop Industry in Bulacan

Originally a rural area, it is quite natural for Bulakenyos to drink coffee especially in the
morning. In fact, coffee is one of the beverages that people store as common commodity. Every
household keeps containers of coffee and sugar along with other household’s basic goods. And
now as the province continue their venture of urbanization, they now included coffee as part of
their industry.
Coffee shops and restaurants are sprouting like mushrooms in the recent years in the
province of Bulacan most especially in Malolos, Baliwag, Bocaue, Sta. Maria, Marilaou,
Pulilan, Plaridel, Meycuayan and San Jose Del Monte even during the pandemic.
Coffee shops in Bulacan became a popular venue for business meetings, quick get
together with family or friends, and even some alone time studying for school, watching
movies/series or listening to music. Each shop has its own well-crafted menu from their
signature coffees, ice blended beverages, cookies, cakes, salads and sandwiches, pasta dishes
and some are even offering rice meals to attract more customers and create loyal ones.

1.2 PESTLE Analysis

PESTLE Analysis is the assessment of the external factors that have an impact on the
competitive environment and operation of the industry. It provides the reader with a “bird’ eye
view” of the industry through digging deeper on its (1) political, (2) economic, (3) social, (4)
technological (5) legal and (6) environmental aspects relevant to its development.

1.2.1 POLITICAL
Ratification of the CREATE Bill
The Department of Finance, under the leadership of the Duterte administration, has
proposed several version of TRAIN Law Package 2. It originated from the TRABAHO Bill

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which was later revised into the CITIRA Law and this 2021 the House of Representative called it
the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Bill.
In the final reading of the bill, the chamber approved the final version of the CREATE
bill, which seeks to lower corporate income tax from 30 percent to 25 percent for large
corporations and 20 percent for small and medium corporations. (Cervantes, 2021)
With this new fiscal incentive, business investors are likely to be encouraged to invest in
industries and sectors that are aligned with the government’s development agenda. Also, it can
create higher value job for Filipino workers. This bill’s incentives will be performance based,
targeted, time bound and transparent.
This CREATE Bill will be an opportunity for businesses to effectively utilize their
resources and allocate the tax savings from the Corporate Income Tax Rate for other necessary
expenditures of the entity, such as procurement of equipment (capital infrastructure) and hiring
of additional workforce (people). Also, there will be subsequent 1% decrease in Corporate
Income Tax (CIT) in the coming years until it reaches the 20% mark. (Lim, 2020)

1.2.2 ECONOMIC
Philippine Inflation Rate
The latest BSP estimates show that inflation, which has been elevated in recent months,
could peak in the third quarter of the year (July-September 2022) and remain above the target
range of 2.0%-4.0% until the second quarter of next year (April-June 2023).
Inflation is likely to slow down and settle within the target range by the third quarter of
next year (July-September 2023), as global oil and non-oil prices start to ease. The impact of the
BSP’s policy rate hikes will also help ease inflation in the second half of next year (July-
December 2023).
Specifically, latest BSP estimates show that inflation will average 5.4% this year, higher
than the previous estimate of 5.0% announced last June 23. Meanwhile, the annual inflation
forecast for 2023 is 4.0%, lower than the previous estimate of 4.2% announced in June. Inflation
in 2024 is expected to average at 3.2%, lower than the previous forecast of 3.3%.

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 Figure 1: Inflation rate in the Philippines (June 2022)

Health of the Philippine Peso

The Philippine peso hit another historic low, while equities entered bear market territory
on Tuesday, September 27, a day after trading resumed following the onslaught of Super
Typhoon Karding (Noru).
Data from the Bankers’ Association of the Philippines showed that the peso closed at
P58.99 against the United States dollar on Tuesday, 17% lower than in the same period a year
ago. Year-to-date, the peso is down by over 15%. The peso’s weakness, as well as the plunge of
most currencies, is attributed to the US Federal Reserve’s aggressive rate hikes to combat
inflation. (Rappler, September 27, 2022 Issue)

Employment and Unemployment Rate

Unemployment rate reached 5.2% in Central Luzon. In April 2022, 281 thousand of the 5.4
million economically active population aged 15 years old and over were unemployed
translating to an unemployment rate of 5.2 percent.  This was lower by 0.5 percentage point
compared with the 5.7 percent rate in January 2022. Likewise, Central Luzon’s unemployment
rate was 0.5 percentage point lower than the national average of 5.7 percent. (Divino, 2022

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 Table 1: Results from the April 2022 Labor Force Survey

Central Luzon (Region III) ranked seventh among regions with the lowest
unemployment rate in April 2022 tied with Central Visayas (Region VIII) and MIMAROPA
with 5.2 percent. Zamboanga Peninsula (Region IX) registered the lowest unemployment rate
with 2.9 percent. (Divino, 2022)

Urbanization and Industrialization in Bulacan

In the December 2 edition of Inquirer’s INQlusive webinar series entitled, Bulacan: A
Rising Business Hub, presented by business analyst and economist understood the urbanization
od Bulacan because it serves as the natural of Manila. Since the capital city is already
congested, progress and business development is moving up north (Alviar, 2022).
The Build, Build, Build program of the previous administration made Bulacan more
accessible for investments and business expansions. The province has a strategic location.
Bulacan uses this edge as the primary factor to entice business people. Named “Gateway to the
Northern Philippines,” this province is accessible to Metro Manila and directly linked with vital
provinces in Luzon. Apart from the Metro, the province of Rizal borders it to the south, Quezon
and Aurora to the east, Pampanga to the West, and Nueva Ecija to the north.
Bulacan’s 15-minute distance from Manila assures the province’s active business
environment. The province also has vast plains and coastal areas, offering more room for
development.

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 1.2.3 SOCIOLOGICAL
Coffee becoming a Global Health Trend
A recent report on eating trends found that those in millennial (aged 25 to 38) and
Generation Z (aged 18 to 24) age groups were 29% more likely to try new health food products
than any other age group. These groups are also more likely to spend time researching healthy
products online before making a purchasing decision. For many, coffee plays an important role
in a balanced, healthy lifestyle. This has been particularly evident in the rise of cold brew and
ready to drink (RTD) coffee beverages, which have been embraced by some as healthier
alternatives to energy drinks.
Another advantage of coffee in this regard is that it provides the caffeine boost that
energy drinks provide while also offering no sugar content (unless added), more antioxidants,
and no artificial sweeteners or flavorings. And while conversations about the physical and
psychological effects of caffeine have been ongoing for some time, it is important to remember
that tea, soft drinks, and chocolate all also contain it. It is not solely found in coffee.
In addition, coffee can also have benefits for those looking to cut down their calorie
intake. The Harvard School of Public Health states that the average can of sugar-sweetened
soda contains 150 calories. In contrast, an equivalent serving of coffee (340g) contains just 4
(Casselbury, 2018). Providing no sugar or sweeteners are added, swapping one can of soda for
a 340g cup of coffee can save an average of 146 calories, making it a great choice for diet
control and weight loss.
Furthermore, coffee contains important nutrients that are linked to improvements in
energy and performance, such as magnesium, potassium, and B vitamins. Studies reveal that
higher levels of magnesium can boost athletic performance, while potassium helps maintain
muscle mass and lower blood pressure (Link & Spritzler, 2022).

Hype of Café Interior Decorations

The interior decoration of a cafe represents it and creates a visual impact on the
customer. It becomes a part of the cafe’s identity. The ambiance creates a virtual impact on the
customer’s mind which makes them want to visit frequently. The interior decoration will help
decide the customer’s mood and will also affect the order placed. Interior decoration is also a
work of art, placing furniture at specific places, different arrangements, lighting, decor, the

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wall colors everything has a feel to it. The interior helps in changing the perception towards
food and ambiance (Ngulubi, 2019).
Right now, coffee shops in Bulacan came in different attacks of interior designs. Some
are bold, tacky and flamboyant. Some specializes in central themes like, plants, comics,
animal-lover, and Victorian era motifs. Some also came having minimalistic designs.

Growing and Developing Coffee Culture

The majority of Filipinos kick off their day with a cup of coffee. For a Filipino, coffee is
more than just a drink. The most typical reason why coffee is popular and loved by many
Filipinos and remains their go-to drink is that it helps them fuel their day and boost their energy.
The good news is that the Filipino coffee industry continues to evolve, according to a study
conducted by Kantar Worldpanel Philippines. Through this study, a notable shift in Filipinos’
coffee-drinking behavior has been observed, and it was concluded that 93 percent of Filipino
homes and those with older persons buy coffee mixes at least once a week. Many consumers of
mixed coffee purchases that contribute to sales growth were mainly from Metro Manila, South
Luzon and Mindanao markets. These two years of consistent growth made the Filipinos shift
from moderate to heavy coffee drinkers (Deocareza, 2015).
Even these days, there are still numerous coffee shops sprouting around Metro Manila
and in the highly urbanized cities and provinces such in particular, Bulacan. This industry has
become popular in the country, and Filipino consumers – many of whom are students doing their
schoolwork, digital nomads working remotely, especially during this time of the pandemic, and,
of course, those who want to relax and enjoy their favorite coffee drink – love going to coffee
shops.

Independent Coffeehouse Movement

In the past ten years, the number coffeehouses present in Bulacan grew rapidly. Even
during the heights of the pandemic, the industry grew much more. Industry players that have
arrive usually belong to the second and third wave of coffee shop industry. These continues
rising of players has two indications, 1) positively, it proves that Bulacan has been open for the
coffee industry and will still continue to strive. And 2) negatively for businesses, rising number
in players indicates that the number of competitors (either direct or indirect) is also rising.

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 This scenario has caused for the competition in the industry in Bulacan to be tight since a
lot of substitutes or present. However, the key to strive in this scenario is specialization of the
coffee shops involved. By successfully doing so. The players in Bulacan were able to provide
diverse and wide scale options

1.2.4 TECHNOLOGICAL
E-commerce
In 2021, the Philippines eCommerce market sales reached $17 billion, largely contributed
by 73 million online active users. This is estimated to reach $24 billion, with 17% growth
through 2025. The COVID-19 pandemic increased the eCommerce demand, with Filipinos
working and studying from home (International Trade Association, 2022).
The eCommerce growth is hindered by challenges including the Philippines continued
low rankings for mobile and fixed broadband internet speeds. In OOKLA’s April 2022 Speedtest
Global Index, the Philippines fixed broadband internet speed was 55.21 Mbps and ranked 59th
out of 182 countries, while mobile internet speed was 19.45 Mbps and ranked 95th out of 141
countries. The Philippines only has 22,405 cellular towers compared to other ASEAN countries
like Vietnam with 90,000 and Thailand with 60,000. The Philippines geographical setup requires
more than 70,000 towers to cover the entire country.
Nowadays, big brands in coffeeshops are now engaging in e-commerce such as
Starbucks, Tim Hortons and Seattle’s Best, mostly from the second wave industry. Some of them
already engage in mobile optimization through mobile applications. Though this trend is quite
not popular with third wave coffee shop industry, they could still pick-up some pieces and use it
for their advantage
.
Digital Marketing and Social Media
Filipinos are prolific social media users and actively use platforms for a whopping 10
hours per day, seven days a week. The best platforms to reach Filipino consumers are Facebook
(67 million active users), YouTube (58.5 million active users), Instagram (14 million active
users), Twitter (9.3 million users), and LinkedIn (9.2 million users). It is estimated that Filipino
social media users will reach 78.5 million in 2022 (ITA, 2022).
In this modern age, businesses should capitalize on the use of the internet and social

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media platforms such as Facebook, Instagram, Twitter, YouTube and even Tiktok to advertise
their products and improve their customer reach. According to forbes.com, businesses with an
established and well-crafted website is perceived by clients to be more credible and trustworthy.
There are chances that several businesses offer the same product, like in the garments industry,
but a website with all the information needed by the customer can be a competitive advantage for
the business. A website on the internet can reach more client overall the country without the
hassle of having to travel to the place.
Based on the survey conducted by the Philippine Statistics Authority, the Information
Economy of the country reported 44.9% of business establishments maintaining a website of
their company. It is higher than the 2015 survey which indicated that 29.5% of the businesses
have a website (Philippine Statistics Authority, 2020)

Online or Cashless Payment

In 2019, the Philippines Central Bank reported that 51% of Filipinos are unbanked and
only 8% use credit cards.  Filipinos prefer cash-on-delivery payments and often use partner
payment centers such as large convenience stores and e-wallets such as GCash and
PayMaya. Philippine credit card users are wary of online transactions due to hacking incidents
and weak cybersecurity protection in the country (ITA, 2022).

Rising availability of specialty coffee machines for home use

Home beverage appliances have risen in popularity for two main reasons: 1) they are more
convenient than shopping at a store or café for drinks, and 2) they offer greater customizability.
If these factors give home beverage machines an advantage, it is not a surprise that craft coffee
makers have become the most popular (Foley, 2016). People tend to consume coffee at the
busiest parts of the day, which puts a premium on convenience. By brewing their own cups of
coffee, consumers can shave 20 minutes off their work commute. The convenience advantage is
a less of a benefit for soda machines and juicers. Second, coffee allows for more customization
than other types of beverages. Craft brewing at home enables consumers to personalize coffee to
their individual tastes and get the same quality and flavor of the coffee they would buy away
from home and consumers are attracted to the skill and challenge involved in crafting their own
coffees (Foley, 2016).

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 1.2.5 LEGAL
Culture of Contractualization
Contractualization is the practice of hiring employees for a short period of time,
usually 6 months and below, before terminating them. This system allows business to reduce
cost of mandatory benefits to be given to regular employees. (Osoro, 2020)
The culture of contractualization is both beneficial and detrimental for businesses. As
a benefit, this practice gives the company the advantage of reducing production cost.
However, this practice affects the turnover rate of the business’ employee and it may hamper
the business processes.
In the 2015 Integrated Survey of Labor and Employment of the Philippine Statistics
Authority, there are 7 million Filipino workers engaged in the exploitative end of contract and
labor only contracting working arrangements. Also, the industry of manufacturing, which
includes garment factories, is found to be one of the top users of the this unethical practice.
Some players in the coffee industry patronize this kind of labor practice. If
contractualization truly ends, this industry will likely be impacted greatly as it relies of
contractual labor force.

1.2.6 ENVIRONMENTAL
Rising support for environmentally friendly products
Majority or 75% of Filipino consumers prefer sustainable and eco-friendly brands, a new
consumer insight survey showed. In the Who Cares, Who Does by Kantar, the world’s leading
data, insights, and consulting group, the report revealed that Filipino consumers are making
significant strides toward becoming more responsible shoppers.
Kantar observed the important role brands and manufacturers play in sustainability,
adding that 75 percent of Filipinos were actively seeking out brands that offer ways to offset
their impact to the environment. According to Kantar, majority (92%) of Filipino shoppers
preferred products made from natural ingredients, while 90% claimed that they are more inclined
to purchase locally-made items. This was because they believed the products to be healthier and
better for their overall wellbeing, and that it helped support the local economy and provided
employment to their fellow Filipinos.
The desire to seek sustainable and healthier options stemmed from the Filipinos’ concern

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for their own health brought on by the pandemic, the report said. Interestingly, having a
sustainable and eco-friendly lifestyle does not apply to affluent shoppers only, it is relevant to all
Filipinos (Magkilat, 2021).

1.3 Analysis of the Industry Using Porter’s Five Forces Model

The Porter’s Five Forces is a framework that allows a business to assess the competitive
environment of the industry it belongs to. It gives them the overview of the potential problems
they may face in the business operation. The analysis of the business industry as a whole and the
competitor’s capacity to excel is crucial in the survival of the business.
In this section, the researchers will provide an assessment of the overall competitive environment
of the coffee industry.

1.3.1 Threat of New Entrants – Strong

The strong force or threat of new entry imposes challenges to the participants in coffee
industry. In Porter’s Five Forces analysis model, this threat refers to the effect of new players or
new entrants in the coffeehouse industry. In this business case, the following external factors
contribute to the moderate threat of new entrants in the coffee industry:
• Moderate cost of doing business
• High cost of brand development

Figure 2: Coffeehouses in Bulacan

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 The moderate cost of doing business refers to the cost of establishing and maintaining
operations in the coffeehouse industry. For example, the cost of operating a small coffeehouse is
lower compared to that of a coffeehouse chain. Also, smaller cafés have lower supply needs and
corresponding supply chain costs. Despite their relatively small sizes, many new entrants can
reduce a coffeehouse’s market share and revenues. Thus, in this Five Forces analysis, this
external factor leads to the moderate threat of new entrants in the coffeehouse industry.
In relation, the high cost of brand development is viewed in the Five Forces analysis
framework as an external factor that reduces the threat of substitution in the coffee industry.
Small local coffeehouses typically do not have the resources to develop their brands to directly
compete with the foreign and big chain brands. Also, brand development takes years to reach the
level and strength of renowned brands.

1.3.2 Threat of Substitute – Strong

The strong force or threat of substitution affects the coffee industry tightly. This threat
pertains to the impact of substitute goods or services on the coffee business and its external
environment. The following external factors contribute to the strong threat of substitution in the
industry:
• High availability of substitute foods and beverages
• Low switching costs between coffeehouses and substitutes
This component of the Five Forces analysis indicates that substitutes have strong
potential to negatively impact the coffeehouse chain business. The high availability of
substitutes makes it easy for consumers to buy these substitutes instead of a certain
coffeehouse’s products. There are many substitutes, such as ready-to-drink beverages, instant
beverage powders and purees, and foods available from various outlets. These outlets include
fine-dining restaurants, vending machines, supermarkets and grocery stores, and small
convenience stores.
The low switching costs further strengthen the threat of substitutes to coffeehouse
products. This external factor is viewed in the Five Forces analysis as an enabler of consumers in
switching from one coffeehouse to substitutes. Moreover, many of these substitutes may cost less
than a coffeehouse’s foods and beverages, thereby strengthening the threat of substitution.

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1.3.3 Bargaining Power of Suppliers – Moderate
Coffee industry faces the moderate force or bargaining power of suppliers. This power is the
influence that suppliers have on a coffeehouse chain business and its industry environment. The
following external factors contribute to the moderate bargaining power of suppliers on coffee
industry:
 Moderate size of individual suppliers
 Limited variety of suppliers
 Supply shortages
The moderate size of individual suppliers is an external factor that imposes a moderate
force on Starbucks. In the Five Forces analysis framework, larger suppliers have stronger
bargaining power on the coffee business.
On the other hand, the limited variety of suppliers provides the industry with only
moderate bargaining power. For example, different suppliers may have similar supplies if they
source their coffee beans from the same region or country. In the Five Forces analysis model,
this condition enables any coffeehouses to shift from one supplier to another with moderate ease
because of these suppliers’ similarities.
The bargaining power of coffee suppliers is partially strengthened because of supply
shortages. Such shortages are linked to issues like droughts and frosts that damage crops, among
the other ecological concerns. Shortages enable suppliers to impose their demands, such as by
increasing the prices of coffee beans, thereby strengthening their bargaining power in the context
of the Five Forces analysis.

1.3.4 Bargaining Power of Buyers – Strong

Coffee industry experiences the strong force or bargaining power of buyers or customers.
This power is based on the influence of individual customers and their groups on the coffeehouse
business environment. The following external factors contribute to the strong bargaining power
of customers towards the coffee industry:
 Low to medium switching costs between coffee shops
 High availability of substitute foods and beverages
The bargaining power of consumers or buyers is among the most significant forces

15
affecting the coffeehouse industry determined in this Five Forces analysis. With low to medium
switching costs, customers can easily transfer from one coffeehouse to other brands, but there is
a huge possibility of loyalty especially to the coffee variants they adore.
The high availability of substitutes means that customers can easily stay away from the
company’s products, and opt for substitutes like instant beverages from vending machines and
home-brewed coffee from local roasteries. These strong external factors overshadow the fact that
individual purchases are small compared to Starbucks’s total revenues.

1.3.5 Rivalry of Competition – Strong

Coffee industry, especially in the food and beverage services, faces the strong force of
competitive rivalry. This force pertains to the influence of competitors on each other and the
coffeehouse industry environment. In this case, the following external factors contribute to the
strong force of competition against companies:
 Large number of coffeehouses and food service firms
 Moderate variety of businesses
 Low switching costs between coffeehouses
The large number of coffeehouses and food service firms is an external factor that
intensifies competitive rivalry in the context of this Five Forces analysis. Starbucks has many
competitors of different sizes, including multinational businesses and small local cafés.
In this Five Forces analysis of Starbucks, such moderate variety strengthens competition by
dividing the market into segments based on business specialty or strategy. In relation,
competitors are moderately varied in terms of specialty and strategy. For example, some
coffeehouses focus on local coffee varieties only.
Moreover, competition is strengthened because of the low switching costs between
coffeehouses. In the Five Forces analysis model, low switching costs reduce barriers when
customers switch from Starbucks to its competitors. Contemporary consumers tend to explore to
satisfy their curiosity especially when a new café or brand is introduced. However, after the
phase of exploration, customers still remain loyal to the brand they are pleased the most.

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1.3.6 Conclusion 

Figure 3: Porter’s Five Forces in the Coffee Industry

Even though the threat of new entrants, threat of substitute, the bargaining power of
buyers and the rivalry among competitors are deemed to be strong, and the bargaining power of
suppliers is high, business enthusiast could still be moderately attracted to the coffee industry
because of its timeless role in the market’s day-to-day life. This means that the products being
offered by the industry will continue to exist and grow into the foreseeable future.
Also, the strong rivalry of competition may be further mitigated through the
establishment of business strategies suitable for the business and its target market, and by
providing warm and high-quality service that reinforces customer loyalty. In relation,
coffeehouse’s corporate social responsibility strategy and stakeholder management initiatives
can help retain customers based on emphasis on sustainable business practices.
The strong force of competition is the combined effect of the external factors identified in
this Five Forces analysis of the coffeehouse industry environment.

1.4 Major Industry Players

In order to craft an effective and efficient strategic management, it is important to identify
and assess the major players of the industry where the business operates. This will provide the
management with an overview of the competitive advantage that the company has over its major
competitors.
For the coffee industry in the Bulacan, the researchers has identified the following major
players in the coffeehouse business.

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 Company Origin Years of Known for
Name Operation
Café+ Plaridel 9 -coffee, blended drinks, pastries, rice meals

Café Congreso Malolos 5 -coffee, blended drinks

Dog House Guiguinto 6 -coffee, blended drinks, animal lover place

Café

Café Galilea Bustos 8 -coffee, blended drinks, rice meals

Café Beam Baliwag 3 -innovative coffee blends and pastries

Table 2: Major Industry Players (Source: Yoorekka Magazine)

1.4.1 Cafe+ Coffee.Brunch.Dessert

Figure 4: Café+ logo and sample food and beverage offerings

Budget: 200 - 400 pesos for two people

Address: 3739 Cagayan Valley Road, Brgy Tabang, Plaridel, Bulacan
Operating Hours: 9AM to 10PM | Monday to Sunday

Established in September 2013, Cafe+ located 5 minutes away from NLEX Sta. Rita exit can be
considered as one of the best coffee and dessert shop in Bulacan. The menu offerings are worthy

18
of comparison to other commercialized cafes in Metro Manila. Aside from coffee and dessert,
they also offer brunch from store opening to 2PM and pasta dishes from 2PM onwards. Although
the place is situated along a busy road, it still offers a cozy ambiance whether you are seated
inside or outside the cafe. In August 2017, Cafe+ opened its first branch in Munoz, Nueva Ecija.
Must Try: Coffee, Milo Volcano, Strawberry Yogurt Smoothie, Mama's Crispy Tapa, Sausage
Feast, Red Velvet Cheesecake, Banana Caramel Waffle, Panini Sandwiches.

1.4.2 Café Congreso

Budget: 200 to 400 pesos for two people
Address: G/F Don Mar Building, Paseo del Congreso Street, Brgy Catmon, Malolos City 3000
Operating Hours: 8AM to 10PM | Monday to Sunday

Figure 5: Café Congreso logo and sample food and beverage offerings

One of the most Instagram-worthy establishment in Bulacan because of it's pastel-colored

setup. It became viral in 2017 because the cafe's interior is very much Wes Anderson inspired, it
closely resembles the set of the movie The Grand Budapest Hotel. The cotton candy pink, teal
green and gold accents provides cool and relaxing effects to the customers. Aside from coffee
and blended drinks, customera could also try their rice meals, pizza, homemade ice cream, and
pastries. The cafe shows love and cares to the environment by providing steel straw for dine-in
orders.
Must Try: Coffee, Blended Drinks

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1.4.3 Dog House Cafe

Figure 6: Dog House Cafe logo and sample food and beverage offerings

Budget: 200 - 400 pesos for two people

Address: 363 McArthur Hi-Way, Brgy Sta Cruz, Guiguinto, Bulacan
Operating Hours: 10AM to 9PM | Monday to Sunday

Dog House Cafe by BL Pet Shoppe and BarkingMad is a dog cafe, pet hotel and dog
school in one, first of it's kind in Central Luzon which opened in December 2016. For 99PHP,
two-legged visitors will have a chance to play around with their resident dogs for two hours. The
cafe allows bringing of your own dog to play with the other dogs, a pet hotel where you could
leave your dogs overnight if you are going out on a trip and a dog school where you can get your
dog to learn tricks. There is a small area at the back where humans could enjoy blended drinks,
coffee, juices, pasta, and sandwiches.
Must Try: Blended Drinks, Sandwiches

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1.4.4 Café Beam

Figure 7: Café Beam Frontdesk and sample food and beverage offerings

Budget: 200 - 400 pesos for two people

Address: Unit 1-2 Point A Bldg, DRT High Way, Tarcan, Baliwag, Bulacan
Operating Hours: 7AM to 10PM | Monday to Sunday

Cafe Beam has the minimalist, beige aesthetic pinned to a T. With simple, white furniture
and white and concrete walls, coffeelovers are sure to be able to take a great Instagram pic
wherever you’re seated. For those who are more into foodstagram photos, the coffee shop also
takes their food presentation seriously. They serve their food well-plated in white kitchenware
that’s on-theme. Typically, they serve their drinks in takeaway cups but their staff will gladly
switch the cups into fancy glasses if you ask them nicely.
The cafe has a wide selection of impressive coffee recipes. Aside from the classics –
espresso, Americano, cappuccino, and mocha – they also offer specialty coffee. These include
the Beam latte, a shot of espresso, earl grey, caramel, milk, and sweet cream – and black sesame
latte, black sesame espresso shot, black sesame cream, and milk. For a unique iced coffee option,
there’s also the apple and passionfruit cold brew coffee which is cold brew with apple and
passionfruit sauce.

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 There are also beverages for non-coffee drinkers at Beam Cafe. They have matcha, chai,
and strawberry latte, a wide range of teas, and flavored sodas. Customers can enjoy your choice
of beverage with the cafe’s croffles, a cross between a croissant and a waffle – in classic,
cheesecake, and pizza flavors.
Must Try: Beam Latte, Croffles, Croughnuts, Black sesame latte, hot chocolate, Matcha
Affogato, Udon Pasta, Brekkie Set

1.4.5 Café Galilea

Figure 8: Café Galilea logo and sample food and beverage offerings

Budget: 200 to 400 pesos for two people

Address: 1163 General Alejo Santos Hi-Way, Brgy San Pedro, Bustos, Bulacan
Operating Hours: 11AM to 12MN | Monday to Sunday

Located in front of the Galilee Wonderland Resort, Cafe Galilea is a gem of Bustos in
terms of quality of food and service. Cafe Galilea is one of the first cafes that boomed in
Bulacan. This coffee offers a wide range of menus, from different coffee drinks to foods like
different kinds of pasta and rice meals. Among the most-loved dishes served in Cafe Galilea
are Sisig Nachos, Messy Pizza Fries, Crispy Kare-Kare, and their signature cakes and coffees.
Enjoying these flavorful foods in a place with a fancy and relaxing atmosphere provides a
comforting feeling for Cafe Galilea’s customers. Truly instagrammable, the café has a very
classy and sophisticated ambiance, a great addition to Instagram feeds. As a health-friendly

22
place, Cafe Galilea also has an al fresco area, where customers can dine while observing health
protocols.
Must Try: Coffee, Blended Drinks, Rice Meals
1.5 Competitive Profile Matrix
Competitive profile matrix is an essential strategic management tool to effectively
compare the firm with the major players of the industry. Competitive profile matrix shows the
clear picture to the firm about their strong points and weak points relative to their competitors.
(Quain, 2018)
In this section of the paper, the researchers will provide a rivalry comparison of the competing
firms in the coffee industry where Café Beam is associated with under the coffeehouse industry.

1.5.1 Key Success Factors

As mentioned in the Porter’s Five Forces Model, even though the threat of new entrants,
threat of substitute, the bargaining power of buyers and the rivalry among competitors are
deemed to be strong, and the bargaining power of suppliers is high, business enthusiast could
still be moderately attracted to the coffee industry because of its timeless role in the market’s
day-to-day life.
The coffee industry is a moderately attractive industry to engage in because of the
minimal capital requirements and the continuously increasing demand for the product despite of
having a variety of substitute. However, this indicator is not enough to guarantee the success of a
business in the industry.
With the growing competition in the market, business should have these key success
factors to gain a competitive advantage over its rivals.

1.5.1.1 Product Quality

The products in the coffeehouse business, because of the tight competition, should be of
the highest standard of quality to gain a relatively good margin of competitive advantage. This
key success factor drives the achievement of the other KSF, specifically customer loyalty. It is
essential for a product related business to ensure that everything that goes out of their door is
something worth the money of their clients.

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1.5.1.2 Customer Loyalty
Customer loyalty is an essential factor for long term success. It provides the company
with assurance that a revenue will be profited from the relationship. Moreover, while customer
loyalty’s primary goal is to retain them as a customer, the end goal would be having these loyal
customers be the advocate of the company through word of mouth.

1.5.1.3 Innovative Technology, Product and Services

In this age of technology, businesses should be able to adapt to the innovations/changes
happening in the business circle. Coffee has become a daily routine in a person’s day-to-day life
and the more it is accessible to them, the higher the percentage that they will remain loyal to a
brand.
These days, social media, online and mobile applications are being utilize to make the
purchasing process easier and more convenient for the customers. Adapting this major
technological move will surely maintain a coffeehouse business stable in the competition.
Coffeehouse industry is a very tight business to be involved in due to the number of new
brands and houses entering the market. Both new and old brands must be able to make their own
signature by which customers will remember them. Also, due to the variety of substitutes and the
similarities of products and offerings, houses must continuously strive to set them apart
positively from the competition and set the bar on a product line.

1.5.1.4 Accessibility
Businesses that are fully accessible are businesses that can reach the widest possible
market. By improving their level of accessibility, businesses will be increasing the number of
people who are potential customers. Since 20% of the population have a disability, accessibility
leads to 25% more potential customers. In addition, many of these customers will be
accompanied by friends and family. For example, a man in a wheelchair will choose to celebrate
his birthday with his family in a restaurant that is physically accessible over a restaurant where
he cannot get inside. And a person with a vehicle will prefer places with parking lots.
The impact of accessibility reaches beyond those who identify as having a disability. A
restaurant that is physically accessible for someone in a wheelchair will also be accessible for
parents with prams. A menu that is easy to read for someone with a visual impairment will be

24
easier for older patrons to see without a phone powered flashlight. A restaurant with good sound
absorption will make it easier for hearing impaired diners to hear the conversation, and it will
simultaneously prevent staff from damaging their hearing in the workplace. (Euan, 2020)
1.5.2 Competitive Profile Matrix (CPM)
Table 3: CPM Matrix of the Major Industry Players
CAFÉ DOG CAFÉ CAFÉ
Critical Success Factor Weight CAFÉ+ CONGRESO HOUSE GALILEA BEAM
CAFE
R S R S R S R S R S
1 Product Quality .30 4 1.2 4 1.2 4 1.2 4 1.2 4 1.2

2 Customer Loyalty .20 3 .6 3 .6 4 .8 3 .6 3 .6

3 Innovative .25 3 .75 3 .75 4 1 3 .75 3 .75

Technology, Products
and Services

4 Accessibility .25 4 1 4 1 4 1 4 .1 4 1

TOTAL 1.0 3.55 3.55 4.00 3.55 3.55

4 - Major 3 - Minor 2 - Minor - Major
Strength Strength Weakness Weakness

CSF # 1: Product Quality

The measure of product quality is really uncertain for the researcher. However, based on
the data gathered on the company’s website, social media pages, reviews and critics from
bloggers, and the interview performed, the researchers can ascertain that all the mentioned
coffeehouses are rated as 4.0.
These cafés are well renowned in the industry because of their super quality of products
and services That enabled them to prosper and remain strong in the competition. Customers may
have experienced minor problems at some points but these coffeehouses were able to address
them properly and further fortify their brand.

CSF # 2: Customer Loyalty

As stated in the Porter’s Forces of Scale, customer loyalty in the coffee industry is very
fluid and dynamic. Consumers will always have a brand in their heart but at the same time,
always have the vigor to explore new and other brands.

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 Among the five coffeehouses in the matrix, only Dog House café has a unique market
and having no competitor on target market is a big plus. That is why it is rated as 4.0. The rest of
the coffeehouses in the matrix were rated as 3.0 because despite of their differentiations and
specialties, they all have the same target market. They all serve as a substitute to another once
customer decides to try new brands.
CSF # 3: Innovative Technology, Products and Services
In the term of innovation for products and services and based on the data gathered on the
coffeehouses’ website, reviews and critics from different blogs, and the interview performed by
the researcher can ascertain that Dog House Café and Café Beam are rated as 4.0.
Dog House Café is the first on Central Luzon to have a dog hotel, school and café in one
place. Though they have the similar product line with other cafes (infused with their own touch
of course), but what set them apart is their services for dogs, and dog-themed interiors. Café
Beam on the side is the first to offer specialty coffee in the province and brought in the town
exquisite and innovative pastries and breads. Their minimalistic interior and infrastructure also
made Café Beam a standout in the industry.
Café+, Café Congreso and Café Galilea also have superb product quality, however, their
offerings are quite similar with each other leaving customers passive in terms of having favorites
when all these houses are compared side-by-side.
In the field of technology, the five coffeehouses are already engaging different social
media platforms, cashless payments, and continuously enhancing their own websites. Though
technology already offers more advance services such as having mobile applications, these cafes
are not yet gearing on that level of advancement because it is costly.

CSF # 4: Accessibility
Being accessible means having all information in a consistent and open format, ensuring
access to everyone and making sure that the brand, location, store, and products are reachable to
all of society. The impact of accessibility reaches beyond those who identify as having a
disability.
In this light, the five coffeehouses were rated as 4.0 for factors considering accessibility.
Getting and navigating information from them were made easy because of their websites and
social media presence. Infrastructurally wise, all coffee houses have their own parking space

26
though Dog House Café only have streetside parking. Ramps were installed for those who have
disabilities and especially-made chairs and comfort rooms to attend their needs.

1.5.1 Conclusion on the Competitive Profile Matrix (CPM)

Table 4: CPM Matrix of Café Beam
CAFÉ BEAM
Critical Success Factor Weight
Rating Score
1 Product Quality .30 4 1.2

2 Customer Loyalty .20 3 .6

3 Innovative Technology, .25 3 .75

Products and Services

4 Accessibility .25 4 1
TOTAL 1.0 3.55

Overall, Café Beam garnered a total rating of 3.55 or an above average rating for the
critical success factors identified by the researcher. Café Beam, in spite of being young in the
industry, should engage more on publicity in order to attract new customers and promote loyalty.
Having an online or mobile application may be vital for accessibility and is highly
recommended, Café Beam can focus for the meantime in marketing, promotions and innovating
products. They can maximize their online presence through having different and engaging social
media accounts and activities.

1.6 Opportunities and Threats in the Coffee Industry

Based on the industry analysis conducted through PEST Analysis, the researchers has
identified the following opportunities and threats of the coffee industry. These opportunities are
the factors that industry players must capitalized on, and threats that they should mitigate/
eliminate.

27
1.6.1 Opportunities
1.6.1.1 Ratification of the CREATE Bill by the Congress.
The Corporate Recovery and Tax Incentives for Enterprise (CREATE) is a fiscal tax
incentive directed towards helping businesses to jumpstart their operation and overturn the
effects of the recent pandemic. This bill will be an avenue for the business to allocate additional
resources on other priority expenditures such as infusion of additional manpower, and
procurement of much needed equipment.
According to Secretary Dominguez of the Department of Finance, “CREATE is really
about trusting the private sector. Instead of passing funds through what tend to be less efficient
government programs, this will leave the money in the private sector’s hands to revitalize their
businesses.” (DOF, 2021)

1.6.1.2 Emergence of Digital and Social Media Marketing

In this modern age, businesses should capitalize on the use of the internet to advertise
their products and improve their customer reach. According to forbes.com, businesses with an
established and well-crafted website is perceived by clients to be more credible and trustworthy.
There are chances that several businesses offer the same product, like in the garments industry,
but a website with all the information needed by the customer can be a competitive advantage for
the business. A website on the internet can reach more client overall the country without the
hassle of having to travel to the place.
Furthermore, the use of internet or social media offers a wide array of opportunity for the
business. It can improve the line of communication between the client and the business, faster
transaction media and an alternative distribution channel. A website or a social media page can
boost the business’ knowledge of the market about the products and services of the business.

1.6.1.3 Rising support for green products and initiatives

As stated in the PESTLE Analysis in 1.2, majority or 75% of Filipino consumers prefer
sustainable and eco-friendly brands, a new consumer insight survey showed. In the report
provided by Kantar, it revealed that Filipino consumers are making significant strides toward
becoming more responsible shoppers.

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 The Nielsen Global Corporate Sustainability Report found that 66% of survey
respondents stated they are willing to pay more for sustainable goods. And, a further study
conducted by Harris Interactive found that 82% of adults claim to be well informed about brands
with a strong track record for sustainability. Therefore, those businesses wishing to thrive, attract
and retain customers must step up to these new challenges and take a step to adapt and change
towards a sustainable economy (Djanogly, 2018).
In the tightening competition in every industry, it is only a must that business be aware of
the consciousness of the market and on different matters they care about. Doing so will serve as
an opportunity for the business to expand and strengthen brand image.

1.6.1.4 Growing and Developing Coffee Culture and Experience

Millennials aren’t necessarily drinking more coffee than other generations, but they are
spending more money on coffee. In other words, they are spending more money on higher
quality coffee experiences. “Millennials have a lot of disposable income,” says Kahn. “But they
aren’t spending it like their parents did on cars and clothes. Instead, they’re spending it on a
better food and beverage experience.”
In terms of aesthetics, the interior decoration of a cafe represents it and creates a visual
impact on the customer. It becomes a part of the cafe’s identity. The ambiance creates a virtual
impact on the customer’s mind which makes them want to visit frequently. The interior
decoration will help decide the customer’s mood and will also affect the order placed. Interior
decoration is also a work of art, placing furniture at specific places, different arrangements,
lighting, decor, the wall colors everything has a feel to it. The interior helps in changing the
perception towards food and ambiance (Ngulubi, 2019).

1.6.2 Threats
1.6.2.1 Independent Coffeehouse Movement
In the past ten years, the number coffeehouses present in Bulacan grew rapidly. Even
during the heights of the pandemic, the industry grew much more. Industry players that have
arrive usually belong to the second and third wave of coffee shop industry. These continues
rising of players has two indications, 1) positively, it proves that Bulacan has been open for the

29
coffee industry and will still continue to strive. And 2) negatively for businesses, rising number
in players indicates that the number of competitors (either direct or indirect) is also rising.
This scenario has caused for the competition in the industry in Bulacan to be tight since a
lot of substitutes or present. Also, the rise of market players provides customers a wide array of
options and substitutes that may cause the decrease or difficulty to attract customer loyalty. Thus,
this movement is considered a threat to every market player.

1.6.2.2 Rising availability of specialty coffee machines for home use

Home beverage appliances have risen in popularity for two main reasons: 1) they are
more convenient than shopping at a store or café for drinks, and 2) they offer greater
customizability. If these factors give home beverage machines an advantage, it is not a surprise
that craft coffee makers have become the most popular (Foley, 2016). People tend to consume
coffee at the busiest parts of the day, which puts a premium on convenience. By brewing their
own cups of coffee, consumers can shave 20 minutes off their work commute. The convenience
advantage is a less of a benefit for soda machines and juicers. Second, coffee allows for more
customization than other types of beverages.
Craft brewing at home enables consumers to personalize coffee to their individual tastes
and get the same quality and flavor of the coffee they would buy away from home and
consumers are attracted to the skill and challenge involved in crafting their own coffees (Foley,
2016). However, this may serve as a threat to coffee shops since it will be more convenient for
customers to make their coffee in accordance with their own likings and touch.

1.6.2.3 Urbanization and Industrialization in Bulacan

Bulacan’s 15-minute distance from Manila assures the province’s active business
environment. In the December 2 edition of Inquirer’s INQlusive webinar series entitled,
Bulacan: A Rising Business Hub, presented by business analyst and economist understood the
urbanization od Bulacan because it serves as the natural of Manila. Since the capital city is
already congested, progress and business development is moving up north (Alviar, 2022).The
province also has vast plains and coastal areas, offering more room for development.
Though this movement of progress will serve as a good opportunity in having bigger
market/customer count, this can also serve as a threat since urbanization entails the establishment

30
 of numerous competitors in the market. When this happens, the growth and stability in revenue
may become difficult to achieve for market players especially those who are new and quite
common.

1.6.2.4 Rising labor and logistics cost in coffee suppliers’ province/country

The rising labor and shipping cost is an external factor that threatens not only medium
scale coffee shops but even the big names in the industry. With the global inflation rate
continuously peaking in, many industries have been affected and their expenses for production
and procuring materials have increased as well.
The basic solution for this problem is to make an increase in the products and services being
offered. However, since the rising inflation does not only affect industries but also the common
people, consumers, despite coffee being a staple part of their everyday life, may look for
alternatives. Thus, this will affect the industry in maintaining stability in cost and revenue.

1.7 ANALYSIS OF INDUSTRY BASED ON OPPORTUNITUIES, THREATS AND

EFE MATRIX
The External Factor Evaluation (EFE) Matrix is a strategic tool used to assess the company’s
external environment and identify the potential opportunities and imminent threat for the
industry players. (Sridharan, n.d.) This section of the paper will discuss the opportunities and
threats affecting the coffee industry, specifically Café Beam., the subject firm.

Table 5: The EFE Matrix of Café Beam.

OPPORTUNITIES Weight Rating Score

1 Ratification of the CREATE Bill by the Congress. .15 3 .45

2 Emergence of Digital and Social Media Marketing .10 4 .40
3 Rising support for green products and initiatives .15 4 .60
4 Growing and Developing Coffee Culture and .15 4 .60
Experience
THREATS
1 Independent coffeehouse movement .15 3 .45

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2 Rising availability of specialty coffee machines .10 2 .20
for home use
3 Urbanization and industrialization in Bulacan .10 3 .30
4 Rising labor and logistics cost in coffee suppliers’ .10 2 .20
province/country
Total Weighted Average 3.20

After conducting the External Factors Evaluation (EFE) Matrix and identifying the
opportunities and threats of the industry, Café Beam, garnered a total weighted average score of
3.20. This means that the company is above average in terms of its response to imminent
opportunities and threats.
For the analysis of the response of the subject entity to the aforementioned external
opportunities and imminent threats, the assessment are as follows:

Opportunities
a) Ratification of the CREATE Bill by the Congress.
Café Beam has been affected by the global pandemic. In their 2020 operations, they had
experience problems with the procurement of supply and cost in logistics due to pandemic
restrictions. However, it did not create a dent on their financial position because consumers still
buy their products. The rating for TECI in this opportunity is at 3.0. This CREATE Bill will be
an opportunity for the business to improve more their operation and to take the opportunities that
they failed not to due to the upset this pandemic has created.

b) Emergence of Digital and Social Media Marketing

Café Beam’s rating for this opportunity is at 4.0. Since their first operations as a stall in
2018, and as a coffeehouse in 2021, Café Beam maximize the use of the internet and different
social media platforms to market their products and services. Their quality advertisements,
promotions and engagements had made an echo in the industry making them a competitive brand
despite of their young presence.

c) Rising support for green products and initiatives

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Café Beam’s rating for this opportunity is at 4.0. Since the establishment of their coffeehouse in
Tarcan, they already took an advocacy for environmental conservation through their green
products, services and initiatives. This action has attracted more customers to them.

d) Growing and Developing Coffee Culture and Experience

Aside from their innovative pastry products and specialty coffees, what made Café Beam a stand
out in the coffeeshop industry in Bulacan is their minimalistic yet captivating atmosphere, thus
providing a new and solace way to experience coffee. With that, Café Beam’s rating for this
opportunity is .40.
Threats
a) Independent coffeehouse movement
The response rating for this external factor is 3.0. Although the subject entity cannot control
the expansion project of its competitors, this external threat can be mitigated by capitalizing on
the providing new and more improved coffee experience and digital marketing opportunity.

b) Rising availability of specialty coffee machines for home use

Same as in the previous item, the response rating for this external factor is 2.0 Although Café
Beam has no control over the consumers’ preference or desire to buy coffee machines for their
home use, they can eradicate this threat by producing products that are hard to imitate or be made
at home, and provide experience that consumers will not be able to have a taste at home.

c) Urbanization and industrialization in Bulacan

Despite having aspects to be considered as an opportunity, researchers considered this
external factor as a threat where Café Beam’s response rate is 3.0 In the establishment of their
coffeehouse in 2021, they were able to make a clear differentiation when compared to existing
brands in Bulacan coffee industry (both big and small names). Despite of the numerous new
coffeeshop brands present and/or making their presence, Café Beam is has a good edge as they
were able to determine how to play with this threat.

d) Rising labor and logistics cost in coffee suppliers’ province/country

33
 The response rating for this external factor is 2.0. Although the subject entity cannot control
the rising cost of labor and logistics, this external threat can be mitigated by building exclusive
partnerships with logistics hubs and coffee farmers. As of now, Café Beam does not have a fixed
supplier of beans since they are into specialty coffee, they procure their bean from different
farms globally depending on the quality per season produced.

1.8 CONCLUSION
To assess and evaluate the industry of Café Beam, the researchers employed the use of
PESTLE Analysis, Porter’s Five Forces Model and the External Factor Evaluation (EFE) Matrix.
The Porter’s Fiver Forces Model determined that the industry has a strong force to engaged in
and the EFE Matrix garnered a 3.20 rating for the company. It means that the company is doing
well so far in the industry, and they should improve its business strategy in terms of its flexibility
in dealing with threats and capitalizing on its opportunities

34
 CHAPTER II
COMPANY ANALYSIS

2.1 Company Background

Since its establishment in June of 2021, Cafe Beam has become the ultimate definition of
minimalist goals. Spacious and bright with its clean lines, soft hues, and zen aesthetic, this coffee
shop’s IG-worthy interiors are sleek while remaining inviting. Effortless yet intentional, its quiet
elegance encourages customers to breathe and take only what is essential. It is a coffeehouse
located at Unit 1-2 Point A Bldg, DRT High Way, Tarcan, Baliwag, Bulacan 3006 with a
primary purpose of introducing and offering specialty coffees to the locality accompanied by
their innovative food product lines.

Before Café Beam’s arrival, the owner, Ms. Annalyn Cundangan, has long been a coffee
afficionado, a pastry chef and a marketing management graduate. She aims to educate the people
about the specialty coffee and bring an enlightening experience to her customers through the
positive atmosphere, minimalistic yet elegant interiors, and sophisticated caffeine and food
offerings handcrafted to perfection.

Café beam has --- regular employees. These employees are the company’s most prized
asset. They are the bread and butter of the company. It is through their skills, values, pleasing
personality, and expertise in making specialty coffees, patisseries and other foods that made Café
Beam’s budding reputation in the business.

35
 This coffeehouse starts its operations as early as 7:00 in the morning and closes at 10:00
in the evening. Having this an early and late time of operation enables Café Beam to cater to a
wider range of customers. In the morning, the coffeehouse serves as the coffee stop and breakfast
hub of many early riders, going to their workplace, bikers engaging in a long exercise, and to
other people who has the appetite for a specialty coffee in the early morning.

Organizational Structure
The following are the key officers of Cafe Beam
a. Analyn Cundangan
Cafe Beam’s owner/founder and a graduate of Treston International College with a
Bachelor’s Degree in Marketing Management. She also studied diploma of Leadership
Management in Australian Health and Management Institute in Sydney, Australia.
She manages all the operations, from accounting, marketing and promotions, research ad
development, and all-in-all in store management of the cafe.

2.2  Products and Services

Presently, Café Beam caters the general public in the locality of Baliwag, and is
continually attracting customers from nearby towns and cities. They serve innovative food
offerings ranging from pastries, breads to diner foods, and specialty coffees whose methods in
brewing and craftsmanship is different from the methods of commercial coffee.

Since its establishment in June of 2021, Cafe Beam has become the ultimate definition of
minimalist goals. With its spacious and bright with its clean lines, soft hues, and Zen aesthetic,
this coffee shop’s IG-worthy interiors are sleek while remaining inviting. Effortless yet
intentional, its quiet elegance encourages every customer to breathe and take only what is
essential.

This nod to minimalism spills over to their limited yet impactful food offerings of
brunch, Udon Pasta, and croffle. A cross between a croissant and waffle, the Croffle is croissant
dough pressed in a waffle maker, giving a breakfast favorite the reboot customers never thought
they needed. While customers can go the sweet route with their cheesecake croffle (P250) or the

36
savory route with the pizza croffle (P235), nothing beats the classic (P160), which you can also
upgrade to à la mode (+P65).

If worked up an appetite, the Brekkie Set (P285) serves multiple breakfast staples such as
sausage, eggs, tots, mushroom, greens, and of course, a croffle, in one plate. Meanwhile, the
straightforward Shrimp Udon Pasta (P275) focuses on just one star ingredient and lets it shine
through. It may be a simple menu but it definitely packs a punch with sumptuous flavors and
quality ingredients. 

Aside from the traditional espresso-based options such as the Americano (P100) and
Cappuccino (P130), this café boasts a Specials Menu for the discerning coffee addict. Their
signature Beam Latte (P150) is a delicate balance of earl grey, caramel, and espresso, while the
Black Sesame Latte (P160) is a black sesame lover’s dream with its infused cream and espresso
shot.

Cafe Beam’s selection of non-coffee beverages is just as well thought of. Their hot
chocolate (P120) is decadent with a sinful top layer of chocolate shavings, and the Matcha
Affogato (P170) is an absolute treat for non-coffee drinkers and their ‘gram.

2.3 Customer History

The Café Beam has a diverse type of customers since they opened the coffee house. This
can be elaborately discussed in two categories: a. in terms of age bracket, and b. in terms of
lifestyle

Cafe Beam’s lists of previous and current customers are as follows:

*Customer in  terms of age bracket
Café Beam markets their products to all age groups. As per their history, Gen Z
hypes their total sales especially during afternoon and evening operations.
In terms of loyalty, Café Beam declares that their loyal customers come from Baby
Boomers and Millennials. The coffee house opens as early as 7:00 in the morning and
customer from this age group flocks to them to get their caffeine needs.
 
*Customers in terms of social status or lifestyle
37
 In terms of lifestyle or status, Café Beam has a record of having businessperson,
students, tourists and bikers as their regular customers. They have been a staple spot for
business meetings, get together, stop over or even a place to unwind and spend some
personal time.

Café Beam operates from 7:00am to 10:00pm. Having this long duration of operation
allows them to cater to a vast range of customers of all types.

2.1 Organizational Diagnosis and Value Chain Analysis

2.1.1 Organizational Diagnosis
a. Management Audit
Assessmen
Audit Question
1. Are company objectives
and goals measurable
and well communicated?
2. Do managers at all
hierarchical levels plan
effectively?
Evidence
t
The company does have an established vision,
YES
mission and objectives.
The CEO also serve as the manager for the top
management levels. She serves as the
operations manager and spearheads the
marketing activities since their organization is
YES still limited and the owner wants to give her full
attention on the business until stability is
achieved.

The organizational structure of the company is

3. Is the organization’s
NO
structure appropriate?
not that appropriate because ideally, there
should be one person managing one specific
managerial position. However with Café Beam’s
existing structure, they function well enough.

4. Are job descriptions and NO The job descriptions of the managers conflicted
job specifications clear? with the duality of the responsibility since only
one person is handling the managerial

38

5. Is employee morale
high?
6. Are employee turnover
and absenteeism low?
b. Marketing Audit
Audit Question
1. Are markets segmented
effectively?
2. Is the organization
positioned well among
competitors?
3. Has the firm’s market
share been increasing?
4. Does the firm have an
effective sales organization?
5. Does the firm conduct
market research?
6. Are product quality and
customer service good?
activities. It often results to miscommunication
and minor problems, such as overlooked
function and activity.
The employees’ morale are deemed to be high
because they strived to meet all tasks and
produce quality products for the customers in
YES
time.
The turnover rate of employee is LOW 80% of
the employees are full-time.
YES
Assessment Evidence
The company’s market is demographically and
geographically segmented. The focus of the
company is to serve specialty coffee in Baliwag
YES and nearby towns. With their location, they are
able to market consumers coming from other
towns within and outside Bulacan.
The company had a great reputation in the
market being the first to offer specialty coffee.
YES They compete alongside the leading brands in
terms of quality and price.
The market share has increased rapidly since its
YES first month of operation.
The company have a stable sales since they
YES already identified their loyal markets.
The company doesn’t capitalize on market
research yet but welcomes academic research to
NO
be done on their behalf.
The product quality and customer service is
good as evidenced by the feedbacks and reviews
coming from their customers, food critics and
YES
bloggers. Also, the company conducts quality
inspection every production and their recipes
and methodologies are FDA approved.
39

7. Does the firm have an
effective promotion,
advertising, and publicity
strategy?
8. Do the firm’s marketing
managers have adequate
experience and training?
11. Is the firm’s Internet
presence excellent as
compared to rivals?
c. Operations Audit
Audit Question
1. Are supplies of raw
materials, parts, and
subassemblies reliable and
reasonable?
2. Are facilities, equipment,
machinery, and offices in
good condition?
3. Are inventory-control
policies and procedures
effective?
4. Are quality-control
policies and procedures
effective?
5. Are facilities, resources,
and markets strategically
located?
The company do utilize the social media as a
medium of advertisement. They also rely on the
YES word of mouth approach, make their presence in
big and notable events.
The marketing manager of the company is the
CEO, who is equipped with the appropriate
YES skills, education and background in running the
business.
The company capitalizes the use of the internet
as their primary marketing tool. They make their
presence in different social media platforms such
YES
as Facebook, Tiktok, Twitter and Instagram.
They are also re-engineering their website.
Assessment Evidence
The raw materials being used by Café Beam
comes from different sources. Their cups, straws,
cutleries are custom-made for them by a partner
manufacturer. They do not have a fixed source of
YES beans because Café Beam always check every
coffee bean being produced globally. Their
source of coffee bean depends on the season
produce.
Café Beam’s equipment and machineries are in
YES good condition since they are newly procured and
have.
Café Beam has an effective way of managing
YES
their inventory.
Ingredients, machineries and utensils are being
checked regularly to ensure sanitation and quality
produce. The finished products like beverages,
pastries and others are being checked before they
YES
were served to the customers. Staff also asks the
customers if they have concerns regarding their
order before they leave them.
YES The business is situated at Tarcan, Baliwag,
Bulacan. It is strategically located because of its
accessibility to clients situated Baliwag, nearby
towns like Pulilan and Plaridel, and even National
Capital Region (NCR).
40
 The company uses competitive technological
6. Does the firm have resources in keeping records, auditing, making
technological YES inventories and even doing marketing activities.
competencies? Also their machineries are up-to-date.

2.1.2 Value Chain Analysis

Value Chain Analysis is a tool to assess the production efficiency of a company. This too
is used by the company to deliver most value of product at the least possible production cost.
Below is the Value Chain Analysis of Café Beam:
Strength or
Primary Activities Value Chain Analysis
Weakness
Café Beam materials and ingredients are from
different parts of the country and even the globe.
Their containers such as cups, wooden cutleries and
others are custom-made from their partner supplier.
They have partner farms and suppliers of coffee
beans in different local (Batangas, Davao, Bulacan, Strength
Ifugao) and international (Vietnam, Brazil,
Thailand and some part of Europe) coffee farms.
The said towns and countries are known producers
of quality coffee bean of all types.
Inbound Logistics
Café Beam’s raw materials are delivered to the
Caloocan office in bulk orders. Café Beam uses the
safety stock inventory management. This is the kind
of inventory management where the company
procures bulk of raw materials for the company to
store in the facilities. The most common problem Weakness
with this type of inventory management is the
tendency of the company to hoard unnecessary raw
materials which often results to stagnant resources
and inefficient utilization.

Operations Currently, Café Beam has 15 employees who are Strengths

employed in a regular and part-time arrangement.
The number of employees are a mixture of bakers,
chefs, baristas, counter staff, servers, and
management staff.
This limited number of employees suffice the

41
 current level of production needed in the café.

The type of production operation of Café Beam is

full production package. This style of
manufacturing is preferred by coffee businesses in
second and third wave coffee industry. The
Strengths
company retains full control over the products from
coffee beans and other ingredients selection up to
the smallest details of the production.

However, the FPP type of production is a tedious

process and requires great amount of time during
production. Also, it only works on small scale
Weakness
production and becomes a problem in the long run
due to production limitation.

Café Beam delivers the finished products on a by-

order system through over-the-counter purchase.

For deliveries, the finished goods are being

Outbound Logistics Neutral
delivered to the client’s location through the aid of
third-party logistics such as FoodPanda, Ordermo,
GrabFood and alike.

Café Beam, since their first operation, already

maximized the use of social media marketing
through different social media platforms such as
Facebook, Instagram and Tiktok.

Independent reviews, blogs and vlogs contribute so Strength

Marketing and much in spreading awareness about Café Beam.
Sales This marketing style is a result of continued
customer satisfaction by product quality and
affordable price.

Due to limited staff and no marketing expert in the

organization, activities in Café Beam’s social media Weakness
accounts are still limited.

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 Strength or
Support Activities Impact on Value Chain Elements
Weakness
Café Beam’s infrastructure includes the hierarchical
level of management pertaining to the following
departments:
1. Finance
2. Marketing/ Sales
3. Operations
The effectivity of these departments and its
Firm managers are essential to the smooth operation of
Weakness
Infrastructure the business.
However, Café Beam’s CEO is micromanaging the
business. This allows the CEO to have full control
on the entire operations. On the other side,
problems such as overlapping of tasks or unurgency
in resolving problems and concerns.

The company hires competent and skilled workers

in the poverty-stricken sector of the community.
Human Resource These workers are the partners of the business to
Strength
Management ensure the quality of the production output.

Café Beam uses industrial brewing and baking

Technology machines to manufacture the finished goods of the
Strength
Development company.

2.2 Financial Analysis and Conclusion

Financial Analysis is the process of systematically evaluating the financial status and
performance of a business in terms of solvency, liquidity, efficiency and profitability. (Tuovila,
2021) This process will allow the management to make intelligent business decisions towards
achieving the company’s objectives.
In this section, the researcher will utilize financial ratios and financial data to determine
the financial performance of the business from year 2017 to 2019.

43
 2.5.1 Statement of Financial Position/ Balance Sheet
The Statement of Financial Position or Balance Sheet provides a reader and idea of how
well the company is performing in terms of assets, liabilities and equity. It is an overview of the
company’s resources, obligations, and ownership details at a certain point of operation of the
organization.
The table below shows the Three-Year Financial Position of Café Beam:

Three-Year Financial Position (2019-2021)

 
 
2.5.2 Statement of Financial Performance / Income Statement 
A financial statement that shows you the company's income and expenditures. It also
shows whether a company is making a profit or loss for a given period 
 

44
 From 2019 up to 2021, there is a positive amount of Café Beam's Net income, which
means that the business operates effectively and is getting better. Business is the same with 26%
Gross Profit Margin by Y019-2020 and increase of 9% by 2021. As observed in the income
statement, the Average Cost of Sales is 71% and a Gross Profit Margin of 29% which means for
every peso that is generated (0.29 cent) is retained while (0.71 cent) is attributed to the Cost of
Good Sold. The operating expenses include utilities, depreciation, management salaries, fees
paid to lawyers, accountants, and other professionals. 
 
2.5.3 Financial Ratios and Conclusion 
     2.5.3.1 Profitability Ratios Profitability Ratios are metrics that assess the ability of a
company to create earnings or be profitable. 
               2.5.3.1.1 Net Profit Margin measures how much net income or profit is
generated as a percentage of revenue.  
                 The trend of Café Beam's net profit margin started at 3.80% in 2019 the same
with 2020 and declined by 2021 with 2.91%. A low Net Profit Margin means that a company
uses an ineffective cost structure or poor pricing strategies. Therefore, a low ratio can result from
Inefficient Management.             

45
  
2.5.3.1.2 Revenue Growth Rate indicates the trend of profitability of a business. 
For Cafe Beam, fortunately had a growth rate from 2019-2020 at 1.85% and a high
Revenue Growth Rate of 24% at 2020-2021. A company's revenue growth rate depends on
multiple factors, any business with a revenue growth rate of 10% or more is considered good.
However, a 2-3% growth is also regarded healthy in some cases. 

 
2.5.3.1.3 Return on Assets (ROA) is a financial metric that measures a firm's efficiency
in terms of generating profits out of its assets. 
For Café Beam, the ratio shows a decreasing return on assets. In 2019 the company has
4.15% declined by 2020 and 2021 with 4.05% and 2.80% which indicates the company might
have over-invested in assets that have failed to produced revenue growth, A sign that the
company might be in trouble. 
 

 
 2.5.3.2 Efficiency Ratios, also called Activity Ratio, assess a company's ability to utilize
its assets and manage its liabilities within a short period of time and make sure that the assets are
capable of meeting short-term liabilities. 

46
  2.5.3.2.1 Inventory Turnover Ratio Inventory turnover is a financial ratio showing how
many times a company turned over its inventory relative to its cost of goods sold (COGS) in a given
period. (Fernando, 2022) 
A low inventory turnover ratio might be a sign of weak sales or excessive inventory, also
known as overstocking. It could indicate a problem with a retail chain's merchandising strategy,
or inadequate marketing. A high inventory turnover ratio, on the other hand, suggests strong
sales. The higher the inventory turnover ratio, the better. 
 

2.5.3.3 Conclusion 
With the above financial indicators (ratios and percentages), the researcher can conclude
that the company is in good shape (profitable). However, it needs to improve its inventory
management to increase production efficiency and ultimately maximize the company's fullest
potential in terms of profit.

2.3 Strengths and Weaknesses of Café Beam

2.6.1 Strengths
2.3.1.1 Brand specialization on Specialty Coffee (third wave Coffee Industry)
Before and during the pandemic, a number of coffee shop business emerged in Bulakan
to serve caffeine beverages and other on the line. This makes the competition tight in the
industry. However, those coffee shops belong to the second wave industry of coffee shops only
even the big brands. This is where the strength of Café Beam enters into place.
Café Beam is the first to offer specialty coffee which is the trademark of the third wave in
the coffee industry. This make Café Beam different and a total stand-out par from other market

47
players.
2.6.1.2 Innovative food offerings and coffee experience
Since coffee shops are now becoming a staple in the everyday lives of people, many
businesses are entering the industry. This allows consumers to have variety of options. However,
this leaves businesses multiple number of competitors. The battleground, therefore, happens in
providing unusual and innovative coffee experience and food offerings.
Since Café Beam is a third wave coffee industry, it is already given that they will are
providing a new and innovative coffee experience to the coffee market and that alone gives them
an edge in the competition. Also, Café Beam also stepped up with their food offerings making
ordinary breakfasts, pastries and patisseries have a twist of a new level of experience.

2.6.1.3 Accessibility of the business’ location and over-all café aesthetics

Café Beam is located at Baliwag, Bulacan. The business’ location is highly accessible to
many consumers from other towns due to the various modes of transportations within the vicinity
of the business location and the access points of national roads.
Aside from accessibility, the aesthetics of Café Beam made a mark especially to coffee
afficionados. They become the epitome of simplicity and minimalistic themed café that allows
customers to focus on what is essential. That is why Café Beam is continuously having
customers even from the National capital Region (NCR).

2.6.1.4 Competent and Experienced management and employees.

The lifeblood of the company are its employees. They are the ones who ensure that the
company is operating efficiently and maximizing the resources.
Despite the micromanaging of the owner who also performs the duties of the major
positions in the organizations such as marketing, head of the operations, human resource, product
development, and many others, she is well-versed in the coffee industry, learned in the business
world, skilled in culinary and pastry -in short, she is molded in all aspects of Café Beam.
When it comes with their staff, Café Beam is composed of trained and skilled workers.
Also, the owner (since their offerings are her own recipes), trains her staff with skills that she is
aware of.

48
 2.6.2 Weaknesses
2.6.2.1 Pricey offerings and products compared to competitors
The increasing popularity of coffee among millennials is one of the key specialty coffee
shops market trends that is contributing to the market growth. Millennials tend to spend more on
premium beverage brands than the rest of the population. They are also keen to experiment with
new drink types, brands, and flavors.
Despite that the quality of coffee and food that Cafe Beam offers justifies the price the
customers have to pay, still, the price set-up has negative impact towards the general customers
who are not well-versed with specialty coffee.

2.6.2.2 Noise mismanagement disrupts the overall café experience

Café Beam is known for their minimalistic yet captivating interior design. This alone
attracts customers towards them. The ambiance inside the café compliments with the total coffee
shop experience. However, during peak hours, the voices of all the customers somehow disrupts
the atmosphere. Besides that, since the beverages are being prepared in the counter, the sounds of
the machines such as blender, grinder, mixer, etc. distracts the solemn atmosphere of the café.

2.6.2.3 Minimal Security

Café Beam tops in providing a different and memorable coffee shop experience. Despite
that the location of Café Beam has low criminality potentials, it is also important that customers
will have the feeling of security and safety. As of now, the whole café is infused with CCTV
cameras. However, immediate security arm such as guards or martials will add more security to
the place.

2.6.2.4. Micromanagement of the operations and organization

The owner of Café Beam performs the majority of the managerial tasks in the
organization. She is up to this day, still micromanaging the business. So far, they have not
experience any big problems that may threaten the performance or image of the café, still there
are some duties or concerns that are not being attended immediately.

49
 Micromanaging may be useful and effective especially in a small business scale. But foir
a growing business, this may cause problems towards the business especially that concerns
managerial responsibilities.

2.4 Internal Factor Evaluation Matrix and Conclusion

Internal Factor Evaluation Matrix is a strategic tool for assessment and auditing of the company’s
major strengths and weaknesses. It focuses on the internal position/ capacity of the business to prosper in a
competitive environment.

Table 6: IFE Matrix of Café Beam

STRENGTHS WEIGHT RATING SCORE
Brand specialization on Specialty Coffee (third
1 0.15 4 0.60
wave Coffee Industry)
2 Innovative food offerings and coffee experience 0.15 4 0.60
Accessibility of the business’ location and over-all
3 0.10 3 0.30
café aesthetics
Competent and Experienced management and
4 0.10 4 0.40
employees.
WEAKNESSES  
Pricey offerings and products compared to
1 0.15 3 0.45
competitors
Noise mismanagement disrupts the overall café
2 0.10 2 0.20
experience

3 Minimal Security 0.10 2 0.20

Micromanagement of the operations and

4 0.15 2 0.30
organization
  TOTAL WEIGHTED AVERAGE 1.00 3.05
However, the internal analysis of the business also shows major weaknesses of the
company that can gravely affect the competitiveness of the subject entity. The pricey offerings ,
noise management, security development, and micromanagement of the organization should be
an issue of concern for the company.

2.5 Strategic Issues facing the firm

50
 The objective of this section is to identify and understand the strategic issues that Café
Beam should focus on and assess. Through this assessment, the company can have a guide in
crafting strategies appropriate to address such strategic concerns.

2.8.1 Should the business lower the prices of their products in order to cater more
people?
The pricing of Café Beam is being justified by their quality food and beverages. Indeed,
they are a little high compared to big brands such as Starbucks, Coffee Bean, and alike. But
engaging and producing specialty coffee is really strict, sophisticated and technical. That is why
the price of coffees under this wave is really pricey.
In a competitive environment, Café Beam must be able to find a way to penetrate the
market in a more effective way if they prefer to stand on their current pricing strategy. Coffee
drinkers in Bulacan is not well versed with specialty coffee, nor the difference among the waves
of coffee that is why it is very easy for them to base their coffee drinks with the price. Effective
marketing about specialty coffee will eradicate this weakness. Also, sustaining and further
developing the coffee shop experience that Café Beam provides will also help in mitigating this
weakness.

2.8.2 What should be done to manage the noise being produced in the cafe?
The primary goal of any coffee shop is to provide a remarkable coffee experience to their
customers. As demonstrated in the matrix, Café Beam is able to provide this experience firmly.
However, managing noise disrupts their success in providing a good experience.
The management must be able to identify the root cause of this noise and make a concrete
plan to address it pro-actively. With the noise of their machines, they can invest on more silent
machines that are now available in the market. Also, they can seal their beverage making counter
with glass wall so that sound waves will be contained.

2.8.3 How to address the issue concerning safety and security?

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 Bulacan is not a zero-crime-rate province. Regardless if the location of Café Beam is
wisely secured since it is not near on any resident, they can maximize the use of their CCTVs
around the premises. Also, they can hire an extra arm of security such as a security guard to
watch over the place especially at night.

2.8.4 How to mitigate micromanagement in the organization?

Café Beam started unofficially with a small stall. The actual coffee house has been
established and expanded only in June of 2021. The owner is really hands on of the business. She
is still not ready to allow other people to take over the vital roles in the organization. This is
somehow difficult to address since the owner has her own reasons. However, with their growing
market, it is only advisable to strengthen the foundation in order to prevent mismanagement or
failure to address certain managerial problems that may lead to the decay of the business.

CHAPTER III
STRATEGY FORMULATION

3.1 Strategic Option: SWOT Matrix

Table 7: SWOT Matrix of Café Beam
STRENGTHS WEAKNESSES

Brand specialization on Specialty W Pricey offerings and products

S1
Coffee (third wave Coffee Industry) 1 compared to competitors

W
S2
Innovative food offerings and coffee 2 Noise mismanagement disrupts the

52
 experience overall café experience

W Minimal Security
S3 Accessibility of the business’ location
3
and over-all café aesthetics

W
S4 Competent and Experienced Micromanagement of the operations
4
management and employees. and organization

OPPORTUNITIES THREATS

O
Ratification of the CREATE Bill by T1 Independent Coffeehouse Movement
1
the Congress
Rising availability of specialty coffee
O Emergence of Digital and Social
T2 machines for home use
2 Media Marketing

Urbanization and Industrialization in

O Rising support for green products and
T3 Bulacan
3 initiatives

O Growing and Developing Coffee Rising labor and logistics cost in

T4
4 Culture and Experience coffee suppliers’ province/country
     

3.1.1 S-T Strategies

ST # 1: Engage more on marketing activities in order to spread awareness about
specialty coffee and the Café Beam brand (S1, T1)
Many new brands are making their presence in the market, thus, posing as competitors
for Café Beam. Fortunately, these new brands are within the borders of second wave coffee
industry. Specialization and offerings may not be a threat for Café Beam, but the lack of
awareness on specialty coffee is.
Bulacan, despite of being a coffee-lover province, is not really well-versed with the
different types of coffee. Predominantly, the market in the said area is only aware of the second

53
wave coffee solely because they patronize coffee houses based on popularity such as Starbucks,
Coffee Project, Coffee Bean, etc.
Engaging in different activities that will promote specialty coffee as the third wave of
coffee industry will strengthen the branding and nature of Café Beam and realization and the
target market will fully understand how specialty coffee works and why it is priced a minute
higher compared to big brands in the second wave industry.

ST # 2: Expand the variety of offerings and continue to provide products and

services, and coffee shop experience that is impossible to be replicated at home (S1,
S2, S4, T2, T3)
With the advancement of technology and availability of over-the-counter specialized
coffee beans, customers can now have a taste of their favorite coffee in the comfort of their own
homes. Though this is a big threat for second wave coffee shop industry, this could be a threat as
well to Café Beam.
Also, the urbanization and industrialization happening in Bulacan contributes to the
emergence of new coffee shops in the market. Having a large number of market players means
customers have more options and even consider some as good substitutes.
In order to mitigate this, the business must develop the skills and craft of their employees
especially their baristas, bakers, and chefs in order to enhance further their current offerings and
provide new specialty coffee products for the customers to gain new and fresh coffee experience
that sets them apart from other coffee shops or even homebased coffees. Also, Café Beam must
maintain and/or improve their coffee shop interior and aesthetics because it adds to the total
coffee experience of the customers that they cannot replicate in their homes or be imitated by the
competitors.

ST #3: Continue to build a relationship-oriented business engagement that fosters

long-term relationship with suppliers and customers. (S1, T4)
Café Beam procures their ingredients and materials from different suppliers around the
globe and makes their choice based on the quality of beans being produced in every season.
Long–term relationship with a supplier mitigates the impact of pricing volatility and ensures

54
supply stability. Suppliers are the company’s lifeblood and should be well-taken care of. These
suppliers include the raw materials suppliers and labor workers of the company.

3.1.2 S-O Strategies

SO #1: Investing on marketing, product expansion and café development and
equipment to enhance coffee shop experience (S1, S2, S3, O1, O2, O4)
With the opportunity that CREATE Bill can provide to the business, Café Beam can utilize
the benefits that they can get by promoting the business and the specialty coffee industry in the
market in order to attract more customers and penetrate the market.
This opportunity can also be maximized in enhancing and developing the coffee
experience of the customers through expanding and giving more variety in terms of food and
product offerings and services.

SO #2: Engage in environmental initiatives, marketing and other activities in order to

attract special customers and have a strong public relation image (S2, O3)
Customers in this generation are smarter, more aggressive, and driven. In the many rising
societal issues that the world is currently facing such as discrimination and global warming, they
tend to support and patronize business that contributes in making this world a better place to live
in.
Embracing deeper Café Beam’s environmental conservation actions such as utilizing
wooden cutleries instead of plastics can also attract more customers especially those who are
advocates of environmental conservation.
.
3.1.3 W-T Strategies
WT # 1: Maximize company brand and specialization (W1, T1, T2, T3, T4)
There is no way that café Beam will lessen their price since it is justified with the quality
of products that they are offering. The threat of competitors can still be eradicated through strong
marketing and improving coffee experience so that consumers will still be open in paying the
price.

55
 Having a strong marketing, superb products, and being able to provide a profound and
different coffee house experience will mitigate the threats of rising coffee competitors in the
market due to urbanization and the trend of homebased coffee machines.

WT # 2: Use savings from fiscal incentives to invest in capital expenditures. (W2, W3,
O1, O4)
The CREATE Bill, although not yet implemented, will be an avenue for the business to
allocate resources for the improvement and procurement of necessary capital expenditures. The
savings from the bill will be an opportunity to invest in the long overdue upgrading of equipment
and machineries, security and investment for aesthetic and staff enhancement.

3.1.4 W-O Strategies

WO #1: Engage in active marketing to instill knowledge about specialty coffee in the
market. (W1, O2, O4)
Price at Café Beam is somehow higher compared to other big brands. Through strong
marketing about specialty coffee, consumers may come to understand the reason why specialty
coffee has to be priced that way.
More than making the market understand the way specialty coffee is priced, marketing the
business will ignite customers’ curiosity and interest for a different coffee experience that they
do not experience with other brands since all or most of them belongs to the second wave
industry only.

WO #2: Investing on software system to improve operation and production

monitoring (W4, O1, O2)
With the problem of the company with micromanagement, Café Beam should invest on a
software system that can aid them in being efficient in monitoring their operation and production
transactions that will lessen the worries or weak points of the organization if they are not yet
ready to mitigate micromanagement.

56
 A system, like CRM or ERP, will allow the company to be efficient in the allocation of
resources and be able to generate prompt reports necessary for business decisions.

3.2 Strategic Option: Internal and External (IE) Matrix

Table 8: IE Matrix of Café Beam

Based on the previously conducted Internal and External Factor Evaluation, Café Beam garnered
an IFE Matrix rating of 3.05 and an EFE Matrix rating of 3.20. As a result, Café Beam falls on
the “I” cell which means that the company should Grow and Build. Also, the company should focus
on market penetration, market development, and product development.
Given the product specialization of the company, Café Beam should focus their attention in
marketing specialty coffee more and spreading knowledge and awareness about it in the market.

57
 Moreover, given the rise of many substitutes and market players in the industry and locality, the
company must work on developing the coffee shop experience that they are offering and widen the
variance of the offerings in the market.

3.3 Vision and Mission of Café Beam

The vision and mission statement are essential as it prompts the company into the right
direction. Here is the current vision and mission of Café Beam:
a) Vision Statement
To become the preferred coffee shop in Baliwag

b) Mission Statement
To create a unique and relaxing place for customers.
To be able to serve customers with quality products.
To provide customers with satisfying cafe experience.

3.3.1 Proposed Vision Statement

To be the pinnacle of specialty coffees. To provide authentic Filipino coffee of the
finest caliber while providing exceptional and individualized service in a lively retail
environment that brightens every customer's day.
Table 9: Analysis of the Proposed Vision
Parameter Yes/ No Evidence
Does it clearly answer the
To be the pinnacle of specialty
question, “What do we want to Yes
coffee...
become?”

Is it concise enough yet To serve Filipinos real coffee with

Yes
inspirational? exceptional customer service

Does it give clear indication as It implies that the service will

Yes
to when it should be attained? brightens every customer’s day

“Our intention is to purchase excellent coffees on a fair basis, roast them to

perfection, and then donate the revenues to charitable causes in the Philippine coffee sector.

58
With the aid of Luzon-developed technology, the company will be able to expand by
producing and marketing coffee products that are of high quality and appealing to
consumers. To provide outstanding, distinctive service, premium items, superb coffee, and
expertise in order to inspire and empower customers to have a coffee experience. To excite
our staff by providing them with a healthy work environment, equality, and the opportunity
to enjoy premium coffee, espresso drinks, coffee cocktails, and more in a unique way, just
like our customers.”
As for the evaluation of the proposed mission statement, below are the evidence
of compliance with the mandated criteria:

Table 10: Evaluation of Proposed Mission Statement

Elements Aligned? Evidence

1 Customers Yes Residents at Luzon
Superior-quality coffees based on
2 Products/Service Yes
customer’s interest
3 Market Yes Within Luzon
4 Technology Yes Developed technologies
Use the proceeds to support
Survival, Growth,
5 Yes charitable endeavors in the
Profit
Philippine coffee industry.
To inspire and empower coffee
6 Philosophy Yes
experience
7 Self-concept Yes Quality coffee in distinctive manner
Donate the revenues to charitable
Concern for public
8 Yes causes in the Philippine coffee
image
sector.
9 Concern for employees Giving employees a healthy
Yes working environment and to also
experience our quality coffee

3.4 Generic Strategy

The generic strategy of Café Beam is differentiation strategy. This type of strategy is
attained through 2 possible ways:
a. Developing efforts to be unique in the market; and/or

59
 b. Selecting one or more attributes that many buyers in an industry perceive as
important
The differentiation strategy of the company is evidenced by the company’s effort to be
different in the market industry by providing quality coffee shop products specializing in
specialty coffee. The coffee industry in Bulacan (and in the country at large) is very tight. With
the current market share of Café Beam, this strategy is conducted through strong marketing
activities and specializing on products that will be new and difficult to imitate in the market.

3.5 Present Strategy

At present, Café Beam. uses the differentiation strategy. The company focuses on
specializing in specialty coffee which is a third wave coffee industry that is new and different in
their current market area. Aside from that, the company also employs the following strategies:
a. Direct Sales Marketing Strategy. The company depends on the personal and actual
presentation of the products and services to potential clients. This is conducted through
business proposals accompanied by samples of products that attracts clients to hire the
services of the company.
b. Referral or Word of Mouth Marketing Strategy. This marketing strategy is engaged
by the company with reliance to former/current client as brand advocate of the business.
Such strategy is implemented through continued customer satisfaction achieved by
maintaining product quality and pricing satisfaction.
c. Employee Development Strategy. This strategy is conducted by the company to ensure
that the employees are equipped with appropriate knowledge and skills essential in
providing quality products and services.
d. Safety Stock Inventory Management Strategy. This type of inventory management
practices the stock piling of raw materials. Safety stock provides the company a buffer
for emergency situation and immediate resources at the helm of the company’s stock
room. However, this strategy often create problem if proper monitoring is not done.

3.6 Objectives

60
 3.6.1 Strategic Objectives
As the strategic objective of the business, Café Beam should strive to be the coffee shop
of choice of Bulakenyos and become the leader in specialty coffee in the province by the end
of 2025 attained through quality foods and coffee and innovative coffee shop experience.
3.6.1 Financial Objectives
As the financial objective of the business, Café Beam should gear towards achieving a
at least 10% revenue growth rate every year and at least a Php 11 Million revenue by year
2025. However, there should be due consideration to the financial impact of the urbanization
and industrialization happening in Bulacan.

3.7 Proposed Strategy

A business strategy is a company’s plan of action towards achieving the desired goals and
outcomes of its stakeholders. It is a medium for the organization to secure a competitive
advantage over its business rivals. For the subject entity, Café Beam, the researchers used the
SWOT Matrix Analysis to help identify and formulate the business strategy deemed fit for the
goals and objectives of the entity.
Based on the SWOT Matrix Analysis, here are the recommended business strategies for
the market penetration and product development business strategy of the company:

3.7.1 Investing on software system to improve operation and production monitoring.

Café Beam should invest on the adoption of the Enterprise Resource Planning (ERP)
System for better inventory management and financial monitoring. The company should consider
adapting this system to enhance the business’ capacity to manage the inventory and monitor its
financial position and lessen the weak points of the company as an effect of micromanagement.
An ERP inventory management system provides real-time inventory information to the
entire organization. This is an important capability for businesses that plan to expand, have
complex workflows or supply chains, need advanced automation, operate in “just in time” mode,
sell many products or simply wish to maximize their investments in inventory. (Schwarz, 2020)

61
 Figure 9: Areas covered by the Enterprise Resource Planning (ERP) System (hooman.design)

3.7.2 Intensify marketing strategies and activities through establishing a social media
marketing roadmap and curating effective advertisement materials to promote
specialty coffee in consumers’ consciousness
The internet is an avenue for a company to promote their products for a wider reach of
customers. By intensifying the company’s internet presence, the business can grasp more
customers. A digital marketing roadmap acts as a solid foundation for all online marketing
efforts of the company. It allows the business to plot a course for optimal growth and lays out the
exact tactics to enable efficiently attain the company’s goals Also, this marketing strategy incurs
only minimal cost and should be capitalized by the company to reap maximum rewards.
Café Beam should further establish and develop their social media presence to penetrate
unexplored market fitting for the company’s production capacity. The social media will allow the
business to advertise the business widely and more efficiently.
The social media presence of the business may be improved through advertisement boost
being offered by social networking sites, such as Facebook. Café Beam should not delimit their
presence in Facebook alone since other sites such as Instagram and Tiktok are also good and
strong platforms for social media marketing.

Figure 10: Process of establishing Social Media Marketing Roadmap

Furthermore, the business must allocate a portion of their resources in the production of
catalogues or business brochures to exemplify the products and services of the company.

62
 Figure 11: Sample Brochures and Catalogue for a coffee shop

3.7.3 Investing in capital expenditures essential to the improvement and expansion of

production capacity and efficiency.
In order for Café Beam to achieve its objectives, the business should invest in the
procurement of production equipment and machineries that will further enhance their food and
beverage quality and foster more profound coffee shop experience for customers.
Since Café Beam is operating from 7:00am to 10:00pm, they basically cover breakfast,
lunch and dinner times. They should also consider expanding their food line up so that customers
will have good choices for lunch and dinner meals.
3.7.4 Strengthen good public relationship credibility through different CSR activities
Consumer behavior tends to be more apologetic and aspirational when it comes to social
issues that the world is facing today. Businesses that openly supports or cooperates to mitigate
these concerns attracts them more. With that, Café Beam should strengthen their public image
and credibility through maximizing their corporate social responsibility activities and programs.
Currently, Café Beam is into environmental conservation. They try to eliminate the use of
plastics in the coffee shop that is why their main cutlery is made out of wood. However, their go-
to cups are still made of plastic. Probably they could expand their CSR activity more by going
away with plastics totally.
Another social issue that is still making huge echo is the fight for opportunities for the
elderly and persons with special concerns and/or disability. Presently, some of the competitors of
Café Beam are hiring senior citizens and/or persons-with-disabilities (PWDs) as regular staffs

63
given that they can still perform the job with proper diligence. Café Beam may also uphold in to
this activity.

3.7.5 Increase branding, customer relations, and customer loyalty through rewards,
memberships and other offerings
Café Beam may have been exceptional with their performance as a coffee house for the
past year, but due to the rapidly increasing number of competitors and substitutes in the coffee
industry, they must do something to retain their customers and maintain or develop their market
position. This could be done by implementing customer-focused activities such as membership
cards and points accumulation activities in exchange for certain rewards or freebies.
Customers also love when they can get things a little personal. Café Beam can also put up
their café merchandise where customers can avail Café Beam coffee related products such as
coffee beans, coffee mugs, tumblers, French press (or coffee press), tea bags, and others.
Café Beam can also be the first to introduce the my-cup campaign wherein customers can
buy an official Café Beam mug or cup and use them whenever they are dining in the café.
Customers who will be doing it will be given a certain percentage of discount. Aside from
boosting the merchandise, this could also be a way to lessen the cost of procuring disposable
cups, thus, decreasing the number of trashes.

64
Figure 12: Sample merchandise for a coffee shop

65
 CHAPTER IV
IMPLEMENTATION

4.1 McKinsey 7S Framework

The McKinsey 7S Framework is a tool for the company management to analyze the
organizational design of the entity. Through this model, the researcher can evaluate the
organization’s effectiveness in terms of the strategy, structure, system, shared values, style, staff,
and skills.
The framework is further categorized into two: hard and soft elements.
4.1.1. Hard Elements
The hard elements are the tangible and identifiable elements which is perceived to be
immediately influenced by the management. There are three (3) hard elements in the framework
-strategy, structure, and systems.

4.1.1.1. Strategy
Since its inception in 2019, the strategy of Café Beam is Differentiation Strategy. As a
small-medium enterprise (SME) penetrating the growing and tightening market industry, the
company focuses on expanding market reach and maximizing potential returns of profit through
offering products that is different and unique compared from other market players.
With the analysis conducted in the previous section, the company is recommended to
implement market penetration, market development and product development. This can be
achieved through the following suggested strategies:
1. Investing on software system to improve operation and production
monitoring
2. Intensify marketing strategies and activities through establishing a social
media marketing roadmap and curating effective advertisement materials to
promote specialty coffee in consumers’ consciousness
3. Investing in capital expenditures essential to the improvement and
expansion of production capacity and efficiency.
4. Strengthen good public relationship credibility through different CSR
activities

66
 5. Increase branding, customer relations, and customer loyalty through
rewards, memberships and other offerings

4.1.1.2. Structure
Cafe Beam employs a limited, micromanaged yet functional organizational structure
having the Chief Executive Officer perform some of the fundamental roles in the organization
giving her the full control.

67
 Figure 13: Ideal Organizational Structure for Café Beam

The direction of the company is spearheaded by the President/ CEO, and supposedly, in
coordination with the respective managers. But since the CEO is still micromanaging the
organization, she also serves the managerial roles. Basing on the records and performance of
Café Beam, their current management is proven effective as of the present. However, the
company encountered problems regarding urgency on addressing minor problems. The company
is a relatively small organization and some functions of the managers tend to overlap with the
other creating miscommunication and conflict between the levels of management especially that
it is being performed by one person.

4.1.1.3. System
Based on the researcher’s interview, the company does not use or utilize any system for
its business processes. They only utilize Microsoft Excel for its financial monitoring, as well as
for its inventory monitoring during the production process. The lack of an established system in
its financial and operational needs may prove to be a hindrance for the company to achieve
overall effectiveness and efficiency.

4.1.2. Soft Elements

68
 The soft elements of an organization are the intangible, but equally important factor to a
company’s overall effectiveness.
4.1.2.1. Shared Values
These are the company’s stated values and behaviors that acts as a guide for the leaders,
employees and customers about the vision and mission of the institution. For Café Beam, the
shared values are as follows:
Quality.
The commitment of providing excellent products that meets the needs and expectations of
the customers. It is the degree of excellence that is aimed by the company in terms of product
output.
Consistency
With a labor intensive business, the capability of the employees to produce quality
products is linked to the consistency and competence and skills that they possess.
Teamwork.
It is the coordination of the company employees towards achieving one goal, which is to
provide quality products for the clients.
Innovation
The objective of the company to provide innovative products and different coffee
experience in the market.
Social Responsibility.
The commitment in providing employment for skilled workers in the poverty-stricken
sector of the community.

4.1.2.2. Style
The leadership style for Café Beam is democratic. The President/CEO utilize this
participative leadership style which promotes trust and confidence to the employees. Coffee shop
or café is an industry driven by collaboration of craftsmanship, taste and inputs from all level.
The democratic leadership style allows the business to be productive through the collaborative
effort of all managerial levels. Also, the President/CEO conducts coaching and brainstorming
activities with its staffs for the improvement of style and operations of the business.

69
 4.1.2.3. Staff
The employees of Café Beam are distributed across different organizational and
operational roles with respect to their appropriate functions. The operations staff of the company
are residents of the community where the business operates (Baliwag, Bulacan). Given that some
of the employees (like baristas, bakers and chefs) are undergraduate and doesn’t have the proper
training but possess the skills, the company provides an incentive program for the employees that
allows them to undergo different trainings. This allows the employees to improve their skills and
deepen their knowledge about the craft.

4.1.2.4. Skills
Café Beam is under the subset of the coffee industry, known as specialty coffee/ third
wave coffee industry. The skills requirement for this type of business includes technical
knowledge on coffee and beverages making, coffee bean selection, and food preparation, also
known as the actual coffee making process.
The skills mentioned can further be improved through continuous training by undergoing
training programs which the business already employs. However, this kind of training program
can be implemented in a more efficient and effective manner. A retention period for the
employees must be included in the contract or a regular position may be employed to strengthen
the business workforce.

Table 11: McKinsey's 7S Framework

Aligned
Element Present Proposed Aligned?
?
Strategy Differentiation Yes Product Development Yes
Strategy through procurement of
additional machines that
Offers specialty will help enhance the
coffee that is coffee shop atmosphere
different compared and expanding café
from the others in menu.
the industry.
Market Development
through offering special
menu to cater customers
with special lifestyle

70
 (vegan, keto, etc.) and
introducing a café
merchandise where
customers can buy coffee
related products such as
coffee mugs, tumblers,
coffee beans, French
press, and alike.

Market Penetration
through investing in
digital marketing more
pursuing clients and
educating them about
specialty coffee

Start fulfilling the

organization managerial
Micromanaged
Structure Yes positions in order to have Yes
organization
proper delegation of
tasks and duties.
Invest in an ERP System
Microsoft Office –
and Venture in digital
Excel and Manual
Systems No marketing to help Yes
Ledger/Book of
promote the products/
Accounts
services.

1. Quality
2. Consistency Capitalize on the existing
Shared 3. Teamwork shared values and
Yes Yes
Values 4. Innovation continue embodying
5. Social such.
Responsibility

Democratic Retain the democratic

Style Yes Yes
Leadership Style leadership style.
Keep the employees.
Work on their skills and
Staff Appropriate Yes Yes
craftmanship
development.

71
  Coffee and Hone the skills of the
beverage making employees through
Skills  Coffee bean Yes intensifying barista, Yes
selection culinary and pastry
 Food preparation trainings

5.2 Balanced Scorecard

The Balanced Scorecard is a strategic planning tool used to monitor and manage the
strategies being implemented by the organization. It is essential in the evaluation of the
efficiency and effectiveness of the strategy and tracks if the business is gearing towards the
objectives of the business.
With the implementation of the proposed strategies, Café Beam has the following
perspective and measures to achieve the strategic and financial objective of the organization:

72

Figure 14: Balanced Scorecard Diagram

Table 12: Balanced Scorecard of Café Beam
BALANCED SCORECARD
“To be the pinnacle of specialty coffees. To provide authentic Filipino coffee of
Vision the finest caliber while providing exceptional and individualized service in a
lively retail environment that brightens every customer's day.”
“Our intention is to purchase excellent coffees on a fair basis, roast them to
perfection, and then donate the revenues to charitable causes in the Philippine
coffee sector. With the aid of Luzon-developed technology, the company will
be able to expand by producing and marketing coffee products that are of high
quality and appealing to consumers. To provide outstanding, distinctive
Mission service, premium items, superb coffee, and expertise in order to inspire and
empower customers to have a coffee experience. To excite our staff by
providing them with a healthy work environment, equality, and the opportunity
to enjoy premium coffee, espresso drinks, coffee cocktails, and more in a
unique way, just like our customers.”

Strategic Grow and Build Strategy: Market Penetration, Market Development and
Priorities Product Development
Customer Enhanced
Loyalty and and Improved
Improved Stronger
increased developed competence
Strategic financial and customer and
market activity products and
Results organizational public relation
and market and overall productivity
performance ties
share in the coffee shop of employees
target market experience
STRATEGIC OBJECTIVES MEASURES TARGET
Financial  Increase of
Perspective Increase Increase Net Minimized  Sales or at least 20-
Revenue Income repair and Revenue 30% in Sales
maintenance  Net Income and 30-40%
cost  Operating in net
Expenses income per
year until
2030.

 A recorded
sale of at
least 11M by
year 2025.

 At least 25%
yearly
decrease in

73
 repair and
maintenance
cost of
machineries
and
equipment.
 Increase
market
share

 To be the
coffee shop
 Length of
of choice in
customer
Expanded Bulacan,
Increase engagement
food and and be the
customer Improve coffee pinnacle of
Customer beverage  % of
loyalty and shop specialty
Perspective options market
customer experience coffee house
share in the in the
satisfaction
identified market.
target
market
 Quality
products
that justifies
its price

 # of
Internal Increase Improve Improve purchased  Subscription
Process production marketing inventory machineries of ERP
Perspective efficiency strategy by management and reduced System to
through social media and cost of efficiently
procurement penetration, allocation of repairs monitor the
of new advertisement, resources company’s
machineries and spreading through  % of inventory
and staff awareness ERP market and
trainings about System share operations
attracted monitoring
specialty
through
coffee
improved
social
media
presence
and
advertising
materials

74
  Improved
Inventory
Turnover

 Decrease in
delays of
 % of
product
compliance
production
Increase with
Learning Improve delivery
worker’s  Decrease in
and employee’s targets
productivity employee
Growth skills and
and keep them turnover
Perspective knowledge  Employee
motivated rate and
Turnover
increase in
Rate
number of
regular
employees

75
 CHAPTER V

FINANCIAL ASSUMPTIONS

With the strategies recommended, the researcher formulated financial assumptions

relative to the chosen strategies. The assumptions will be projected from year 2022-2025 in
consideration of the identified strengths, weaknesses, threats and opportunities of the subject
company. The financial projections are based on the actual events in the industry and
mathematical formulas.

5.1 Summary Results

The projected profitability, liquidity, and solvency ratios of Café Beam were all
improving in the aforementioned years.

From the 6% Return On Equity in Year 2021, it is projected to improve to 13% in year
2025. Return On Assets will also improve from 3% in 2021 to 9% on 2025, showing that the
company is more efficient and productive in managing its Balance Sheet to generate profit.

The Net Profit Margin shows that Café Beam will be effective in converting sale of
services into actual profit from 3% in 2021 and 5% by 2022 to 9% by 2025.

Liquidity. The Quick Ratio generates 0.56 in 2021, 0.65 on 2022 on 2020 and 0.73 in
2025 while the Current Ratio generates 2.69 in 2021, 3.05 in 2022 and 4.20 on 2025. Increase in
Current Ratio means that the company is growing into its capacity and the Company has the
ability to pay it's short term loans.

With that, the researcher can conclude that with proper implementation of the proposed
business strategies and improved production efficiency, the business will be successful in
achieving positive results for the company’s operation.

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5.2 Attainment of Objectives

5.2.1 The Cafe Beam continues to create a unique and relaxing place for customers and be
able to serve customers with quality products with a satisfying cafe experience in Baliwag,
Bulacan.

5.2.2 The company will increase its production efficiency as a result of the procurement of new
Coffee machinery, especially the inventory management feature.

5.2.3 Continued employee development and commitment will be achieved through the training
program brought by the TESDA BARISTA NC II consist of competencies that a person must
achieve in the deliverance of good quality coffee in commercially operated cafes or specialty
coffee shops.

5.3 Financial Projection Assumptions

5.3.1 Gross Revenue will increase by at least 5-10% per year from 2022 to 2025.

5.3.2 Net Income will increase by 82% by the end of 2022 and 75% by 2025.

5.3.4 Loans Payable will decrease by 23% in the end of 2025.

5.3.3 Cost of machine will not be more than 30% of the Gross Service Revenue.

5.3.5 An Accountant/Bookkeeper will be hired on January 2023 and will monitor the
effectiveness and efficiency of all expenses, assets, revenues, liabilities, etc. in order to provide
decision making analysis and reports to the top management.

5.3.6 A Driver - Reliever will also be hired on January in order to avoid the opportunity cost on
missed trips.

5.3.7 Employee Performance Appraisal will be conducted by the top management on January
2023 based on the performance evaluation for the period January 2022 - December 2022 and will
implement the Employee Reward and Recognition in February 2023 for the outstanding
employees based on the metrics which will generate 5% additional service revenue due to
increasing commitment and motivation of all employees to achieve company goals.

77
5.3.8 Management operations will improve and will operate seven days a week to cater high
demand for coffee and Pastries.

5.3.9 Acquisition of Biometric System on January 2023.

5.3.10 Allocation for Marketing and promotional activities starting on January 2023.

5.3.11 Implementation of Corporate Social Responsibility Programs and Activities starting on

January 2023.

5.3.12 Conduct Training and Seminars for all the employees starting on January 2023.

5.4 Projected Financial Statements

Projected financial statements incorporate current trends and expectations to arrive at a

financial picture that management believes it can attain as of a future date. At a minimum,
projected financial statements will show a summary-level income statement and balance sheet.
This information is typically derived from a revenue trend line, as well as expense percentages
that are based on the current proportions of expenses to revenues.

The Projected Financial Statement of Café Beam includes (1) Statement of Financial
Position - Balance Sheet (2) Statement of Financial Performance - Income Statement.

78
 Café Beam
Comparative Projected Statement of Financial Position
Balance Sheet for the period 2022-2025

Table 13: Projected Financial Position (2022-2025)

Café Beam
Comparative Projected Statement of Financial Performance
Income Statement for the period 2022-202

Ta
ble 14: Projected Financial Performance (2022-2025)

79
5.5 Projected Financial Ratios

The projected financial ratios of The Café Beam include ratios pertaining to the
company’s liquidity, efficiency, and profitability.

T
able 15: Projected Financial Ratios (2022-2025)

80
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