Caribou Coffee Company

Case Study: Caribou Coffee Company, Inc. - A Strategic Analysis

Introduction

This assignment presents a full strategic analysis on Caribou Coffee Company, Inc. (Case study 28 - Dess, Lumpkin and Eisner, 2008.)

Company Overview

Caribou Coffee Company, Inc., founded in 1992 and headquartered inMinneapolis, Minnesota, is the second largest company-owned gourmet coffeehouse operator in theUnited Statesbased on the number of coffeehouses. As ofSeptember, 2009,Caribou Coffeehad 525 coffeehouses, which includes 112 franchised and licensed locations.Caribou focuses on offering its customers gourmet coffee Caribou Coffeefocuses on creating a unique experience for customers through a combination of high-quality products, a comfortable and welcoming coffeehouse environment and a unique style of customer service. The company presents its mission statement as follows:

?Our mission at Caribou Coffee is to provide a total experience that makes the day better.? (Caribou Coffee Company, Inc., 2009)

The Company is a majority-owned subsidiary of Caribou Holding Company Limited and trades on the NASDAQ under the ticker (CBOU) (NASDQ, 2009.)

Industry Definition

Caribou Coffee Company operates in the fast food industry. The fast food market can be defined as the sale of food and drinks for immediate consumption either on the premises or in designated food areas which may be shared with other foodservice operators, or for consumption elsewhere [REF] this definition excludes sales through vending machines and is restricted to sales in specific foodservice channels.

All market values are given in Operator Buying Prices - that is the amount spent by foodservice operators on the food and drink that they serve and not the amount the consumers spend on food and drinks [REF] The difference is the mark up the foodservice operators adds in order to cover their costs and generate a profit. Consequently, this values the market in terms of the amount of money for which food and drink manufacturers are competing.

In context, Caribou Coffee Company presently has its roots in the United States (US) but has expanded on an international level outside the US to Asia, the Middle East and the United Arab Emirates (UAE.) In terms of global presence, the Company does not plan to expand into Europe at this present time (Caribou Coffee Company, Inc., 2009.) However, the Company does continue to increase its global presence through franchise expansion both domestically and internationally.

However, the competitive market, along with a potential class-action lawsuit involving store managers, has caused some serious issues, including increasingly high net losses and decreasing stock price. By providing ?an experience that will make the day better,? Caribou Coffee has created competitive advantage in their store operations, but the question remains whether they can maintain this and use it to sustain their growth strategy.

Creating strong human capital is the foundation for the Company's differentiation strategy. One of the issues that will be analysed in this case is whether or not Caribou Coffee's attempts in developing human capital, will enable them to achieve a sustainable competitive advantage given the competition and threats they are facing. In order for Caribou Coffee to maintain its competitive advantage it must continue to create differentiation in its coffeehouses through their human capital. The Company has developed strong capabilities in recruiting, developing, and retaining their employees but this can be easily copied by competitors however, this is not enough to sustain their advantages. To continue to expand they must maintain their strong focus on human capital, in addition to developing their other strengths to create a bundle of resources as the basis of differentiation.

References and Bibliography

Internet References

Accessed:http://quotes.nasdaq.com/asp/SummaryQuote.asp?symbol=CBOU&selected=CBOU on 2 January, 2010 at 12.30pm

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