caseism

Café Xaragua Case Solution & Answer

Café Xaragua Case Solution

Objective

Café Xaragua is an online Canadian retail store that sells the finest quality coffee, made from green beans, which are exported from Haiti. The co-founder of the retail store:“Robert Lehnert”decided to offer the export quality coffee beans to the Calgary Farmers’ market,just after the first year of Xaragua’s opening. Lehnert along with the other co-founders of the business, are skeptical if this plan will work out,and if this plan will help in increasing the Xaragua’s business. The owners are struggling to make a decision.

We have suggested what Lehnert and the other co-founders of Café Xaragua should do from the option of either-selling the coffee beans to the Calgary Farmers’ market or avoiding taking this step as the business is in profit currently. The suggested recommendations are backed up by the detailed analysis of the business, projected income statement and balance sheet.

SWOT Analysis

Strength Weakness
Ø  Export quality and aromatic coffee beans.

Ø  Directly importing the incomparable quality coffee beans from Haiti.

Ø  Affordable price.

Ø  Business is new in the market.

Ø  Provides online service only.

Ø  Limited capital to invest in the growth opportunities.

 

Opportunities Threats
Ø  Coffee beans is the second largest industry in Canada.

Ø  Increasing demand for fresh and aromatic coffee in youth.

Ø  Positive media attention and reviews.

Ø  Existing string competitors in the market,for example: Starbucks.

Ø  The social and political situation in Haiti is extremely unstable.

Ø  The success of the business can bestalled by an insecure supply chain (Haiti’s socio-political issues) and existing competition.

PEST Analysis

Political The political situation of Canada is quite stable overall,and is favorable for the business purposes. Café Xaragua will not have any political issues while operating in Canada.

Haiti’s political situation is highly unstable. Café Xaragua exports its famous coffee beans from the south-eastern region of Haiti. The unstable political situation of the country could heavily affect the coffee business.

The coffee and the coffee bean business heavily relies over international trade. Trade relationships between the countries that produce or consume coffee play a huge role in shaping the final price of the beverage. This can affect the overall sales of coffee.

Economical Coffee lovers prefer freshly ground coffee over the pre-made one. According to a report, about 88% of Canadians claim to consume coffee every day. This proves that the coffee business is very profitable in Canada, and that coffee consumer spend a hefty amount on coffee, every month.

On the other hand, the economic condition of the coffee bean suppliers is not very stable in Haiti.Economic recession is the main concern in this coffee bean and coffee brew business,considering that it can prompt the reduced manufacturing.

Social Coffee contains a large amount of caffeine, especially the ones that are made from the fresh cocoa beans and are freshly grounded. While consuming coffee is not hazardous to health but drinking or taking an excessive amount of caffeine is dangerous. Awareness of the adverse effects of caffeine can impact the coffee bean business. This might result in a reduced demand for the beverage and a greater demand for decaffeinated alternative Xaragua should consider this factor, and if possible, it should also introduce an alternative to increase the business.

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