III.

EXTERNAL ENVIRONMENT

The researcher utilizes Michael Porter's Five Forces analysis approach to determine the
Maker and Made Cafés' strength and position. This analysis explores the global coffee
industry sector and the external forces that influence the company's competitive challenges.
Maker and Made Cafe's external environment is examined using Michael E. Porter's Five
Forces analysis approach, which considers external elements that define the competitive
landscape. These external elements are competition, buyer power, supplier power,
substitution threat, and new entry threat.

Maker and Made Café

Porter's Five Forces Conclusion
1. Competitive Rivalry Strong
2. Bargaining Power of Customers Strong
3. Bargaining Power of Suppliers Moderate
4. Threat of Substitutes Strong
5. Threat of New Entrants Strong

1. Competitive Rivalry

Based on our analysis, the following external factors contribute to the strong force of
competition against Maker and Made Café.

 Large number of coffeehouses and foodservice firms

 Competitors' brand popularity is strong
 Low switching costs between coffeehouses

Maker and Made Cafe faces numerous competitors of various sizes, including global
corporations and small local cafes. Coffeehouses like Starbucks, Tim Hortons, Coffee Beans,
and Coffee Project, as well as foodservice companies like Dunkin' Donuts, are among the
company's key competitors. In the context of this Five Forces research, the large number of
coffeehouses and foodservice enterprises adds to competitive rivalry.
2. Bargaining Power of Customers

Buyers or customers have a strong bargaining power, which Maker and Made Café
experienced. According to Porter's Five Forces analysis model, this power is based on the
impact of individual customers and their groups on the coffeehouse business environment.
The following external variables contribute to the substantial bargaining leverage of
customers in relation to Maker and Made Café.

 Low prices for switching between coffee shops.

 High availability of replacement meals and beverages.
 Small number of individual buyers

These strong external forces portray the reality that individual purchases are small in
comparison to Maker and Made Café's total earnings. Small individual purchases, according
to the Five Forces study, indicate that individual consumers have very little influence over the
business. However, low switching costs and substantial replacement availability result in a
strong overall bargaining power of customers against Maker and Made Café. Consumer
bargaining power is one of the most significant forces influencing the coffeehouse firm, as
determined by this Five Forces analysis. Customers can simply switch from Maker and Made
Cafe to other brands thanks to their minimal switching expenses.

3. Bargaining Power of Suppliers

Suppliers have moderate bargaining power, which Maker and Made Café must deal with.
Porter's Five Forces analysis model defines this power as suppliers' effect on the coffeehouse
chain's business and industrial environment. Suppliers have moderate bargaining power over
Maker and Made Café due to the following external factors:

 Individual providers are of moderate scale

 Supply shortages
 Limited variety of suppliers

The moderate size of individual suppliers is an external element that exerts a moderate effect
on Maker and Made Café. According to the Five Forces analysis model, larger suppliers have
more bargaining power over the coffee industry. However, because to the restricted variety of
suppliers, they have only minimal bargaining power in comparison to Maker and Made Café.
Coffee suppliers' bargaining leverage is partially increased as a result of supply constraints.
Shortages allow suppliers to impose their demands, such as raising coffee bean prices, so
improving their bargaining power under the Five Forces approach.

4. Threat of Substitutes

Maker and Made Cafe are affected by the strong force or threat of substitute. This risk,
according to the Five Forces analysis model, is related to the influence of replacement goods
or services on the coffee industry and its external environment. The researchers conclude that
these are the external variables that contribute to the strong force of substitution against
Maker and Made Café:

 High availability of substitute foods and beverages

 Low switching costs between coffee and other drinks
 High affordability of substitute products

Consumers can easily purchase substitutes in place of Maker and Made Café due to their
widespread availability. There are numerous alternatives, including ready-to-drink beverages,
quick beverage powders and purees, and foods accessible from a variety of sources. Fine-
dining restaurants, vending machines, supermarkets and grocery stores, and tiny convenience
stores are among the available options. Furthermore, the low switching costs increase the
threat of coffee alternatives. The Five Forces analysis approach considers this extensive
availability as an external factor that increases substitutes against Maker and Made Café
products.

5. Threat of New Entrants

Maker and Made Café face challenges due to the strong force or threat from the new entrants.
In Porter's Five Forces analysis model, this risk relates to the impact of new coffee industry
companies or entrants. In this business case, the external factors listed below contribute to
new entrants' strong threat to Maker and Made Café.

 Low cost of brand development

 Low supply chain costs
 Low of doing business
Smaller cafés require fewer supplies and incur reduced supply chain costs. Small coffee
shops are less expensive to operate than large coffee shops. These factors present a strong
threat to Maker and Made Café, which is also a new and small coffee establishment.
IV. ANALYSIS OF STRATEGIC FACTORS

STRENGTH

 Good Store Location- Maker and Made Café is located in Bonifacio Global City.
The company is in a favourable spot because BGC is surrounded by prominent firms
such as major global corporations and financial institutions.

 High quality coffee beans and beverages- Maker and Made Café offers premium
coffee, specialty beverages, and exclusive recipes that attracts niche coffee
enthusiasts.

 Distinctive Atmosphere- Maker and Made Café features a nice and inviting
ambiance, with comfortable seating, decent lighting, and a soothing environment that
invites return visits from satisfied customers.

 Skilled Barista and Great Service- Based to the customer reviews we saw on
Tiktok, The Cafe has a well-trained barista team that provides exceptional service and
a positive experience to consumers. They actually have proper training in customer
service, efficiency, and coffee-making procedures, which increases satisfaction with
customers.

WEAKNESSES

 Intense and High Competition nearby- The coffee industry, like any other, is
extremely competitive with local and well-established brands like as Starbucks,
Harlan + Holden Coffee, Baristart Coffee Philippines, and others. This is one of the
cafe's weaknesses because it was only recently opened.

 Financial Constraints- A limited budget for expansion, marketing efforts, and

obtaining high-quality raw materials could limit firm growth.

 Operational Challenges- Using manual processes results in inefficiencies, order

processing delays, and increased operating costs. These are not the most glamorous
aspects of owning a coffee shop, but they are all necessary for providing excellent
customer service and happiness.

 Reliance on a particularly niche coffee market - Another weakness is the reliance on

coffee trends, which can fluctuate eventually, and the risk of waste connected with
perishable food.

OPPORTUNITY

 Product Expansion- Capturing a larger market share through expansion. Businesses

that provide more options can attract a wider range of customers.

 Brand Awareness- Although most branding initiatives may not produce instant
results, they can typically improve your brand over time, resulting in more repeat
customers. Running coffee sampling events, implementing loyalty programs, and
collaborating with local businesses all contribute to establishing a market presence
and attracting new customers. Their coffee preferences represent an opportunity for
Maker and Made Cafe.

 Changing Consumer Trends- Professionals and students looking for a location to

work or study will benefit from creating remote work-friendly spaces, giving free Wi-
Fi, and having power outlets. Today's coffee shop customers are primarily
professionals and students.

THREATS:

 Economic Instability- Consumer spending decreases during financial downturns,

which has an impact on profitability. To maintain consumers during poor economic
conditions, coffee cafes must offer affordable options. Strategizing and conducting
coffee promotional efforts can assist them in combating these economic instabilities.

 Market Sensitivity- Increased competition from huge chains and independent

businesses might affect market share. Differentiation through individualized service
and unique offerings is critical.
 Regulatory Challenges- Compliance with evolving health codes, tax rules, and food
safety standards necessitates constant modifications and increased operational
expenditures.

 Consumer Trends- Consumer behavior may change away from coffee cafes as home
brewing becomes more popular and there is a demand for sustainable alternatives.
Adapting by marketing specialized coffee beans and brewing equipment helps
mitigate this risk.

 Rising Labor cost and Staff High Turn Over- High worker turnover has an
influence on service consistency and quality control standards. Offering competitive
compensation, training programs, and staff incentives might help to increase
retention.
V. STRATEGIC ALTERNATIVES

GROWTH STRATEGIES

The Maker & Made Café is a new coffee shop. Because of this, the researchers of this
strategic management paper proposed growth strategies that can be used in the future. Market
penetration is one of the most effective strategy alternatives for new businesses. By
implementing aggressive expansion methods, the organization will undoubtedly compete in
the market. According to Ansoff Matrix, market penetration involves offering more of the
same foods and beverages. Maker & Made Café may employ this tactic by selling more of
their coffee blend beverages in different places. The researchers of this paper aim for Maker
& Made Café to improve its business, revenues, and profits while capitalizing on its
competitive advantages.

The second growth strategic alternative that Maker & Made Café may utilize is
product development. In the Ansoff Matrix, the aggressive expansion approach entails
introducing new items to existing markets and target market. As part of its growth plan,
Maker & Made Café may occasionally introduces new menu items. However, product
development is only a secondary growth strategy because it involves considerable risks, such
as the risk of producing food and beverage that do not generate satisfactory profits.

STABILITY STRATEGIES
For secure market stability, Maker & Made Café may utilizes a profit strategy
particularly a cost leadership. Standardized menu items and coffee preparation techniques,
may improve efficiency and reduce waste, resulting in reductions in expenses. Economies of
scale may provide for cost-effective process that will support Maker & Made Café
competitive cost leadership goal.
The second growth strategic alternative that Maker & Made Café may utilize is
differentiation. According to Michael Porter's model, this generic approach entails creating
and utilizing competitive advantages that differentiate the organization, such as unique
product and coffee qualities. Maker & Made Café may use this strategy to ensure that the
coffees and service they will provide are distinct enough to set them apart from the
competition.

RETRENCHMENT STRATEGY

The Maker & Made Café currently has no retrenchment strategies in existence. As a
result, the researchers of this strategic management paper proposed retrenchment strategies
that the company may implement in the future.

If Maker and Made Café experiences negative cash flows, decreased sales, or
operational inefficiencies, it may implement retrenchment techniques as part of its business
strategy. These initiatives seek not only to restore financial stability, but also to position the
organization for long-term success by realigning corporate activities, eliminating waste, and
maximizing resources. The fundamental goal is to guide a company back to a cost-effective
and sustainable path.

Maker and Made Café may use the Divestment or Sell-out strategy. Divestment
strategy entails selling off non-core assets or business units that are no longer in line with the
company's fundamental objectives. This technique will allow Maker and Made Café to
refocus its resources and efforts on its main business while also receiving revenue from the
sale. Rather than continuing to offer unprofitable products during a period of falling market
demand, Maker and Made Café may choose strategies such as divestment to streamline
operations and redirect resources to more viable endeavours.

DISCUSSION ON SUBWAY’S STRATEGIC ALTERNATIVES

The strategies proposed above by the researchers of this paper demonstrate the Maker
and Made Café most effective options to ensure ongoing growth and stability. The first
strategy to be is Maker and Made Café’s growth strategy. The company may utilize
concentration or vertical growth, particularly forward integration. The company may expands
its supply chain locally through intensive market penetration and product development.

Second, Maker and Made Café’s proposed stability strategy. To maintain profitability,
Maker and Made Café may utilize a profit strategy. Cost leadership is the company's key
strategy alternative for improving efficiency and reducing waste, resulting in expense
reductions. This strategy will help the company in reducing the cost of its business. The
researchers aim for Maker and Made Café to increase their profit margins and offer
competitive prices for their better menu options.

Lastly, Maker and Made Café’s proposed retrenchment strategy. Maker and Made
Café may utilize a sell-out strategy to expand its business and to avoid offering unprofitable
products during a period of falling market demand.
VI. RECOMMENDATION

 Maker & Made Café should utilize a little by little aggressive market penetration in
order to compete with a large number of coffee shops in the future, particularly the
multinational well-known coffee shops like Starbucks and any others. This approach
will help Maker & Made Café effectively execute its growth and stability strategies.

 Implementing effective marketing strategies will help Maker & Made Café strengthen
its brand and protect its business from competition and new entrants.

 To deal with the strategic marketing challenge, Maker & Made Café should utilize the
proposed strategic alternatives. Maker & Made Café competitive and future growth
strategies must concentrate on business expansion and industry leadership while
maintaining the brand and its values. This competitive strategy will identify the
competitive advantages and business capabilities that will be use to ensure
profitability in the global coffee shop industry. By using more aggressive franchising
to open new locations, the organization will carry out its expansion strategy. In this
regard, the competitive pricing that attract customers and help Maker & Made Café’s
growth plan of market penetration are made possible by the generic competitive
strategy of cost leadership.

 The organization should also consider increasing its investment to help it achieve its
goals. Because investment stimulates financial growth by adding money into the
economy, which is subsequently spent on goods and services in order to offer them.
I. IMPLEMENTATION PROGRAM

Management Plan

Maker & Made Café should have a quality management system. The organization
must implement corporate-level quality management standards. By implementing these
standards, Maker & Made Cafés will be able to maintain consistent productivity and output
quality across coffee shops while accounting for market demand, consumer preferences, and
expectations.

Marketing Plan

Maker & Made Café should invest more in new product development or upgrades that
meet market demands and consumer preferences while emphasizing and improving its market
branding. In addition, the company should have an effective marketing tactics and
promotions to reach its target market. This will have an impact on Maker & Made Café's
competitive and growth goals, which involve cost reduction and product development.

Financial Plan

To avoid future financial difficulties, the organization should have an adequate

financial plan. Maker & Made Café should evaluate its financial health and progress in order
to avoid shortcomings or financial problems. Financial plan frames the business concept,
leadership, market, and competition. It's an important part of financial statements since it
helps the company acquire capital from investors or private lenders. It can also help the
company to understand cash flow allowing them to allocate key financial resources more
strategically.

Operational Plan

Maker & Made Café operations management should use the proposed growth and
stability strategic alternatives to reach its goal. These strategic actions will improve the
business performance while expanding and improving its brand with additional locations in
markets throughout the country. By this, Maker & Made Café will see effectiveness in
managing corporate and franchisee operations, that equates to efficiency and productivity in
reaching Maker & Made Café's goal and vision, as well as satisfying the company's business
purpose.

Human Resource Plan

Maker & Made Café management should prioritize personnel growth and
enhancement. Training programs and satisfaction assessments are very beneficial.
Management, particularly the organization's managers, should also promote solutions that
facilitate the distribution of ideas for developing Maker & Made Café's corporate culture,
which influence productivity, job satisfaction, and human resources.