Challenges And Opportunities For Developing Country – A Report On Innovation Process For Paradiso Coffee Roaster

Overview of the Paradiso Coffee Roaster

Discuss about Challenges and Opportunities For Developing Country.

The aim of the report is to reflect the implementation of the innovation process on a new venture that can be a stand-alone entity or part of an existing business. PCR (Paradiso Coffee Roaster) is a boutique coffee roasting company and a small start-up. The company doesn’t have retail outlets and wholesale presence. The operations of the PCR began since 2006 and the company is focusing on whole bean sales which include the single origin and tailored coffee blends for particular markets. The report includes the details related to the future business opportunities for this new venture and the relevant strategies to move the business from the new venture development stage to the growth stage.

Paradiso Coffee Roaster is a start-up whose objective is to open the retail outlets as the start-up is in the development process as of now. The aim of an entrepreneur is to develop PCR brand in Melbourne CBD and suburb as a quality distributor and the retailer of coffee. Along with this, the objective is to establish a viable retail presence. Moreover, there are more than 60 other boutique roasters in Australia some of them are Romeos of Balwyn, St Ali of South Melbourne, The bean Barn, Kokoda Coffee.

The company deals in the sector of food and beverages that is expected to rise in the coming few years. In the year 2018, revenue in the food and beverage segment is equal to the US $279 million in Australia. User penetration in the sector is predicted to result in the growth as current it is 8.9% which will reach 11.8% in 2022 (Statista, 2018). Moreover, the Australian market for the roasted coffee also reflects the growth due to which the competition in the market is increasing.

The company offer powered chocolate and distribute IZZO coffee machines to the customers and the coffee makers respectively. The start-up provides roasted beans, blend samples, different sort of beans on demand. The company ensures that they are proposing good quality in their products and services.

A target market is referred to as the particular group of customers who mostly like to buy the products and services offered by the company (Wedel and Kamakura, 2012). PCR target market includes: –

• Drip Coffee drinkers- The drip coffee drinkers include the people who like to consume coffee on daily basis. The age of the coffee drinkers matters while talking about the regular coffee drinks. It is the fact that most of the people who consume coffee on daily basis fall under the age group of 18-24 years and 25-39 years. These buyers help the company in achieving maximum sales with revenue (Wagner, 2018).
• Specialty coffee drinkers- These drinkers include the people who want to adjust their coffee according to their requirement which makes them to add new ingredients in the coffee that they are offering.
• Whole bean buyers- The primary target of the PCR include the people who are whole bean buyers. These buyers buy beans in bulk for their home and office purpose which helps the company in increasing sales. Moreover, these buyers can easily buy the machines provided by the company which gives an opportunity to the company to improve its phase from development to growth.

Innovation refers to as the new idea or concept. The innovation can take place in any business being it a start-up or existing on (Frederick, Kuratko and O’Connor, 2015). It is taking an existing concept or idea and bringing improvements in it with the use of step by step process.

Industry

The initial step in the innovation process is to clear the innovation goals of the business. The goal of the company is to open the retail outlets where they can offer the facility of the takeaway. The customer can easily take-away the coffee and the packaged fresh roasted beans. Along with this, the company wants to deliver varied and extensive products in their retail outlets.

This step comprises of the analysis of the real world which include the current situation of the markets, needs of the customers and the challenges faced by them (Center for process innovation 2013). Along with this it also includes the analysis of the competitors. The local competition in the takeaway and packaged coffee is increasing. The major competitors of the company include Cyber coffee, kokoda coffee, the Bean Barn and many others. The competitors of the PCR have opened its viable retail presence. The local competitors are present at a walking distance from each other which shows that most of the people visit Clayton for buying coffee. The PCR retail outlet is willing to make it differentiate from its competitors for whom they have to bring innovation in their products and services. Though the company will offer an extensive range of products, offering quality in its product, they believe in attracting the people towards their outlets through their values (Chesbrough, 2010). In addition, the company believes in keeping the environment welcoming for the customers that reflects the success and their passion for beans.

Based on the details extracted from the analysis this step motivates the company to develop the innovative ideas for achieving the goals and objectives of the company. Once the ideas have been developed the initial evaluation and prioritization will lead to a portfolio of innovation that you can test (Gassmann, Enkel and Chesbrough, 2010). PCR believes in being different from its competitors present in the market and for this the company is bringing an extensive range of products but to make it more effective the brand should bring customization in the takeaway retail outlets. This is the fact that there are many take-away retail outlets but there is nothing innovative in this. This is the idea for PCR to bring customization, in which the brand will consider the customer preference of ingredients while making coffee and packaged beans for take-away. There are different flavoured beans and milk (condensed, fresh and pressurized milk) available in the market that can change the taste of the coffee.  

Products or services

Apart from this, PCR should make use of different packing and presentation as attractive and effective packing will help the company to attract the customers. Along with this, PCR should offer the complimentary on order according to the quantity. The complementary product can include donut and a cookie which is one of the ideas that makes the company differentiate from its rivals. On the retail outlets, PCR can offer the welcome coffee to the customer that makes them feel valued and also leads to the promotion of products and services. These are the few innovative ideas that can be used by PCR in product and service to make strong customer base.

This step of innovation process defines the transformation of the ideas into the practical innovated products which could be offered by the company into the targeted market. The main innovation is the customization of the product according to the needs of the customers. PCR can implement this which helps them in understanding the needs of the customers. The customization of the product will be possible when the company will be able to source quality products from the suppliers (Huizingh, 2011). The main suppliers from where the company can get the unroasted beans include HA Bennett in Melbourne, Coif-Com in Sydney and the ARC in Melbourne.

PCR has to ensure that they form more tie-ups with the suppliers for the different types of coffee beans. The four main coffee beans which are available are Coffee Arabica, Coffee Liberica, Coffee Excelsa and Coffee Robusta (Coffea canephora) (Atlas Coffee Club, 2016). The below image shows the different types of beans that can be used by the PCR for the customization.

PCR can make use of the below image as a template for the company which will be convenient for the customer to identify the required coffee.

Apart from this, the ideas related to complementary, packaging and the welcome coffee will be valued added services of the company. PCR will be able to differentiate with their competitors when they will be able to bring innovation in both product and services. Therefore, the major innovation in the product is customization in coffee which is hardly offered by any competitors as it will be expensive to source raw material. Along with this, the minor innovation in the services offered by the company.

This is the final step where the company test the innovation and develop it to accomplish the operations. The commercialization includes the access of the production facilities, logistics and routes to the market (Sheu and Lee, 2011). This is the step when the company actually implement the customization at their retail outlets so that they can check the same with the customers. This is a testing stage in which they can test that this facility is beneficial for them or not. PCR will get to know the risk associated with this product with the innovation and along with this they can analysis the success and the failure of the innovative plan. Currently, the PCR employees include the two owners who manage the business but with this innovation, they need to appoint the person who can help them in conducting the same.

Target market

This is the fact that PCR has to manage the risk and rewards at each stage because there is step by step process of the innovation. The innovation process reflects that the company can fulfill the objective of opening retail outlets with the innovation in it.

There are numerous benefits and challenges which will be faced by the company while implementing the new business opportunity that is customization in product and value added in services.

• Retail outlet (Take- away): – The benefit of implementing the take-away retail outlets includes: –

1. Increase in the sales of the PCR which leads to the maximization of the profit.
2. Increase in the brand presence in the market.
3. Opportunity for the expansion of the products and services.
4. Opportunity for the conversion of the retail outlet into café in coming years.
5. A clear understanding regarding the expectations of the customers (Pearson, et.al, 2011).

• Customization: – The benefit of implementing the customization in the takeaway retail outlets includes: –

1. The customer can consume the products of their choice which helps the generating customer satisfaction.
2. The customer can select those products which will not create an impact on the health of the customers.
3. The business will be able to generate customer loyalty which means repeated sales and ultimately increases the profit (Trentin, Perin and Forza, 2014).
4. The business will be able to save their amount of marketing the product.

• Other value-added services: – These services will make the customer feel valued for the business along with his they will be able to get the delightful experience.

• Retail outlet (Takeaway): – Some of the challenges are: –

1. The implementation of the retail outlet needs funds which might affect the PCR as they have to procure the funds for achieving the objective.
2. There is numerous other take-away retail outlets are available due to which the company might not be able to succeed in the market (Gereffi, Frederick, and Gereffi, 2010).

• Customization: –

1. Most of the people are not aware of the fact that which coffee beans will be perfect for their consumption so they rely on companies. This reflects the failure of the customization innovation in retail outlets.
2. PCR need to form the tie-ups with different suppliers and they have to pay a high cost for different beans which will increase the price if customer customizes the product according to their need. Most of the customers don’t want to pay high prices for the customization.

• Other value-added services: – This will enhance the cost of the company and will reduce the profit of PCR. Strategies to move the business from the new venture development to the growth stage

PCR can adopt different strategies to move the business from the new venture development to the growth stage. Out of these some of the strategies are discussed below: –

• Stay focused on what sells best: – Most of the start-ups fail when they try to expand their business before reaching the growth stage. In order to achieve the growth and expansion they try to fullfill all the demands of their customers. This strategy does not work so it is recommended to the business owner to concentrate the core business activities. The owner of PCR should follow the targeted growth step by step as this is the only way through which the company will be able to reach the growth stage (Sappin, 2016). The resources are precious for the company so they should not waste it.
• Innovate and expand strategically: – At the growth stage, most of the owner directly get involved in the innovation and expand they don’t make strategies (Rothaermel, 2015). It is suggested to the owner to identify the relevant and irrelevant elements of the business. According to that, PCR can keep the relevant elements on priority and can make the strategy for the innovation considering those elements because these elements can revenue for the company. Thus, this results in the movement of a new startup to the growth stage.
• Let processes and products take center stage: – At the initial phase, the companies are mostly depended on the skills of a small core team to grab the chance and amaze the clients. But on the other hand, maintaining quality increase the difficulties for the business due to which they will not be able to grab the upcoming opportunities. It is recommended to PCR to always maintain the quality of the products which helps the company to grab the opportunities associated with the coffee business. It is essential for the PCR to standardize its business which helps them to take the business to the growth stage.
• Build your brand: – In the initial stage, brand tries to form the relationship with their clients as well as focuses on forming a positive brand image. When the start-up enters into the growth stage they try to make their customer loyalty towards their brand. PCR is a small start-up after the implementation of the innovation the company will be able to establish a strong customer base along with the brand presence. This shows that the company has attained the growth stage now the company can take a step to expand the business (Petch, 2016).

The Australian government supports the entrepreneurs to facilitate entrepreneurial activities and for the same, the government has introduced various programs some of them are discussed below: –

The entrepreneur program is a suite of the facilities services that provide the assistance to the small and medium business to grow and innovate (Australian Government, 2018). The program is the Australian Government’s flagship initiative for the business productivity and the competitiveness.

It emphases on opportunities to improve are: –

• Business capabilities for the innovation
• Business research collaboration
• Innovative entrepreneurship along with the commercialization

The program includes the 4 elements:

• Business Management: – Facility of the experienced business facilitators and advisor for the business operations (Australian Government, 2018).
• Accelerating Commercialisation: – Helps the medium and small business for the new product and services.
• Incubator support: – Helping the business to develop the capabilities that help in improving the business of new and existing ones.
• Innovation connection: – The supports from the experiences innovation facilities who work identify the knowledge gaps that are preventing the business to register growth.

The program came into existence in the year 2014, October 31^st and three new streams within the Entrepreneurs Infrastructure programme were introduced by the Federal Government. The core elements of the EIP includes: –

• Accelerating Commercialisation: – Up to $1 million matched 50:50 grant funding support will be available from government side (PWC, 2018).
• Business Management: – Assistance and the services to enhance the business operations.
• Research Connections: – Assistance and support in collaborating with the research sector.

It is recommended to form the policies related to the entrepreneurial ecosystem. The formation of the effective policy for the entrepreneurial ecosystem needs the active involvement of the Government Ministers to empower the policies and program. Through this, PCR entrepreneurs will not get affected by the social and economic environment.

The government can introduce a contest in which the entrepreneurs can share their business plans with the government and the winning entrepreneurs will be awarded with the help in the funding of new venture. This contest will boost the morale of entrepreneurs and enhance the business activities in the country.

Conclusion

It can be concluded at the end that Paradiso Coffee Roaster can achieve success with its innovative ways in the business. Innovation can lead to the success of the business but can also lead to the failure of a business, so to make it favorable and effective the company should analyze the market. As PCR made use of Innovation process used to identify the business opportunity. Moreover, the report includes the suggestion related to the strategies that the PCR should follow to move the business from the new venture development to the growth stage. In the end, it reflects the numerous program introduced by the government to support the entrepreneurs.

References

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