Business strategy analysis of Lolacc company website

Lolacc

Competitive Advantage

A competitive advantage is something that sets the company apart from its competitors. In order to entice customers, a company needs to have something that it does better than its competitors. The more competitive advantages the firm has, and the stronger they are, the more competitive the company will be in the marketplace.

Lola Savannah has a number of competitive advantages that help it in the marketplace. One advantage that Lola has is with respect to freshness and the quality of the roast. Freshness is important because freshly-roasted coffee tastes better, and this is especially true for coffee that has been pre-ground. Coffee from major food companies or importers like Sunbelt Imports lacks the freshness of Lola's coffee. Lola ensures that it receives its beans as quickly as possible from the harvest by working with wholesalers to shorten the supply chain. The fresh beans are then roasted in Houston. Not all roasters are created equal. Lola has a high quality roasting drum, and an expert roaster on staff. Better roasting brings out more of the delicate flavors that differentiate a great cup of coffee from a good one.

The online ordering system also helps to enhance freshness. This system allows consumers to work with the company to schedule the roasting and shipment of their beans. The use of UPS as a logistics provider allows Lola Savannah to deliver the coffee from Houston to anywhere in the country with just a few days, so that the beans arrive when they are at their peak freshness. The serious coffee shops and retailers that comprise the Lola Savannah customer base appreciate freshness of product and rapid delivery, and often tell the company this is one of the reasons they deal with Lola Savannah.

Another advantage that Lola has is its ability to match flavors. Lola Savannah has over 80 flavors that it can create in its coffees. This is more than any of its competitors. Flavored coffees are highly popular, and can also be used in a number of other coffee-based beverages. The quality and variety of the flavors forms another competitive advantage. The supply chain is another source of competitive advantage for Lola Savannah. With coffee it is important to have contacts around the world in order to access the best coffees. Each region has its own character, and Lola has contacts with wholesalers around the world that enable it to get a great mix of beans from all over -- fruity Central American beans, earthy Pacific beans, and complex African ones. This ability to source the best coffees to complement Lola's flavorings allows for Lola to extend the competitive advantage that is has from the flavors alone.

Beyond product, another advantage for Lola is the brand name that the company has built over time. Lola competes against not only Sunbelt Importers but also Katz Coffee as well, and the quality of Lola's coffees attracts strong wholesale business from the likes of Kroger, Fiesta, HEB and a number of small coffee shops around town. With this customer base, Lola has broad exposure in the local area, and that attracts even more wholesale customers and fans of the retail operation as well.

Lastly, Lola Savannah aims to have a competitive advantage in service. There are a number of elements to the service component that the company seeks. The first is that Lola Savannah aims to have a high level of customer satisfaction not just with the product but with the entire experience from the first time a prospective customer visits the website to the moment with the end user is drinking the coffee. . The site is designed in such a way that buyers can find the information they need about the coffee. There are multiple customer service options and Lola Savannah staff are always willing to walk a customer through the number of different options. Because the coffee is produced in small batches, custom orders are also possible. Additionally, Lola Savannah offers service in both English and Spanish, to meet the needs of as many Texan customers as possible. By focusing on a service orientation, Lola Savannah can outperform the larger competitors, such as Katz Coffee and Sunbelt Imports, who cannot offer the same high level of care and attention. This service, along with the exceptional coffee, is what draws customers to Lola Savannah and it is also what will make the customers into loyal customers who keep coming back.

Strategic Alternatives

Strategic alternatives provide guidance as to how best the company can improve its business. There are a number of alternatives that can help take a good business and turn it into a great one. Diversification is one option, and there are a number of different ways that a company can diversify. Right now, Lola Savannah has a single business multiproduct strategy, which does not provide much diversification but this is a small company we are talking about. Lola does have the opportunity, however, to diversify through related diversification. This approach would mean something like opening a chain of coffee shops, or getting into the tea business. Lola Savannah has a good brand name and the product is exceptional. It should pursue other opportunities within the coffee business in order to grow. Unrelated diversification is not recommended because it moves too far from the company's skill set. Small enterprises like Lola Savannah should stick to just one business in order to retain management focus.

There are five generic strategies that the company can choose from. Lola should opt for focused differentiation. The total size of the market for Lola is small, because it operates only in the Houston area. It competes in a specialty coffee niche away from the large companies like Nestle that dominate the market. In this small nice market Lola is differentiated as a high quality local producer, and the 80-plus flavors provide another point of differentiation.

The company needs to set this strategy in accordance with the industry conditions. There are a number of factors that go into the industry conditions, including the rivalry with existing competitors, the bargaining power of buyers, the bargaining power of suppliers, potential entrants and product substitutes. The rivalry with existing competitors is not that significant, because most of the major competitors, including Sunbelt, are quite large and do not compete directly with Lola. The industry is fragmented, so there is room for both cost leaders and differentiated companies.

The bargaining power of buyers is high because of the competition. In order for Lola to have a differentiated strategy, for example, it needs to have a product so good that people will pay extra for it, as product uniqueness helps to overcome the high bargaining power of buyers. The bargaining power of suppliers is also high. Coffee is traded on the global commodities market, and Lola must generally pay the market price. Lola also competes with other roaster companies for the top beans. There is a high threat of potential entrants to the industry. There are low barriers to entry and the coffee business is usually quite profitable. . The cost of a roaster is not that high. This means a new competitor could emerge at any time. There is less risk of substitute, although there are a number of alternative ways to get caffeine, like tea, energy drinks, yerba mate and caffeine pills. The risk is low, however, because coffee drinkers are usually loyal to coffee.