Strategic Management Analysis of T4: A UK Bubble Tea Company Assignment Sample

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Introduction - Strategic Business Analysis of T4 Tea Company

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A business plan is a succinct description of how an organization expects to accomplish its objectives (Kabeyi, 2019). The ability to interpret management solutions, anticipate the future, and steer a firm's operations in the appropriate direction is dependent upon a solid understanding of strategic innovation management. Strategic management enables an organisation to react in real time and act swiftly to reduce risk exposures. Operations management, advertising, and economics are only a handful of the many components of strategic management. As a consequence, things need a high degree of inspection (Kurpiela and Teuteberg, 2022). It needs meticulous planning, analysis, as well as execution of strategies to accomplish Organisational objectives. Corporations need rapid internal and external reactions. As long as present conditions and available resources permit, the aforementioned strategies may well be applied. When confronted with unforeseen occurrences, whether internal or external to the firm, it is becoming more common for businesses to include strategy management within their organisational structure.

Among the most critical components of every corporation's strategy is its business plan, particularly details precisely how the company expects to accomplish its goals. T4, a Taiwanese tea manufacturer, made its debut in 2004. The accompanying study provides an in-depth analysis of the firm (www.t4.co.uk). According to this research, PESTLE is used to assess a company's potential threats and opportunities, which aids in the formation of a strategic plan again for organization. A comprehensive examination of the company's competitors is also conducted, which aids in determining the company's competitive strengths and limitations, which only further aids in the development of an organization's comprehensive business strategy (Ellitan, 2021). The company's market analysis, that also aids in strategic planning, makes use of tools such as the SMART Strategic Objectives. To achieve the company's goals, the SAF model would be used to assess and monitor the company's business budgeting and planning needs.

Mission and Vision statement of the company

T4's mission statement is "to deliver happiness to clients and their friends, both in the United Kingdom and throughout the globe." In this regard, it is believed that the company has a substantial requirement to extend its organization's business in the foreign market in order to compete effectively in the domestic sector. As a result, the Organisation will supply the amplest and highly qualified cup of tea to its customers in order to elicit most powerful delight within the minds of the customers while working on the basis of the commitment (Rey and Bastons, 2018). Furthermore, in order to visibly retain its commitment, the Organisation would concentrate on the improvement of the quality of its products in order to deliver a more appealing and gratifying service to its customers.

According to T4, the company's vision statement is "Treat the people like family, because it will be loyal to inspire with a pioneering attitude." In this regard, it is simple to deduce that T4 is considerably contributing to the development of its product quality so order to please its customers by treating them as if they had been members of their own family. Specifically, the organization has begun to cultivate the finest leaves of tea with great care and concern in their tea-growing operations, rather than relying on any kind of tea bag or tea powder as a substitute. It is via this process that the organization is able to put their vision into action throughout their Organisational business practices in order to attain their Organisational objectives (Slater and Mizon, 2018).

LO1 Impact and influence which the macro environment has on an organisation.

External Analysis using PESTEL

A company's success may be affected by macro-environmental (external marketing) elements that marketing specialists collect and analyse using PESTEL. Firms such as T4 depend on PESTEL research to assist them comprehend market trends and continually improve their operations. The following study demonstrates external impacts on T4's approach using PESTEL.

Political: Government policies, management, and change are all political considerations, as are international trade policies, internal political concerns and trends, tax policy, and movements toward regulation and deregulation. Politically, the United Kingdom's policy supports fair trade commitments that benefit equally domestic consumers and international businesses. "From 2005 to 2006, the annual growth rate of the hot beverage business (which includes loose leaf green and black teas, , fruit and herbal teas, immediate and ground coffeesand chocolate and malt drinks) was just 0.2 percent." (2017) (Brenna). This business sells instant coffee and tea packs. Despite a decline in general demand for hot beverages, there is an emerging "sophisticated" and "niche" market for coffee and tea. The UK's political climate favours tea and coffee growth, and T4 is a major chain that lays the groundwork for future market development. In the long term, the corporation stands to benefit significantly from this.

Economic: Inflation and interest rates; labor costs; job growth and unemployment; the influence of globalization; disposable income for consumers and companies; and possible changes in the economic environment are all economic variables. Supermarkets currently sell teabags for less than they did a generation ago, given the current UK tea costs and 1977 figures. Natural resources as well as a low-cost labour in exporters' home countries, as well as severe rivalry on the UK market, might well be exploited (Hajra, 2017). However, a pall of sadness remained in the air. Tea growers face risk if demand continues to exert such downward pressure on tea prices, considering tea's poor export value. The US dollar's depreciation and retailer limitations in the UK may both contribute to the reduced price of UK tea.

Societal factors: It is important to note that social elements are not limited to demographics (e.g. demographics of a person's age or gender, their colour or ethnicity, or the size of their family). Tea is often regarded as the world's most popular beverage, second only to water. Daily, around 800 million cups of tea are consumed worldwide. On any given day, the UK has the greatest per capita share. With 160 million cups of tea consumed daily in the United Kingdom, the tea industry was valued at more over $500 billion (Raimo et al., 2020). Tea aficionados of all ages may pick from an extensive selection of teas. Due to its superior flavour and health advantages, green tea is far more popular than red or black tea. Global tea manufacturers are taking note of this country's transformation into a coffee-drinking nation.

Technological: Technological elements impact marketing in (1) “new methods of creating products and services”; (2) “new means of distributing goods and services”; (3) “novel approaches of interacting with target audiences”. In comparison with the rest of the EU, the UK agricultural production is highly mechanised and efficient by European standards. T4 interacts closely with farmers that have a thorough understanding of old procedures and practises in order to produce the finest perilla plums (www.t4.co.uk). Locals who go abroad prefer Jasmine Green Tea and look forward to inhaling the delightful scent. As a national brand, the company significantly depends on mechanization and cutting-edge technology to grow (Prakash, 2018). Automation and the utilisation of technology are critical components of running a successful cafe, which is why T4 utilises both machines and human labour to guarantee that its customers get the highest quality tea and natural flavours.

Environmental: Because of the rising scarcity of raw resources, environmental considerations are critical, as are pollution abatement goals, a commitment to operating ethically and sustainably, and a focus on reducing one's carbon footprint. It is apparent that T4 employs natural ingredients and does not use preservatives in its products. The business mostly employs old practises that are less environmentally destructive to produce its raw materials, which include Perilla plum, natural mint, and peppermint. Human labour is utilized to minimize the reliance on technology. This has a positive influence on the environment and makes the firm eco-friendlier. Customers are more inclined to purchase from businesses that emphasise their concern for the environment.

Legal: Health and safety, equal opportunity, ethical guidelines, consumer rights and legislation, and product labelling and safety are all examples of legal considerations. Tea is controlled in practically every country as a consumer product under food and beverage regulations. As a consequence, the constraints on its storage, distribution, and manufacture apply. Consumer safety is a primary concern for the British government, which supervises its inhabitants on a regular basis. Natural flavourings are employed in the creation of T4's goods and tea leaves, which enables the firm to expand and amass a sizable customer base.

LO2 Assessment of an organization’s internal environment and capabilities

Internal Analysis using SWOT

SWOT analysis:

Identification and justification of the organisation’s existing and/or potential competitive advantage

VRIO analysis:

• I. Valuable: One of T4's most valued assets is its good brand recognition in the United Kingdom. Consequently, the company's expansion has remained localised. Providing high-quality goods and services to their clients has allowed them to enhance the atmosphere in their workplace (Indartono and Wibowo, 2017).
• Rare: Since of this, the firm cannot compete with its competitors in the sector because it lacks a big supply chain infrastructure (Yudhistira, 2016).
• III. Imitable: Due to the increasing price and insufficient management processes of tea goods, T4 finds it difficult to generate distinct tea flavours (Indartono and Wibowo, 2017). The absence of involvement on the global platform had hindered the organization's ability to reproduce the globalized world for organisational growth.

Organised: When an organisation fosters the execution of its corporate principles, it uses a number of strategies to more openly organise the firm.

LO 3 Competitive environment analysis using Porter’s Five Forces model

Power of the buyer: 

In the tea business, it is common practise to purchase a number of cups of tea as well as a snack all at the same time. Customer service representatives, on the other hand, will be unable to discern much of a difference between teahouses. In any case, it seems that buyers are in control as well as sellers (Shamim, 2019). Tea users may choose to make their own tea at home rather than purchasing it in order to increase their energy levels. Therefore, to address the bargaining power of the customer, T4 can add more flavours as well as quality that will in turn help the brand to limit the bargaining power of customers for making a string customer base.

Suppliers' bargaining power:

In the tea and café business, wholesalers' negotiating strength is not a significant source of concern. Because the inputs to the industry are not distinct, this is a contributing component to the problem. T4 is encouraged to swap providers as quickly and readily as possible as a result of this. Therefore, suppliers are no longer associated with a certain firm. The firm T4 also relies on a mixture of suppliers for its raw material supply as part of its business strategy, reducing the negotiating strength of suppliers in the process (zcan, Mondragon, and Harindranath, 2018) Consequently, when it comes to bargaining, suppliers in the café business have very little negotiating power, making a company's image very crucial in this market.

Rivalry

T4 is under tremendous danger from firms such as Chatime CoCo, Fokus, Bubble Tea Supply, and a slew of other well-known bubble tea brands. Making the tea from perilla plums and infusing it with natural pulp, jasmine, and peppermint might provide a competitive edge over the competition. Given that there are little discernible differences in the items they're purchasing, buyers often consider cost when choosing between competing brands (Hajra, 2017). Because of this, knowing what consumers want is crucial in order to obtain a competitive edge. Because strong companies have complete influence over the market, brand image is a critical component of competitiveness. Therefore, to gain competitive edge over other competitors, T4 must adopt the cost leadership strategy by lowering the price of its offering to create a huge consumer base.

The threat of substitute products:

The availability of replacements is a major concern in the tea and snack store industry. When it comes to caffeinated beverages such as coffee and hot chocolate, many people believe that tea is a superior alternative to these beverages. As far as tea is concerned, this is a commonly accepted notion (Chen et al., 2019). Customers may now create their own cup of tea anytime they want since there is now a large range of tea alternatives available on the market. Customers who picked these lower-priced options over the more costly tea available in the store will not be entitled for a refund. When compared to other tea and bubble-tea establishments, such as T4, T4 provides a broader range of flavours and sweets than the competition.

The threat of new entrants:

There will be less chance of new rivals entering the tea and bubble tea industry. The increased pricing and high profits of established businesses are at least a part of the solution to the lack of competition in the marketplace. They've already found out how to minimise costs while simultaneously increasing production (Wu, 2020). Among the general public, they're well-known for their work. Some of the most well-known firms in the industry have built their reputations on their brand awareness and market dominance. According to the current state of competition in the business, new entrants may feel intimidated by existing competitors. As T4 provides bubble tea which is a unique product, T4 should sustain with its differentiation strategy that would not be hampered by any new entrants in the market.

LO4 Apply models, theories and concepts to assist with the understanding and interpretation of strategic directions available to an organisation.

Critical evaluation of the different types of strategic directions available to the organisation

As Porter said, there are four main ways to describe company behaviour and guide company operations. The four unique techniques are referred to as “cost leadership, differentiation, cost focus, and differentiation” emphasis. One or both of the four methods indicated above are used to describe them.

Cost leadership strategy:

Improved profitability and the creation of shareholder value are the primary goals of cost management leadership, but they are also concerned with lowering the costs of selling goods and services to the market (Viltard, 2017). T4's physical labour expenses may be decreased if automation was used as part of its cost leadership strategy.

Differentiation strategy:

A firm's differentiation strategy aims to set it apart from competition. Many different products are included in this approach, from one of the most basic to the most complex, and each has its own unique set of benefits and drawbacks. To further boost its competitiveness and expand its market, T4's innovation includes products made from natural herbs, such as fresh tea leaves. These goods provide the business an edge in the market.

Cost Focus strategy:

As a consequence, the Cost Focus Approach improves the Cost Leadership strategy. As the name says, this technique consists of two parts. a company may become an industry's go-to supplier by focusing on a certain industry or geographic region (Greckhamer and Gur, 2019). Using the term "cost" refers to a business strategy that places a strong priority on cutting costs while still delivering high-quality goods and services. Given the company's global reach, T4 does have the opportunity to collaborate with major bubble tea companies to expand its business.

Differentiation Focus strategy:

"Strategy" refers to a business's efforts to differentiate itself from its competitors. Both the strategy's distinguishing characteristic, as well as how the firm has entered a tightly defined market, are emphasized by Cost Focus (Viltard, 2017). As a means of gaining a competitive advantage, T4 should strive to solicit feedback from its consumers.

Justification and recommendation of the most appropriate growth platform/s and strategies

Ansoff matrix

Market Penetration: 

Market penetration can be approached in a variety of ways by a business. Pricing reductions as well as pricing strategies have a single effect: they lower prices. Increase the effectiveness of the product's advertising or sales activities. Direct selling enables a more complete penetration of the market (Kipkirui, 2017). T4, a very well tea bubble brand, offers a diverse selection of bubble tea flavours. This strategy may be used to reward its loyal customers.

Product Development:

T4 has significant opportunity to expand its client base with this method. This method is sometimes related to strategic product growth. Consumers will be enticed by the addition of fresh flavours and delectable delicacies to the company's bubble tea.

Market Development:

T4's target demographic may be defined as its customers, which helps the company to improve product sales. T4's advantages as a national organisation is that it can determine the most profitable areas for bubby tea sales, such as Asian nations such as China and India.

Diversification:

This approach entails entering new markets with new goods. T4 can enter the food business and provide evening as well as lunch meals similar to McDonald's to increase sales.

Ways and means by which the chosen strategies can be monitored in order to ensure success.

The SAF model is used to analyse the strategic plan:

• Suitability: Throughout most circumstances, a market that is suitable for company helps organisations significantly with growing their own enterprises by raising profits. T4 basically executes and employs a variety of tactics and strategic strategies in order to effectively analyse the suitability for the organization's business in order to increase its market share (Tarisciotti et al., 2016). Through this strategy, the company is able to boost its operational efficiency by delivering Taiwan bubble tea towards its clients and establishing a market for the business that is both acceptable and pleasurable.
• Appropriate or Acceptable: In this manner, prior to adopting and using different kinds of strategies inside of the organization's business, T4 always conducts an analysis of the outcomes, risks, modifications, and reactions of stakeholders towards the execution of those strategies. As a result, the organisation gains the required support from its stakeholders by conducting an effective analysis of the consequences of its initiatives following their implementation. How T4 can benefit its stakeholders efficiently throughout the course of its future business operations.
• Feasible: In this approach, T4's organisational capabilities, assets, and aptitudes would be strengthened, making it more capable of enduring the load of future firm operations. The organization's future financial requirements for incorporating complex technical features may be controlled effectively by accurately estimating future expenses, analysing cash flow, and establishing break-even points (Tarisciotti et al., 2016). As a consequence, the organization's size has increased dramatically.

Valid strategies and tactical objectives to achieve overall strategic objectives

Conclusion

To summarise, strategic planning can aid in the growth of T4's Bubble Tea company. Strategic management helps an organisation to respond quickly and effectively in order to alleviate risk exposures. Management of operations, promotion, and finance are only a few of the many elements of strategic management. As a result, items need a high level of examination (Kurpiela and Teuteberg, 2022). It requires rigorous preparation, analysis, and execution of strategies in order to achieve organisational goals. Corporations need quick internal and external responses. T4's long-term success will be assisted by prudent strategic planning, which will give the company a competitive advantage. The purpose of this research is to conduct an in-depth analysis of the company's weaknesses and strengths in order to develop a competitive strategy for today's market.

The preceding research conducts an in-depth examination of the company (www.t4.co.uk). According to this study, PESTLE is being used to evaluate a business's prospective risks and opportunities, which supports in the development of a strategic plan for the organisation. Additionally, a thorough investigation of the company's rivals is undertaken to ascertain the company's competitive strengths and weaknesses, which contributes in the development of an organization's complete business plan (Ellitan, 2021). The market study conducted by the organisation, which also serves as a guide for strategic planning, takes use of methods including the SMART Strategic Objectives. Additionally, in order to accomplish the company's objectives, the SAF model was utilised to review and monitor the firm's budgeting and planning requirements.