Question

Case Study From a small kiosk in a shopping mall established in 1997, Dr Cafe has become one of the leading coffee-shop chain in the Middle East with over 600 branches in the world. Dr Café’s success has built upon its popularity among young and trendy people and its unique approach of selecting the "best beans" in the world. Between 2008 and 2010, it has continued its aggressive expansion to Malaysia and Singapore with more branches in sight. In fact, in its plan for 2030, Dr Cafe has set its vision to expand globally and increase its network to over 30,000 branches! The marketing department has been assigned by Dr Cafe's CEO to investigate and propose possible options for expansion into a completely new area that is Europe. You are assigned by your marketing manager to help in this regard. Questions: What variables need to be considered while developing a list of potential countries? Which market entry strategy you would suggest most suitable to enter into the global market? Discuss at least three challenges that Dr Cafe may face in the early period of expansion.

Answer 1

1.The list of variables to be included are product acceptance, culture of eating out and social get together, demographics of the potential consumers, their taste, preferences and consumption patterns, competiton scenario with active players in same sector, competing products from other sectors, climatic conditions and food habits and potential place of coffee within that setting.

2. Being a specialised prduct, franchising would be the most effective market entry option because the local partners with excellent knowhow of local culture, customs and consumption habits would be the ideal ones to make a successful launch on such a big scale where the company might not have access to such huge resources and capital to increase the network to 30000 branches in a go.

3. In early period of expansion, the company may face the challenge in from of product acceptance, particularly when there are competing products and customers are habitual to them. Another challenge may be in form of a strong and established competitor selling same product. Third challenge can be in from of fewer customers owing to climatic conditions, demographic factors including conservative approach to eating out.