University of West London

CRITICAL ANALYSIS 2016

REPORT OF CAF ZEE AND
A CONTRAST
COMPARISION WITH TEA
PIGS
Small and medium enterprise, Assignment 1,
Element 2 Pratik Shrestha (21240206)
Word Count : 1513 words
Introduction

This report will focus on critically analyzing and evaluating Caf Zee Pvt. Ltd, and also in
contrast and comparison with Tea Pigs Pvt. Ltd. which was presented by Aleksandra
Segmenova and Milena Lambova. The reason Tea pigs was chosen to compare with, is
because they can be considered a valid candidate as a competition having a substitutionary
product and also are relatable the most. The data used are a mix of primary and secondary
data. The primary data were collected from a one on one interview with the companys
entrepreneurs where as the secondary data was collected from the companys websites and
various other academic sources. The aim and objective of the report are listed below.
To highlight the Business concept, competitive advantage and competitive
environment of the SMEs
To critically evaluate the findings for Business strategy for growth development and
how they manage incoming challenges
Provide proposals for the development and further growth of Caf Zee.

Business Background

Caf Zee is an Individual Specialty coffee house and A mini roaster located in New
Broadway, Ealing high street, opened in July 2014. The coffee shop is equipped with 20
employees and with a net worth of around 500,000 which categorizes the company as a
small enterprise. The company was founded by Sebastian Olid who is also the Head Roaster
of the company. The vision of the company is the determination that quality should be the
right of the consumer and a belief that high street coffee shops could be offering a better
product.

Tea Pigs is also a private limited company which was established by Nick and louise, located
in Brentford, Middlesex UK. They began business in 2006 and currently has four directors
and a total of 19 employees. The net worth of the company is 2,710,000 therefore the
company is a medium enterprise. They believe in supplying only the highest quality tea and
never compromising with quality as well as being focused in a tight customer base. The
coffee for Caf Zee is supplied directly from the farmers with high research being done and
cupped to the the right characteristics for their customers. The reason they used Fairtrade
coffee is so to get the best quality coffee and from different varieties all around the world. All
of this is done by keeping the Origin of coffee history in mind and not break any possible
connections.
Findings / Main Body

Business Concept and Competitive Advantage

The vision of high quality coffee and great fresh food is what began Caf Zee (Caf Zee,
2016). They believe in producing high quality and fresher products for their customers. They
meet these beliefs by roasting Fairtrade coffee every day in small batches and preparing fresh
food. They have stayed true to historical roots by reflecting their Greek heritage in their
products. Their targeted customers are mostly between the age of 18 and above. Their main
USP is clearly their coffee and fresh food, but also an important source of competitive
advantage is their unique in-store environment and very friendly, well-trained staff. Their
store environment is very open and antique with loads of space and very secure. They also
have a meeting room available. These attract a focused market base of passionate coffee
drinking customers. They also use e-commerce as a recourse for marketing and do wholesale
retailing of coffee beans and bakery.

The Business concept of Tea Pigs is very similar in contrast to Caf Zees Because they have
such similar markets and they focus on High Quality products as well. Tea pigs believes in
focusing on passionate tea drinkers which serves a small segment of customers. They have a
big base of regular tea drinkers who drink a lot of tea per capita and are ready to pay a
premium price for their high quality tea. The company offers only a limited number of
products with high quality and characteristics which are unmatched by competitors. This is a
strong source of competitive advantage (BarneyHesterly, 2006)
.

Business Environment and Competition

In this section we find a lot of similarities between the two enterprises. Caf Zee and Tea Pigs
both operate in Competitive market structure that is monopolistic in nature. Both the tea and
the coffee industry are massive in size and very stable. But the whole structure of the market
suggests the competition being dominated by big brands for both the industries such as Costa,
Starbucks and Tetley. Both their business structure and sources of competitive advantage lead
them to be very competitive which is due to exceptional products that are high in quality,
customers that are loyal and a strong brand name. Caf Zee faces direct competition from
established brands such as Costa Coffee, Starbucks and other Artisan coffee shops around
Ealing Broadway. To differentiate themselves from the competition the company has created
a unique environment that is distinct to its brand. Even indirect competition poses a threat to
the companies. They involve Subway, Bubble tea, and even Tea shops. Tea Pigs Pvt. Ltd, can
also be considered a Competition that sells a substitutionary product from that of Caf Zee
and vise versa. Tea Pigs competes directly with Yoga tea, Dr Stuarts, Yorkshire Tea, T2 and
Twining. However, the company has similarly focused on a concentrated customer base and
are proving themselves to be unique between the masses of giants.
Business Challenges and Strategies for Growth and
Development

Both of the companies face various challenges when operating and also during management.
While interviewing Sabastian he shared many concerns faced by the management. The main
business challenge was maintaining the product demand and supply of fresh food and great
coffee in a regular basis compared to other high volume coffee stores such as Costa and
Starbucks. The reason is because they believe in the freshest of products they prepare every
thing in small batches so that their quality and freshness can be assured to the highest.
Another challenge that they face that should be pointed out that their price range is higher
compared to other competition around Ealing Broadway. And to add Caf Zee found Ealing
to have a less people who really seemed passionate about coffee and all the science and
history that goes behind it, which was a similar problem for Tea pigs in the tea market sector.
However, the cafe has improved like for like sales during its years of operation with a weekly
average sale of 10,000 in 2016 than that of 4000 in 2014. They follow a growth strategy
that focuses on new product and market development plus diversification. They have stated
that they would like to further expand their stores in various locations and also by
incorporating vertical integration they plan to eliminate the middleman and acquire a closer
relation with their suppliers.

On the other hand, Tea Pigs has faced different challenges than that of Caf Zee as well. A
concerning challenge for them was their small team of staff which is quite insufficient for
Efficient day to day operation and further growth of the company. Along with that they face a
challenge of very few channels to market their companys product and also insufficient
advertising as well. All these factors are very much important for growth and development of
a company. Even though tea pigs had all the challenges they have demonstrated a solid
growth in performance as reports show the business has expanded and accumulated steady
amount of assets without much debt.

Recommendation and Conclusion

Caf Zees strategy for growth follows horizontal integration and expansion, which is its
recommended model to chase after. They require to eliminate the market gap between its
competition by acquiring small enterprises and expanding further into the market. The best
possible recommendation for Both Companies is to acquire further investment opportunities
to improve their Assets and acquire more branches (Ottesen, 2001). Also a marketing strategy
need to be developed in order to improve brand awareness and advertise their brand and
product onto their customers. A lot of resources are available and could be used such as
Vouchers, Event Sponsorships, Posters, Leaflets and Social Media. Both companies also
should make note of improving their human resource as to match their increasing revenue and
development (Varey, 2002). Caf Zee has to look back on their prices for their coffee
products as they are not in the competitive level. They need to be reduced to maintain balance
so that they attract the customers and also maintain profit margin.
By Critically evaluating all the data from the Two companies, both of them are clearly
operating in similar industries and also follow similar paths. However, it can be seen that
Caf Zee is a more infant enterprise compared to Tea pigs in contrast of Capital and Brand
Name. They both believe in providing the highest quality of product and services and focus
on a small market segment of particular customer base. Both the companies have shown
significant growth during their periods of operation and their entrepreneurs are fully aware of
what challenges they are facing and need to get past for further growth and development.

Bibliography

References

Barney, [Link], W. (2006). Strategic management and competitive advantage.

Upper Saddle River, NJ: Pearson/Prentice Hall.

Caf Zee. (2016). About Cafe Zee. [Online]. Available at:

[Link] [Accessed: 25 March 2016].

Dess, [Link], A. (1993). Strategic management. New York: McGraw-Hill.

Gamble, [Link], A. (2009). Essentials of strategic management. Boston:

McGraw-Hill Irwin.

Ottesen, O. (2001). Marketing communication management. Copenhagen:

Copenhagen Business School Press.

Tea Pigs. (2016). About Us. [Online]. Available at:

[Link] [Accessed: 25
March 2016].

Varey, R. (2002). Marketing communication. London: Routledge.