Wednesday, November 13, 2013

Caribou Coffee, a Coherent Company

The idea of aligning the internal capabilities of an organization with its strategic goal, as discussed in the article by Leinwand and Mainardi, is employed by Caribou Coffee in pursuit of their goal to become the leading brand in the provision of specialty coffee products in the United States. Consistent with the traits associated with a coherent company, Caribou Coffee successfully addresses the following steps in constructing their growth strategy:

Choosing the Way to Play

Caribou Coffee understood that they faced stiff competition in the US coffeehouse industry, with around 500 competitors already in business. However, the trend of increasing average daily consumption of gourmet coffee products among adults  in the last 3 years, have suggested to Caribou Coffee that there is sufficient avenue for growth left to explore. The company identified established brands such as Starbucks and Dunkin’ Donuts as its main competitors, and chose to differentiate Caribou Coffee from them by, one, penetrating into a customer base unexplored by these brands, and two, providing a more refined, superior quality of product and service than the standardized experience provided by common coffeehouse franchises.

Evaluating the Capabilities System

Caribou Coffee identified the following group of interconnecting capabilities to help them attain their strategic goals: business relations with large corporations with distributional capabilities, extensive recruitment and training programs for employees focusing on customer service and possession of a large database of demographic information of the target customers.

To penetrate into a customer base unexplored by their competitors, Caribou’s business partnership with corporations such as Coca Cola has allowed them to gain a unique and massive exposure to customers through distributional method unavailable to either Starbucks or Dunkin’ Donuts.  Additional exposure to a broader consumer base has allowed Caribou Coffee products to be sold not only through coffeehouses but also, retail sales outlets. This has allowed Caribou to generate significantly more revenue from sales and as a consequence, freed up resources to aggressively introduce new products to the market. In addition, the large database of demographic data Caribou possesses has been strategically deployed to produce a sophisticated statistical tool, which Caribou uses to determine the location of its new store openings. The distributional expertise from Coca Cola allows efficient delivery of products to these new outlets, as well as offering advice on large data analytics.

To provide a more refined and superior quality of product and service, Caribou Coffee has tweaked its recruitment and personnel training programs to focus on customer service. In conjunction, Caribou has also began to nurture an organizational culture of entrepreneurship, brand awareness and organizational pride among its employees, which they predict would help employees project a more positive outlook towards the company and its products, and therefore, translate into improved quality of customer service experience.

The company experienced a slight decline in net sales in 2012, but currently stands as the second largest company-owned coffeehouse operator in the United States. Opening of new stores and introduction of new products are set to continue throughout 2013 and 2014, and prospective growth in net sales is projected to be between 6 to 8 percent.


Thus, the points made by Leinwand and Mainardi can only be reinforced through the continued successful performance of Caribou Coffee. 

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