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Keurig Coffee is a company that is involved in coffee business in the United States and it started its operations in 1990. The founders of the company were John Sylvan and Peter Dragone; they started it with an aim of serving fresh coffee to the American people. The company invested heavily in the coffee brewing technology by investing resources in research, engineering and development.
This paper seeks to analyze how Keurig Coffee can improve its operation by using various resources that are available. The essay will analyze how this business can use the staffs that are there in the business to achieve competitive advantage over other businesses, which offer the same products and services as Keurig Coffee. The paper will also analyze the benefits of merging this business with another by looking at how this can help in improvement of service delivery and increasing the firms market share that will, in turn, translate to an increase in revenue.
Keurig Coffee can use the team of its workers who are involved in research and design to come up with products that will give its competitive advantage over other players in the brew industry in America. The firm can achieve competitive advantage through usage of its resources in the following way; first, the company can use its group of researchers to achieve competitive advantage. The team of researchers should engage in activities that will help the company come up with coffee brew brands that will meet consumer satisfaction. They should scan the company environment to understand the needs of the customers (Guidry, 2001). Having the knowledge of the customers’ needs, the company will be in a position to develop brands that suit customers’ needs, thus, achieving a competitive advantage over other brew products in the American market.
Secondly, the company can use its brand image to create product loyalty. This will enable the company to manage a certain portion of the market, thus, ensuring that the company has assurance of a ready market for its existing and new products. Thirdly, the firm can utilize its ability to package products to its advantage. The company can use its team of designers to package products in a unique ways that market the products among the potential consumers. The company can achieve this by using brewers, high speed packing lines and portions packs. Finally, the firm can achieve competitive advantage by usage of its trade mark to create brand loyalty and market its products among the coffee brew customers (Trout, 1969).
Human resource capital is an important aspect of any firm, as it contributes directly to the success or failure of the firm. Keurig Coffee management understands the importance of retaining a highly motivated work force, which is very crucial to the attainment of the firm’s goals. First, it created an independent working environment that encourages creativity, independent thinking and innovation among its workers. This motivates workers as they feel that they are part of the firm and their abilities are fully recognized by the firm’s management. This attribute has helped the firm to manage possible high turnover among its employees.
Secondly, the company motivates its workers by giving them reasonable pay and providing a conducive working environment, where there is room for career development. This played a key role in maintaining a highly motivated work force there, reducing high turnover rates in the firm (Thomas, 2004).
The partnership between Keurig Coffee and Green Mountain Coffee Roaster provided the two firms with leverage core advantage as well as competence core advantage. Keurig benefited as it was able to concentrate in its core business of brewing fresh coffee without worrying about marketing and packaging issues. The company also benefited from the well established distribution channels of Green Mountain Coffee Roasters. The packaging of the firm’s product was done by the partner, thereby enabling the firm to reduce cost of packaging.
On the other hand, Green Mountain Coffee Roasters also benefited from this partnership. They managed to sell fresh brewed coffee to their customers and they managed to concentrate in the business that they were good of packaging and selling coffee brew products. The firm benefited from the loyalty of brewed coffee customers that Keurig had, thereby it managed to increase its sales from this partnership.
Keurig Coffee entered into a chain sharing activity with Green Mountain Coffee Roasters and it brewed the eight brands, produced by Green Mountain Coffee Roasters, on its behalf. On the other hand, Green Mountain Coffee Roasters packaged its Arabica coffee beans in Keurig’s patents and also use K-patent cup to distribute its products.
From this arrangement, the companies reduced the cost of production, thereby increasing their sales revenue. Secondly, this reduced cost of distribution as each company could distribute products on behalf of the other company. The packaging cost was also reduced for the two companies by benefiting from their chain sharing activity agreement (Harland, 1996). Sales volumes for the two firms increased, as they were able to benefit from the market share of each other. The promotions of the new products were also reduced as the firms shared existing markets and there was no need to invest heavily in running promotions.
Vertical integration can be defined as merging of two or more businesses that are at different levels of production and management (Machosky, 2006). During the acquisition process, Keurig Coffee was concerned with the major shareholder of the company, who had the right to approve as well as reject any attempt to sell Keurig Coffee. They possessed the highest voting rights due to the contractual limitations, thus, the final say on the sale of the firm rested on them.
The acquisition of Keurig Coffee by Green Mountain Coffee Roasters can be said to be a form of vertical integration because the two companies were at different levels of production. Keurig Coffee was brewing fresh coffee, while, on the other hand, Green Mountain was roasting coffee. Therefore, the two companies were at different level of production, thus, merging the two of them can be said to be vertical integration.