Costa and Dyson Question
Costa
Profits – 109.8m (2014), 90.1m (2013), 66m (2012), 46.4m (2011).
Costa Stores Worldwide – 1871 (2011), 2203 (2012), 2527 (2013), 2861 (2014).
2011 target was to achieve annual profits of 100m by 2016. This was achieved in 2014, mainly due to the rapid international growth in demand for coffee. New targets need to be set and this is to expand into and take control of the rapidly growing international coffee market.
Operate in 30 countries including US, India, China, Russia, Germany, Poland, Turkey, Romania, Malaysia and Vietnam. Moving into more ‘obscure’ countries like Romania, Malaysia and India as their economies develop and the countries become more modern with more businessmen. They are trying to gain a large share of the market before competition from the likes of Starbucks becomes too large.
They have targeted China (300 stores), India (60 stores) and Russia (25 stores). These are 3 of the 4 BRIC countries, the nations with the fastest growing economies in the world. There is likely to be a huge rise in demand for coffee in the near future in these locations.
Cheaper staff abroad and lower costs. Gives more room to work with when trying to be as profitable as possible. UK stores have higher running costs and, due to minimum wages, the staffing costs are higher. International stores may give Costa higher profit margins.
Dyson
Profits – 382m (2013), 364m (2012), 306.3m (2011), 235.6m (2010).
Sell products in over 70 countries.
Initially, all Dyson vacuum cleaners and washing machines were made in Malmesbury, Wiltshire. In 2002, the company transferred vacuum cleaner production to Malaysia. Washing machine production moved a year later. Cost savings allowed for larger investment in R&D in UK headquarters.
Although manufacturing has been outsourced to poorer, less economically developed countries, their main sales areas are still the richer countries. Dyson sell premium technological products. People from LEDC’s are far less likely to purchase Dyson products than in countries such as the UK, US and Japan where people have disposable income and a need for their products. In 2012, sales were boosted hugely by their success in Japan and the US. 85% of Dyson’s sales were outside the UK in 2012, compared with just 30% in 2005. They became the top selling upright vacuum cleaner in the US in 2012 with a 27% market share.
10 mark response
A corporate strategy outlines how a business plans to meet their corporate objectives that they set out. Objectives tend to be financially related, such as increasing profits, and the strategy helps them to achieve improved profits. As the world becomes increasingly global, it could be argued that businesses need to change their strategies to react to this.
Costa Coffee are an international coffee shop originating from the UK. They have seen a rapid rise in profits over recent years, with 2011 profits at £46.4m, whilst in 2014 profits reached a huge £109.8m. This goes hand in hand with the number of shops open worldwide. In 2011 there were 1871 Costa sites, with 2861 in 2014. Costa spotted an opportunity in the international market, specifically in rapidly growing economies such as China, India and Russia. These are 3 of the BRIC countries, the nations with the fastest growing economies in the world. As they grow, the
