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Just Coffee has a profit margin of 26 percent while its main competitor has 52 percent. The companies sell their products at equal prices. However, the difference in the profit margins indicates that Just Coffee is at risk of losing, at least, a section of its market share to the competition.
Just Coffee should overcome the syndrome of routinism, which commonly affects established firms. It should adopt updated opinions on research and development, and seek to improve the quality of its products. The company should also plan strategically since new entrants into the industry may copy unfair trading methods used by the other company and take control of the market. This may lead to a reduction in the company’s profitability over time.
Besides, Just Coffee needs to consider identifying substitute inputs, labor unions, supplier concentration that can help it compete effectively. Its current Suppliers of raw materials, services, and labor limit its ability to compete effectively due to overpricing.
Just Coffee has the necessary resources to compete with the company and take control of the market. It has the necessary documentation and approvals that enable it to procure coffee from coffee-grower cooperatives. The competitor does not have the capacity. Possibly, the competitor has no resources and, therefore, uses unfair trade mechanisms to remain relevant in the market. It takes advantage of laborers and farmers and underpays them. Just Coffee needs to take action to limit the impact of the threat since the company is maximizing its opportunities for introducing more competitive products.
Therefore, Just Coffee should remodel the systems of receiving raw materials and distributing finished products to customers. It needs to procure affordable raw materials and pay cost effective wages. It should also consider reducing overhead expenses. Ultimately, if these options do not work offer desirable results, Just Coffee should invite labor unions and ask them to intervene.
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