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1. Introduction : Mad Koffee’s Strategic Growth: Overcoming Challenges in F-Commerce
In the competitive business area, success of business is highly influenced from the strategic options and choices undertaken by the management team. The present report is based on the case scenario of Mad Koffee, is an innovative f-commerce company from Bangladesh founded by Amin in Chittagong in 2017. It became a famous performer in the ever-evolving world of online commerce. It is known for its early designs that sparked viral feelings through positive word-of-mouth. Mad Koffee faced a turning point when criticism arose on social media, including claims and faced issues of the T-shirt color bleeding. The company continues its efforts to overwhelm local issues and competition as it works in a complex global market (MAD KOFFEE, 2023). Mad Koffee is on its way to redefining the narrative and establishing a persuasive global presence with a basis of innovation principles of f-commerce. The strategic analysis of the company focuses on commercial flexibility and creativity, based on its unique t-shirt designs. The company strategically takes advantage of online platforms such as Facebook for global perceptibility and success. The report sketches the main challenges of the f-commerce company and advises strategies and choices for the growth and international expansion of Mad Koffee’s.
2. Strategic Position
Analyzing strategic position of Mad Koffe using models
As a Bangladesh online fashion company looking for international expansion, Mad Koffee’s company faces a significant challenge in making new strategies and decisions that are in favor of the company. The company known for its stylish and unique designs and positive word of mouth, has faced criticism on social media because of the color bleeding issue of its T-shirts, down its reputation in the market. The necessity for global expansion arose due to high local competition and operational restrictions (Globocnik, Faullant and Parastuty, 2020). The strategic problem is whether to choose an effectual international market entry strategy to balance the advantages of online shopping and its disadvantages. The case highlights the changing aspects of business strategy, emphasizing how important it is to adapt to challenges, safeguard the brand identity and navigate composite international expansion for long-term success.
PESTLE and Porter’s five force analysis
It identifies the external factors of the company that affect the decision of the company to come into the international market. Porter's five-force analysis helps in analyzing the strategic position and abilities of the company to compete in the international market.
| PESTLE factors |
Porter five force factors |
| Political- political stability affects the operations of Mad Koffee and trade agreements help in doing international business. |
Competitive Rivalry- there is a large competition in the market for Mad Koffee, so they need a strategic approach and opportunity to explore the global market to increase their customer base. |
| Economic- the economic conditions of a country impact the operating business cost and also affect the purchasing power of consumers. For instance the interest rates are low then it will increase the efficiency of the company because it will reduce the interest expense as the rates have reduced and now they will get cheaper money. |
Bargaining Power of buyers- the bargaining power of consumer is high as the company operates to keep the consumer satisfied and it is necessary to keep the consumer happy. the color bleeding issue regarding the company’s t-shirt impacts the reputation of the company among several customers and gets negative feedback from social media. To mitigate this situation they want to make new strategies and gain the trust of customers again. |
| Socio-cultural- They need to understand the needs and pReferences of customers to attain success in the wide market (Pfoser, et. al, 2022). It also supports making products according to the current preferences of the market customer. Currently people have become more conscious relating to the way the appear so it is necessary to provide better services. |
Threat of new entrants- for Mad Koffee, the threat of new entrants in the f-commerce sector is less because of the high challenges of maintaining brand status and starting their journey on online platforms keeps the people away from the industry. |
| Technological- Innovation in technology advancements in the production equipment or processes help in improving the quality of products. Currently Mad Koffee is using all the latest techonlgoy which makes the working of the company better and improved. |
Bargaining power of suppliers- the accessibility of alternative suppliers for materials used in their products affects Mad Koffee’s negotiating position with the supplier (Rahman, et. al, 2020). Ensuring quality control measures in the production process can also help in decreasing the risks. |
| Legal- They focus on intellectual property laws to protect their brand and designs. Compliance with local regulations is important to obey, in terms of packaging, labelling and maintaining product standards and quality control. |
Threat of substitute products- In the fashion industry, there is always competition for companies to make changes in their design, quality and experiences to compete with their competitors. Moreover, there are many alternative options available in this line so threat from substitutes can said to be high. |
| Environmental- The mad Koffee need to use sustainability practices to mitigate the issues of the environment and to increase consumer awareness. For this Mad Koffee is providing for better CSR practices and ethical practices. |
VRIO ANALYSIS- The VRIO analysis model is a strategic technique used for considering the internal resources and competencies of the company. It consists of factors such as value, rarity, imitability and organization.
| VRIO model |
| Value- The f-commerce platform needs low investment and capital, which is valuable for the company to start its journey. The positive word of mouth for Mad Koffee and the unique designs of the company help in gaining value and attracting large consumers in the market all over the globe. |
| Rarity- The ability of the company to make unique designs and styles makes them rare and earns positive word of mouth in the market (Fauzi, et. al, 2021). It helps in achieving a competitive advantage to Mad Koffee. They have a strategic concept for selling their products on online platforms which gives them a rarity. |
| Imitability- The low startup capital in the field of the f-commerce industry makes them available for competitors and easy to imitate. The designs of the company are also easy to replicate or imitate due to their viral nature and word of mouth. |
| Organization- The strategic decision of Mad Koffee is to go beyond the national boundaries of the market help in adapting to dynamic market changes and concentrate on their growth. Quality control measures and managing its brand reputation are the main concerns of the company to increase its organizational effectiveness after the color bleeding issue. |
SWOT analysis The SWOT analysis helps in estimating the company’s strengths, weaknesses, opportunities and threats factors. It helps in analyzing the internal factors of the company that are affecting its operations.
Strengths
- The unique designs and positive word of mouth of the company help in gaining the value and attention of customers among a diversified range of customers in Bangladesh or other countries.
- Another strength of Mad Koffee The use of the f-commerce platform in the fashion industry helps the company operate their business with ease and requires low-capital investment for launching their business on a desired platform.
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Weaknesses
- The quality issues related to their t-shirt color bleeding spoiled their brand image in the market and the negative feedback from customers among their quality issues also occurred (Cao, et. al, 2023). To overcome this issue they need to win the trust of customers by making strategic decisions and genuine efforts.
- They face trouble in operating locally due to rigid competition in the country market.
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Opportunities
- They can add more products to their existing line and diversify their range of new products to expand their global reach and brand reputation in a large market. It increases the chances of gaining positive word of mouth.
- The decision to go at a global level improves their customer base and diversifies their operations. It also gives a chance to sell their products in different other markets and collaborate with international dealers of fashion.
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Threats
- They need a solid strategy to fight competition with international competitors at the global level. They need to think critically about every factor that helps in ensuring their growth on a global scale.
- The negative impact of social media in influencing the company’s reputation is a potential threat. Effective management is needed to decrease their risk.
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3 Strategic Choices
Developing a strategic plan for the growth Mad Koffee’s revenues
Tows matrix-
| Strengths (S) |
Weaknesses (WO) |
| Opportunities (SO)(WO) |
- Application of a premium pricing strategy in business by making superior-quality designs in fashion brands.
- Entering into new markets globally to increase the operations of the company and target customers who want unique designs in their brand (George, Walker, and Monster, 2019).
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- Develop a quality control technique for products to solve the issues related to product damage, without increasing the prices of products.
- Grow their global reach to enter into new international markets and emphasize on quality assurance techniques to maintain quality.
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| Threats (ST), (WT) |
- The niche market focus of the company is on their unique designs that make the company distinct from others in the market.
- When competition is less powerful, focus on precise market sections or demographic groups.
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- Implement cost-cutting actions to offer competitive pricing without compromising the quality of products.
- Develop novel markets that target price-sensitive customers who want fashionable designs.
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Mad Koffe, facing challenges in its local market and determined by the need for global expansion, has a number of strategic options to develop a growth plan for revenue growth. First of all, to correct the negative reviews of shirt smell, and color bleeding, the company is free to concentrate on improving product quality and introduces strict quality control measures. It also builds trust among consumers and makes Mad Kofee a trusted brand in the global market (Jocevski, et. al, 2019). Second it may be essential to investigate the diversification of the product line into products other than t-shirts. To accommodate a broader audience and reduce dependence on just one product category, the company may introduce new or additional products. Furthermore, this strategic move is connected with the trend of selling a variety of fashion items through the f-commerce platform.
Moreover, by investing in innovative marketing strategies, the company can take advantage of its early strengths in popular designs and positive word of mouth. By working with influencers, partnerships or interactive social media campaigns it is likely to regain positive attention and increase demand (Amed, et. al, 2023). Also, the company is able to consider partnerships or collaborations with local distributors and retailers to enable faster entry into the global market and improve its understanding of community priorities when deciding where and in what way it wants to enter the international market.
ANSOFF matrix
The Ansoff product or market growth matrix helps Mad Koffee in developing a strategic plan for revenue progress. Market penetration, diversification, market and product development are the four factors or growth strategies included in this matrix. To create a constant and flexible growth plan, the company will be capable of regulating its approach to considerate particular circumstances including market entry, product development and diversification.
Market penetration- The Company concentrates on penetrating its current market by raising its marketing efforts, improving its image as a positive brand and resolving quality issues related to t-shirt color splashes, Mad Koffee can further expand its presence in the prevailing market. By focusing on new products and improving customer satisfaction, it is conceivable to gain a larger market share (Cosenz and Bivona, 2021). Each strategy should be carefully implemented in assessment of the unique challenges and opportunities presented by f-commerce and international markets.
Market development- The latent for Mad Koffee to combat its local competition and gain access to an untouched customer base lies in exploring new international markets. The company will be able to enter new geographies where stylish designs are in demand through the use of f-commerce platforms. This strategy is in line with the company’s requirement for global expansion.
Diversification- By the given latent capacity of f-commerce, along with the challenges facing local markets, Mad Koffee may differentiate its product offering through a combination of related or unrelated industries (Siegfried, et. al, 2021).To grow the business smartly and reduce dependence on a single market segment, it may be essential to explore partnerships or acquisitions.
Product development- Mad Koffee can develop new and innovative products in current markets or international markets by using its core ability to produce stylish designs. To address the problem of over-dependence on t-shirts, this may also include intensifying the product line to include accessories, shoes or other fashion items.
Discussing various international entry mode strategies that firm may pursue for expanding internationally
Mad Koffe contemplates various international entry mode strategies for international expansion, because of the superior challenges and opportunities in the f-commerce sector. Some possible strategies for entering the international market can be:
Joint ventures- Joint ventures are those that involve working together with a local company for the construction of a new entity. This method consents the local partner to share the risks and profits with Mad Koffee, firming up its strengths to steer the complex international market. The strategic partnership is based on the local partner’s knowledge of the international market, regulatory atmosphere and consumer behavior (Cuervo?Cazurra, Mudambi, and Pedersen, 2019). It promotes mutual growth and enables market entry by balancing the approach.
Greenfield investments- This type of investments include creating a business in an international market. This approach is responsible for complete control over business but involves higher risk and preliminary capital requirements. In markets where f-commerce is expanding quickly, Mad Koffee can think of this as a vast long-term opportunity. It verifies the alignment of brand, morals and business model through the development of its personal infrastructure & operations (Sharma, et. al, 2020). Greenfield investment allows the company to take advantage of evolving opportunities and establish an independent presence in the target market.
Strategic alliances and partnerships- Mad Koffee can increase valuable insights and earlier entry into target markets through collaboration with recognized local partners or strategic alliances with existing businesses in the target markets. This tactic utilizes partners’ local market knowledge and their personal customer base (Zaman and Chowdhury, 2022). This method lowers hurdles to entry, overcomes challenges in the area of operations and hastens market entry. Furthermore, Mad Koffe’s flexibility is improved by its interactions with locally engaged partners in the global environment.
Licensing and franchising- A new strategy is to license or franchise the ‘Mad Koffee’ brand to local businesses in international markets. It provides fast entry into the market, without large capital investment (Paul and Mas, 2020). However, in this approach, maintaining quality control and brand consistency will be of ultimate importance. The resources, expertise and well-known presence of local partners are used as part of this strategy. Maintaining stringent quality control and ensuring while offering cost benefits will become a crucial requirement. Ensuring proper communication and operative contractual arrangements is vital to preserve Mad Koffee’s reputation.
- STRATEGY IN ACTION FOR MAD KOFFEE
The SAFe strategy action tool can be used to measure and implement strategic options for growth and international market entry (Katsikeas, Leonidou and Zeriti, 2020). The tool deliberates the suitability, acceptability, and feasibility of strategic options to provide a clear framework for the decision-making process.
SAFe model
The SAFe model is a scaled agile framework model, designed to support large administrations adopting active and thin practices at scale. It is significant to consider many factors when evaluating the suitability, acceptability and feasibility of a SAFe positioning within the company.
| |
Suitable
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Acceptable
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feasible
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Total score
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- High competition
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4
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4
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5
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13
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- Unique designs
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5
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5
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5
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15
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- Quality concerns
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4
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4
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4
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12
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- Global level expansion
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3
|
3
|
4
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10
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On the basis of above evaluation, by designing apparels uniquely firm would become able to attract more customers. In this way, increasing customer base may result into high productivity and profitability. This is particularly because of the reason that the score is highest for unique design and this implies that the feature of unique design is the best alternative for the company to invest as the strategic direction. This is particularly for the reason that when the effective design will be provided to the company then it will be improving the efficiency of the company.
The Ansoff matrix can be used by Mad Koffee to estimate growth strategies as it faces challenges in its local market. The company has the capability to develop products away from t-shirts and make innovations to address past glitches of color bleeding. In order to spread its presence, the company can explore new markets for its present products or introduce new designs. By entering into new market firm would become able to increase both market share and profitability.
The strategic alliance appears to be the most feasible option for the company to expand its operations internationally (Alon, Apriliyanti and Parodi, 2020). Mad Koffee is capable of influencing its market knowledge and lowering entrance barriers by working with well-known local retailers or distributors. By reducing the risks linked with cultural differences and regulatory complexity, this partnership allows for a smooth evolution to global markets. As a Bangladeshi f-commerce company, Mad Koffee has to make important decisions to multiply its international business.
5. CONCLUSION
In summary, Bangladeshi f-commerce Company, Mad Koffee faces the challenge of moving into international markets, subsequent to the negative reputation of its products due to quality problems. In spite of the easiness of deployment and low preliminary venture capital requirements for f commerce platforms, global expansion requires a strategic method, because of negative social media feedback and rigid local competition. By means of these thoughts, Mad Koffee should focus on quality control, reestablish its reputation by targeted social media and marketing efforts, and consider different ways to access it with the help of online marketplaces or strategic alliances. Transparency, consumer education and inspiring adoption of local preferences are vital to success. This conclusion underlines the importance of a universal strategy conjoining product improvement, and marketing flexibility in entry routes with a view to overwhelming the difficulties of global trade and restoring Mad Koffee’s position on the world market.
REFERENCES
Books and Journals
- Alon, I., Apriliyanti, I.D. and Parodi, M.C.H., 2020. A systematic review of international franchising. Multinational Business Review, 29(1), pp.43-69.
- Amed, I., Berg, A., Balchandani, A. and ANDRÉ, S., 2023. The State of Fashion 2023.
- Cao, J.M., 2023. A STUDY OF DIGITAL TRANSFORMATION STRATEGIES OF AT CLOTHING COMPANY. The EUrASEANs: journal on global socio-economic dynamics, (5 (42)), pp.276-288.
- Cosenz, F. and Bivona, E., 2021. Fostering growth patterns of SMEs through business model innovation. A tailored dynamic business modelling approach. Journal of Business Research, 130, pp.658-669.
- Cuervo?Cazurra, A., Mudambi, R. and Pedersen, T., 2019. Clarifying the relationships between institutions and global strategy. Global Strategy Journal, 9(2), pp.151-175.
- Fauzi, I., 2021. PROPOSED SOLUTION TO INCREASE REVENUE IN FASHION DENIM INDUSTRY (THE CASE OF LACUS. ID DENIM) (Doctoral dissertation, PRESIDENT UNIVERSITY).
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- Pfoser, S., Herman, K., Massimiani, A., Brandtner, P. and Schauer, O., 2022, February. From Linear to Circular Packaging: Enablers and Challenges in the Fashion Industry. In International Conference on Dynamics in Logistics (pp. 435-445). Cham: Springer International Publishing.
- Rahman, M.M., 2020. Suggested strategy for Bangladesh garment manufacturers and exporters association (BGMEA) during and post Covid-19 to protect the industry from massive loss. Global Journal of Management and Business Research: B Economics and Commerce, 20(9), pp.58-67.
- Sharma, P., Leung, T.Y., Kingshott, R.P., Davcik, N.S. and Cardinali, S., 2020. Managing uncertainty during a global pandemic: An international business perspective. Journal of business research, 116, pp.188-192.
- Siegfried, P., 2021. Strategic Management Business Cases and Management Concepts. BoD–Books on Demand.
- Zaman, R.T. and Chowdhury, A.H., 2022. Mad Koffee: Will a Local Bangladesh F-Commerce Company Survive in the International Arena?. SAGE Publications: SAGE Business Cases Originals.
Online
MAD KOFFEE, 2023. Online. Available through. : <https://sk.sagepub.com/cases/mad-koffee-bangladesh-f-commerce-company-international-arena>
