Introduction
Alfred LA is a medium-sized rapidly expanding coffee shop in Los Angeles specializing in fashionable caffeination (Directo-Meston, 2016). In a highly crowded and competitive market, Alfred LA is actively working to find a niche that will give it a competitive edge over its rivals. The management of this company has been highly interested in expanding its operations beyond the national borders. As a part of this effort, the firm currently has an outlet in Tokyo, Japan, and it has plans to open more shops in Europe. This business model canvas will make it possible to analyze the operations of this firm, factors that can potentially enhance its success, and issues that may impede its rapid expansion.
Alfred LA’s Business Model Canvas
A business model canvas makes it possible to understand specific factors that may affect a firm’s normal operations. Osterwalder, Pigneur, Bernarda, and Smith (2014) define a business model canvas as “a visual chart with elements that describe a firm’s value proposition, infrastructure, customers, and finances.” This tool outlines all critical issues about a firm in a way that makes it easy to identify points of strengths and areas of weaknesses. Table 1 displays Alfred LA’s business model canvas.
Table 1: Alfred LA’s Business Model Canvas.
The Sydell Group is a key partner of Alfred LA in the local market. The partnership will enable the latter to expand its operations locally without requiring a significant investment in infrastructure. Alfred LA is also working closely with suppliers to ensure easy access to raw materials at the right time and at the best price. The key activities of this coffee shop include producing beverages for and promoting related products to its customers.
The firm also helps organizers who want to use the facility to come up with an appropriate plan of activities. When identifying key resources for the company, Alfred LA’s intellectual assets were identified as one of the most important factors leading to the success of this firm. The organization’s unique approach will enable it to overcome such market challenges as rivalry in the industry. Human resources, financial resources, and physical assets including the facility and equipment used to prepare products at this firm are also important.
When defining the firm’s value proposition, convenience is a value that this company heartily embraces. It seeks to meet the needs of its customers in the most convenient way possible. Another value that the model identifies is customization, which implies treating every customer as a unique person who may have preferences that differ from those of most other clients. This strategy makes it possible to attract tourists while at the same time keeping a loyal base of local customers.
Accessibility and timely service are yet other values that the firm cherishes. While the company’s values shine forth clearly, it was not easy to determine the cost structure of the firm. However, the structure was broadly grouped into three classes: fixed costs, variable costs, and economies of scale. The revenue stream of the firm comes from the sale of the products it offers in the market and the commissions it earns through event planning.
A company’s relationship with customers is another important factor that defines its success. Alfred LA has embraced the concept of community by developing products that target a specific group within the country. The organization has also maintained open communication with clients and employees to understand the emerging trends in the market. In terms of segmentation, while the firm has identified a specific niche in the market, it has also developed products that target the general market. The channels the company uses to promote its brand and products include home deliveries for some customers and after-sale services, especially for tourists.
Reflections on the Process of Business Model Canvas Creation
When creating the business model canvas above, some issues were noted that I believe the management of the firm should not ignore. The business model canvas identified specific strengths that can help the firm to overcome threats and deal with internal weaknesses. In this section, the focus is to reflect on specific issues identified in the model.
How My Understanding and Opinion of the Business Changed as I Worked on the Canvas
When working on the canvas, new information emerged about the business that redefined my opinion and understanding of the firm. One issue that became clear was the special market niche that the firm targets. Initially, I believed that Alfred LA is just a normal coffee shop offering a variety of drinks similar to those available in any other restaurant. However, I learned that this firm has a unique culture – the Korean culture – defining the nature of the products it offers in the market.
Few firms in the United States share a similar approach and business model. I also realized that this firm offers a unique commitment towards its customers, treating every client as a unique individual whose needs may vary from those of the majority. Following that ideal, the company goes a step further to offer products that meet these needs in the best way possible.
Parts That Were Hardest to Complete
When developing the business model canvas, some sections were not easy to complete, such as determining the cost structure. As Pijl, Lokitz, and Solomon (2016) observe, publicly traded firms have a responsibility to publish their financial documents regularly, at least once every year. However, private firms such as Alfred LA are not required to make their financial documents available in the public domain, which makes it difficult to identify the cost structure of the company. Ascertaining all the key partners that the firm is working with is also not an easy task unless the management identifies them.
Strengths, Weaknesses, Opportunities, and Threats to the Business
When analyzing a firm, one of the most important tools to employ is the SWOT model (Campbell, Gutierrez & Lancelott, 2017). This model helps in identifying the strengths, weaknesses, opportunities, and threats that a firm faces in the market. When developing the business model canvas, these issues came out clearly. One of the greatest strengths of this firm is its niching strategy. The company identified a gap in the market and then came up with an effective strategy for serving customers in this segment.
Another major strength is the strategic partnership that it has developed in the market that enables this firm to expand its operations without having to incur huge expenses. It was also evident that the coffee shop has embraced a unique approach to delivering its services. The strategy of meeting the individual needs of customers will enable it to gain a competitive edge in the market.
The business model identified specific weaknesses that the management of this firm needs to address. One of the main areas of weakness is the fact that this company represents an inconspicuous brand in the market. The brand Alfred LA is not widely known in the United States, a sign that the firm needs to do more to promote its image in the market. It was also evident that although the management is pursuing effective expansion strategies, no clear plan is apparent as to how it is going to promote its brand and products both locally and in the international market.
The model has identified opportunities that the firm should take when operating in the market. One of these is the ability to expand globally. Products that the firm offers have great potential to be popular in South Korea, China, and Japan. The fact that the United States has maintained a good relationship with some of these Asian countries can facilitate Alfred LA’s capacity to expand its operations to this region (Directo-Meston, 2016). Improved technology also supports opportunities for this firm to expand its operations, making it easy for the company to promote products using social media platforms.
The management of Alfred LA will need to determine how to deal with threats in the market. The main issue identified when developing the business model canvas involves stiff competition. Although the company has identified a unique niche in the market, clients can still purchase alternative products from rival companies. Another problem is imitation as it is fairly simple for new or existing firms to imitate the business model or products this firm offers. Table 2 provides a summary of the SWOT analysis.
Table 2: SWOT Model.
Conclusion
Alfred LA is an up-and-coming coffee shop that started its operations in Los Angeles and has since expanded to other locations across the country. The business model canvas shows that the firm has an effective plan that would enable it to achieve growth both locally and in the international market. The strategic partnerships that the company has embraced and its unique business model will enable it to become a major player in the beverages market.
References
Campbell, A., Gutierrez, M., & Lancelott, M. (2017). Operating model canvas: Aligning operations and organization with strategy. Zaltbommel, Netherlands: Van Haren Publishing.
Directo-Meston, D. (2016). How Melrose Place’s Alfred Coffee became a fashionable lifestyle brand. Vox Media. Web.
Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2014). Value proposition design: How to create products and services customers want. Hoboken, NJ: Wiley.
Pijl, P. D., Lokitz, J., & Solomon, L. K. (2016). Design a better business: New tools, skills, and mindset for strategy and I. Hoboken, NJ: John Wiley & Sons.