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Effects of current downturn on Caffe Nero

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This paper illustrates that since its development in the year 1998, Caffe Nero has been expanding ever since. Gerry Ford, the chairman and chief executive of Caffe Nero is more than satisfied that the overall performance of the business. The earnings of the business have not remained positive but have surpassed the firm’ s forecasts. The economic downturn has had considerable impacts on the revenue, but the overall profits of the company have remained positive and have shown a rising trend. This is considered as a significant achievement for the chain as the economic downturn had negatively impacted many other brands prominent brands in the industry.

One of the crucial aspects which Ford and the administrators of Caffe Nero are concerned about is that the business may lose a significant amount of revenue to the declining rate of tourism of London. However since the other branches of the coffee brand has been thriving well, the overall revenue of Caffe Nero is expected to remain positive. Caffe Nero expects to grow further in the coming years through opening more number outlets.

It also expects to enter the markets of Asia. It is perceived that such strategies of growth can reduce any risk of decline in the coffee market of the western nations.   Moreover venturing into emerging nation also facilitates operating in less saturated market conditions. In the western nations the economic downfall, saturated coffee market, and continuously rising competition have propelled many firms to expand their activities into other nations. The competition pressure existing in the external environment for Caffe Nero can be analyzed through Porters Five forces. The of buyers in the retail coffee chain industry is high.

This is due to the aspect that consumers can easily to switch to other brands according to their preferences. Hence in order to manage the bargaining power of buyers, Caffe Nero is required to sell its products at competitive rates. It is also essential that the company promotes itself more through advertisements and differentiate its products from existing brands in the market to achieve competitive advantages.

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preview essay on Effects of current downturn on Caffe Nero
  • Pages: 9 (2250 words)
  • Document Type: Essay
  • Subject: Business
  • Level: Undergraduate
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