"Java The Hut" and the Special Eateries Industry

Wake up and smell the coffee!! Java The Hut (JTH) Coffee is everywhere.The world's number one specialty coffee retailer; JTH has 15,000 coffee shops in more than 38 countries.The company offers customized coffee drinks and food items, as well as roasted beans, coffee accessories, and teas.JTH owns approximately 8,500 of its shops, which are located in about 10 countries (mostly in the US), while franchisees operate more than 6,500 stores worldwide (primarily in shopping centers and airports).The company also owns Jana's Best Coffee and Giuseppe's Italia coffee brands, which are often found in airports, bookstores and university settings.In addition, JTH markets its coffee through grocery stores and licenses its brand for other food and beverage products.Total revenue in 2015 was $6,456,947,000.JTH employs approximately 223,000 people worldwide.JTH is a world-renowned company with a very recognizable icon (a black pirate ship floating on a lime green sea).Seventy-seven percent of JTH's sales are comprised of specialty drinks tailored to meet the demands and desires of each individual customer.Lately, quality has suffered due to JTH's rapid expansion and inability to properly train new employees before they are needed at the counter.JTH has such partnerships with growers through a program called "We are Committed".These partnerships are beneficial to all parties, as they provide JTH with some control over their inputs (raw materials) and in turn, growers have a committed buyer.

Coffee is the second largest U.S. commodity and firms in this industry must differentiate themselves in the hope of sustaining a competitive advantage.Brand name and logo are very important, as is the ability to meet customer's expectations.About 150 million consumers in the United State drink coffee, with 89% of U.S. coffee drinkers brewing coffee at home (especially with the introduction of specialty home brewing machines-such as Keurig) rather than purchasing ready-to-drink coffee at coffee shops and restaurants such as Java The Hut, Dunkin' Donuts, or McDonald's.Packaged coffee for home brewing is easy to buy in any grocery store and typically carries a retail price of $4 to $6 for a 12-ounce package.

Backward and forward integration may also be an important component of organizational success and profitability.Backward integration can be achieved in this industry via partnerships with coffee growers.Forward integration can be achieved through licensing agreements, such as partnerships with the bookstores, restaurants, government and airlines.Another important issue for this industry to monitor is the global coffee supply.Coffee is the second largest US import surpassed only by oil imports.Most of the coffee is produced in a belt "bounded by the Tropics of Cancer and Capricorn", with the top ten coffee producing countries being Brazil, Vietnam, Uganda, etc.Coffee is the world's second largest commodity and requires growing temperatures between 68 to 75 degrees and 70 inches of annual rainfall. However, over the past decade, developers, eager to build houses and resorts for American and European retirees have been snatching up prime coffee-growing land.Global warming has also become a great concern for coffee growers.

The special eateries market is large and growing at a rapid pace due in part to changing tastes and increasing disposable income in developing countries such as China.In fact, over 400 billion cups of coffee are consumed every year.The numbers of competitors in the industry is also increasing.Large companies such as McDonald's, 7-11 and Dunkin Donuts are entering the market which has predominantly been comprised of smaller chains such as, Supreme Bean, Coffee and Tea, The Tea Leaf, Peet's, Coffee-to-Go and Java Jet.Though, smaller chains pose a small risk to JTH's current 48% market share, large companies like McDonald's could pose a serious threat.

a.Using the Hambrick Strategic Diamond and the information listed above answer the following for JTH (3 points);

i.Arenas

ii.Differentiators

iii.Staging

iv.Vehicles

v.Economic Logic

1. What are the Industry Characteristics for the Special Eateries Industry? (1 points)

1. What are the driving forces that may potentially impact the Special Eateries Industry? (1 points)

1. Based on the information above and your knowledge of the Special Eateries Industry, what are the Key Success Factors for this industry? Explain your choices. (1 points)

1. Provide a SWOT analysis for Java The Hut. (4 points)