Don Macchiatos

2024 Strategic Plan

Prepared by:
University of the Cordilleras
Dallen, Faust Edilbert
Escaño, Benjamine
Falluyan, Luvilyn Magwelang
Gallego, Jack Nicholas
Maderas, Leila Jeremy
Valdez, Prince Charle

March 2024
 Table of Contents
I. COMPANY OVERVIEW
A. Company Logo Pg. 4
B. Company History Pg. 5-6
C. Nature of Business Operations Pg. 7
D. Mission and Vision Statement Pg. 8
Core Values
II. STRATEGY FORMULATION
A. SWOT Matrix Analysis Pg.11
Strengths
Weaknesses
Opportunities
Threats
B. TOWS Matching Pg. 12
C. PESTEL Analysis Pg. 13-
14
D. Porters Five Forces Analysis Pg. 15
E. Boston Consulting Group (BCG) Matrix Pg. 17-
BCG Evaluation 18
F. Strategic Position and Action Evaluation (SPACE) Matrix Pg. 19-
SPACE Matrix Analysis 20
G. Internal Factor Evaluation (IFE) Matrix Pg. 21
IFE Matrix Analysis
H.External Factor Evaluation (EFE) Matrix Pg. 22
EFE Matrix Analysis
I. Internal External (IE) Matrix Pg. 23-
IE Matrix Analysis 26
J. Competitive Profile Matrix Pg. 27
K. Grand Strategy Pg. 28

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COMPANY OVERVIEW

A. COMPANY LOGO

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 B. COMPANY HISTORY
I. THE MAIN
In the bustling streets of Cebu, where the aroma of freshly brewed coffee
drifts through the air, there lies a café known as Don Macchiatos. Born out of a
passion for both coffee and affordability, Don Macchiatos has become
synonymous with quality brews that don't break the bank.

The story of Don Macchiatos begins with Nickie "Nic-nic" San Juan, a
visionary entrepreneur hailing from Pinamungahan, Cebu. Formerly a dedicated
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call-center agent, Nic-nic's journey took a turn during the pandemic when she
embraced motherhood. Alongside her partner, she managed Pure Leaf Milktea, a
venture that flourished amidst the challenging times. Nevertheless, their
unwavering commitment to progress and innovation persisted.

During her pregnancy, Nic-nic found solace in sipping coffee, as did her
partner. Yet, the exorbitant prices of popular coffee brands prompted them to
envision a different path. Why pay more when they could craft their own brew?
Thus, Don Macchiatos was born. Through rigorous training and strategic
partnerships with affordable suppliers, they perfected their craft, specializing in the
beloved Iced Caramel Macchiato.

In a world where premium often comes with a hefty price tag, Don
Macchiatos dared to defy the norm. They aimed not only to satisfy but also to uplift
their community, particularly students and working individuals on tight budgets.
Nic-nic's own experiences as a student, sacrificing meals for a cup of coffee, fueled
their mission to make quality brews accessible to all. Hence, the iconic price point
of 39 pesos was set—a testament to their commitment to affordability without
compromise.

"Bahala og ginagmay, basta kanunay," a cherished Cebuano adage echoing

the importance of consistency, became their guiding principle. Don Macchiatos
stood firm in their belief that success lies not in exorbitant prices but in unwavering
dedication to delivering excellence, day in and day out.

The resounding support from the people of Cebu propelled Don Macchiatos
to unprecedented heights. From humble beginnings, their café transformed into a
beloved destination, attracting coffee enthusiasts from every corner of the city.
Encouraged by this overwhelming response, they ventured into franchising,
spreading the essence of Don Macchiatos far and wide.

II. THE BRANCH – LOWER BONIFACIO, BAGUIO CITY

Ms. Venus Latube is among the franchisees of the Don

Macchiatos café. The franchisee first branch out in Palawan,
and upon its success, Ms. Latube decided to expand operations
to Lower Bonifacio, Baguio City.

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 The decision to open a branch in Baguio City was prompted
by the success of Ms. Latube's uncle's branches in Palawan.
Encouraged by her mother, she and her boyfriend embarked on
the venture.

As Ms. Latube is studying in Baguio City, they opted to rent

a commercial space within the city. Consequently, they were
able to open the branch on November 16, 2023.

C. NATURE OF BUSINESS OPERATIONS

Don Macchiatos specializes in offering a range of
specialty coffee drinks at very affordable prices. Their
menu features a variety of options in cold beverages,
each crafted with unique flavors and recipes.

Strategically situated near a local university, Don

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Macchiatos primarily caters to students and young adults.
This location allows the café to effectively meet the tastes
and budgetary needs of its target demographic, thereby
ensuring its relevance and accessibility within the
community.

A. MISSION AND VISION STATEMENTS

VISION
Don Macchiatos is inspired by the vision and mission of
Big and Successful coffee chains in the Philippines. Simple
and straightforward, The Vision is to be able to provide
high-quality coffee accessible to all without burning
a hole in one’s pocket. The vision provides clarity around
the direction and long-term strategy that the business will
employ.

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 “To provide high-quality coffee
accessible to all without burning a hole
in one’s pocket”

HIGH-QUALITY ACCESSIBLE WITHOUT

BURNING A HOLE
COFFEE TO ALL IN ONE’S POCKET
Safe and Clean Budget-friendly
Prime Location
Great Aroma prices
Customer Friendly
Real Coffee Beans Various sizes
Affordable
Flavorsome Promos and
Flexible payment
All natural ingredients Discounts
options
Bundle offers

MISSION AND VALUES

As a forward-looking business organization, Don
Macchiatos aspires to provide budget-friendly but
high-quality coffee to all. In order to move towards
our visions and goals we must strive to live up to
our mission and values. The following statements
define the mission and values of Don Macchiatos.

MISSION
 Provide high-quality coffee for a low price.

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 Deliver high-quality customer service.

 Promote environmentally friendly practices.

 Create a Warm and Inviting places for all.

CORE VALUES

 Product Quality
 Environmentally Friendly
 Great Quality Service
 High Product Quality
 Food Safety
 Customer Service
 Engagement

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 STRATEGY
FORMULATION

A. SWOT ANALYSIS
The SWOT analysis highlights Company ABC's internal competencies as
well as its exterior market position. The overall picture reflects a mix of
good and negative characteristics. The SWOT analysis assists in
identifying viable defensive and offensive strategies by comparing
strengths to opportunities and weaknesses to threats.

Strengths Weaknesses

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 Prime Location Manual system
Hyped trend Highly Competitive market
Quality Products & Services Product Cost disadvantage
Budget Friendly Limited customer area
Student Friendly Limited storage space
Direct relationship with High chance of break-ins
customers
Stock shortage
Highly focused
Lack of Ambiance and
niche
Aesthetics
Customer
High Cost of
Focused
lease
Highly diversified menu Reliant on one main channel
Efficient product serving of sales

Opportunities Threats
High number of customers High number of new entrants
Open for further expansion High options for substitute
External to DM

Wider range of products Uncertain economic conditions

Able to offer online services Shifts in customer preferences
Partnerships/ Collaborations with other Shortages in supplies
business Regulatory changes related to health and
Implement loyalty programs or rewards safety standards
Franchising opportunities Negative impact of natural disasters
Introduce innovative technologies such as Increasing costs of utilities or overhead
mobile ordering or self-service kiosks expenses
Diversify revenue streams by offering Legal challenges such as lawsuits or
merchandise disputes
Invest in staff training and development to Reputation damage from social media
enhance service quality and customer backlash
satisfaction

B. TOWS MATCHING
WEAKNESSES STRENGHTS
THREATS
WT ST
Product Cost Disadvantage & Budget Friendly & Highly
Rising Operational Costs: Diversified Menu:
Implement cost-saving measures Counteract threats from other
and negotiate with suppliers to firms using a similar approach
mitigate the impact of rising by emphasizing affordability and
operational costs on the product continually innovating the menu
cost disadvantage. to maintain a competitive edge.
Limited Storage Space & Stock
Shortage: Student Friendly & Efficient

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 Improve inventory management Product Serving:
systems to optimize storage space Mitigate the threat of
utilization and prevent stock encroachment by new firms into
shortages, reducing vulnerability to local markets by focusing on
supply chain instabilities. efficient service tailored to
student preferences.

WO SO
Manual System & Online Prime Location & Direct
Presence and Delivery: Relationship with Customers:
Address the limitations of manual Leverage the prime location and
systems by investing in online direct customer relationship to
ordering and delivery platforms to expand the product line and
enhance convenience and reach introduce health-conscious
new customers. offerings, catering to changing
Limited Customer Area & consumer preferences.
OPPORTUNTI
Market Expansion: Quality Products & Services:
ES
Overcome limited customer area Utilize the reputation for quality
constraints by expanding into new to establish partnerships with
markets with high demand for local businesses and expand
specialty coffee. market presence through online
delivery services.
Highly Focused Niche &
Customer-Focused:
Further diversify the highly
focused niche by expanding
product offerings based on
customer feedback and demand.

C. PESTEL ANALYSIS

 POLITICAL:
- Government regulations and policies regarding food safety,
labor laws, and business operations can impact the café's
operations.
- Changes in taxation policies, such as increases in taxes on
imported coffee beans or beverages, can affect costs and
pricing.

 ECONOMIC:
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 - Economic conditions, such as inflation rates, GDP growth, and
unemployment rates, can influence consumer spending
patterns.
- Fluctuations in currency exchange rates can impact the cost of
imported coffee beans and other ingredients.

 SOCIAL:
- Trends in consumer preferences and lifestyles, such as the
increasing demand for specialty coffee and the rise of coffee
culture, can present opportunities for growth.
- Changing demographics, such as an aging population or an
increase in the number of young adults, can affect the café's
target market.

 TECHNOLOGICAL:
- Advances in technology, such as mobile ordering apps and
online delivery platforms, can enhance customer convenience
and improve operational efficiency.
- Technological innovations in coffee brewing equipment and
techniques can impact the quality of the café's offerings.

 ENVIRONMENTAL:
- Growing awareness of environmental issues, such as climate
change and waste reduction, may lead to increased demand
for sustainable coffee products and eco-friendly practices.
- Changes in weather patterns and natural disasters can affect
coffee bean production and supply chains.

 LEGAL:
- Compliance with food safety regulations, health codes, and
licensing requirements is essential for the café's operation.
- Legal issues related to intellectual property rights, such as
trademarks and copyrights for the café's branding and
recipes, must be addressed.

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 D. PORTERS FIVE FORCES ANALYSIS

1. THREAT OF NEW ENTRANTS:

 Brand Loyalty: Established brands in the local coffee market may
have strong customer loyalty, making it difficult for new entrants to
gain market share.

 High Initial Investment: Setting up a café requires significant initial

investment in equipment, location, and marketing, acting as a barrier
to entry.

 Regulations: Government regulations related to food safety, health

codes, and licensing can increase the complexity and cost of starting
a new café.

2. BARGAINING POWER OF SUPPLIERS:

 Coffee Bean Suppliers: Don Macchiatos Café's bargaining power may
be affected by the availability and pricing of coffee beans, influenced
by factors such as weather conditions and global supply chain
disruptions.
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 Equipment Suppliers: The café's bargaining power with equipment
suppliers may be influenced by the availability of alternative suppliers
and the uniqueness of the equipment required for specialty coffee
preparation.

3. BARGAINING POWER OF BUYERS:

 Price Sensitivity: Customers' willingness to switch between coffee
providers based on price may impact Don Macchiatos Café's pricing
strategy and competitive position.

 Product Differentiation: The café's ability to offer unique and high-

quality coffee beverages may reduce customers' bargaining power by
increasing their willingness to pay a premium price..

4. THREAT OF SUBSTITUTES:
 Alternative Beverages: Substitutes for coffee, such as tea, energy
drinks, or homemade beverages, may pose a threat to Don
Macchiatos Café's market share, especially if they offer similar
benefits at a lower price.

 Home Brewing: The increasing popularity of home coffee brewing

machines and DIY coffee recipes may reduce customers' reliance on
coffee shops for their caffeine fix.

5. COMPETITIVE RIVALRY:
 Number of Competitors: The intensity of competition in the local
coffee market depends on the number and strength of competitors,
including both large coffee chains and independent cafés.
 Differentiation Strategy: Don Macchiatos Café's ability to differentiate
itself through unique offerings, such as specialty coffee recipes and a
cozy ambiance, can influence its competitive position and customer
loyalty.

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E.BOSTON CONSULTING(BCG) MATRIX

MARKET SHARE
HIGH LOW
STARS QUESTION MARKS
M H
A I
R G
H
K
E
T

G
R
O
W
T
CASH COWS DOGS

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 L
O
H W

R
A
T
E

Stars: Macchiato Original – Best sellers of the shop, requires heavy

investment to maintain their growth.

Question Marks: Macchiato Overload – High market growth rate but

low market share, requires further investment.

Cash Cows: Macchiato Matcha Low market growth rate but high relative
market share, generates significant cash flow, and requires minimal
investment.

Dogs: Macchiato Mango - Low market growth rate and low relative
market share, does not generate significant profits.

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F. SPACE MATRIX
Internal Strategic Position External Strategic Position
Competitve (CA) Industry (IS)
Market Share -3 Market Growth Rate 5
Brand Strength -2 Industy Profitability 6
Product Quality -1 Technological Changes 4
Distribution Channels -2 Barriers to Entry 3
A
Affodability -2
xi
s Average: -2 Average: 4.5
X Total X axis score: +2.5
Financial (FS) Environmental (ES)
Liquidity 3 Economic Conditions -2
Profitability 5 Political Stability -1
Leverage 4 Technological Changes -3
A Return on Investment 6 Social Trends -1
xi 4. -
s Average: 5 Average: 1.75
Y Total Y axis score: + 2.75

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Aggressive Strategy - The Company has a competitive
advantage and it can protect it. A critical factor is the
possible entry of new competitors into the industry. To
maintain this advantage product development,
integration with other companies, acquisition of
competitors or focusing on competitive products.

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G. INTERNAL FACTOR EVALUATION

Weighted
Strengths Weight Rating
Average
Prime Location: 0.15 4 0.6
Quality Products & Services: 0.2 4 0.8
Budget Friendly: 0.1 3 0.3
Student Friendly: 0.08 2 0.16
Direct relationship with customers: 0.12 3 0.36
Highly focused niche: 0.15 3 0.45
Customer Focused: 0.18 4 0.72
Highly diversified menu: 0.1 2 0.2
Efficient product serving: 0.1 3 0.3
Total: 3.88
Weaknesses
Manual system: 0.08 2 0.16
Highly Competitive market: 0.2 4 0.8
Product Cost disadvantage: 0.15 3 0.45
Limited customer area: 0.1 2 0.2
Limited storage space: 0.07 2 0.14
High chance of break-ins: 0 1 0
Stock shortage: 0.12 2 0.24
Lack of Ambiance and Aesthetics: 0 1 0

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 High Cost of lease: 0.12 3 0.36
Reliant on one main channel of
0.15 3 0.45
sales:
Lack of Brand Recognition: 0.13 2 0.36
Total: 3.16

H. EXTERNAL FACTOR EVALUATION

Opportunities
Increased demand for challenging, well designed
0.12 3 0.36
projects:
Expand private development clients: 0.15 4 0.6
Change in demographics & land use patterns: 0.1 3 0.3
Acquire transportation & planning expertise to capture
0.13 3 0.39
projects:
Just scratching the surface on ADC: 0 1 0
In-depth assessment: 0.1 3 0.3
Online Presence and Delivery: 0.18 4 0.72
Partnerships with Local Businesses: 0.12 3 0.36
Expanding Product Line: 0.15 3 0.45
Sustainability Practices: 0.15 3 0.45
Market Expansion: 0.2 4 0.8
Health-Conscious Offerings: 0.12 3 0.36
Total: 5.09
Threats
Other firms using a similar approach: 0 1 0
Encroachment of new firms into local markets: 0.18 4 0.72
Firm size issues: 0 1 0
Talent retention issues: 0 1 0
Competition 0.25 4 1
Economic Fluctuations: 0.2 4 0.8
Rising Operational Costs: 0.18 4 0.72
Changes in Consumer Trends: 0.15 3 0.45
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 Health Regulations and Policies: 0 1 0
Regulatory Changes: 0 1 0
Supply Chain Instabilities: 0.15 3 0.45
Intensified Market Saturation: 0.2 4 0.8
Total: 4.94
Overal Weighted Average: 17.07

I. INTERNAL EXTERNAL MATRIX

To evaluate the Internal-External (IE) matrix, we calculate the
total weighted average of the Strengths, Weaknesses,
Opportunities, and Threats (SWOT) factors.
* Strengths: 3.88
* Weaknesses: 3.16
* Opportunities: 5.09
* Threats: 4.94
Total Weighted Average = Strengths + Weaknesses +
Opportunities + Threats = 3.88 + 3.16 + 5.09 + 4.94 =
17.07
Based on the IE matrix, with a total weighted average of
17.07.

Don Macchiato’s business is positioned in a favorable

position in the competitive environment. This indicates that
your strengths and opportunities outweigh your weaknesses
and threats. It suggests that the business is in a strong
position to capitalize on available opportunities while
mitigating potential threats, thus maximizing its competitive
advantage.

RAPID MARKET GROWTH –

Don Macchiatos' quick market expansion given that they
have started in Palawan, then moved another branch here
offers the business a big chance to grow both its revenue and
market impact. Don Macchiatos may profit from the growing
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trend of specialty coffee beverages by utilizing its strong
brand, superior product, and devoted customer base. But it
also presents difficulties including heightened competition,
strains on the supply chain, and the requirement to uphold
quality standards in the face of swift growth. To properly
capitalize on this market expansion, the organization should
prioritize strategic market penetration, product innovation,
and operational efficiency.

• STRONG COMPETITIVE POSITION -

Several elements contribute to Don Macchiatos' competitive

position in the market:
* Reputation: Don Macchiatos has established a solid
reputation for itself thanks to its delicious coffee drinks, top-
notch customer support, and welcoming environment, all of
which encourage repeat business and draw in new
customers.

* Product Differentiation: To differentiate itself from rivals

and appeal to a wide range of customers, the company offers
inventive and distinctive coffee blends, specialty drinks, and
food alternatives.

* Operational Efficiency: By keeping operations running

smoothly, the business is able to provide prompt service and
consistently high-quality products, which increases client
happiness and loyalty.

* * Customer Experience: Strong customer connections and

repeat business are fostered by Don Macchiatos' emphasis
on the customer experience, which is demonstrated by the
friendly atmosphere, attentive service, and interesting
promotions.
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All things considered, these elements support Don
Macchiatos' strong competitive position and help it prosper in
the fiercely competitive coffee market.

• *ADAPTABILITY & INNOVATION –

Don Macchiatos is incredibly flexible and inventive:

1. Menu innovation is the process of continuously adding new

food items, specialty drinks, and coffee blends to cater to the
shifting tastes of customers.

2. Technology integration: Putting digital loyalty programs,

contactless payments, and smartphone apps into place for
the convenience of customers.

3. Store design is the process of changing layouts to make

hospitable spaces that reflect contemporary desires.

4. Sustainability: Giving eco-friendly sourcing, packaging, and

environmental effect reduction first priority.

5. Flexible Business Models: Investigating pop-up cafés,

drive-thrus, and alliances to broaden client base and adjust
to shifting market conditions.

All things considered, Don Macchiatos' commitment to

innovation guarantees its competitiveness and propels the
coffee industry's expansion.

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• *STRATEGIC LOCATION –
Don Macchiatos chooses its places carefully:

1. High-Traffic Areas: Located in busy areas to increase foot

traffic and visibility.
2. Accessibility: Provides clients with simple access in
metropolitan areas, retail hubs, and business districts.
3. Target Demographics: This strategy focuses on places like
office buildings and college campuses where the
demographics are similar to those of its clientele.
4. Competitor Proximity: Takes into account being close to
rivals in order to preserve a competitive advantage and gain
market share.
5. Opportunities for Expansion: Finds unexplored markets or
developing communities for future development.

All things considered, Don Macchiatos' well-considered site

selections maximize visibility and accessibility, which helps
explain its success in the coffee industry.

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 J. COMPETITVE PROFILE MATRIX

Don Macchiatos Competitive Profile Matrix

Critical Success Factors Don Macchiatos Starbucks Dunkin' Donuts
Weight Rating Score Ratings Score Ratings Score
Product Quality 0.15 4 0.6 4 0.6 3 0.45
Price 0.1 4 0.4 3 0.3 4 0.4
Brand Strength 0.15 4 0.6 5 0.75 4 0.6
Location 0.1 4 0.4 5 0.5 4 0.4
Variety of Options 0.1 4 0.4 5 0.5 4 0.4
Customer Service 0.1 3 0.3 4 0.4 3 0.3
Target Market 0.1 4 0.4 4 0.4 4 0.4
Marketing Effectiveness 0.1 3 0.3 5 0.5 4 0.4
Total 1 3.4 3.95 3.35

In determining the competitive position of the business, Don

Macchiatos placed 2nd in between Starbucks in 1st and Dunkin’ Donuts
in 3rd. Don Macchiatos demonstrates its ability to compete effectively in
the coffee shop market, leveraging its strengths while also identifying
areas for improvement to maintain its competitive advantage against
industry giants like Starbucks and Dunkin' Donuts.

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 K.GRAND STRATEGY

RAPID MARKET GROWTH

QUADRANT I QUADRANT II

MARKET DEVELOPMENT (MD) PRODUCT

DEVELOPMENT (PD)

1. MARKET EXPANSION 1. MENU INNOVATION

2. STRATEGIC ALLIANCES 2. TECHNOLOGY INTEGRATION
3. TARGETED MARKETING 3. SUSTAINABLE PACKAGING

STRONG
WEAK
COMPETITIVE
COMPETITIVE
POSITION
POSITION
QUADRANT III QUADRANT IV

MARKET PENETRATION (MP) BACKWARD

INTEGRATION (BI)

1. CUSTOMER RETENTION PROGRAMS 1. SUPPLIER PARTNERSHIP

2. STREAMLINED OPERATIONS 2. OWN PRODUCTION FACILITIES
3. LOCALIZED MARKETING 3. SUSTAINABLE SOURCING

SLOW MARKET GROWTH

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