Mandates

 Explicit Mandate
o Leaders in government and business felt that they needed to invest even more
in the stability and growth of the sector, which was critical to the EDconomy
of Colombia yet vulnerable to the effects of weather, plant, disease, changing
states and wild swings in commodity markets.

Competitors

Starbucks: Positions itself as a place college students can hangout, study and meet people

Caribou: Interiors reflect the atmosphere of a mountain lodge High coffee quality 33% of
customers have $60- $100k annual income

4P

 Place: Juan Valdez in Colombia has more than 170 stores and 68 around the world.
 Promotion: Juan Valdez has one of the most important symbols of marketing and
advertising around the world “ Juan Valdez and his mule Conchita”.
 Product: Juan Valdez offers products at not cost like lactose-free milk more for a lower
price on the product . Offer similar products to Starbucks
 Price:
o Price Comparison
 Coffee: 4 sizes between $ 2.4 and $3.00 II $ 3.5 and $4.5
 Capuccino: 4 sizes between
 Chocolate: 4 sizes between

Coffee Value Chain

1. Cost of production – it costs money to fertilize, prune, and generally take care of coffee
trees, let alone the costs of harvesting the coffee and processing it until it’s stable enough
to send to market.
2. Cost of transportation – not as much as it used to be, but it’s tricky getting coffee from the
mountainside where it grows over bad/ nonexistent roads to a major port.
3. Cost of distribution – the now-fragile roasted coffee needs to be distributed to thousands
of retail stores, and coffee shops each of which needs to mark up the coffee to keep the
store in business. The processing and handling of green, or raw coffee adds 50% to its
price, according to estimates by the Fairtrade Foundation, which works for a better deal
 for coffee producers. Much of this goes towards paying for transport, storage and
handling costs.

Alliances Hotels:

 Hotel JW Marriott, Hotel Marriott,

 Businesses:,Samsung, Procter & Gamble,
 Restaurants:McDonald’s,

Generic Strategy Model

 Narrow
o Only for people who walk into their stores.
o Offers exclusive Colombian coffee blends packages.
 Low Cost
o Products at better prices than competition
o Offers a good experience to customers
o Controls the whole value chain

Key Success Factors

Increase Market reach at a global scale.

Key Success Factor: Carefully choose the countries or markets in which Juan Valdez will either
begin or increase market presence by doing research regarding each market consumption habits,
competition, economic situation, entrance costs and barriers, and the necessary investment.

Increase per capita coffee consumption.

Key Success Factor: It is critical to understand the culture in each country Juan Valdez has
presence. There are several specific reasons why people drink coffee (as stated in Chapter 1,
Section 1) and they must be taken into consideration for marketing and advertising campaigns, as
well as when defining strategies

SOLUTIONS

Reduce operation costs

Technological Integration among stores, supermarkets and institutions, as well as among different
countries. Because the operations of Juan Valdez are carried out across several countries and in
stores and restaurants, as well as the intent to integrating eCommerce, it is extremely important
to have connected systems and allow data exchange data in the most effective and efficient way.

It is critical to have efficient processes such as packaging, scheduling, shipping, inventory, order
taking and resource tracking and management as a part of a holistic and connected transaction
framework. Technology should also be able to integrate multichannel retailers, various
distribution centers and manage them both as a whole and uniquely. Inventory and transaction
reporting should also be updated in real time.

Technological innovation to differentiate and enhance customer experience.

Use geolocation and an application that offers shopping rewards program that uses a points
loyalty system through smartphones. This solution does not require customers to have the app
open, but it alerts them when they arrive at a store or restaurant and immediately starts
interacting

Costs

Juan Valdez has invested large amounts of money in the past decades and it has paid off well. It is
not easy to put together small local coffee growers and build a company with global presence and
such a strong brand with excellent reputation. The past two years were the first to show profit,
this is expected not only to remain this way but to show a sustainable increase in the profit
margin. In order to implement the mentioned solutions, it is necessary to define a budget for
technology implementation. The proposed solutions require an initial $45 million US dlls for
software implementation and hardware acquisition.

Recomendaciones

Juan Valdez has and will continue to face difficult market conditions, fall in international coffee
prices, crop losses due to fungus or meteorological conditions, variations in exchange rates and
other conditions that will affect market conditions and can hinder its performance and results. To
be able to face difficulties and survive with the least losses possible, the company must raise its
performance and compete with superior capabilities to have as much advantage as it can. Great
care must be taken to reduce operation costs and have them running smoothly to achieve
sustained growth and profit to turn Juan Valdez in a global solid company.

There always is a switching cost, but when carefully planned, the return of investment should be
clear and make it profitable.