Koi Cafe

KOI Café

1. Introduction

KOI Café is a bubble tea franchise that was first established in Taiwan in 2006 with a focus on product development and innovation. A year later, KOI Café’s first overseas store was opened in Singapore. KOI Café aims to turn Taiwanese teas into a global heritage by presenting their authentic beverages all over the world. With plans to keep Taiwan’s heritage of premium bubble tea alive, they make sure that their beverages are made with consistent controlled quality and standardized preparation processes. KOI Café perceives the importance of giving careful attention to specifics with their products. The tea leaves are specially imported from the Alishan and Nantou mountains in Taiwan for their thickness and aroma. To maintain its consistency and quality, the tea is made by hand individually before serving to their consumers. The company continuously developed and has become an established international brand. (KOICafé, 2012)

2. Discussion

2.1 General Environment Analysis

A PESTEL analysis is used to analyze and monitor external factors relating to a business scenario and how these factors will influence the performance and activities of an organization in the long-run. It is often used in collaboration with other analytical business tools such as the Porter’s Five Forces to give a clear understanding of a situation and related external factors. (LLC, 2015)

2.1.1 Political factor

The political factor determines the degree to which the government may affect or impact the economy or a specific industry. (LLC, 2015) Analysis shows that with the honest government leaders and little disputes among them, Singapore is politically stable. Back in 2013, Singapore faced problems with employment rates as many companies turned to foreigners from Singapore’s neighbouring countries that come in search of jobs in Singapore who are willing to work efficiently even while minimally paid. (Soh, 2013)

However, these problems were tackled politically by introducing foreign worker levy for S Pass and Work Permit holders as well as taxes. Foreign workers are then required to be paid a minimum set amount depending of which sector they work for. This provides a stability of job opportunities between locals and foreigners.

Regulations on hygiene standards are imposed to ensure that food are hygienic and safe for consumption. Since Singapore is well known for its wide range of food, policies like these help it retain its good reputation to satisfy. (Government of Singapore, 2013)

KOI café, being within the F&B (Food and Beverage) industry, requires a lot of manual and physical labour; these jobs are usually taken quickly by foreigners in the past as a common objective was to find a place to work in Singapore.

However, due to the previously mentioned policies that were established, KOI Café now has a well maintained balance of employees who strive for it to grow.

2.1.2 Economic factor

Singapore, being a vast, fast developing country, it is one of wealthiest countries, and it has the highest per-capita income in ASEAN. (Economics, 2015)

Since it is always developing, citizens face problems such as labour shortages and the rising standard of living. This makes the need for a high paying job very strong. As for business sectors, this makes profiting a challenge.

Local citizens and companies often find themselves stuck at a point where they are not earning enough to sustain their standard of living. However, with the ongoing problems, it is reported that unemployment rate remains low, and companies and citizens still are able to earn a reasonable amount of disposable income. (Ngerng, 2013)

Singapore is able to concentrate on shaping economic development strategies to prepare itself for the future. The business environment, like government and labour relations has made Singapore the world’s easiest place to do business. With the tax rate at 17% in Singapore, there is more disposable income that allows more opportunities for the company to expand and invest in assets, such as machinery or motor vehicles.

2.1.3 Social factor

Industries can benefit more if they take note and follow sociocultural conditions. (Kaplan, 2015, p69) Singaporeans have the common nature of living life in the fast lane, spending most of a day either working or studying, they barely have time to sit back and spend quality time for themselves. Living healthily becomes quite a challenge for them when they’re surrounded by processed and instant foods. KOI Café displays a sense of understanding for their customers by improving through customer’s feedbacks. (KOICafé, 2012)

To cope with the desire of customers to be healthy, KOI Café offers a wide range of consumables on its menu, with a choice of sugar level, toppings and flavor. Being a small country, Singaporeans often face the problem of overcrowding. However, the queues of KOI Café outlets are managed differently from normal stores, customers are given a ticket with a queue number instead of having to wait in line for what they’ve ordered. This drastically reduces the probability of mishaps.

Just like any other company, KOI Café face competitors in the F&B (Food and Beverage) industry. When KOI Café was first introduced to Singapore in 2007, it spiked a phenomenon of “Bubble Milk Tea” being a trend to Singaporeans. Soon, competitors rose and joined the industry. By sticking to original ideas and unique recipes, KOI Café remains one of the most famous brands till today.

2.1.4 Environmental factor

The climate change in Singapore is consistent, summer all year round, which makes it more stable and ensures businesses to have little to no interference. Also, because of the humidity in Singapore, sales of KOI Café may increase as people tend to want cold refreshments. Disease outbreaks and epidemics are rare in Singapore as the country has taken measures to prevent, control and are prepared for any health related situations. (Pang, 2013) Also, as Singapore is an island surrounded by other bigger countries, natural disasters are nearly impossible to happen within it. Therefore, the environmental factor is a will not pose as a threat to the company and its business.

2.2 Competitive Environment Analysis (Porter’s Five Forces)

Porter’s Five Forces is used by industries to identify