Internal problems of poor communications
1992, Easy Way Tea from Taiwan has since expanded its presence worldwide. While they remain a small scale player, relative to the greater competitors, the company does a represent noteworthy presence within the industry. In terms of business model, the organization operates through both wholly owned stores, as well as franchises. Easy Way Tea promotes franchises as a way of supporting the development of the communities in which it operates. They promise their franchisees financial independence and the ability to work for themselves, and they guarantee success supported by the company’s expertise (Easy Way Tea Australia Website).
In Australia, Easy Way Tea has been present since 2001 and has in the meantime opened 45 stores, 20 of which are wholly owned and the rest of 25 are franchises. The first store was opened in Sydney, but within the following two years, the organization would be operating a total of 8 stores. Today, stores are present in most regions of Australia and the strategy of expansion is continually sustained. The main products sold by the company are tea drinks and tea-based drinks, such as tea and milk shakes. The company also sells fresh fruit drinks or jellies.
The organization takes pride on the high quality of their products, proved by the fact that the teas are fresh, prepared daily and in front of the customers and made from the best ingredients. Their marketing strategy has focused on the placement of the Easy Way teas as unique products. The Easy Way Tea’s mission is that of becoming “the most loved and valued tea beverage brand in the world” (Easy Way Tea Australia Website).
2. Business Topic
Despite the impressive success registered by the tea company in its nine years of operations in Australia, fact remains that the organization is yet unable to compete with the greatest players in the beverage industry in Australia. It faces intense competition from fast food chains which sell their own beverages or the beverages of others, through exclusive contracts.
Aside from fast food stores, intense competition is also posed from the part of national beverage retailers, such as Boost, firm launched in 2020, and currently operating 189 stores in Australia, as well as in Singapore, Hong Kong, Chile, the United Kingdom and so on. Another important competitor is Nudie, which, similar to Boost, sells fresh fruit juices. Nudie has been presented within the market since 2003 and it now operates 5,000 stores in Australia alone. The third and fiercest competitor is National Foods, which alone controls 55 per cent of the Australian consumer markets (Fruit / vegetable juice Australia Report, 2009).
While there are several issues to be identified within the entity and which can be considered as causes for the relatively poor performance of Easy Way Tea in Australia (see the third section, SWOT Analysis – Weaknesses), the primordial reason remains that of the inability of the Asian retailer to adapt to the unique needs of the national market. Many of the employees are Asian and barriers are often encountered in the relationship between firm and customer base. And even when the employees are native born, the company’s culture does not tailor to the features of the local culture.
Given this situation, it becomes impending to find solutions by which the Easy Way Tea Company can better understand the local culture, and as such better address and serve the needs of the local customers. In order to achieve this desiderate, it is necessary to conduct an analysis of the situation and the market, generate and evaluate solutions and eventually, make informed recommendations.
3. Situation and Market Analysis
The more relevant means of conducting an analysis of the situation and the market is that of analyzing the features of the internal and external environments. The elements are included in the SWOT, PEST and Porter analyses below.
The company has a business presence and expertise of nearly two decades
Their product offering is vast, revealing an ability to satisfy the needs of a diverse customer base
The quality of their products is also increased and the experience of interacting with the company is enhanced by the politeness and servitude of the staff members
They operate through a combined method which reduces costs and shares risks
They enjoy an international presence
Despite their initial efforts, the company has not managed to perceive the cultural differences. In other words, they have proven unable to understand the features of the local culture and adapt its operations and its offering to the Australian culture
Another weakness is related to the company’s brand. While it does inspire trust and stands for the values of the organization, it is only limitedly popular and accepted in Australia
Then, while the employees are obliging, helpful and polite towards the customers, their actual expertise in preparing tea and the art of serving it, is virtually inexistent. The employees to do not recognize tea making and serving as a way of being, but simply treat is as a regular job — this approach fails in attracting new customers.
The cultural differences also lead to internal problems of poor communications.
Communications are as well poor with the customer base, and the marketing campaigns and promotions are virtually inexistent
While the product offering is vast, it is entirely Asian, without any adaptation to local tastes
A major opportunity is presented by the incremental emphasis placed on a healthy nutrition. This virtually means that the populations would prefer natural and healthy teas to processed beverages such as sodas, translated into a higher demand for teas
The Australian Department of Agriculture is committed to stimulating the farmers to grow tea plants (Burt); this means that the Easy Tea Company could reduce its costs by purchasing tea leaves from Australian markers; additionally, such an endeavor would improve its reputation and would promote it as a declared supporter of the development of the Australian communities.
There is intense competition within the Australian tea market, and this competition is expected to intensify in the years to come.
Difficulties will be posed by the fact that the market is already mature and consolidated, meaning that only the strongest companies would survive
Also, a threat of the external environment is the possible refusal of customers to purchase foreign products, but instead choose the teas of national retailers
Australia enjoys political stability which promotes the development of the business community. Yet, it differs from the regime and the constitution in Taiwan, meaning as such that the Easy Tea Company would have to hire local legislators to assist them. Recent developments by the Department of Agriculture strive to stimulate the growing of tea leaves within the country, in a context in which most of the tea is imported.
Australia has a rich economy, based on a highly developed market sector. The population’s living standards are among the highest in the world and the unemployment rate is among the lowest. The average income per Australian individual is of $39,400, more than three times the global average (Central Intelligence Agency, 2010).
As it has been mentioned throughout the SWOT analysis, in the Internal Opportunities section, the modern day society is incrementally focused on a healthier life style, this including a healthier menu. It translates into the fact that more and more people replace their sodas with fruit tea, or even their coffee with black, white or green tea. Teas are healthier than other beverages because they contain less caffeine than cola drinks or coffees; they reduce fatigue; they maintain mental alertness; they stabilize the level of fluids in the human body; they reduce blood clotting; they lower blood pressure and they lower the cholesterol (Tea Industry Website).
Historically, Australians have placed a great emphasis on tea, this being a constant presence in their homes. It was even considered a necessity in times of socio-economic hardship. As coffee imports from Europe increased after 1945, the popularity of the tea would suffer (Australian Government, Culture Portal).
Today, another social feature also favorable to tea consumption is given by the intense worries relative to the safety of the environment. In this order of ideas, the more responsible consumers would prefer to have the land cultivated with tea plants than rather have it polluted by soda makers.
Within Australia, tea consumption is subjective to age and ethnicity — people over 25 are the ones more likely to consume tea than younger individuals; people over 45 drink more tea than coffee, whereas people below 45 drink more coffee than tea; the average Australian family uses 600 tea bags a year; in the totality of drinks consumed in Australia, tea holds 18 per cent (Australian Bureau of Statistics, 1999).
Australia has followed the trend and pace set by other developed western states regarding the development of high technologies to improve the quality of life. Within the tea sector, the technological innovations are best observed at the level of ready to drink teas, prepared on the spot, in front of the customers.
Porter’s Five Forces Analysis
Bargaining power of buyers — low; individual consumers cannot influence the price, but large buyers can negotiate better contracts
Bargaining power of suppliers — low, as they need the tea companies to buy their items
Barriers to entry — relatively high due to the maturity of the market
Substitute products — their threat is increased, including items such as sodas, bottled water, juices or coffee and coffee-based beverages
Competitive rivalry — increased as all players strive to improve their competitive positions, increase their access to customers and increase their market share.
4. Solution Generation and Evaluation
Before generating a solution, it is necessary to look at the problem encountered by the Australian Easy Tea Company from three different angles — the 5W questions, fishbone diagrams and the Pareto analysis.
The 5W questions:
Who? The Tea Easy Australia Company
What? Cannot improve its competitive position
When? Now and for the past nine years
Where? In Australia
Why? Because it does not understand the local culture
The fishbone diagram
The problem at the Australian Easy Tea Company is that it does not seem able to overcome its limitations and impose itself on the national market as a strong competitor. Despite its sustained business efforts, it remains unable to compete with the largest companies in the market and it does not seem able to attract more customers. There are four main causes leading to this outcome. The first one revolves around the inability of the company to cross the cultural boundaries and understand and adapt to the local culture. This translates into poor communications among the employees of different cultural backgrounds, as well as poor communication between the employees and the customers. Additionally, the company has imported its Asian product offering, which does not seem to be to the liking of the Australian customer base.
The next three causes are the poor communications with the public, the weakness of the Easy Tea brand in Australia and the fact that the company’s employees are untrained to present tea consumption as tradition and a way of life. The Pareto chart below reveals the importance of each of these factors.
As it can easily be observed from the chart, the most severe problem is by far the inability of the tea company to comprehend the cultural differences and appeal to them. In terms of importance, it is followed by the weakness of the brand within the Australian market, the poor communications with the public and the poor skills of the staff members. Given this status quo, the solution is a complex one, focused primarily on strategies aimed to help the company better understand and address the needs of the culturally diverse Australian market. Yet, the strategies will also focus on other components of the greater problem, such as improving relations and communication within the company’s internal environment, as well with the public, or increasing the qualifications of the staff members.
5. Finding and Recommendation
Based on the previously conducted analysis, the recommendation constructed is that of investing more in the placement of the products onto the market. In other words, the managerial team at Easy Way Tea Australia ought to consider the implementation of the following elements in the marketing mix:
Incremental emphasis on the health dimension of the beverages, such as their nutritional value, but also on their great taste
A most important thing to be done is that of selling the Easy Way teas in a wider variety of recipients. In this order of ideas, it would be best to sign a bottling contract with a national purveyor and offer the customers the possibility of enjoying the drink at home, in the office and so on. While this measure would increase customer acceptance of the teas, it would also constitute a strong competitive strategy.
One should not forget that the contemporaneous economy is currently facing the challenges of an internationalized financial crisis; in this instance, it is pivotal for the organization to implement smaller retail prices which make the beverages more accessible to wider customer palettes
In terms of the pricing strategy, when opening a new store or launching a new product, this ought to be a penetration pricing strategy throughout the first month, after which time the pricing strategy should be a variable one. With the penetration pricing strategy, the company would ensure large numbers of customers due to lower retail prices; the variable pricing strategy sees that the retail price of the tea would be established based on the costs incurred in its preparation and distribution (Moore, 2008)
It is imperative for the company to invest in marketing campaigns. It should as such allocate special marketing budgets that would fund various actions to improve the popularity and perception of the company, the products and the brand
The marketing campaigns, including components such as advertisements, could be constructed to promote the exotic features of the teas, but also the Australian tradition of tea drinking
The advertisements should promote the experience of drinking the Easy Way teas, rather than the product itself
As a way of improving customer relations and perceptions, but also as a means of attracting more customers, the company should promote the art of making, serving and consuming tea as a way of life. The endeavor would imply investments in the training of the employees. It would even be advisable for the management to offer cultural training to its Asian workers and to stimulate social interactions between the culturally diverse staff, with the end result of a better consolidated team
Tea consumption is Australia is influenced by age and ethnicity. While it would be difficult to construct marketing campaigns based on ethnicity, it would be useful to construct them based on age groups. The young target audience could be attracted through modern presentations and exotic recipes, while the older consumers could be attracted through the sense of high quality and tradition
The company should maintain its current system of combined wholly owned stores and franchises, but it should make one alternation in the way it interacts with the franchisees. These individuals are the very core of the Australian culture and they are the ones who not only understand it best, but can operate in a means that best addresses the needs of Australians. In other words, the executives at the Easy Tea Company should interact with the franchisees at a deeper level, gather insight and even allow the franchisees to implement their strategies in better appealing to the local customers.
Burt, J., Growing green tea in Western Australia: development of a green tea industry in the Manjimup / Pemberton area, Government of Western Australia, Department of Agriculture and Food, http://www.agric.wa.gov.au/PC_92186.html?s=1001 last accessed on March 4, 2010
Moore, C.W., 2008, Managing small business: an entrepreneurial emphasis, 14th edition, Cengage Learning EMEA
1999, 4804.0 — National Nutrition Survey: Foods Eaten, Australia, 1995, Australian Bureau of Statistics, http://www.abs.gov.au/Ausstats/[email protected]/e8ae5488b598839cca25682000131612/9a125034802f94ceca2568a9001393ce last accessed on March 4, 2010
2010, the World Factbook — Australia, Central Intelligence Agency, https://www.cia.gov/library/publications/the-world-factbook/geos/au.html last accessed on March 4, 2010
Australian food and drink, Australian Government, Culture Portal, http://www.cultureandrecreation.gov.au/articles/foodanddrink / last accessed on March 4, 2010
Easy Way Tea Australia Website, http://www.easywaytea.com.au last accessed on March 4, 2010
Tea Industry Website, http://www.teaindustry.com/tea_health.htm last accessed on March 4, 2010
Fruit / vegetable juice Australia Report, 2009
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