Critical Success Factors and the Future
By competing in an industry largely dominated by established competitors, Espresso Armando faces a formidable challenge to gain market share. The current line of Espresso Armando machines, while technically superior and rapidly growing in reputation, is priced higher than the existing products from the foreign competitors. To counter this price difference, and to entice the coffee stores and restaurants in the U.S., Armando has formulated a strategy to increase their competitiveness. “We intend to make a less sophisticated machine for people who cannot afford the top machine and would want to make espresso but may not want the expense. A large base for that would be restaurants who only purchase one or two for their entire business.” Without going into detail, Armando has identified several facets of the machine’s construction that will allow him to decrease the production cost, while maintaining the same high level of performance and quality.
The second step their success will be Armando’s ability to raise capital. Until now, the funding for this venture has mainly come from of the ongoing audio business. They have also received additional funding from Small Business Association (SBA) loans. By raising capital, new technology development and production can be undertaken to assist the organization’s growth plans. “This is a very competitive business and were dealing with a commodity product. Because of our size and the size of our competitors we are not able to price our product at the level like the other manufacturers. Our economies of scale are not as efficient as the other companies. When we start making more machines we will be able to improve the price.”
With increasing resource requirements, competing against established companies, and convincing buyers that a better coffee-producing machine will more than offset the Espresso Armando’s purchase price, the company has a significant task in front of it. This looks to be a promising year for Espresso Armando. The company hopes to sell 100 to 200 units. From there, the sky’s the limit in their quest to gain a significant share of the domestic espresso machine market , “and doing it always at the best price to performance ratio than the competition.” – ###