Published by MBA Skool Team, Last Updated: April 15, 2020
PESTLE Analysis of Costa Coffee analyses the brand on its business tactics. Costa Coffee PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand.
PESTLE analysis is a framework which is imperative for companies such as Costa Coffee, as it helps to understand market dynamics & improve its business continuously. PESTLE analysis is also referred to as PESTEL analysis.
The political factors in the Costa Coffee PESTLE Analysis can be explained as follows:
Costa Coffee is a leading coffee chain brand in the world. The effect of political decision on Costa Coffee differ from country to country. Costa Coffee operates in 32 countries and it has to follow the rules set by the government of that country. Now if the government is business friendly, then corporate tax would be less, there would be less restrictions on operating business and it will be easy to get the license to open up store easily. In China the labour is very cheap, so the company can easily keep its prices down there to lure more customers and if the government focuses mainly on people then its laws will be very rigid and it will become difficult for it to operate in that environment.
Below are the economic factors in the PESTLE Analysis of Costa Coffee:
Costa Coffee thrives on business globally with several economic policies.
The economic growth in developing countries opens up a window of opportunity for the company to expand its market and increase its revenue significantly. Developing countries like china is growing very rapidly and with the rising income of the people there, the consumption habits are also changing which is beneficial for the company. Costa Coffee is doing so well in china that it is planning to open up 1200 stores there by 2022.
Following are the social factors impacting Costa Coffee PESTLE Analysis:
The social trends change rapidly which impacts the business for Costa Coffee. It could be either changes in income of the people or because of changing in the preferences. It will provide both opportunity and threat for a company. In developing countries where rising income led to change in consumption habit of people benefited the company. People in china and India started preferring going out for snacks, food and coffee. Middle class people now prefer to go out in a café to hangout. This creates opportunity for Costa Coffee to grow its consumer base. On the other hand, people are becoming more health conscious now and many people see coffee negatively in terms of health and thus may start avoiding it altogether.
The technological factors in the PESTLE Analysis of Costa Coffee are mentioned below:
The companies all over the world spending millions of dollars to remain technological advanced in this cut throat competition world. Costa Coffee is also keeping itself updated technologically. It is investing in technology to manage their HR and payroll processes. Costa Coffee is using Ceridian’s Dayforce Workforce Management Technology to plan staff scheduling to deliver accurate and timely payment of 18000 employees within its retail business, Costa Express and support centre. It has also joined hands with Barclay card to launch a reusable cup with integrated contact-less payment technology that will allow its users to pay with a wave of their cup. It will help in tracking the payments, top up their balances and reuse the cup after wash.
It will reduce the time taken to make payments and moreover it will encourage people to ditch single use cups.
Following are the legal factors in the Costa Coffee PESTLE Analysis:
It is very important for a company to work under the legal frame work set by the government and judicial bodies of the country. one such laws mentioned to treat labours humanely and certain basic working conditions need to be fulfilled according to law. But Costa Coffee is accused of not treating its workers like humans. Many of its employees complained against the company that the working condition in Costa Coffee is very poor. They have to work for more than 60 hours a week while the contract mentioned only 48 hours per week work and when they worked for 48 hours a week their salary has been deducted. Moreover, it was alleged that company charges from its workers 200 euro for their own training.
In the Costa Coffee PESTLE Analysis, the environmental elements affecting its business are as below:
With the increasing awareness of people of the climate change, it became the huge responsibility of companies to provide products and services which are sustainable in one way or another. Costa Coffee has also decided to be a part of saving the environment. It has decided that it will recycle the same volume of takeaways cups used by its customer annually to stop wasting of millions of cups in a landfill.
Costa Coffee has set the target to recycle 500 million cups by 2020 which is equivalent to its customers usage of the cups annually. It will incentive the waste companies to collect waste cups and send it to recycle plants. They also opened up roastery in Essex which is built to make sure zero waste to landfill, efficient machines to reduce energy consumption by 30 % etc.
To conclude, the above Costa Coffee PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.
This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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