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Tea Station USA – SWOT Analysis

Free «Tea Station USA - SWOT Analysis» Essay Sample

Introduction/Background of Company

Tea Station is one of the largest franchise chains in the United States that produces high-quality tea and offers a contemporary relaxing environment to all customers. The prime driving force of ‘old business, new management’ in Tea Station’s operations has ensured a phenomenal success for the company through sales and marketing. With four in every five consumers drinking tea in the USA, the demand for this beverage will keep rising in the next five years due to rise in health awareness and the increase of new product offers. The company constantly strives for excellence in the marketing of unique tea-flavored foods and drinks. Tea holds the second position, next to water, in the category of most popular beverages in the world. Even though tea consumption per individual in the USA is lower as compared to such countries as China and the UK, the country has experienced an increase in tea consumption in recent years. According to Bailey (2015), the USA is the fourth largest tea market globally based on retail value. Thus, it comes after Japan, Russia, and China, with their market values of 3.5, 4.0, and 9.7 billion dollars respectively (Yohannes & Matsuda, 2015). This SWOT analysis will help in finding the areas to improve in order to become a leader in the tea industry.

Strengths

Vibrant Target Market

The target market should of the company includes middle-aged adults and young adults between the age of 18 – 50 of all genders who belong to all classes. Not all customers in this market will have the same interests; however, they all of them need quality drinks of many flavors and at affordable prices (Stivaros, 2017).

Customer Comfort

Tea Station is a typical establishment for the people looking to relax, have a beverage, and meet with friend or business associates with the primary objective of fulfilling all their needs (Sankaran & Sankaran, 2011). The company provides a different culture to the USA. Such a uniqueness forms a brand that ensures profits for the company since it is set apart, thus attracting consumers who need new experiences.

Good Customer Service

Generally, clients’ needs are fulfilled efficiently in terms of products and service.  Employees communicate in a friendly way but professionally with their customers. The services are quick, and customers are not kept waiting for long. This kind of service impresses consumers and gives the bsuiness a competitive edge.

Devoted Employees

Employees at the Tea Station stores are devoted professionals with high rates of job turnout. They meet their job expectations and take the initiative even when it is not in their job description. More importantly, they are team players, a factor that ensures the smooth running of the business (Hicks, 2009). Therefore, Tea Station USA can use the dedication of their employees to increase their customer base and market share through constant sales and marketing.

Adequate Technology

The company uses adequate technology that makes work easier and service provision quicker. Additionally, employees are trained to use these technologies. TEA Station has an around-the-clock online service, which helps the company make sales that bring great revenue to the company.

Good Establishment and Unique Culture

Tea Station is fairly established in the USA, especially in California, and it remains a subsidiary to Ten Ren Tea, a famous Taiwan-based tea company. The tea-flavored snacks and meals are the unique and selling point of the company. Tea Station also brings the ancient Chinese tea culture by offering a wide selection of hot and cold tea-related beverages. The décor in Tea Station’s stores has become iconic among customers, and that in itself is a brand for marketing. Battle (2016) states that tea stores also build memorable dining and drinking experiences for customers by creating a serene and modern environment with a touch of Chinese culture.

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Weaknesses

Concentration of Stores in One Area

All 12 Tea Station stores are located in California.  This leaves the consumer market in other areas of the USA untapped. Such a situation also creates competition within the company itself, which may lead to the overworking of some branches (Sankaran & Sankaran, 2011). The executive management of Tea Station should consider opening stores in other areas to take advantage of the current and expected increase in the consumer market in the tea industry.

Lack of Information about the Company

Although Tea Station is a subsidiary of Ten Ren Tea, the company is not well marketed, and many people do not know about it. Moreover, it does not have facilities such as an independent website since it only has the one of the mother company. Tea Station has failed to provide vivid company information on it website including the mission and vision so that both workers and consumer could feel more connected and included in the purpose of the company (Sankaran & Sankaran, 2011). Therefore, social media promotion can make online pages more active by posting offers, answering customer questions, and addressing their concerns.

Opportunities

Create Variety and Availability

Consumers are generally excited by new discoveries and experiences. Breaking the monotony of everyday menus and products offered provides these new experiences. This can be done by offering new and differentiated flavors and having many unique and different varieties of tea. This will attract a huge client base that wants to try something different.

 Health and Wellness Awareness

Tea Station has the opportunity to provide its customers with healthier nutrition and diet.  According to FAO (2012), shoppers opt for healthier diets, and many of them consider food as medicine for their overall health improvement. Specifically, there is a rising focus on naturally healthy beverages and foods that offer functional benefits. Nowadays, many consumers are aware of the health benefits of tea, and they prefer it as an alternative to the beverages with sugar additives. According to Goggi (n.d.), the total value of tea sold in America grew from below 1.8 billion dollars in 1990 to above 12 billion dollars in 2015. Preference for healthier drinks is one of the factors that contribute to this increase, and Tea Station is one of the major contributors. Tea varieties, such as green tea, have gained popularity in the diet and nutrition of people, which offers an opportunity as it expands the market for the company.

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Food at Its Natural State

There is an increasing demand for natural food. Processed food and drinks become less popular among consumers, which has led to the minimal use of artificial ingredients. Tea is a simple and a natural wholefood (Battle, 2016). Thus, by preferring this drink, consumers reject processed beverages, such as sodas, which helps in raising the demand for healthier options. This trend of natural food state broadens the consumer market for Tea Station since it already serves tea-flavored products.

Sustainability

Sustainability is an important factor for consumers and it impacts their decisions when choosing products. American consumers increasingly seek foods that minimally affect the environment (Jain, Hansra, Chakraborty, & Kurup, 2010). Consumer decisions are also equally affected by economic and social sustainability.

Threats

Competition

Even though Tea Station has a dozen stores in California, it faces competition from more stabilized competitors such as Muvans Pocherohan. Apart from that, competition still emerge from coffee shops and other restaurants. This competition can be counteracted by developing and offering new products or improving the existing ones. Secondly, Tea Station can offer additional utilities and services such as a quiet study area. The company can have a competitive edge by ensuring that its products have the highest level of quality (Sankaran & Sankaran, 2011). Tea Station can communicate with customers and have surveys to ensure that they are satisfied. Finally, the management of the company should take time to understand the competition by trying their products, such as the popular Tienli Gift Canister, to find their advantage over those of Tea Station. Foodservice companies constitute 20% of the tea industry, with ready to drink option taking the lead at 48.2 % (Goggi, 2017). Food service grows significantly, while tea is offered quite often in the restaurants of any type. Tea Station needs to capture consumers in this growing market and beat the competition.

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Weather Conditions

The signature teas mostly served in the Tea Station stores are hot because it is a requirement to use hot water in order to bring out the unique flavor of the beverage. During hot seasons, for example, in summer, most people prefer cold beverages; hence, tea is not their drink of choice (Yohannes & Matsuda, 2015). As mentioned earlier, the Tea Station stores are located in California, and this state is generally hot, so most people would not choose tea in such weather conditions. To deal with this threat, Tea Station can introduce their brand of iced tea prepared in their stores to serve during hot weather conditions.

Conclusion

In summary, the popularity of tea has grown tremendously over the past 15 years. This growth is mainly attributed to the increase in health and wellness awareness. The target market of Tea Station includes adults and the company’s objective is to fulfill their needs as consumers. This SWOT analysis will act as a guide to achieve this objective. The company strengths include good customer service, adequate technology, devoted employees, good establishment, and unique culture. The weaknesses include the concentration of stores in one area, thus leaving a huge consumer market untapped, and lack of information about the company. Apart from weaknesses, there are opportunities such as the creation of a variety of products and availability and preference of tea to other beverages by consumers to achieve wellness and health. The threats to the business include competition from more stabilized consumers and seasonal preferences, caused by weather conditions due to the geographical location of the stores. These threats and weakness can be addressed by conducting a survey to know customers’ satisfaction levels. Secondly, this beverage company can provide extra service to achieve a competitive age. Finally, Tea Station USA needs to take time to understand its competition.

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