Business Essential Advanced - PDF

BUSINESS ESSENTIAL
ADVANCED

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
1. Market Research and description of country..........................................................................1
2. Marketing Mix........................................................................................................................3
3. Implication that are faced by Marvin and Smith’s coffee-shop..............................................4
4. Interpretation of financial statements......................................................................................5
5. Summary.................................................................................................................................6
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business is being considered as economic activities whose main concern is to continuous
production and distributing goods and services to users (Anderson, Sweeney and Williams,
2011). Main aim of business organisation stays is to satisfy human needs through offering them
products or services according to their needs. As give by Dicksee “It refers to a sum total of all
activities related with purchase of goods and services with the main objective to earn profit as
well”. In present report, Marvin and Smith are two partners of a famous coffee shop named as
Marvin & Smith’s Coffee Shops. Wandsworth, South London is the place where Hank and Patty
opened their first coffee shop in the year of January, 2016. When they become popular, both the
partners have decided to expand their business in Spain. Report will include, marketing mix,
financial account's interpretation along with summary which is related to viability in enlarging
the business.
TASK
1. Market Research and description of country
As given in case study, Hank Marvin & Patty Smith are the two partners that decided to
establish their business food and catering industry. After doing complete market investigation for
12 months, both have mutually agreed and opened a coffee shop at South London. Research that
has been done was to look into different aspects like selection of location which is best, looking
at what market segment they are going to target, key rivals, funds that are needed, selection of
suppliers and many more. In the month of January of year 2016, Hank and Patty established their
first coffee shop at Wandsworth, South London.
After gaining good popularity at international market (Bradford, 2015). Hank and Patty
decided for business expansion. Both have discussed and came up with a plan to launch its
coffee products at SPAIN. Total GDP rate of this nation is $1.506 trillion and as per capita it is
$32,559. On the other hand, SPAIN comes on the 25th position from all of the countries in
Europe that consumes coffee products which is good number of business expansion in coffee
industry. Apart from this, revenue under coffee segment is around US$1,299m which was
captured in the year of 2018. According to statistics report, in coffee industry Spain's largest
market segment is of roast coffee. US$1,138 million is the market value of this segment than any
other coffee part. With the help of these numerical values, it has been analysed that coffee
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market sector of Spain is anticipated to grow with the rate of 2.6% in the year of 2021. Hank and
Patty have chosen this country for business expansion because around 67% of all the citizens of
Spain consumes roast coffee daily. As given under a report, on an average around 112 litres of
coffee is being consumed by Spanish people within a year. Therefore, these are some of the
reasons which attracted Hank and Patty to open a coffee shop in SPAIN.
Facts based on lifestyle, culture, and coffee drinkers of Spain
According to total population of SPAIN, figures stated that every single individual of this
country has helped in generating US$27.95 in 2018 and it is still running. People in this country
aged in between 18-29 years mostly consumes coffee because they feel that it is a refreshment
drink through which they can perform well. On the other hand, people with the age from 30 to 50
consumes caffeine to keep up good stamina in themselves. Therefore, coffee can be considered
as an essential things that plays a crucial role in lifestyle of local citizens. Apart from this, people
of SPAIN follows a different culture from others like they like to visit new places and spend
evenings with the beloved ones and likes to sit at a beautiful place like restaurants and cafe.
Citizens of SPAIN also believes that coffee can be considered as an effective drink that can help
them in staying energetic all day long (Burke and Friedman, 2011).
Away with this, coffee chains and speciality coffee shops with diversifying nature of
them in cities of SPAIN has followed traditional approaches. After looking at the lifestyle which
is being followed by youngsters of SPAIN, coffee shops have decided to make changes as per
the requirements of them. Following new trends and offering quality roast coffee can easily help
Hank Marvin & Patty Smith to grab a good position at marketplace of SPAIN in short period of
time. On the other hand, around 100 out of 35.4% Barcelona's people likes to taste new products
Logistical Considerations-
Logistical consideration can be stated as a prime element which plays a crucial role for
business firms which includes various things like location, inventories and places where products
and services are going to be delivered. Barcelona is the place where Hank and Patty have
decided to expand their place. Therefore, it is required for them to keep an eye on things like
how much expansion is gonna cost them, do citizens of this city will love coffee of this chain, is
liquidity of this coffee shop is strong enough through which they can reduce all the problems.
Ethical Considerations-
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Ethical considerations can be considered as accumulation of different values, perceptions
and principles which helps in getting right or wrong thing according to human perspectives. It is
necessary for Marvin & Smith’s Coffee Shops to look into different aspects like behaviour of
targeted customers of new place and many more. If Marvin & Smith’s Coffee Shops will develop
quality based coffee which is putting good impact on health of people, then it can be taken as
positive initiative where coffee shop will easily grow.
Structural challenge-
It can be said that selection process of a country that where expansion will be fruitful
faces high number of challenges. Some of state of affairs that can be faced by Marvin & Smith’s
Coffee Shops are rates of taxation, average income in country, economic situation and many
more things (Cavusgil, Rammal and Freeman, S2011).
2. Marketing Mix
Marketing Mix is being considered as different tactics that needs to be taken into account
by every business concern so that to promote product along with its brand at marketplace of
Spain.
Product: As given under case study, Hank and Patty came to a conclusion that they will
establish a coffee shop at SPAIN. Some of main and famous products of this
coffee shop are roast coffee, cappuccino which can be considered as main seller.
Around 67% people out of total people likes to drink coffee. This made this
coffee shop to launch its products in SPAIN. Major advantage of establishing its
new coffee shop is that people of SPAIN likes to drink quality roast coffee.
Marvin and Smith’s coffee-shop's speciality is this only. Spain's coffee beans are
valuable enough which can help this coffee shop to make products as per the taste
of them.
Price: Marvin and Smith’s coffee-shop if looking to expand its business in SPAIN, then
it is required for them to select or adopt an effective pricing strategy and apply it
on coffee that they are selling so that to sustain at marketplace of SPAIN. This
coffee shop can charge high to its customers because people of this country likes
to visit new place and try to bring changes as well in their lifestyle. With the help
of proper effective pricing strategy, Marvin and Smith’s coffee shop can grab a
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good position at marketplace in a short period of time.
Promotion: In order to do proper business expansion in SPAIN. It is required for Marvin and
Smith’s coffee shop to adopt best suitable trendy approaches of promotion. This
will help, this coffee shop in grabbing good position at marketplace in short
period of time. In modern era, most of people of SPAIN stays on online on
different social networks. Therefore, putting an ad on social media tools like
Facebook, Instagram and etc. can help them in grabbing good position at
marketplace (Using the Marketing Mix to Strengthen your Marketing Strategy,
2016).
Place: In given case study, Hank and Patty has kept their focus on business expansion at
SPAIN which is one of the growing country in all over world. As given in the
reports, in Barcelona which is metro city of SPAIN where most of people likes to
drink high quality based coffee. Therefore, it can be said that this is one of an
imported place where Hank and Patty can grab a good position at marketplace.
Targeted place of business expansion i.e. Barcelona. Around 67% of 100%
Spanish people likes to drink roast coffee. This is being considered as a crucial
things that can put positive impact on organisation.
3. Implication that are faced by Marvin and Smith’s coffee-shop
A) Information Systems-
This is being referred to a system where data is being collected and stored. After when
information got stores it is then utilised whenever it is needed by the company. The data which is
possessed by the company is very useful in serving and communicating to customers. On the
other hand, it is pretty much required for organisations while business expansion because
possessed information can be helpful in crucial stages. Information systems can help Marvin and
Smith’s coffee shop in adding different data which is being utilised at the time of expansion. On
the other hand, Hank and Patty at this time is having good reputation among United Kingdom
and have high customer base. Previous technology would not help Marvin and Smith’s coffee
shop to store data related to new place and i.e. SPAIN.
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Proper utilisation of information system and using data which is being stored can help
Marvin and Smith’s coffee shop to gain many competitive advantages while expanding the
business (Guffey and Loewy, 2012).
B) Management structure-
An organizational structure can be understood as foundation which includes how an
organisation operates. This includes ample number of policies along with rules that a company
follows like organization controls along with delegates tasks and duties. While expansion of
business, it is required for the business organisation like Marvin and Smith’s coffee shop to set a
proper structure through which information can be flowed. Therefore, it is pretty much required
for the organisation to develop products and services through as per the feedbacks that has been
given by consumers and make changes in them accordingly as per the needs. Management
structure that Marvin and Smith’s coffee shop is carrying is hierarchical which may put impact
on them (Lamb, Hair and McDaniel, 2011).
Therefore, it is required for Marvin and Smith’s coffee shop to use systematic
management structure where information can go through top level to lower level of management
is a systematic manner at the time of business expansion.
4. Interpretation of financial statements
Profitability Ratios: This type of ratio is being mostly utilised by organisations when it
comes to make decision that are related to performance and place of the organisation throughout
the year (Hair, 2015). Some of effective ratios that can be used by Marvin & Smith’s Coffee
Shops are given below:
 Gross Profit Margin: This is being considered as a margin, in which sales revenue of
Marvin & Smith’s Coffee Shop is being computed with the help of gross profit margins.
This sort of ratio aid organisation look at where they are lacking and what they needs to
bring in so that company do not face problems. High and low profit margin shows both
high and low sales. This sort of ratio aid in looking at different sections as well.
 Net Profit Margin: This sort of profit margins shows a proper representation of revenue
which is being left after removing all the expenses (Patten and Newhart, 2017). Higher
net profit ratios helps company in looking at yielding higher profits of Marvin & Smith’s
Coffee Shops.
Gross Profit 208,000
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Net Profit 26,800
Sale 360,000
Ratios Formula Results
Gross profit
Margin
Gross profit / Total Sales *100 208000/360000*100
= 57.8%
Net profit Net incomes / Total Sales *100 26800/360000*100
=7.4%
From the above ratios, it can be concluded that company is able to maintain its effective
position in the market simultaneously yielding sufficient amount of profit as well.
Liquidity Ratio: This ratio can be helpful for Marvin and Smith’s coffee-shop to locate
the ability to pay its debts. This includes:
1. Current Ratio: Computation which has been done has showed that Marvin and
Smith’s coffee-shop's ability of paying back all the liabilities is strong enough. 2:1 is being
considered as ideal current ratio.
2. Liquid Ratio: This type of ratio helps in analysing how effective a company is, and its
capability of retiring current liabilities. Here, ideal acid test ratio is 1:1.
Current Asset 35,400
Current Liability 6,200
Liquidity ratio:
Current ratio Current assets / Current liabilities 35400/6200= 5.7
Liquid ratio Liquid assets / Current liabilities 35400-8000/6200=4.4
ROCE Operating expenses /Capital
employed *100
(26800/ 106800)*100 = 25%
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With the help of above mentioned computation, it is being analysed that liquidity of
Marvin and Smith’s coffee-shop is high in nature that will help Hank and Patty in gaining many
competitive advantages at SPAIN in short period of time (Sundareswaran, 2011).
5. Summary
Project which is being given above was related to business expansion of coffee shop in
other state of United Kingdom. Hank and Patty were two partners that opened first coffee shop in
starting of the year of 2016. Both of these partners have carried a good experience in food and
catering section. When they started good profit and gained a respectful reputation in United
Kingdom, Hank and Patty made their decision to establish their coffee shop at SPAIN. People
with the age in between 18 to 38 of this country mostly likes to drink good quality coffee drinks.
There are plenty of factors that they need to taken into account while expanding business in other
country.
It is required for Hank and Patty to develop proper plans so that to maintain capital
requirement, location, resources, transportation facilities must be taken into consideration so that
business can get expanded right on time. Hank and Patty has already analysed the market of
SPAIN which has helped them in making effective decisions like they found what exactly
targeted customers of SPAIN are looking for (Tyson, 2014). Proper initiatives will take Hank
and Patty to great heights at competitive market of SPAIN. On the other hand, it is also
mandatory for them to develop unique promotional and pricing strategies so that they can gain
many rivalry advantages.
CONCLUSION
From above mentioned report, it is being concluded that there are ample number of
factors that mostly impacts upon business expansion. Marketing Mix is an essential tool that
plays a crucial role through which company can easily grow in much effective and efficient
manner. Business expansion is only possible if company will focus on different things like
optimum use of assets and resources.
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REFERENCES
Books and Journals
Anderson, D. R., Sweeney, D. J. and Williams, T. A., 2011. Essentials of modern business
statistics with Microsoft Excel. Cengage Learning.
Bradford, M., 2015. Modern ERP: select, implement, and use today's advanced business systems.
Lulu. Com.
Burke, R. and Friedman, L., 2011. Essentials of management and leadership in public health.
Jones & Bartlett Learning.
Cavusgil, S. T., Rammal, H. and Freeman, S., 2011. International business: The new realities.
Pearson Higher Education AU.
Guffey, M. E. and Loewy, D., 2012. Essentials of business communication. Cengage Learning.
Hair, J. F., 2015. Essentials of business research methods. ME Sharpe.
Lamb, C. W., Hair, J. F. and McDaniel, C., 2011. Essentials of marketing. Cengage Learning.
Patten, M. L. and Newhart, M., 2017. Understanding research methods: An overview of the
essentials. Taylor & Francis.
Sundareswaran, S. D., 2011. Essentials of Managing Stress in the Era of Globalization-An
Organizational Perspective. Journal of Contemporary Research in Management. 6(3).
p.67.
Tyson, S., 2014. Essentials of human resource management. Routledge.
Online
Using the Marketing Mix to Strengthen your Marketing Strategy. 2016. [Online]. Available
through: <http://www.dreamalatte.com/coffee-shop-business-plan-marketing-mix/>.
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