Coffee Export Market Analysis

This assignment requires students to conduct an in-depth analysis of the coffee export market in Finland. The analysis should explore market trends, consumer preferences, competitive landscape, and regulatory factors. Students are also tasked with developing a comprehensive business plan for a hypothetical coffee exporting company targeting the Finnish market. The plan should outline key strategies, marketing initiatives, financial projections, and risk management considerations.

BUSINESS ESSENTIAL

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Logistical and ethical considerations with structural challenge of expanding coffee shop in
Finland.........................................................................................................................................1
2. Tailored marketing mix for coffee shop expansion plan in abroad........................................3
3. Implications of the need for Marvin and Smith's to cover a wider geographical area ...........6
4. Evaluation of impact of profitability and liquidity on decision-making of a company..........7
5. Conclusion...............................................................................................................................9
REFERENCES..............................................................................................................................10
.......................................................................................................................................................10

INTRODUCTION
Business is an activity which includes trading of materials or services to earn
some income to run a company. It gives power of decision making to a businessmen.
Profit is like fuel for each business as without earning sufficient profit, it cannot be run
(Cobanoglu, 2011). Hence, business essentials are those activities that are necessary
for each firm to run its operations. It also supports all issues which hindering its
activities.
In this report, the selected country is Finland in which there are many
opportunities for Marvin and Smith to grow its coffee business. These opportunities will
justify the reason behind choosing particular country which has been discussed in this
report. This report also consists of various considerations like logistical, ethical and
structural challenges to support justification. Various implications of Marvin and Smith's
needs have been discussed to cover a wider geographical area in different countries.
The main objective of this report is to analyse how profitability and liquidity of
Marvin and Smith would impact their decision-making.
1. Logistical and ethical considerations with structural challenge of expanding coffee
shop in Finland
Business expansion in totally new geographical area is not an easy task,
therefore company needs lots of research work to start a new business (Drucker, 2017).
These research works will give them competitive advantage in the new location.
Country: Finland is the best suitable country where Marvin and Smith would
open new coffee shop for expansion of its business. Finland comes under the Europe
Union because this country is a Northern European Nation which is surrounded by
Sweden, Norway and Russia.
Justification: Behind choosing a particular country, there are numerous factors.
These factors are explained as below with the particular reasons:
 Finland has highest rate of coffee consumption per person in the world. This
country consumed 66 million tonnes of coffee in 2015 which is a very big figure.
This per capita consumption rate is 12.2 kg / year.
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 Interest of public in Finland's special coffee is increasing. The quality of
consumers and the variety of coffee is focused on
 Also, sale of organic product has increased from past years, because
government of Finland is strictly permitting only organic foods.
Logistical Considerations: Finland has a dark green area, which means that it
is best to produce coffee beans that are imported from other countries. These imported
beans could be stored here safely. In this country, requirement of Legal European
Union deals with food safety of the Finland and it is also applicable to coffee. Therefore,
green coffee beans doesn't comes under legal restrictions because it is safe from
pesticides, mycotoxins and salmonella and it is also considered to be low risk on these
measurements.
Finland is importing huge number of coffee from different countries which is also
plus point for Marvin and Smith, as this advantage might help them in getting various
suppliers of coffee across the world and as a theory of Porter's five forces, Marvin and
Smith could reduce the impact of bargaining power of suppliers at low level.
Ethical Considerations: People of Finland prefer hygienic and organic coffee
having high quality. Marvin and Smith uses beans of Gumutindo Coffee which is the
finest coffee in world and thus, it would be a big advantage or opportunity for a company
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Illustration 1: ICO.
(Source: ICO, 2016)

to meet Finland's people’s requirements. It can also produce coffee in Finland by
providing employment to its local farmers. The people of Finland are very sensitive to
each other. Therefore, providing jobs to the farmers certainly force them to buy coffee
from Marvin and Smith's shops.
Structural Challenge of Expanding: There are various threats or structural
challenges which might be faced by Marvin and Smith while expansion of their business
in Finland. These challenges have been described as below:
 For starting a new coffee shop in Finland, Marvin and Smith requires UTZ
certificate due to increase in sales of sustainable coffee as compared to previous
years.
 Marvin and Smith has to face Paulig and Meira which are the largest coffee
companies of Finland. They have extra advantage because these companies sell
certified coffees. Therefore, Marvin and Smith requires these company’s support
to initiate their new business in Finland.
 Marvin and Smith needs coffee beans for their product because there is a great
need for finest coffee in Finland as they require varieties in it . So, Hank and Patti
have to take a loan to start their business here.
Overall, it can be said that Marvin and Smith has a good opportunity to expand
their own business in Finland because they will find large number of buyers of coffee
and Finland's environment is the most suitable for production of green coffee beans.
Also, Finland's government supports free certified trade for coffees which could be an
advantage for company as this will support Marvin and Smith in selling coffee at low
price.
2. Tailored marketing mix for coffee shop expansion plan in abroad
The marketing mix is defined as the right product at the right place, at the right
time and at a reasonable price, it is able to sell 7P's of product development in the
marketing mix and sell it in the market (Fletcher, Fletcher and Fletcher,2012). These
7P's of marketing mix can be applied for the expansion of the coffee shop overseas,
because it can make marketing strategy effective and also provide strong marketing
pillars for business plans. Marvin and Smith need to analyse the status of current
market trends and competitors before planning a marketing mix.
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Marketing mix is required by Marvin and Smith because it will support business
in strengthening its market strategies (Kauffman, 2011). Below are explanation of
marketing mix strategies for Marvin and Smith to expand its business in abroad: Product: This factor of marketing mix, concentrates on core ability of the
company to provide service to their customer's in as better as possible. But
making of product strategy is not possible without relevant data's of customer's
preferences, tastes and moods (Lamb, Hair and McDaniel, 2011). Hence, Marvin
and Smith requires to find answers of these below questions to make product
strategy:
◦ How should menu is to be appeared ?
◦ Is companies present sources are enough to meet market demands ?
◦ What are the customer's preferences ?
On the basis of these questions, Marvin and Smith could produce
conclusion and made the appearance of their product according to the customer's
preference. Marvin and Smith's menu should be focused on famous categories of
coffees which is popular in Finland, prices should be mention with the product and there
should be no hidden terms and conditions. Company has to arrange some funds to
meet the requirements of Finland's people.
 Price: This strategy is essential to compete with other companies in the market.
The price is usually based on the position of the shop in the market because it
tells the company's original message about the value and perception of Marvin
and Smith for consumers (Lindegaard, 2010). For example, if many of their
consumers use to visit coffee shops, than Marvin and Smith would manage sales
their coffee at a lower cost compared to other competitors and if less customers
have access to the store, then to keep the company's cost, company needs to
increase its price. Price should also be based on consumer perception about the
value of products. If the price exceeds their perceived value, then the customer
will not be satisfied with the product. Prices should be matched with consumer
demand and expectations.
 Promotion: This marketing mix strategy is required for products publicity. A
famous brand does not need adequate promotion because its name is a
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publicity, Marvin and Smith need to have links with other brands or to advertise
their products on popular TV channels to promote their products at overseas
(Linnenluecke and Griffiths, 2010). Coffee shop can not affect the global market,
so Marvin and Smith need a brand name and must first be popularized in local
communities. It can make it famous for launching its shops in different countries.
 Place: This factor of marketing mix plays an important role, as it provides
feasible locations for selling companies product. Like for example, if Marvin and
Smith choose the location for their coffee shop which is near to bus stand, metro
stations or at tourist places than it will provides convenience to local people to
have easy access to coffee shop. Therefore, as a part of this strategy it is
recommended to Marvin and Smith to open coffee shop near these places or
near to those places where people usually sit idol, waiting for friends, spending
free time, etc.
 Packaging: This factor is also important for marketing strategy because many
times customers like to buy a product for their unique packing style instead of the
product's average quality (Mendling, Recker and Reijers, 2010). Hence, while
making packaging strategies, it is necessary for Marvin and Smith to focus on
unique packaging styles to attract maximum people from abroad countries. In
simple sense, packaging should be eye catchy and attractive. Below is the
demonstration of unique packaging style for Marvin and Smith's product:
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Illustration 2: Dream[alatte
(Source: dreamalatte)

 Positioning: For Marvin and Smith, it is necessary for them to stand in the
market against their rivals. They need to identify their position in the customer's
mind. The company can take regular feedback on the quality of its product from
the customer's product. Marvin and Smith need to launch a coffee shop so that
they can offer quality and coffee varieties (Wirtz, 2012). Because European
trends are increasing for speciality coffee.
 People: In this marketing mix, Marvin and Smith needs to focus on its target
market and customers. It also needs to focus on those people which is suitable
as its employees. Companies requires critical thinking of how these employees
could be useful tool for the firm if they execute as a market strategies to set
themselves as a strong coffee shop in abroad markets.
Hence, a strong and effective marketing strategies would support Marvin and
Smith in analysing the factors which could solve issues of customers with fulfilling their
required needs of product.
3. Implications of the need for Marvin and Smith's to cover a wider geographical area
Marvin and Smith has a long term vision which is serving their coffee across the
world. They have a mission to cover broad geographical area of each developed
countries. Below is the discussion of implications of Marvin and Smith's needs:
 Information Systems: These are the collection of all relevant data collected
from various sources such as primary and secondary sources. Information
system supports managers in the decision-making process for approval of new
projects (Montague, 2010). The needs of information system by Marvin and
Smith could impact the cost of a company, as gathering primary and secondary
data's needs some investments. Before every new launch, company has to
gather fresh primary informations like people, population, preference of
customer, government regulations, etc. Hence, as Marvin and Smith doesn't
have enough funds to bear these costs, they requires external funds to meet
these expenses. Also additional research team is required for collecting proper
informations.
 Personnel and Managing staff issues: A small company can easily manage
the issues of its personnel and employees because they can easily reach them,
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but for a person, large organization management staff and personnel are
complicated, it takes a lot of time to resolve their issues (Omachonu and
Einspruch, 2010). To enhance your business abroad, the needs of Marvin and
Smith will also be removed. The facilities and wages that company spend on
employees may also be affected. Because to run a business overseas, very high
cost strategies are necessary.
Hence, these two issues are interconnected with each other, because without
proper information systems, company will not able to know staff members behaviour,
psychology and cultures. This lack of information might affect the company through
failure in managing issues of coffee.
4. Evaluation of impact of profitability and liquidity on decision-making of a company
Marvin and Smith can't take decisions of expansion their business abroad
because they have to pass through several criteria to know if the new project is taking
cash inflows for a company or not (Patten and Newhart, 2017). To support the decision-
making process of Marvin and Smith, below is calculations of ratio analysis like
profitability and liquidity ratio's:
Profitability Ratio's: These type of ratio's provides relevant informations to a
company which is related to their profits earned during a year. Profitability ratio's
provides weight-age of gross profit and net earnings with respective sales revenues
(West, 2012). Below is the calculation of Net profit margin of Marvin and Smith:
Net profit Margin
Amount £
Net profit (A) 26800
Sales Revenue (B) 360000
Net profit Margin(A/B)*100 7.44%
Interpretation: In the above calculation, the net profit is only 7.44%, indicating
that the company is using its maximum amount in the sale cost. On this margin margin,
it is difficult for Marvin and Smith to survive abroad. To achieve higher cash flow, its net
profit margins will have to be improved. Otherwise it should be dependent on external
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sources such as loans and borrowings from the bank. But in order to pay regular
interest, the company requires a more gross profit margin.
Liquidity: It tells about companies that the refining capacity liquidity ratio is to
calculate the exact ratio of existing assets available to pay short-term loans to the
company to refund their debt. Statue ratio is 2: 1 (Slack, Brandon-Jones and Johnston,
2011), which is to maintain every business. Below is the calculation of Current Ratio or
Liquidity ratio of Marvin and Smith:
Current Ratio
Amount £
Current Assets (A) 35400
Current Liabilities (B) 6200
Current Ratio (A/B) 5.7096774194
Interpretation: Current ratio of Marvin and Smith is 5.7, which is very much high
than idol current ratio (2:1). It can be concluded that, company is not using current
assets in productive way. Because most of its cash has used in business operations.
This indicates that company has blocked most of its cash into business and for extra
fund it has to be dependent on external funds which again increase its expenses due to
payment of interests on debts (Uhl and Gollenia, 2016). Therefore it is suggested that
Marvin and Smith should increase the portion of current liabilities to proper balance
between current assets and liabilities.
5. Conclusion
Marvin and Smith can manage to expand its business to Finland because the
demand for coffee market is huge and proper trade is allowed by Finland's local
government as compared to other countries. This project is beneficiary for the company
to reduce the cost of production of Marvin and Smith and it can provide competitive
advantage for them (Tyson, 2014).
In Finland, Paulig and Meira has covered most of the Finland's coffee market.
There's minimum possibility that Marvin and Smith could face the competition of these
two big companies. Hence, it can tie-up with these companies to grasp rest of the
Finland's market. Company has invest most of its funds to pay wages and expenses on
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employees training programmes, this training helped employees in improving their
productivity but at the same time this has increased the overall cost of Marvin and Smith
which could trouble business through running out of cash situations.
Marvin and Smith can manage to expand to Finland because the demand for
coffee market is huge because compared to other countries, company has an
opportunity to reduce the cost of production because Finland's local government has
allowed free right trade permission which could also provide Competitive Advantage to
the company.
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Online
Exporting coffee to Finland, 2017. [Online]. Available
through<https://www.cbi.eu/market-information/coffee/finland/>.
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