Business Essentials Advanced Assignment (Doc)

BUSINESS ESSENTIAL
ADVANCE

Table of Contents
INTRODUCTION ..........................................................................................................................1
Market Research..........................................................................................................................1
Facts based on lifestyle, culture, and coffee drinkers of German's............................................2
2. Marketing Mix........................................................................................................................3
3. Implication experienced by Marvin and Smith’s coffee-shop................................................4
4. Interpretation of Financial Statement......................................................................................5
5. Summary.................................................................................................................................7
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
The term “Business” refers to an activity of making, selling, or buying goods or providing
services in exchange of money. According to Stephenson, (2014) it means “the regular purchase
and sales of products undertaken with an aim of earning profits and acquiring wealth through the
satisfaction of human wants”. Marvin and Smith's is well-renowned coffee shop, situated in
Wandsworth in South London. It was opened by Patty Smith and Hank Marvin who have worked
together for years in the catering and food sector. After gaining popularity in London, both of its
owners have decided to expand its coffee-chain in another region of European Union. The given
report covers what all aspects need to be taken into consideration by Marvin and Smith while
expanding business operation to Germany. Along with this, it will also discuss marketing mix,
critical analysis of financial information & overall summary of overseas expansion.
TASK 1
Market Research
As per the given case study, Hank Marvin & Patty Smith have worked together for year
with food and catering industry. After gaining much experience, both have mutually agreed, to
set up its own coffee-shop in London. Before opening its first business venture, they spent nearly
12 months in researching and planning about the details of coffee-house such as selecting best
location, identify target market, key competitors, amount of capital required, choosing best
suppliers, key products and services that they are going to offer in their coffee-shop and so forth.
In January 2016, they opened their first coffee-shop in Wandsworth, South London.
However, after gaining much popularity, both have come up with an expansion plan and
want to set up one of their coffee-shops in Germany. According to statistics reports, Germany is
the 3rd largest coffee market in the world after Brazil and U.S.A. The main reason behind
choosing this country is about 86% of total population of Germans consumes coffee on regular
basis. It has been estimated that on an average a German people consume 165 litres of coffee,
when compared to 107 litres of beer and 140 litres of water (Growth and Trend of German
Coffee Market, 2016.). Additionally, each year ample number of visitors visit Germany which
can be taken as an advantage as it significantly contributes towards increasing the overall sales of
this sector. It has been estimated that on an average Germans drinks about 1.43 cups of coffee on
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daily basis. Along with this, country is exceptionally good in the domestic coffee roasting
process & has a large and cost-effective processing industry.
Facts based on lifestyle, culture, and coffee drinkers of German's
Approximately 27.6% of the total population, aged between 18-29 years consider coffee
machine as a status symbol marker, as compared to the 17.7% of elder population aged 50 years
or above. As a matter of fact, majority of total population prefer to drink coffee outside the
home; possibly at a cafe or a restaurant. Around 50% of all German people are coffee drinkers
and are willing to spend more money for consuming quality coffee (Anderson, Sweeney and
Williams, 2011). According to a research it has been figured out that, drinking coffee is the best
way to feel fresh and live. A comparison of coffee lifestyles in main cities of Germany reveals
interesting trends as well as differences. For example: 1/3 of Berlin's total population aged
between 18-29 are re-discovering the trend of drinking coffee in the afternoon. In-short, there is
huge possibility of generating higher sales lead in these cities. In-fact 47.1% of Berlin's young
drinkers seek to try and taste varieties in coffee & aromas.
Talking about ethical consideration, Marvin and Smith's coffee shop has a strong
rationale of promoting equality and fair trade & expect their employees to value these beliefs and
demonstrate behaviour in the workplace accordingly. Additionally, they ensure to provide high
standard training to its German staff members. From the view point of customers, innovative
ideas are formulated which gives them high level of satisfaction. In-fact, staff members were also
expected to help out customers during playing short-board games when they have no one to play
with. Apart from this, there are various other key consideration that Smith and Marvin needs to
look into include transportation facilities, availability of suppliers etc. For example: Hank and
Patty must check what all mode of transportation are available for target population to reach at
their coffee-shop. It's selected location must be in the heart of the city that instantly seize the
attention of vast number of consumers (Bradford, 2015). As German people prefer to drink
quality coffee which means they are willing to pay higher prices. Apart from this, themed
evenings are going to be organized for Germans which indirectly attracts them. Moreover,
German people prefer to read books while drinking coffee. With the passage of time, Hank and
Patty realise that its initial information system might get updated with passage of time which
creates difficulty while expanding business in Germany. Thus, it become primarily important for
them to update its structure as per current market and technological trend so as to gain high
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competitive advantage over other contenders. So Hank and Patty must ensure the availability of
books along with free Wi-Fi, power point sockets for charging mobile, laptops etc.
2. Marketing Mix
It refers to a set of activities or tactics, mainly undertaken by firm with a motive to
promote its product or brand in the market place.
Product The product offered by firm is either a tangible good or an intangible
service that effectively fulfil specific demand or need of customers.
According to the given case study, Hank and Patty have decided to set
up its new coffee-chain in Germany. The reason for selecting this
particular country is around 86% of its total population consume coffee
on daily basis which means approx. 165 litres of coffee is consumed by
per person per year. As it's a wholly coffee-shop so key products include
wide variety of coffee (as German people are always ready to try new
coffee flavours). Along with it, other products like pastries, cake,
patties, juices, snacks, cookies, herbal infusions and high quality tea can
also be served to target customers. The USP of Marvin and Smith's
coffee shop is to make coffee by using finest coffee beans.
Price This “P” is concerned with selecting appropriate pricing strategy for the
products that are going to be served among end-users. Knowing the fact
that, Germans can easily spend money on coffee, Marvin and Smith can
adopt premium pricing strategy for its coffee-shop. Moreover, German
people are much fond of trying and testing different variants of coffee.
This can also come out as an advantage for Marvin and Smith's coffee
shop as it attracts customers by using finest coffee beans in its coffee.
This gives them high competitive edge over other rivals like Kraft Hein,
Tchibo, Starbucks, Nestle etc. Moreover, with the application of this
strategy, firm will be able to maintain its brand image in the premium
segment.
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Place According to the given case study, it has been figured out that owner of
Marvin and Smith's coffee shop has decided to expand its business
operation in another European Country. As a result, both have agreed to
open of their coffee-shop in Berlin, Germany. Almost 47.1% of coffee
drinkers seek out variety in aromas and coffees, which is reflected by
the modern boom in new coffee drinking location, starting from vintage
style coffee shop to modern co-working coffee-house. Another thing
that needs to be taken into account is selecting a suitable location in the
heart of the city that seizes the attention of large number of customers.
Promotion It includes different marketing communication techniques and strategies
like advertising, sales promotion, print media, special offers, social
networking sites etc. that eventually help firm in promoting its goods or
services. As Marvin and Smith's coffee shop is new in town; it requires
to pay extra attention towards promoting its products. For example: It
can create its Instagram or Facebook page. Additionally, print media can
also be taken into account to attract the local population. Also, concept
of themed evenings is also going to be introduced by Hank and Patty;
special discount coupons must be given to first 50 customers.
3. Implication experienced by Marvin and Smith’s coffee-shop
Gaining High Competitive Edge: Every association goes for attaining high competitive
advantage in the market over its opponents. Before setting up its 1st coffee-shop in London, Hank
and Patty spent close around a year for inquiring about and planning the points of interest of
every single fundamental factor that necessities to considered before setting up its coffee-house
(Burke and Friedman, 2014). Hank and Patty launches its coffee-house in South London and
after getting positive reaction from clients they have chosen to extend its business activity in
Germany (Hair, 2015). Before setting its first coffee-shop outlet in Germany, they do the
statistical surveying and furthermore assembles data with respect to the present contender.
Taking the benefit of the way that close around 86% of German adults consumes 1.43 coffee
consistently which implies when a German people wishes to begin any business in Germany,
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opening coffee-shop is the only idea that initially comes into their minds. This is the motivation
behind why there is vast number of cafés accessible in Germany (Guffey and Loewy, 2012). This
empower Hank and Patty to offer such goods and services that provide them high
competitiveness level over its rivals but in an innovative and creative manner. The organization
chose to utilize finest quality of beans of best suppliers. In addition to this, company has
decided to include staff members in various activities conducted during themed evenings. This
results in motivating both consumers and workers (Cavusgil, Rammal and Freeman, 2011).
Another factor based on which firm can attain high competitive edge in the market is its
pricing strategy. Hank and Patty knows the fact that, German people are always ready to spend
good amount of money on consuming quality coffee.
Organization Culture: It includes practices, qualities and principle of any company &
its members. Culture likewise incorporates organization's vision, objective, values, norms and
assumption. In general, culture of any business enterprise signify the way things are done or
finished in an organization. The shared esteem or values plays significant role in creating
important variables that an individual or group members are catering in context of delivering
quality products. In-fact the culture of any organization represents the manner in which their
worker interacts with each other. A healthy and positive culture encourages employees to remain
motivated and loyal towards the firm. The work culture likewise helps in improving company's
brand image (Hair, 2015). At the end of the day, an organization is better known by its culture.
Hank and Patty began its 1st coffee house in January, 2016 with a point of serving best quality
coffee in the market. They utilized best coffee beans which turns into the explanation behind
grabbing the consideration of customers. Later on when they began picking up benefit and gets
positive reaction from clients they chose to grow its business activity in another nation also. So
they come up with setting up its new cafe in Germany. As Hank and Patty have years of
experience in working with food industry, they were well aware of the fact that organizational
objectives can be achieved in a better manner by keeping its staff members satisfied.
Consequently, they generally keep their workers propelled by including them in its decision
making process and furthermore provide high standard training to them which makes them more
effective and efficient. Additionally, Hank & Patty also provide wage and development
opportunities to its man-power (Guffey and Loewy, 2012).
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4. Interpretation of Financial Statement
As per the given case scenario, Hank and Patty have decided to expand its business
operation in Germany with a hope to capture high market share and strong customer base. But
before this, it is important to analyse last year financials so as to figure out whether company is
having adequate amount of funding for future expansion or not. With this, they also get to know
whether setting up a new coffee-house in Germany proves to be a good decision for them or not
from financial perspective.
A) Two Profitability Ratio
Profitability Ratio: With the help of these ratios, overall performance and efficiency of company
can be determined throughout the year. It encompasses:
 Gross Profit Margin: This ratio contrast net benefit of the organization with its business
income. This proportion distinguishes how much business is winning considered the
required expenses to create its merchandise and enterprises. High gross profit represents
higher proficiency of centre business activities which implies organization is as yet
giving net acquiring taking care of settled costs, profits, working expenses and
deterioration also (Lamb, Hair and McDaniel, 2011). Then again, a low net revenue
speaks to low deals, firm market rivalry or wrong deals arrangements. This proportion
makes sense of how well organization is controlling its cost of stock.
 Net Profit Margin: Net Profit describe the income left business substance in the wake of
deducting all costs from deals. This proportion reveal the measure of benefit that an
organization can separate from its aggregate deals figures. High net benefit proportion
discovers that organization is satisfactorily returning higher benefits.
Gross Profit 208,000
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
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=7.4%
From the above proportions, it can be interpreted that organization can keep up its
successful position in the market as well as generate sufficient amount of profits.
B) Two Liquidity Ratio
Liquidity Ratio: Hank and Patty utilizes these ratio keeping in mind the end goal to
distinguish its capacity to pay its obligation commitment. This proportion demonstrates that
whether company's present resource will be adequate to meet the organization's commitment
when they wind up due (Sundareswaran, 2011). It includes:
 Current Ratio: This proportion speaks to the capacity of Marvin and Smith's coffee
house to pay back its capacities with its advantages. Perfect current proportion is 2:1.
 Liquidity Ratio: This proportion measure organization's capacity to utilize fast advantage
for resign its present liabilities. Perfect basic analysis proportion is 1:1.
Current Asset 35,400
Current Liability 6,200
Ratios Formula Results
Current ratio Current assets / Current liabilities 35400/6200= 5.7
Liquid ratio Liquid assets / Current liabilities 35400-8000/6200=4.4
From this it can be made sense of that, the liquidity of Marvin and Smith's café is
profoundly compelling when contrasted with others rivals. This implies they are well using their
present resources.
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5. Summary
The given report talks about Hank and Patty who have decided to expand its business
operation i.e. coffee-house chain in Germany with an intent to capture large market share and
strong customer based in international market. As they both are having incredible involvement
in this specific area, they had opened up its first cafe in South London. In January, 2016 they the
two dispatches Marvin and Smith's coffee-house (Guffey and Loewy, 2012). In the wake of
getting positive reaction from clients they both chose to extend its business in Germany where
nearly larger part of its populace drinks espresso two-three times each day. There are a lot of
components that they have to considered while growing business in other nation. Elements like
capital requirement, area, assets, transportation offices must be contemplated while extending
business task in abroad market. (Sundareswaran, 2011).
CONCLUSION
According to above mentioned report, it can be concluded that there are several key
aspects that needs to be taken into account by business owner while setting up new business in
new market. Factors like selection of location, identify market, availability of resources, market
analysis also plays key role in launching new business venture.
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REFERENCES
Books and Journal:
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
Growth and Trend of German Coffee Market. 2016.[Online]. Available through: .
<http://www.dreamalatte.com/coffee-shop-business-plan-marketing-mix/>
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