(PDF) Business Essentials - Marvin and Smith's coffee shop

Business
Essential

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Country where business should expand its services. .........................................................1
2. Marketing Mix of Marvin and Smith coffee shop.............................................................2
3. Issues and challenges faced by business and how it is be managed...................................4
4. Calculation and evaluation of financial information..........................................................6
5. Summary about overall viability of overseas expansion. ..................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business essential can be refers as a set of business activities which are
important for business and its functioning (Hair Jr and et.al., 2015). Business is any
organisation where goods and services are exchanged for money. It is essential for
business to follow all this function for effective and efficient functioning of organisation.
Business essential includes financial resources, human resource, marketing,
technology. In this report chosen company is Marvin and Smith's coffee shop. This
coffee shop was established in January 2017 and location of this shop is Wandsworth
in South London. This shop is using finest coffee beans from Gumutindo coffee. This
report consist a detailed study of location which will be best suitable for new coffee
shop. Marketing mix is also conducted in order to identify product, price, place and
promotion of business. Evaluation of major function of business to identify challenges
that company have to face. Also, calculation of ratios that influence decision making of
business.
1. Country where business should expand its services.
Marvin and Smith should plan to launch their new coffee shop in Portugal. This
country would be best suitable for this business because for economic condition of
Portugal, social trends and demand of coffee in this country (Wilson, 2014). All these
factors will help Marvin and Smith for their earning profits by satisfying need and
requirement of customers of Portugal country. They should open an attract coffee shop
where customers can comfortably sit and enjoy their coffees. It should have relaxing
ambience for their consumer so that customers can feel fresh. Coffee-houses serves as
a centres of social interaction by providing place to congregate, talk, read, write
entertain or pass the time to individual or group of people. Economic condition: Portugal economy is one of the major reason for choosing
this country to expand Marvin and Smith business. It is a developed country with
advance technology and high income economy. Portugal economy is very much
dependent on overall developmental trends of Europe. This country is
continuously growing and progressing towards more private enterprise. This will
be very helpful for Marvin and Smith coffees shop to increase its profitability by
1

expanding its services in Portugal. Government of this country is attracting new
investment will help in overall economic growth of company. Therefore economic
condition of Portugal will help in effective and efficient working of Marvin and
Smith coffee shop. Social trends: Social trends can be refers as type of activities which is
participated by large number of people (Scarborough, 2016). Customers are
attracted towards new and creative things so it can help Marvin and Smith coffee
shop to influence more customers to their shop. Social trends of digital and social
media will help in informing and connecting with customers and communicating
products and services offered by coffee shop. People of Portugal are always
ready to try new thing and exploring new places. Coffee shops are place where
people can spend some time with their friends and family to relax.
 Demand: Portugal is a one of those countries which spend most on coffee. So in
this area demand of coffee and coffee-house are very high. People of this
country enjoy drinking coffees as well as spending time in coffee shops. Here
people are habitual of drinking coffee on daily bases and this is very important for
coffee shops. Portugal is in top six country who pay most for coffees and
consume coffee, this refers that demand of coffee is very high in this country as
compare to tea and cola products (Caffeine (Coffee) Consumption By Country,
2019). In this area people prefer instant coffee more than roast coffee. Therefore
it is an huge opportunity for Marvin and Smith to expand its coffee shop business
in Portugal area. Company should establish attractive and creative coffee-house
and provide quality coffee to customers.
All of these are the major reason for selecting this country for Marvin and Smith
coffee business (Gamble, Peteraf and Thompson, 2014). These factors will help in
develop and effective functioning of coffee shop. Economy of county can financially help
business to grow whereas social trends and demand of product will attract more
customer as well as increase sales of business.
2. Marketing Mix of Marvin and Smith coffee shop.
Marketing mix can be refers as all those factor which influence demand of
product and these products are controlled by company. It consist of 4 P's which is
2

product, price, place and promotion. Marvin and Smith needs to put right combination of
these so that their business can attract more customers in cafe. Business must have
right products at right place with right price by conducting right promotion techniques.
Marketing mix can be define as set of actions and tactics that Marvin and Smith coffee
business to promote its brand and products in market. This 4 P's can help business in
developing effective marketing strategies so that company can target right customers
(Engemann and Henderson, 2014). Marketing mix of Marvin and Smith's coffee
business are mention below. Product: It is refer as all goods and services offered by company in exchange of
money. Company's products should be developed in such as way that it can
satisfy needs and wants of customers. Products and services of Marvin and
Smith' s coffee business are food and drink products as well as interior or other
equipments of cafe. This company is offering different types of coffee as well as
other food products but instant coffee unique product as it contains special
ingredient. They are made up of high quality products in order to service valuable
product to customers. Marvin and Smith coffee shop have comfortable sit space
and area for their guest and its intangible products includes is services to
customers. They have well trained staff which leads to improve in over all
experience of customers. Price: It is very important element of marketing mix as it directly influence overall
profitability of business. Price can be refers as value charged from customers in
exchange of products and services offered by company (Labusch, Aier and
Winter, 2013). Marvin and Smith have to develop an effective pricing strategies
that can help business to earn profits for business functioning. Company should
develop price strategies while considering cost involved in developing products
and offering their services to customers. Marvin and Smith should determine the
price which can be afford by consumers as well as they are willing to pay.
Therefore right pricing of products will leads to smooth functioning of business. Place: It is the area where company is providing it services. Marvin and Smith
can select Portugal country to expand its business and service. This area will be
most suitable for Marvin and Smith's coffee business because of high demand of
3

coffee in country. Place is the physical location of the business and area where
people can visit to purchase products. Marvin and Smith should launch in centre
area so it will be convenient for customers to visit more often. Place near to office
can be build as place for business meetings. This area will attract crowd which is
working and are capable of affording high quality products of Marvin and Smith.
 Promotion: It is a way of communicating and informing customers about
business and its products. Promotion of business is very important for attracting
customers and influencing them to purchase products (Sungur and et.al., 2014).
Marvin and Smith can use modern as well as traditional methods of promoting its
product. Promotional methods which can be used by company is advertising,
personal selling as well as company can use digital media and social media to
attract customers. Company should develop creating promotional strategies in
order to increase sales of business.
Marketing mix can provide guide to Marvin and Smith's coffee shop to success of
company. This will help in developing effective business strategies which can leads to
overall profitability of organisation.
3. Issues and challenges faced by business and how it is be managed.
Marvin and Smith are planning to expand their business in to different
geographical area so that have to deal with various issues and challenges. In order to
move into unfamiliar territory company needs to start and setup their business function
from starting (Hnátek, 2015). Major issues or challenges which is faced by this business
is that they have to hire and train new employees and identify needs and wants of new
customers. Challenge from which Marvin and Smith's business have to deal with are
mention below. Untrained staff: For providing its services into new market area company have
to find and recruit new employees. Employees are very important part of
company and they are the reason of success of business. Marvin and Smith
have to hire new employees and train them according to business. Training
employees is very difficult task for company as it require time and cost in proper
training of employees. Training is very essential part as it will help in understand
process and procedure of business. In order to provide high customer services
4

company have to provide training to staff and develop their skill and ability to
perform task in coffee shop.
 Identifying needs of customers: When company is moving into completely new
territory to expand its products and services in new market area, company have
to find out needs and wants of customers. It is very important to identify
requirement of customers business is planning to serves (Toth, 2013). Different
area of world have different needs and demands and company have to offer
products according to customers preference so that they purchase products. Its
is very difficult to identify needs of large number of individual. Each and every
person have different needs so it is challenges process for company to analyse
specific needs of customer and satisfy their requirements.
Business consist of various department and these challenges and issues can be
managed by different function. Human resource department can train employees and
marketing department function is to identify needs and requirement of customers.
 Human resource management: This department is responsible for managing
employees and resolve issues related human resources of company. Human
resource management function is to recruit well qualified employees with right
skills and ability. This department will provide training to employees so that they
can work effectively and efficiently. Marvin and Smith's company can provide
training to new employees by various methods. Human resource team can
provide on the job as well as off the job training to new employees. Training will
help in improving ability and skills of employees and leads to provide valuable
experience to customers.
 Marketing: Marketing function will help in increase sales of company by offering
products according to need and wants of customers. This function of business is
responsible for improving overall profitability (Khan and Adil, 2013). This
department can help Marvin and Smith's company by in identifying needs and
wants of customers by conducting market research. Marketing team can perform
a research to understand customers of new market as well as needs or
requirements of customers. It is very important to develop market research as it
will help in developing product according to customers requirement. Marvin and
5

Smith's coffee business can conduct online and offline servery or research about
customers as this will help in analysing requirements of new customers.
4. Calculation and evaluation of financial information
Evaluating and calculation of liquidity ratio as well as profitability ratio is mention
below
Liquidity Ratio:
It is financial ratio that determines ability of firm to repay their short term liabilities
(Rosca, Arnold and Bendul, 2017). Ratio shows that sufficiency of current assets to
meet current liabilities. In other word, how quickly a firm can convert its current assets
into cash and cash equivalent so that they can repay their liabilities on time.
Liquid ratio includes various ratio like current ratio, Acid test ratio, absolute liquid ratio
and basic defence ratio.
Current ratio= Current Assets / Current liabilities
Quick ratio = Quick Assets / current liabilities
Profitability Ratio:
These are the ratio that used by management in order to take financial decision
in the firm. It measure capabilities of a company to generate profit out of its sales
revenue, Operating cost, earning on equity during particular period of time. It may
includes margin ratio and return ratio.
Profitabili
ty ratio Formula Calculation
Gross
profit
ratio Gross profit / sales 208000/360000 58%
Net profit
ratio Net profit / sales 26800/360000 7%
The analysis indicates towards the liquidity and profitability position in respect of
Marvin & Smith’s Coffee shops. Profitability position was in favourable situation for the
6

year 2017. It is evaluated that the manufacturing profit of the profit is 51% more
comparison to net profit margin (Kalman, 2014). However, the net profit margin is
recorded as 7%. For decision-making and strategic planning, it is important to control
the non-manufacturing expenses as administration expenses. It is required to control
the variable expenses as other expenses and miscellaneous expenses for better use
and consideration of net profit.
Liquidity
ratio Formula Calculation
Current
ratio
Current assets / Current
liabilities 38400/6200
6.1935
48
Quick ratio
liquid asserts / Current
liabilities 27400/6200
4.4193
55
By evaluating the liquidity, position of company it is concluded that company has
current assets of £38400 in the form of cash and inventories and current liabilities worth
£6200 in the form of trade payables. Current ratio shows 6.19 for the year 2017 that
indicates that organization is enough capable to repay its current liabilities. Liquidity
ratio indicates shows 4.419 through which it is considered that company is capable to
repay its current liabilities except the bank overdraft by using liquid assets (Janita and
Chong, 2013). For decision, making it is important to cap the current ratio to the ideal
current ratio.
Current business state: At present, the business is working very well and in
profitability position. Profitability and liquidity position indicates towards favourable
situations for business expansion plan.
Evaluation: Calculated ratio can be considered as favourable in terms of
determining the changes and variations in more strategic and fractional manner. The
current position of organization retains strong liquidity position that can assist the
business expansion plan.
5. Summary about overall viability of overseas expansion.
Marvin and Smith can grow business by expanding services of business in
different area. Company can expand and launch new shop in Portugal country as this
7

country is one of those place where people are expanding most coffee. So it is very
good opportunity for Marvin and Smith to move in this country and provide their product
and services. This will help very helpful for this business to increase its profitability
(Floyd and et.al., 2013). Company have to develop various strategies related to pricing
of product as well as promotion of product. Business should determiner prices which
help in earn profits as well as people are willing to pay that price. Product and services
of company should be able to offer value to consumer and it to be worth to price
charged by company. This business can take advantage of social media as well as
digital media to promote its products and services. This is easy to use and help in
targeting large amount of customer at same time. Social media will help in
communicating and informing customers in creative and innovative and it leads to
attract more customers (Saleem, 2017). while expanding business into new area,
company have to face various challenges and needs to manage those issue for
effective and efficient working of Marvin and Smith's coffee business.
CONCLUSION
From the above report it can be conclude that it is very important for a business
to analyse various factors before selecting location to expand business in new area.
Company needs to identify demands of product offered by business in new area so that
company can earn profit by expanding its services into new area. Company have to
face various challenges while moving to new territory and marketing mix will help in
determining various strategies for business growth.
8

REFERENCES
Books and Journal
Hair Jr, J.F. and et.al., 2015. Essentials of business research methods. Routledge.
Wilson, J., 2014. Essentials of business research: A guide to doing your research
project. Sage.
Scarborough, N.M., 2016. Essentials of entrepreneurship and small business
management. Pearson.
Gamble, J.E., Peteraf, M.A. and Thompson, A.A., 2014. Essentials of strategic
management: The quest for competitive advantage. McGraw-Hill Education.
Engemann, K.J. and Henderson, D.M., 2014. Business continuity and risk management:
essentials of organizational resilience. Rothstein Publishing.
Labusch, N., Aier, S. and Winter, R., 2013. Beyond Enterprise Architecture Modeling–
What are the Essentials to Support Enterprise Transformations?. Enterprise
Modelling and Information Systems Architectures (EMISA 2013).
Sungur, C.T., Binz, T., Breitenbücher, U. and Leymann, F., 2014, September. Informal
process essentials. In 2014 IEEE 18th International Enterprise Distributed
Object Computing Conference (pp. 200-209). IEEE.
Hnátek, M., 2015. Entrepreneurial thinking as a key factor of family business
success. Procedia-Social and Behavioral Sciences, 181, pp.342-348.
Toth, C., 2013. Revisiting a genre: Teaching infographics in business and professional
communication courses. Business Communication Quarterly, 76(4), pp.446-
457.
Khan, M.N. and Adil, M., 2013. Data analysis techniques in service quality literature:
Essentials and advances. Serbian Journal of Management, 8(1), pp.95-112.
Rosca, E., Arnold, M. and Bendul, J.C., 2017. Business models for sustainable
innovation–an empirical analysis of frugal products and services. Journal of
Cleaner Production, 162, pp.S133-S145.
Kalman, Y.M., 2014. A race to the bottom: MOOCs and higher education business
models. Open Learning: The Journal of Open, Distance and e-Learning, 29(1),
pp.5-14.
Janita, I. and Chong, W.K., 2013. Barriers of b2b e-business adoption in Indonesian
SMEs: A Literature Analysis. Procedia Computer Science, 17, pp.571-578.
Floyd, L.A., Xu, F., Atkins, R. and Caldwell, C., 2013. Ethical outcomes and business
ethics: Toward improving business ethics education. Journal of business
ethics, 117(4), pp.753-776.
Saleem, M.A., 2017. The impact of socio-economic factors on small business
success. Geografia-Malaysian Journal of society and space, 8(1).
Online
9