Analyzing Business Strategies for Success

This assignment delves into the key factors that contribute to a firm's sales and profitability in the market. It examines factors like location, innovation, customer needs, and the effectiveness of the marketing mix (product, price, place, promotion). The analysis also incorporates financial ratios, such as profitability and liquidity, to demonstrate a company's commitment to market share expansion and sales growth.

Business Essentials

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Deciding the country to expand coffee shop...........................................................................1
2. Marketing mix in relation to expansion plan of coffee shop abroad.......................................2
3. Implications of the need for Marvin and Smith to cover wide geographical area in different
country.........................................................................................................................................4
4. Evaluating financial information how their profitability and liquidity impact upon decisions
.....................................................................................................................................................4
5. Summary about overall viability of overseas expansion.........................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Before starting up any business venture, it is essential for entrepreneur to undertake
various functions which are related to launching new product or service, expanding current
business etc. Thus, these factors are considered as essentials and thus business need to adopt
them before starting any new venture (Wilson, 2014). Entrepreneurs need to assess varied
political and economic conditions prevailing in the country so that they could follow them
appropriately and thus accomplish the business activities. Present report discusses about Hank
Marvin and Patty Smith who possess a dream to start their own coffee shop. Thus, for that they
are planning to analyse various factors such as location, target market, suppliers etc. After
starting the business in South London, they think to expand the business in European Union
country.
1. Deciding the country to expand coffee shop
After starting the business in South London, Hank Marvin and Patty Smith decided to go
overseas expansion plan and thus planning to launch the coffee shop in European Union country.
This, would result firm in growing the business venture and thus enhance the sales and
profitability of firm in market (Anderson and et. al., 2014). There are various factors such as
political, legal, economic, environmental and social that affects the activities of business.
However, market growth is one of the factor that directly impacts upon the business and
therefore, firm need to assess the same before launching the coffee shop in any specific country.
As Marvin and Smith decided to enter into foreign location and grow their business in European
Union country it is essential for them to identify the country which is suitable for them and helps
in influencing target consumers. There are around 28 nations in European Union that possess
trade policy in regard to analyse the expectations of customers towards the products within those
countries. However, in regard to expand the business in international market, entrepreneur needs
to identify the needs and wants of customers that possess huge impact upon firm (Sherry and
Canon, 2014).
Hence, Germany has been selected which is EU nation and thus possess cold climatic
conditions therefore, it creates more demand of coffee among consumers. Therefore, Marvin and
Smith focuses upon expanding the business functions in Germany and thus aims to expand in
such EU nation so that best results could be carried out (Jaggia and et. al., 2016). Following are
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the different factors that need to be considered in regard to analyse them before starting the
business- Fair trade policy- Here, entrepreneur needs to identify the policies of German
government and thus they assess that country supports and encourages entrepreneurs who
are using fair trade policy. As per this policy, supplier is able to make supply to the
businesses who are operating worldwide and thus provide them varied benefits to carry
out their business within nation (Cavusgil and et. al., 2014). Thus, German government
supports entrepreneur who plans to expand their business in such market. Environmental aspects- Within Germany there is cold environment and thus demand of
coffee is high. As current business deals in coffee products it benefits consumers and
influence them towards firm. Majority of the consumers living in Germany likes black
coffee and thus it provides various health benefits to them so that firm could expand its
business in such market (Min, 2015). Market- There are high number of German population who intake coffee on regular basis
and thus Marvin and Smith gets tough competition within such market as there are varied
coffee shop operating in country (Ajagbe, Long and Solomon, 2014). However, demand
of coffee is high therefore, firm could plan to expand in such market as climatic
conditions of Germany is cold and thus majority of people prefer to consumer hot drinks
over cold.
 Gross Domestic Production- Automobile industry of Germany is flourishing and
therefore it has € 3.70 Trillion gross domestic production and thus large number of
employees are working within such industry. Therefore, Marvin and Smith could plan to
open their coffee shop at such location and enhance their business opportunities
(Cobanoglu and et. al., 2011).
2. Marketing mix in relation to expansion plan of coffee shop abroad
Through developing marketing mix it helps business to emphasizing upon various factors
and thus decide that Marvin and Smith are planning to expand their business in Germany which
is a European Union nation (Ebert and et. al., 2014). However, firm needs to make their
strategies according to expansion of business in international market. Following are the different
marketing mix strategies such as-
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 Products- Marvin and Smith belongs to food and catering industry, therefore they plan to
start their own coffee shop and thus later decided to expand it in overseas market. Firm
needs to analyse the needs and expectations of customers and then prepare a list of
products that needs to be provided (Ferrero and Sison, 2014). However, it has been
identified that most of the people living in Germany focuses upon their health and aims to
consume healthy drinks and therefore, Marvin and Smith decided to provide proper
healthy coffee for their target consumers. Price- It is another factor of marketing mix which needs to be decided by firm before
entering into new market. Marvin and Smith needs to decide the purchasing power of
consumers in the target market and then sets the prices of products accordingly. Company
needs to select cost effective strategy and thus at initial stage, they need to sell their
product at low rates and then gradually increase the cost of coffee (Smith, Mills and
Dion, 2012). It is also essential for firm to use such strategy because there are various
competitors available in market selling similar products and thus tend them to decrease
their prices in order to influence clients towards firm. Place- Marvin and Smith need to assess the place factor which is essential for them to
select in order to start the operations. Here, firm selects Germany market and thus
identifies the needs and expectations of customers and then provide them similar products
so that sales could be enhanced. However, Germany is selected because it is having cold
environment and thus people consumes mode amount of coffee as compared to cold
drinks (Wilson, 2014). Thus, it is the suitable place and thus firm to expand its operations
in market.
 Promotion- Further, promotion is another crucial factor that helps in advertising the
Marvin and Smith coffee products in Germany. However, most of the consumers are
using social media i.e. internet, e-mails and Facebook so that company could promote
themselves over them. For instance, firm can carry out contest through Facebook and
thus influence consumers towards firm (What is Supply Chain Management?. 2011).
Further, company could also use print media i.e. newspapers, pamphlets etc. in regard to
inform customers about new business in market.
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3. Implications of the need for Marvin and Smith to cover wide geographical area in different
country
Following are the different points that need to be discussed for Marvin and Smith in
regard to cover wide geographical area in Germany such as- Organisational culture- It possesses huge impact upon Marvin and Smith coffee shop
which is currently operating in South London. Thus, after such growth, firm plans to
enhance its business in abroad. Therefore, company aims to maintain effective
organizational culture and obtain beliefs and values so that it do not badly impact upon
Germany consumers (Wilson, 2014). Hence, Marvin and Smith maintains similar culture
in Germany also and safeguarding the ethics while carrying out the business activities.
However, as business works independently and bring new changes so that needs could be
fulfilled of customers. Through improving the business culture and bringing innovation
within coffee shop helps in attracting customers towards firm in regard to enhance sales
and profitability of firm in market. It is essential for firm to maintain business culture and
thus carry out activities so that performance of firm could be enhanced. Building
innovative culture helps in influencing German consumers towards firm and therefore, it
aids in improving firm's sales and profitability (Anderson and et. al., 2014).
 Supply chain- Further, it is another factor that needs to be consider by business at the
time of geographical expansion. For instance, Marvin and Smith need to manage the
supply chain and thus focus upon customers who are directly consuming coffee products
in market (Sherry and Canon, 2014). Hence, it is essential for firm to carry out supply
chain and thus deliver products to customers effectively. Organization needs to carry out
effective supply chain within Germany market and thus enhance sales and profitability of
firm in market. Here, firm chooses single supply chain and thus directly deliver coffee
and other food products to consumers who are visiting coffee shop. Thus, such aspect
helps in influencing business opportunities and enhances customer satisfaction in market
(Jaggia and et. al., 2016).
4. Evaluating financial information how their profitability and liquidity impact upon decisions
Following are the different financial information that needs to be identified by business in
regard to make effective decisions about expanding business in new market-
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 Liquidity ratio- Such ratio helps in defining the liquidity status of firm. However, it helps
in identifying the total ability of business for paying off its short term debts against its
assets out of total profits of firm (Cavusgil and et. al., 2014). Further, after evaluating the
the liquidity ratio, if the answer comes to more than 1 then it means that it is fully
recovered by firm. Following are the different types of liquidity ratio such as-
Current ratio- Such ratios are calculated by business in regard to determine whether firm is
capable to fulfil its short term debts or not (Min, 2015). Further, it is also calculated by dividing
total assets by total liability. 2:1 is the idea ratio and the higher the ratio it helps company to pay
the liabilities against the assets. However, lower ratio is ineffective for firm and creates bad
image consumers . Following is the calculation of current ratio of Marvin and Smith-
Formula
Current ratio= current
liabilities /current assets
Calculation
35400/6200=5.7
2:1 is the ideal ratio therefore
current ratio for Marvin and
Smith is 5.7:1, which is more
than the set limit. Therefore, it
is good for business.
Quick ratio- It helps in identifying the abilities of firm in regard to pay short term debts. Quick
ratio is also termed as acid ratio (Ajagbe, Long and Solomon, 2014). Here, if the ratio is less than
1 then business is not able to pay its liabilities and debts while, if it is more than 1 it helps firm to
pay the debts and liabilities.
Formula
Quick ratio= cash +marketable
securities /current liabilities
Calculation=
(35400-8000)/6200=4.42
Acid ratio that has been
calculated is 4.42: 1, which is
alos higher than ideal ratio and
thus it is a good sign for
business. As, ideal ratio is 1:1.
 Profitability ratio- With the help of such ratio, it helps in identifying the capabilities of
firm and thus make income over expenses. There are different forms of profitability ratio-
Gross profit ratio- Through the financial statement of Marvin and Smith gross profit ratio of
firm could be identified in relation to assess cost of goods and services against the sales that are
generated by business (Cobanoglu and et. al., 2011).
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Formula
Gross profit ratio=(Gross
profit/sales)*10
Calculation
= (208000/360000)*100
=57.77%
Thus, gross profit margin of
firm is much higher than ideal
ratio. Hence, it is beneficial
for Marvin and Smith.
Net profit margin- Company uses such ratio in relation to identify net profits that is earned by
firm and carry out business activities. However, net profit margin is being calculated from sales
and also subtacting all the indirect costs and expenses incurred by firm in relation to assess net
profits. Company aims to identify the business profitability and thus make necessary changes so
that firm could increase or decrease their net profit (Ebert and et. al., 2014).
Formula
Net profit margin=(Net
profit/sales)*100
Calculation
= (26800/360000)*100
=7.44%
It assesses that Marvin and
Smith are less compared to
the gross profit ratio.
5. Summary about overall viability of overseas expansion
Marvin and Smith aims to expand its business operations in European Union nation.
Therefore, it selects Germany so that business could be expanded in that country and enhance
sales and profitability of firm. It would result in improving business viability and thus carry out
overseas business expansion so that market share could be improved (Ferrero and Sison, 2014).
After starting the business in London, company aims to enter into international market and
selects Germany so that they can identify the needs and wants of customers and provide them
coffee products. For this, firm needs to carry out proper market analysis and identify the needs
and wants of customers so that target market could be selected in regard to improve sales and
performance in market. Marvin and Smith analyse the market conditions of Germany and attain
high growth and success. As per the needs of customers, firm provides different products or
services related to coffee and attain high sales. It is essential for firm to adopt cost effective
pricing strategy so that low prices could be maintained by firm at initial and then gradually
increase them so that market share could be enlarged (Smith, Mills and Dion, 2012).
Further, Marvin and Smith analyses that the market in which firm aims to expand is cold
area and therefore, demand of coffee is high. Hence, it is beneficial for them to improve business
performance and sales in market. Firm needs to adopt different promotion methods and identify
the needs of their clients so that sales could be improved. In order to attract customers in new
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market, firm needs to keep low prices at initial stage and then gradually increase it (Wilson,
2014). It will help in influencing large number of consumers towards firm and thus improves
business performance in market. Also, company needs to develop proper supply chain that
results in identifying the way through which they could easily reach to end users.
After identifying the suitable market it helps business to start up the venture and thus give
tough competition to rivals. Also, using different promotional strategies such as Facebook,
internet, e-mails and pamphlets it helps business to carry out desired results in terms of
enhancing sales and profitability in market (Anderson and et. al., 2014). Thus, through adopting
all such aspects it results in improving the overall viability of business in overseas expansion.
CONCLUSION
It can be concluded from the study that entrepreneur needs to plan different factors before
launching any new business concept in market. Therefore, it is essential for business to identify
different factors such as location, innovation change, target customers needs etc. in order to
enhance sales and profitability of firm in market. Mavin and Smith also identifies effective
marketing mix strategy i.e. product, price, place and promotion in regard to deliver quality
products and services to customers. Also, identifying the profitability and liquidity ratios of firm
it helps in proving that business aims to enhance its market share and sales.
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REFERENCES
Books and Journals
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Sherry, C.S. and Canon, C.L., 2014. An Introduction to “Business Essentials”. Journal of the
American College of Radiology. 11(2). pp.110-111.
Jaggia, S. and et. al., 2016. Essentials of business statistics: communicating with numbers.
McGraw-Hill Education.
Cavusgil, S.T. and et. al., 2014. International business. Pearson Australia.
Min, H., 2015. The essentials of supply chain management: New business concepts and
applications. FT Press.
Ajagbe, M.A., Long, C.S. and Solomon, O., 2014. The impact of sales promotion and product
branding on company performance: A case study of AIICO insurance Nigerian
PLC. Procedia-Social and Behavioral Sciences. 129. pp.164-171.
Cobanoglu, C. and et. al., 2011. The impact of technology amenities on hotel guest overall
satisfaction. Journal of Quality Assurance in Hospitality & Tourism. 12(4). pp.272-288.
Ebert, R.J. and et. al., 2014. Business essentials. Pearson Education Canada.
Ferrero, I. and Sison, A.J.G., 2014. A quantitative analysis of authors, schools and themes in
virtue ethics articles in business ethics and management journals (1980–2011). Business
Ethics: A European Review. 23(4). pp.375-400.
Smith, T.A., Mills, A.M. and Dion, P., 2012. Linking business strategy and knowledge
management capabilities for organizational effectiveness. In Conceptual Models and
Outcomes of Advancing Knowledge Management: New Technologies (pp. 186-207). IGI
Global.
Online
What is Supply Chain Management?. 2011. [Online]. Available Thorough:
<https://scm.ncsu.edu/scm-articles/article/what-is-supply-chain-management>.
[Accessed on 30th March 2017].
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