Business Expansion & Analysis Report

This assignment tasks students with analyzing the feasibility of expanding a small coffee shop business overseas. It requires students to conduct a market analysis, assess the financial viability (including ROCE), consider various marketing mix elements, and propose an organizational structure that would support international expansion. The focus is on providing a comprehensive report outlining the opportunities and challenges associated with this strategic decision.

Business Essentials

Table of Contents
INTRODUCTION...........................................................................................................................1
TASKS ............................................................................................................................................1
1. The country in which marvin and Smith’s coffee shop could expand...............................1
2. marketing mix.....................................................................................................................2
3. Implications of the need for Marvin and Smith’s to cover a wider geographical area......4
Q4. Evaluate how their profitability and liquidity may impact on decisions available to
marvin and smith....................................................................................................................5
Q5. Write a concluding summary about the overall viability of overseas expansion at this
stage........................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES ...............................................................................................................................9

INTRODUCTION
Business organization who perform their operations in order to fulfil the needs of
their customers. They perform their activities in order to accomplish their objectives
such as to improve the growth and to generate more revenues. In order to fulfil these
goals, they have to face some of issues related to the competition and high cost in
market (Omachonu and Einspruch, 2010). The present report in based on the case
study of hank marvin and patty smith who want to open their coffee shop at different
places. Below mentioned report is based on business essentials who explains the
country in which they are expanding their business. It is focused on the elements of
marketing mix so that business can be established. Further, how their profitability and
liquidity can affect the decisions of the Hank and Patty.
TASKS
1. The country in which marvin and Smith’s coffee shop could expand
When any organization expand their business operations in another country then
they have to focus on some of the factors such as political, social, economical, legal,
environmental and so on (Young and Dhanda, 2012). After analysing these factors they
can establish their business into another country. Here, hank marvin and patty smith
can expand their operations in Copenhagen so that their profitability level can be
improved. They can offer their services at this place due to some reasons such as:
 The people of the country prefer to drink coffee in the cafeteria so this will be a
great opportunities for the new small business to offer their services to the
customers (Jaggia and et. al., 2016). By establishing their business in such place
they will be able to attract number of customers towards their services.
 The economy of Copenhagen is good so it will be helpful for the small business
enterprises to improve their growth in such a place. Along with this, the GDP rate
of the country is constant from the last three years so they can generate more
revenues.
 Copenhagen have some automotive and manufacturing industries so their overall
brand image is also good. The company will be able to get the labour at low cost
so that they can get the competitiveness in the country.
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 Copenhagen also export their goods in other cities of Denmark and the political
stability is also their in the country so hank marvin and patty smith can open their
coffee shop in the country. Due to the high level of export and import their
relations with other countries are also good and there is less channes of terrorist
attack.
 The country is also following the ethical system so their image is different from
other places (Hugos, 2011). They are more focused on the rights of human and
their freedom. So, here they can perform their operations in ethical manner by
following all the rules and regulations that are made by the state government.
 There are no trade barriers when any business organization of Copenhagen
perform their operations in other country of European Union. So this will be a
benefit for the marvin and smith to expand their business in EU.
 The small business enterprise can buy their resources from the local suppliers of
the country so there is no transportation cost and due to this the expenses of the
firm get reduced. Through this their overall performance can be improved and
they can increase their profits.
 Copenhagen is a good tourist place as there are many people who come to visit
the place. They can open their shop in the country where more people come so
through this they will be able to attract number of customers towards their
products (Tavitiyaman, Qiu Zhang and Qu, 2012).
 Logistic is a tool that is used by the organisations so that they can manage their
operations from suppliers to customers. Along with this, an enterprise manage
their supply chain so that consumers will get the quality products for their
services. It is the responsibility of the manager to sell the products to their service
users in an efficient manner.
 All the business activities are performed on the basis of the ethical values and
principles so that their overall performance can be improved. Along with this, all
the business operations will be able to performed so that customers will satisfied
towards companies services.
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 When marvin and Smith’s open their shop in new market then they have to face
some challenges related to the economic development, political stability and so
on.
2. marketing mix
To open a new coffee shop in the market of Copenhagen, Marvin and Smith
have to adopt the 4p of marketing effectively (Ebert and et. al., 2014). So, that they can
increase their sales and can be able to survive in market. The 4p are as follow:
Product: So, their product is no new for their consumers. Customers already
going in coffee shops with most of their time. So, they have to produce a unique
composition of their coffee. It helps them in the increment of their product. Also, they
have to maintain their quality. If their quality became poor, so their range of customers
also get reduced.
Price: They have to set their price according to their customers preference. They
have to set their unique concept price high (Hollensen, 2015). And the price of other
things also have to get according to their customer range. Prices have to be settled
down to keep customer variation in mind and also keep in view their competitors price.
They have to maintain their price as relatively low and cheap then their competitors. So,
consumers are getting attracted towards them. With price is not just a thing, with low
and cheap prices they have to maintain quality of their product.
Place: It is one of the biggest factor for them. If their place is convenient for
every one then large range of customers are going their but if it is not then they have to
suffer heavy loss. So, with this their location is also to be at well establish and good
place so, they are attracting more and more consumers. Also they have to spent some
money over on their coffee shop with some innovative idea of making their coffee shop
with some designs and use other things for attraction.
Promotion: they have to use more acceptable promotion strategy. So, that they
can attract more and more people (Blumberg, Cooper and Schindler, 2014). They can
use social media as promotion place by making pages, events etc. this helps them in
attracting large range of target customers. They can use newspaper as a source for all
these things. By providing newspaper coupons and rebate coupons over on any
product. They can make their own app for their consumers through that their customers
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can get discount vouchers. Another important thing in promotion is tag line. If they have
attractive tag line in innovative manner so large consumers are getting satisfied through
that. All these factors help them in their survival.
Peoples: Marvin and Smith have to use their local peoples as a employees in
the coffee shop, it is helpful for them to communicate with the customers to analyse the
demands of them (Xia, 2011).
Process: They have to use an appropriate process to make coffee which helps
them to manage taste and quality in the coffee.
Physical Evidence: It is having huge impact on the customers, they have to use
attractive coffee mugs and as well as they have to use attractive colour theme in their
shop which helps them to attract customers towards them (Tavitiyaman, Qu and Zhang,
2011).
3. Implications of the need for Marvin and Smith’s to cover a wider geographical area
There are many factors which may affect the performance of the marvin and
smith when they expand their services in another country. Some of these issues are
related to management structure and competitive advantage.
Management structure: In order to perform well in the another country, the
small business organisation have to follow organizational structure. Through this, a
proper directions can be established in the firm so they will be able to achieve their
objectives (Askhatova and et. al., 2013). All employees will be able to know about their
targets that what they have to follow so that their growth can be improved in an efficient
manner. Some of the structure that are followed by the business organisations are
divisional, functional, matrix and hierarchal. Here, marvin and smith can follow
functional organization structure so that all members will be able to know about their
roles and responsibilities. There are some of the functional units in the enterprise such
as human resource, financial, resturant executives, research and development. If all
these department perform well then their overall goals can be achieved. Through these,
all managers of the different departments will be able to manage their activities or
operations so that their growth and positions can be improved in Copenhagen than any
other market leader.
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 Through an effective management structure, the manager of coffee shop will be
able to improve their communication with their subordinates.
 A transparency can be created among all the members of the different
departments so they will be able to improve their performance.
 An employee in the firm will be able to get an opportunity to do the work as per
their interest.
 Communication channel can be improved that can build a trust among all the
employees who are working at the workplace.
Gaining competitive advantage: When organization perform their operations in
their external environment then they will be able to get an opportunities so that they can
gain the competitiveness in the market. In order to improve their position in the market,
marvin and smith have to offer quality products to their customers (Anderson, Sweeney
and Williams, 2011). Through this, they will be able to create a strong base of
consumers. Along with this, they can use some of the strategies in order to gain the
competitive advantage such as: Cost leadership: This is the strategy that can be used by the business
organization in order to gain the leadership in the cost of the products. There are
some people who are price sensitive so they will not be able to but the high cost
products. So manager have to make some pricing strategies so that their overall
satisfaction of the customers can be improved. Differentiation: This is an another strategy that is used by the organization so
that they can offer quality products to their service users. Through quality and
innovative products, firm will be able to attract the people who want to buy some
unique services (Affuso, Capello and Fratesi, 2011). Marvin and smith can
create a strong base of consumers who are brand loyal for the company. By the
innovative products, they will be able to convert their regular customers into loyal
one.
 Focus: This is the last strategy which is the combination of cost and
differentiation. In this, the manager of the company is focuses on a group of
people who are looking for the unique products at the flexible cost.
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Through these strategies, marvin and smith will be able to gain the competitive
advantage in the market of Copenhagen (Teeratansirikool and et. al., 2013). Apart from
these, they can hire some people from the country who have knowledge about the
locations of the country. The employment rate in Copenhagen is high so the spending
income of the local people is also high. So, people can buy such as coffee.
Q4. Evaluate how their profitability and liquidity may impact on decisions available to
marvin and smith
Liquidity ratio as given below:
Ratio Formula Result
Acid test ratio (Current Assets -
Inventories) / Current
Liabilities
27,400/6200
4.42
Current ratio Current Assets/Current
Liabilities
35400/6200
5.7
Acid test ratio:
This ratio is help to calculate the liquidity of the cited organisation which can help to
evaluate the ability of the business unit to pay its liabilities. If a business unit have
enough asset which can cover its current liabilities that firm can pay all short term
obligations without sale of long term asset of the company. As per the scenario of cited
business entity their acid test ration is approx 4.5 which refers that the firm having
enough asset and financial resources they can pay 4.5 times their current liabilities
without compromising with their fixed assets.
Working capital ratio
In this ratio a firm's can measure its working capital and make their decision
accordingly. In the context of cited business unit WCR is approx. 8 which is also a good
sign for the company. This shows that the company is able to operate their business
operations in the long time without any hurdles.
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Profitability Ratio as given below:
Ratio Formula Result
Profit margin ration Net Income/Net Sales
26800/360000*100
7.00%
Return on Assets: Net income/Average Total
Assets
26800/(113000/2)*100
47.00%
Return on capital employed Net Operating profit/Capital
Employed
45200/(113000-6200)*100
42.00%
Profit margin ration
This another significant ratio for each and every business unit. This ratio help to the
higher management in order to make the decision for their long term business plan. This
ratio belongs to the profitability or profit margin of the company. As per the given case,
cited business unit profit margin is 7 percent which is good for a small and emerging
company.
Return on capital employed
In this ratio investor are measure and calculate their return on their investments. The
stakeholders of the business unit are more interested in ROCE ratio. In the context of
the given business it is approx 42% which is too good for the firm. It shows that small
business unit financial position is strong and they can expand their business easily.
Q5. Write a concluding summary about the overall viability of overseas expansion at this
stage
Hank Marvin and Patty Smith wants to expand their business so that they can
improve their brand image and their position in the market. When any organization offer
their services in another country they have to face some of the issues related to
political, economic, social, government laws, technological, environment factors and so
on. After analysing these issues they can expand their business in Copenhagen so that
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their growth can be improved. The economy of the country is good so owner of the
company can open their coffee shop in order to enhance their brand image.
They can make their plan on the basis of the elements of marketing mix so that
their overall growth can be improved. Some of the variables of the marking mix are
product, price, promotion and people. These all the important for a organization so the
manager of the firm have to make some strategies related to these elements so that
their overall profits can be achieved. Along with this, manager can identify their
profitability level and their growth level so that Hank Marvin and Patty Smith can make
an effective decisions in order to achieve their goals.
The manger has to focus on their organizational structure so that their overall
activities can be managed. For this, they can follow functional structure so that their
overall performance of the functional units can be improved. All members will be able to
know about their roles and responsibilities that they have to follow in the enterprise in
order to accomplish their targets. On the other hand, they can use some of the
strategies so that they will be able to gain the competitive advantage in the market.
Some of the approaches are related to cost, differentiation and focus. Through these,
they will be able to attract number of customers towards their services.
CONCLUSION
From the above mentioned report it has been concluded that all the organization
perform their operations in the business environment. By performing such an
operations, companies will be able to know about their strength and opportunities. Along
with this, marketing mix help the firm in improving their performance in the market.
Through this, they will be able to improve their growth and position. Hank Marvin and
Patty Smith can open their coffee shop in Copenhagen so that their overall profits can
be achieved. Further, in order to gain the competitive advantage in the market, they can
use some of the approaches.
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REFERENCES
Books and Journal
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