Business Essentials: Coffee Shop Expansion in Netherlands

This report discusses the justification for expanding a coffee shop business in Netherlands, presents a marketing mix strategy, describes key factors and challenges in expanding into unfamiliar territory, and evaluates financial ratios for decision making.

Business Essentials

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Justification regarding the choice of country..............................................................................1
TASK 2............................................................................................................................................2
Present a marketing mix strategy in relation to coffee shop expansion......................................2
TASK 3............................................................................................................................................4
Describe the key factors which are used to expand businesses into unfamiliar territory and
shows issues and challenges........................................................................................................4
TASK 4............................................................................................................................................5
Using financial information calculate and evaluate rations and its influence on decision
making.........................................................................................................................................5
TASK 5............................................................................................................................................6
Write concluding summary about the validity of this expansion................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Business essentials define as a sets of various components that are needed to be
considered by every organizations to achieve the long term objectives and goals of a business.
This will required several things like clear objective, strategic planning, research, size, location,
adequate fund, effective distribution system and management as well as skilled employees.
When a company planning to expand their operations in a new country they needs to emphasised
on above all aspects in order to better growth and survival. This report is based on Hank's &
Patty's coffee shop that is planned to expand their business in Netherlands. Under this report
discussed about the clear justification towards choice of country, develop marketing mix strategy
to coffee shop, many factors that are used by Marvin & Smith to expand their business. In
addition, calculate and evaluate several ratios by using financial informations and at last
facilitates conclusion regarding expansion validity.
TASK 1
Justification regarding the choice of country.
Hank Marvin and Patty Smith have worked collectively from a long duration of time in a
food as well as catering industry as they both having a similar dream to open up their own
businesses and they plan accordingly to opened a coffee shop. Both spent approx 12 months in
market evaluation or investigation towards the collection of information of coffee shop which
includes location, quality, customers, financial investment, products and services as well as
competitors. After that in 2017 it was established in Wandsworth, South London and when a
company gets success at this location they designed to spread out its business in new
geographical location that is Netherlands (Jongen and Stoel, 2019).
This country is a North-western European country and basically known as a flat canals
landscape, Windmills, Cycling routes and tulip field. The capital of Netherlands is Amsterdam
and it deals in Euro currency. The country is used to conduct market research that are as follows: Political factor of Netherlands: Hank's & Patty's analysed that the political environment
in that country is stable with the parliament democracy as governmental policies are
friendly. They feels that Netherlands is one of the least corrupted country in the world as
it is a tolerant, friendly as well as cooperative society so it provides an opportunity to
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expand their coffee shop business in Netherlands (PESTEL analysis of the Netherlands,
2017). Economic factors of Netherlands: They both conducted research about the country's
economic conditions as they found that I is the largest importer of coffee in Europe so it
provides several opportunities for international player to enter into the coffee market
along with its products (Kiørboe, 2015). Socio-cultural factors of Netherlands: This is to be seen as that the market of premium
coffee is increased due to the raise in number of educated people who are willing to pay
premium prices for superior quality of coffee as well as for green coffee. So there is an
opportunity for Hank's & Patty's to expand their business at premium prices in
accordance of better quality (Freeman, 2018). Technological factors of Netherlands: This force also supports the expansion of Hank's
& Patty's business in that specific country as they tends to increase in coffee machines as
it results in increase number of customers. There is an opportunity to innovate coffee
brewing technologies that helps in enhancing sales (World's top 10 coffee consuming
nations, 2019). Environmental factors of Netherlands: As coffee brewing is related to the waste
production that leads to environmental degradation. So the demand of organic and green
coffee is increases in Netherlands. So Hank's & Patty's finds that companies are moving
towards sustainable development and policies.
 Legal factors of Netherlands: It is quite stable in the country as they needs to be follow
some legal laws in Netherlands as it is a liberal as well as tolerant country so there are
many things which are legal such as personal belief, political opinion, sex, nationality and
so on that helps in achieving long term sustainability and success (PESTEL analysis of
the Netherlands, 2017).
After considering all the factors Hank's & Patty's founds that after Brexit agreement
between UK and Europe it will make no difference in their environments and policies which are
beneficial for the coffee shop to expands their business in Netherlands.
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TASK 2
Present a marketing mix strategy in relation to coffee shop expansion.
Marketing mix refers to the mixture of several marketing determinants that are needed
to be considered by all organisations in order to starts or expands their businesses in new
location. Hank's & Patty wants to grow their coffee shops in Netherlands so the study of
marketing mix is necessary for them in order to understand the all aspects appropriately as well
as ensures that they will be capable to achieve long term growth and success in new geographical
location (Pulido, 2017). As there is need to be analysed main 4p's of marketing mix such as
product, price, place and promotion for Hank Marvin and Patty Smith. These are as follows: Product: The company considered both tangible as well as intangible products and
services to better serve their customers. As Hank and Patty's coffee shop business
expands in Netherlands which they offer several varieties of coffee such as macchiato,
cappuccino, mocha, latte, americano as well as affogato etc. in addition it also offers
organic and green coffee which are more demanded in that country. Also, they plan to
innovate a creative theme as a interior of shops to get a better experience of customers
and also print background on cups and tables. Unique selling properties of its business
will be green coffee beans for all kind of beverages which will makes their drinks sugar
free and they used honey. Price: There are various strategies which are used by an organization to sell their procts
and services in the marketplace. It includes premium, economy, skimming and
penetration strategies. In premium based on the high prices of items that are of high
quality and uniqueness to take a competitive advantages. Economy prices means attract
customs firstly at low prices who are price conscious. In price skimming strategy a
company focused on increasing their sales of new products and services. Penetration
means set low prices of offerings initially and attract large customers. Hank and Patty's is
going to expands their business in Netherlands as they are required to use premium
based pricing strategy of their items as in that country people are more educated and
they are willing to pay high price for better quality products. Place: At a time of expansion a business owner needs to focused on the physical location
where they sale their products to customers. Hank and Patty's expands their coffee shops
in Netherlands so owner needs to decide a place where they can open a shop. They have
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decided to open their first shop in Amsterdam city which is the capital of Netherlands as
this place is famous for 'coffee' shops. This is the main reason behind choosing this
location as a place to open a coffee shop of Hank and Patty.
 Promotion: This is require to promote their products and services in order to attract large
number of customers. As Marvin and Smith's Coffee Shop is going away to opened in
Amsterdam, Netherlands. So they decide to promote their products and services by using
social media as a medium of aware people as well as publish pamphlets also. In
addition, they have to provide attractive offerings discounts and coupons to the people
which helps in increasing visiting traffic at a time of opening shop that could be
redeemed in futures and it has a specific period of time like 3 months or 6 months. All
these promotional strategies helps in increases the awareness of market presence at a new
location as well as encourage large customer base to gain high profits.
All the above elements of marketing mix helps in expanding businesses in an effective
way in new location or country as it provides a clear view about marketing strategies as well as
identify that what, when, where and how sale company's products and services. Also, assists in
developing large customer base which results in high profitability along with long term survival
and sustainability of Hank and Patty's in Netherlands (Ajami and Goddard, 2014).
TASK 3
Describe the key factors which are used to expand businesses into unfamiliar territory and shows
issues and challenges.
While a company willing to expands its operations in new location they needs to be
focused on several aspects such as human resource management, finance and accounting,
operation or supply chain management as well as marketing. Hank and Patty are planning to
operates its coffee shop in Netherlands as it requires to focused on such elements to achieve a
long term growth and success in new marketplace. Marvin and Smith should consider these
aspects while launching its business operations in unfamiliar territory as well as where they face
some challenges which creates obstacles in their expansions. There are described any two factors
such as follows:
Human resource management: This is a very essential to have skilled, experienced,
knowledgable as well as competent employees for every business organizations as they can assist
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to achieve the business objectives effectively and long term growth. For Marvin and Smith's
coffee shop it plays a significant role as they needs to be emphasised on human resources. There
are several factors that are needed to be considered while expanding its business in Netherlands
that are considered as follows: Inability in using data effectively: The recruiter of company is well known in choosing
technological tool but they are lack in effectively use that data and information. It is
significant for recruiters to be capable for employ those data in order to take better
decisions as well as enhance the process but it happens hardly in the context of Marvin
and Smith's coffee shop that creates issues for the company.
 Lack of efficiency during recruitment procedure: As recruiters waste their precious time
by playing unnecessary as well as ineffective activities that can outcomes in duplication
of attempts (Challenges, 2019). Many activities like sourcing prospective and skilled
candidate as well as assessing their resumes should take hours not days but the recruiter
of Marvin and Smith's coffee shop waste their more time on this activities which creates
issues for them.
Operations/logistics/supply chain management: The supply chain management of the
organisation helps them in managing the flow of the goods and services. It includes
synchronising the supply side activities which adds value to the customers. This helps the
company to gain the competitive advantage in the marketplace. In Marvin and Smith's coffee
shop it plays a crucial role as they needs to have the raw material available on time to provide
goods to the customers on time. The key factors which are associated with this function are : Cost : The cost is an important element which affects the supply chain of the organisation
as the prices of the raw materials changes with change in various factors. To reduce the
interruption in the supply effective analysis of the suppliers and the impact of significant
changes need to be considered by Marvin and Smith’s coffee.
 Technologies : The technology helps in effective operations of any organisation. In
supply chain with the help of various advance software and innovative techniques the
exact quantity and at what can be identified. This will help Marvin and Smith’s coffee to
manage their cost and their inventory as well (Kjerland and Bertelsen, 2014).
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TASK 4
Using financial information calculate and evaluate rations and its influence on decision making.
Profitability ratio: This kind of ratio is used to examine the company's ability to earn
profitability. Hank and Patty can calculate profitability ratio in order to analyse the profitability
which are earned in new markets like Netherlands. It can be considered as follows:
Profitability ratio Formula Calculation Result
Net profit ratio Net profit/ sales *100 26800/360000*100 7.44%
Gross profit ratio Gross profit/ sales*100 208000/ 360000*100 57.78%
From the above calculation it shows that the gross profit ratio of Hank and Patty's coffee
shop is high in comparison of net profit ration. This will shows that an organization incurred
several indirect expenses that has to be reduced its net profit. This negatively influence the
business decisions of expansion in Netherlands as it shows high differences in both.
Liquidity ratio: This ratio helps in calculating organizational liquidity as it can be
measured that assists in able to pay all current liabilities with the help of short term funds. To
analyse the company's liquid strengths is going to expanded in Netherlands by Hank and Patty
several ratios are examined that are described as follows: Current ratio: This ratio helps in identifying that organizations will be able to meet all
short term debts with the use of available resources or not (Feinberg, 2019). Hank and
Patty will be able to measures that a company can successfully established or not in
Netherlands. Quick ratio: This ratio is used to analyse the company's ability to clear all current
liabilities by paying off with the help of quick assets. This will assist Hank & Patty in
order to identify liquid strengths of their idea of expansion in Netherlands. These ratios
are considered as follows:
Liquidity ratios Formula Calculation Result
Current ratio Current assess/ current
liabilities
35400/ 6200 5.71
Quick ratio Quick assets/ current 27400/ 6200 4.42
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liabilities
From the above calculation it shows that gross profit ratio of Hank & Patty's coffee shop
is high are show as they occurs many indirect expenses that has reduced its net profits. This can
impacts business decisions of expansion as it shows huge difference between both ratio.
TASK 5
Write concluding summary about the validity of this expansion.
Hank and Patty are planning for expansion of their business in Netherlands. For this they
have identified various variants with which they can expand their business. For analysing the
profitability and the liability of the organisation the ratio analysis has been done. This will help
the Marvin and Smith's Coffee Shop in assessing their better liquidity. On the basis of such
analysis the owners decided that they will use price penetration strategy for their coffee which
will help them to attract more of customers. They have also planned that they will use green
coffee beans and will ignore sugar which will make product a healthy one. For promoting they
are planning to use pamphlets, through online marketing etc. It is identified that this business
option is viable as the plans which are formulated can easily be executed. When a business
expand they need to focus on various external factors along with that they need to consider
various marketing strategy which the owners of this has effectively done.
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REFERENCES
Books & Journals
Ajami, R. and Goddard, J. G., 2014. International business: Theory and practice. Routledge.
Engwall, L., Kipping, M. and Üsdiken, B., 2016. Defining management: Business schools,
consultants, media. Routledge.
Feinberg, M., 2019. Exploring an emerging land use conflict: GIS based site selection for
expanding forests in Denmark.
Freeman, T.P. And et. al., 2018. Changes in cannabis potency and first-time admissions to drug
treatment: a 16-year study in the Netherlands. Psychological medicine. 48(14). pp.2346-
2352.
Jongen, E. and Stoel, M., 2019. The elasticity of taxable labour income in The Netherlands.
Kiørboe, N., 2015. Moving Towards a Circular Economy: Succesfull Nordic Business Models:
Policy Brief. Nordic Council of Ministers.
Kjerland, K. A. and Bertelsen, B.E. Eds., 2014. Navigating Colonial Orders: Norwegian
Entrepreneurship in Africa and Oceania. Berghahn Books.
Pulido, M., 2017. Formulating a strategy for an E-commerce of specialty coffee: Startup
company the Netherlands.
Online
World's top 10 coffee consuming nations. 2019. [Online] Available through:
<https://www.worldatlas.com/articles/top-10-coffee-consuming-nations.html>
Challenges. 2019. [Online] Available through: <https://www.talentnow.com/7-biggest-
recruitment-challenges-faced-by-modern-recruiters/>.
PESTEL analysis of the Netherlands. 2017. [Online] Available through:
<https://www.howandwhat.net/pestel-analysis-netherlands/>.
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