Essentials of Business and Entrepreneurship

The assignment provided is a report on a cafe that has been operating successfully and aims to expand its business by following fair trade practices. The report discusses various books and journals related to business essentials, including policy essentials, marketing, leadership development, and entrepreneurship. It also includes online resources such as articles and websites that provide information on the seven essentials of leadership development, strategic uses of alternative media, and communication essentials for female executives. The assignment requires students to analyze and summarize the key concepts and strategies for success in business and entrepreneurship.

BUSINESS ESSENTIALS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1 Expansion of the business in the country.................................................................................1
2 Marketing mix applied in expansion .......................................................................................3
3 Need implications of the wider geographical area...................................................................4
4. Evaluation of profitability and liquidity .................................................................................5
5. Summary ..................................................................................................................................
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CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
In the overseas countries, there are most of the companies which have continuous growth
in business that influence them to expand their business operations. The regular increase in
growth of the economy has changed the life style of people in the countries. In this report, an
analysis of cafe Marvin and smith is taken in to consideration which is owned by Hank Marvin
and Patty smith. The cafe has a good quality reputation in serving better coffee brand to the
customers. A continuous increase in trend of coffee has increased their business. As the demand
for their East African inspired coffee shop with themed evenings has increased. The report has
been analysing the expansion of business in the European country which help the owners to
decide in which country they have the opportunity to expand their business.
1 Expansion of the business in the country
In the European countries, there is a rapid increase in demand of coffee among the people
and emerging trend of coffee has made an influence on the companies to expand their business.
The wide growth of the coffee brands has made the market more viable for the customers to
choose their preference among the present alternatives. In the context, we have considered about
the cafe Marvin and smith which is started by Hank and Patty and has a goodwill of serving the
best coffee blend of the beans of the Gumutindo coffee. After analysis it can be said that the cafe
will expand its business in the Germany because there is a rise in demand of the coffee among
the customers. The suppliers have also considered that the most the customers in the Germany
have a preference of the Gumutindo coffee and will have focused on consumption. The
continuous growth in the economy of the country has a given a positive impact on the income of
people. The rise in income has also made an impact on the expenditure of the people. It has been
considered that the growth in the economy has changed the lifestyle and needs of the people.
There is an increase in the demand of the quality products among the customers and there is an
opportunity for the Marvin and Smith Cafe to expand their business. There is a continuous
increase in the demand of coffee among the people because they will feel that it is suitable for
their life style. The people who have high earning will prefer the cafe which provide a good and
high quality and more facilities as compared to the normal cafe. The Hank and Patty will make
the attractive layout of the cafe.
The ethical consideration has described that the cafe has a fair-trade policy of enabling
the farmers from to earn an independent income. The ethical practices of the Marvin and smith in
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the business will influence the people in the country to prefer the brand. The cafe is also
providing a high-quality tea and herbal infusions which has changed the psychology of the
customers towards the other brands in the coffee (Grant and Taylor, 2014). It has been
recognised that the cafe has also provided the training to the staff to increase their efficiency and
also offered a high compensation as compared to their competitors like Baristas. A rapid growth
in the lifestyle of the people has shifted their focus from normal to high quality products. The
customers who have a luxurious life style will prefer quality products and does not give
significance to the price. Marvin and smith will focus on the customers who have a luxurious life
will prefer the quality of their coffee. They have a strong moral perception of promoting fair
trade practices and have provided this quality to their staff and expected from them to value their
belief.
Marvin and smith will have to consider a perfect location to establish their cafe which
will help them to promote their cafe easily (Linnenluecke and Griffiths, 2010). They must target
the place where they found the always new customers like tourist which arrive in the country.
They will have an opportunity of growth if they open the cafe in the locations of Berlin like The
Brandenburg Gate, Gendarmen markt, Unter den linden. They will provide a better and luxurious
atmosphere in the cafe for the people who prefer a luxurious lifestyle. The layout of the cafe will
be attractive which will influence the customers and provide a feeling of comfort or good
environment. These locations are mostly consisted of the tourist and situated at the prime
location of the Berlin. The logical reason behind the expansion at these places will be the
customers and competitor (Bernstein, 2015). Marvin and smith will get an ease in the delivery of
the essentials from the suppliers and will also provide fast services to its customers. They will
cover have benefit of the suppliers to expand their business as they have a great influence on
them to provide fair prices for their coffee. The hank and patty will consider that there will be a
perfect supply of coffee in the shop by the supplier. In the Germany they will require the
Gumutindo coffee to provide an east African feel to the people of the Germany. They will focus
on the quality and will not give more significance towards the price. They will have to create the
image in the Germany as they have in the UK. They will consider this important to grow in the
market.
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2 Marketing mix applied in expansion
The coffee house is looking to expand in German cities. Here are marketing mix
strategies for the new company for expansion of its business.
 Price: Price is the optimal part of marketing for a firm in the market. Marvin and smith's
coffee shop need to keep their price strategy a decent and effective one as it coveys a
profile output of your quality and value. Pricing should be done in accordance with the
competitors price (Joshi, 2012). Too much price for the products will make the coffee
shop unpopular as the customers value their money more over the products they
purchase. And a cheap product line will hit the common psychology of customers to
value the product according to their price, they may think that the quality is too low cause
of the price. The coffee shop also take in consideration the purchasing power of the
consumers in the country.
 Product: Marvin and smith's coffee shop needs make their products look attractive, as
customers are considered more likely to eat or drink products which look delicious. The
coffee shop can also make the menu look different and attractive with distinctive names
of the products (Bowie, 2017). A supreme quality of product is important to the coffee
shop as it initiates brand loyalty.
 Place: The destination for the coffee house must be a reachable place for the customers.
The place should give a homely feeling with the coffee shop's inclusive structure. Marvin
and smith's coffee shop must also take in consideration the neighbourhood of the location
to attract more number of customers (Flanagan and Alfonso, 2017). The location of the
coffee house must be near to housing area so that new customers will get attracted on
their drive to work. Main street should be selected as the location so that prime location
can be achieved for the coffee shop.
 Promotion: Marvin and smith's coffee shop should be given a decent promotion before
opening of the place. Organising of a grand opening play as a magnet to a lot of
customers. Marvin and smith's coffee shop already has a built up good will which can be
used to give them an edging advantage over other coffee shops (Ragas and Culp, 2014).
Continuous promotion and advertisement in the local publishes will help them gain early
popularity in the new country.
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3 Need implications of the wider geographical area
For the expansion of the business Marvin and smith has considered several implications
in the Germany which will affect it covers a wider geographical area. There are various things
which have considered important for Hank and patty to cover the targeted customers in the
country. There are several competitors in the market of Germany which provide same quality
coffee brands. Competitors like Barristas have a great influence over the professional customers
who prefer the perfect quality in the coffee and luxurious place (Harding, 2014). For the
expansion of the business at the suitable place company has face several implications such as
increase in the marketing cost, rise prices in the cost price of the coffee due to increase in the
import charges, increase in the cost of hiring the staff as compared to the home country. These
implications have an impact on the business which has been described below:
Gaining competitive advantage: It will have a positive impact on the business because
there are several competitors available in the market which have great demand of their coffee.
There is a competitive advantage for the company to provide the coffee which is not available at
the competitor's shop. They will focus on the marketing strategy of the competitor to understand
the increase their sale. There is a continuous increase in the demand of the coffee at these place
because of tourist place and this is a competitive advantage for the hank and patty to influence
the new customers. It is to be considered that the cafe will have a good will of providing good
quality coffee and the themed evenings such as playing board games (ABUSE, 2015). These are
facilities provided by the Marvin and smith to gain the competitive advantage and attract the
customers by to purchase the coffee. There are some negative impacts on the business if the
competitors will follow its marketing techniques provide the same coffee to its customers. In
Germany there are various competitor brands of the Marvin and smith which are providing good
quality of coffee to the customers. They will create the problem for the Marvin and smith to start
the cafe in the city Berlin and should focus on the price policy of the cafe to make changes in
their price. It has been considered important for the Hank and Patty to analyse these implications
and use necessary measures to attain the advantage. They will use various ideas to influence the
customers and provide high range of coffee products as compared to the substituents. They will
try innovation new type of flavours and satisfy the needs of the customers.
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Personnel and managing staff issues: For the enlargement of the business in the other
country company will face various problems like issues of staff. The company have to hire the
new staff for momentary of the business and have to face some problem in managing the staff.
The Hank Patty will hire the staff from geographical area of Germany. An understanding has
been created among the employees of the fair trade policies and the values of the business. The
issues will arise if the staff will not cooperate with each other and not follow the values. To
manage the issues related to the staff they will try to hire the employees of the competitors by
paying them some sort extra benefits and compensation. They will create a positive work
environment in the cafe and provide them opportunity to communicate with customers (Boddy,
2012). These implications will be considered important in expansion of business by the Marvin
and smith so that they will cover the more geographical area of the Berlin.
4. Evaluation of profitability and liquidity
Profitability ratio: They are a part of financial analysis that are used to assess business's potential
of generating earnings in comparison to expenses incurred and other costs incurred during a
specific course of time (Harding, 2014). Profitability ratios include profit margin, return on
assets. Profitability ratios having a higher value indicate stability and progress in the business.
Profit margin: profit margin is kind of profitability ratio, it is calculated by dividing net
income in total revenue or division of net profit by sales (Bardle, Galloway and Stephens, 2010).
Profit margin is expressed in percentage. The ratio indicates the margin of profit earned in every
pound of revenue received.
Gross profit ratio: Gross profit ratio is calculated by subtracting cost of goods sold from
total revenue and then division of the result to total revenue or dividing gross profit by net sales.
Gross profit ratio = Gross profit / Net sales * 100
208000 / 360000 *100 = 57.8 %
Net profit ratio: Net profit ratio is calculated as dividing net profit by net sales
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Net profit ratio = Net profit / Net sales * 100
26800 / 360000 *100 = 7.4 %
The large difference in the gross profit ratio and net profit ratio indicate towards the
Marvin and smith's coffee shop's non-operating expenses being massively high which result in
the drop of profit from gross level to net. This also concludes that the coffee shop is not earning
enough profit out of the sales revenue.
Liquidity ratio: Liquidity ratios are calculated to measure a company's ability to pay its
debts and also to keep a track of its margin of safety (ADEGBUYI and Odularu, 2013). These
ratios also help in measurement of liquidity of a business. It is an analysis of current liabilities in
relation to liquid assets of a business. Liquidity ratios include current ratio, quick ratio, operating
cash flow ratio.
Current ratio: Current ratio is calculated to render a company's ability to pay short and
long-term debts. This is calculated by taking in account the current assets and current liabilities
of a business.
Current ratio = Current assets / current liabilities
35400 / 6200 = 5.8
A high current ratio of Marvin and smith's coffee house indicate that it feasible in
payment of its short and long term debts, giving stability to the business.
Quick ratio: Quick ratio measures the short-term liquidity of the business. This ratio
indicates a business's potential to pay its interim debts (Winter and et.al., 2012). It's an analysis
of current assets excluding inventories in relation to current liabilities of a business.
Quick ratio = (Current assets – inventories) / current liability)
(35400 – 8000) / 6200 = 4.4
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A good quick ratio indicates that the coffee shop has an ability pay its short-term debts
easily.
There is not much difference between the current and quick ratio which is a good sign to
consider that the business is liquid enough to pay all its debt in time.
5. Summary
By taking the overall analysis, it has been considered that the cafe has the viability to
introduce a cafe in the European union country Germany and has a continuous growing and
emerging trend of coffee in the market. From the above analysis, we have recognised that the
Marvin and smith has the goodwill which helps the Hank and Patty to expand their business. The
business will expand if the company will keep the prices as quality of the coffee. They will
provide the luxurious and better layout to the cafe that will influence the people who will prefer
the brand. They will try to analyse the business strategy of the competitors and target a market
segmentation. They will focus on the customer's behaviour and remove the negative implications
which affect the business (The Marketing Mix 4P’s and 7P’s Explained, 2017). They will also
consider the customers who are health conscious and will prefer the herbal infusions and provide
them by sourcing from the supplier of Uganda. They will maintain a positive relationship with
the supplier to reduce the extra cost of the import of the coffee in the Germany. To provide the
luxurious feeling to the customers they will offer a variety of East African Inspired Snacks,
Mock tails, pastries etc. In the marketing elements, it is to be considered that the cafe will
consider on the product attractiveness and taste. They will not comprise with the quality content
and try implement new things by taking the feedback of the customers. They will apply various
methods to promote the cafe such as advertisements in media, mouth publicity, incentive
programmes to the staff who promote the sales of the cafe etc. They will cover the geographical
area of the Berlin for the expansion of the business and use the competitive advantage which
they have as compared to the competitors. They will face some issues like requirement of staff
and their management at work place. They will provide the training to the employees and the
values of the business. Hank and Patty will provide better compensation to its staff in
comparison from its competitors. An analysis of financial statement has determined that the cafe
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has an adequate profitability to pay the suppliers and it will have the opportunity to expand its
business in Germany. The current position of has determined the profitability ratio which is
considered as appropriate for the expansion of the business.
CONCLUSION
In the above report, it has been considered that Marvin Spencer has the opportunities of
expanding their business because there is a continuous increase in the demand of the coffee. The
wide growth of the coffee brands has changed the preference of the customers towards the
coffee. An analysis has determined that the owners will expand their business in European union
countries and having a goodwill in the market. The report has summarised that the current
profitability of the cafe is appropriate and the owners will expand their business. At last it has
been considered that by following fair trade practices the cafe will introduce the business. Hence,
the report concluded that there are wide opportunities for the cafe house to expand their business.
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REFERENCES
Books and Journals
ABUSE, S., 2015. Policy essentials. IMIESA. 89(7). pp.81.
ADEGBUYI, O. and Odularu, G.O., 2013. Essentials of Agricultural Marketing and Trade in
Nigeria. Business Horizons. 78(1). pp.73-83.
Bardle, S., Galloway, L. and Stephens, S., 2010. Book Review: Essentials of Entrepreneurship
and Small Business Management, The Politics and Aesthetics of Entrepreneurship,
Nurturing Science-Based Ventures: An International Case Perspective. Business
Horizons. 8(1). pp.3-8.
Bernstein, M.H., 2015. Regulating business by independent commission. Princeton University
Press.
Blundell, A., 2015. The seven essentials of leadership development. Journal of Advertising
Education. 46(2). pp.60.
Boddy, D., 2012. Essentials of Management. Pearson Higher Ed.
Bowie, N.E., 2017. Business ethics: A Kantian perspective. Cambridge University Press.
Coombs, D., 2012. Strategic Uses of Alternative Media: Just the Essentials. Journal of
Advertising Education. 16(2). pp.60.
Flanagan, D.P. and Alfonso, V.C., 2017. Essentials of WISC-V assessment. John Wiley & Sons.
Grant, A.D. and Taylor, A., 2014. Communication essentials for female executives to develop
leadership presence: Getting beyond the barriers of understating accomplishment.
Business Horizons. 78(1). pp.73-83.
Harding, M., 2014. Outsourcing Essentials: How To Start Outsourcing for Freelancers and
Contractors.
Harding, M., 2014. Outsourcing Essentials: How to Start Outsourcing for Small Business
Owners and Entrepreneurs. CreateSpace Independent Publishing Platform.
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Joshi, M., 2012. Essentials of marketing. Bookboon.
Linnenluecke, M. and Griffiths, A., 2010. Beyond adaptation: resilience for business in light of
climate change and weather extremes. Business & Society. 49(3). pp.477-511.
Phelps, M. and Hohlfeld, U., 2011. International collaboration–Needs, essentials and pitfalls.
Bulletin of the Association for Information Science and Technology. 37(3). pp.30-33.
Ragas, M.W. and Culp, R., 2014. Why Knowledge of “Business 101” Matters. In Business
Essentials for Strategic Communicators. 78(6). pp.3-17.
Winter, E. and et.al., 2012. Study Skills: A handbook of essentials for Business and Marketing
students. Journal of Advertising Education. 67(2). pp.89.
Online
The Marketing Mix 4P’s and 7P’s Explained, 2017. [Online]. Available through:<
http://marketingmix.co.uk/>. [Accessed 3rd August 2017].
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