Expansion of Marvin and Smith’s Coffee in Netherlands

This report discusses the selection and justification of Netherlands as a country for expansion, the tailored marketing mix for the expanded market, key factors to consider while expanding, calculation of profitability and liquidity ratios, and a summary of the findings.

Business Essentials

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
QUESTION 1...................................................................................................................................3
Selection and Justification of Country for expansion.................................................................3
QUESTION 2...................................................................................................................................4
Tailored Marketing mix for expanded market............................................................................4
QUESTION 3...................................................................................................................................6
QUESTION 4...................................................................................................................................7
Calculation of ratios....................................................................................................................7
QUESTION 5...................................................................................................................................8
CONCLUSION ...............................................................................................................................9
REFERENCES .............................................................................................................................10

INTRODUCTION
Business essentials is set of those activities and elements which are required for the
success of company's operations. These includes different plans, models, tools and fundamentals
which are key to success and growth. Business essentials are innovative set of self-paced courses
which are developed to improve the critical business skills to expand internationally and to move
forward. All the actions involved are designed for flexible and efficient learning in corporate
environment. This report is based on the case study of two entrepreneurs who opened their coffee
shop as per their dream (Directivas, 2019). In January 2017, Hank Marvin and Patty Smith,
opened their coffee shop named Marvin and Smith’s coffee in Wandsworth, London. They also
had overseas expansion plans and accordingly they conducted market research and decided to
open their coffee shop in Netherlands. According, to their research they made a marketing mix
for working effectively and efficiently in overseas market conditions.
MAIN BODY
QUESTION 1
Selection and Justification of Country for expansion
In last several years lot of countries entered the European Union and after through
research Hank and Patty decided to expands their operations in Netherlands and most
specifically Amsterdam. Various reasons are there which attracted Hank and Patty to choose
Netherlands for growth opportunity. These reasons are highlighted below with factual evidences.
1. Open for global trade- Netherlands economy is very open and free for international trade
to flourish. The economy has huge opportunities for global traders to operate in their
marketplace, providing strong protection of property rights and investment possibilities.
The political leaders of the country are more concerned and prioritising some structural
reforms which opens doors for businesses (Fadhilla Umami, 2019). Marvin and Smith’s
coffee can also be helpful for the country gaining support of government as they are
bringing employment for local experts. Also, rising trades will result in better economic
position and that will provide higher purchasing power to the public. As money flows in
economy and people will get more power to spend their earnings it will be beneficial for
Marvin and Smith’s coffee business.

2. Increasing tourist- The country is slowly becoming most preferred tourist spot, although
the population is very low but people are attracted towards it. In previous years almost 16
million tourist visited EU country and data says that these numbers are going to double in
near future. Tourist are regularly increasing which is a very big opportunity for Marvin
and Smith’s coffee as the company gets global exposure. More and more people gets to
know about the brand increasing its reputation in global market. This will also give
chance to Marvin and Smith’s coffee to increase their market share by opening new
stores in other counties too as people know the brand (Farida and et. al., 2018).
3. Preference of visitors- Another, factor which influenced Hank and Patty to select
Netherlands for expansion is the taste and needs of visitors. Mostly, the tourist who
visited EU in last years are from neighbouring countries which have high consumption
rate of coffee. This factor is the one which can bring lots and lots of profits towards
Marvin and Smith’s coffee. As seen from Germany, its economy is growing and have 5th
position in global marketplace. Nearly, 5.24 million Germans are visiting Netherlands for
spending their vacations. This is a great business opportunity which can bring huge
profits and growth to Marvin and Smith’s coffee.
These are some factors which attracted Hank and Patty's attention towards Netherlands market.
They analysed that Netherlands is a very attractive place to run their coffee business, its
increasing tourism and sue to which rising purchasing power of local people works as great
strength for the country. These strengths of Netherlands will provide better business to Marvin
and Smith’s coffee if explored properly.
QUESTION 2
Tailored Marketing mix for expanded market
Marketing mix is a tool which is utilized by organisations to promote their brand and its
products or services in the provided marketplace (Herman Ruslim, 2019). This tool involves
some set of actions which companies take to introduces its offerings in markets and fulfil the
needs or desires of customers. This model works as foundation for businesses and mostly used
when organisation is entering into some new market with their products or remaining in the same
marketplace but introducing new good. There is one more condition in which marketing mix tool
can be utilized, when companies diversify in both product and geographically. Marketing mix is

a technique made of four elements or in other words it contains four unique factors which
enables organisations to make effective plans and work efficiently providing what customers
need. These factors are Product, Price, Place and Promotion (Ilias and Razak, 2019). Hank and
Patty also used this tool for their expansion in Netherlands, for bringing their coffee house
Marvin and Smith’s coffee. They have used these four elements and made their plans with proper
detailed market research. These elements are elaborated in the next section in detail:
1. Product- This refers to the company's offerings and their unique goods or services which
they have developed for their targeted marketplace. Hank and Patty is expanding their
operations in Amsterdam, they conducted research and according to its result Roast
Coffee generates the most revenue in coffee market. Therefore, they concentrated on this
factor, company uses the fines coffee beans Gumutindo Coffee. Also, Hank and Patty
made the ambiance of their coffee shop according to Ugandan theme as their beans are
from there. It is relaxing with East African feel and practical as customers needs. They
provide free Wi-Fi's and charging sockets to for customers to charge their phones, laptops
and other needed electronics.
2. Price- It refers to the amount entities are charging from the customers and they are also
willing to pay. These prices are fixed by company in accordance with the cost they
incurred for producing products or services and in accordance with the market analysis.
Purchasing power of people or exactly customers plays a vital role in failure or success of
products or services businesses offer (Rosa and Lestari, 2019). If someone can not afford
any product they will not even consider those goods as their needs or either they will
move to some substitutes which are cheaper in price. Therefore, price factor is very
important, Hank and Patty have closely analysed the market. They are targeting the
middle class and upper middle class individuals and families. Their prices of different
flavours of coffee and other side products are in accordance with the cost company is
incurring and at the level guests are willing to pay
3. Place- This is a very important part of marketing mix, it relates to placement of products
and distribution channel. Companies have to position their products and distribute them
in such a manner to reach and increase there accessibility to potential buyers or
customers. The organisations have to focus on their target market and then accordingly
set and explore their distribution channels so that they reach to its maximum consumers.

Hank and Patty was expanding in Netherlands, along with it they opened two new
branches of Marvin and Smith’s coffee in and around London. That means, at the same
time they opened three new outlets out of which one is for overseas expansion. This
shows they are covering wide area and making its presence everywhere for being
accessible to each of its customers also, attracting new guests. This is resulting in
increasing their market position, market share and customer base, people known the
brand Marvin and Smith’s coffee globally.
4. Promotion- These are those actions entities take to introduce its brand and updates the
market about its products and services. These activities are conducted by company to
boost its brand recognition along with sales (Sovrano and et. al., 2019). Many activities
are undertaken by firm to promote their operations and brand like sales promotion,
advertisements and increasing public relations. Marvin and Smith’s coffee promotes fair
trade and equality, they make their promotional strategies with this agenda and position
itself in market like that. They expect their employees to behave in the same way and
provide training accordingly.
QUESTION 3
Key factors of consideration while expanding
Expansion of operations is a very tedious task, it involves various efforts which are
required to perform by the management for effective results. This expansion action includes
many factors which are very influential and decides the success or failure of business. Hank and
Patty also overlooked these factors and considered them while performing expansion actions,
they are as follows in context of marketing and human resources management of Marvin and
Smith’s coffee.
Marketing
It is a process which includes several activities like selling, promoting, market research
and advertising. Marvin and Smith’s coffee is also entering an entirely new territory which
means that market research is compulsory for the company. They have to gather information
about the market trends, values, preferences of people, economic condition and the purchasing
power of targeted customers (Tella and Ibinaiye, 2019). All this will enable Marvin and Smith’s
coffee to plan and make strategies accordingly and work efficiently. Some challenges will be
faced by Hank and Patty, while researching market and making plans. One of the major

challenge they faced while performing market research is understanding trends of Amsterdam's
market. They performed various surveys and interviewed many individual to understand their
mindset and to know what they prefer the most.
Human resource management
Men is the key resources by which a company works effectively and who execute all the
plans in appropriate manner for attaining predetermined goals and objectives. Human resources
management is a very critical job or task which managers perform. Every individual is unique,
their behaviour is different from one another and they act in various ways in situations. The
challenge which is faced by Marvin and Smith’s coffee managers is in managing the staff, they
had to behave in unique manners with every individual (Tinc and Sorensen, 2019). Leaders had
to identify motivating factors which will make personnel to work effectively and perform their
given duties in order to attain their goals. Leaders used different tactics and offered those
rewards which can motivate them in positive way and they feel important for organisation. This
way employees got more involved in operations, suggested ways to run business and perform
their duties with utmost expertise. They are given proper trainings and development sessions to
keep the customers experience at the top, make good quality coffee exactly according to the
expectations of guests.
QUESTION 4
Calculation of ratios
Ratio analysis: It can be defined as the process of determining operational efficiency,
profitability and liquidity of an organisation by analysing different elements of financial
statements. With the help of it, actual position of an organisation can be determined by the
management as it guides them to assess that the decisions which were taken in last years have
resulted positively or negatively. For the purpose of establishing business in Netherlands it is
very important for the management of Marvin and Smith's Coffee Shop it is very important to
analyse its current position. For this purpose ratio analysis could be used in which liquidity and
profitability rations could be calculated. Description of different types of them is as follows:
Profitability ratios: These ratios are calculated to determine profitability of the
organisation.

 Gross profit ratio: It is used by companies to determine percentage of gross profits on the
sales generated by the company.
 Net profit ratio: This ratio is calculated to ascertain relation between net profit and
annual sales.
Calculations of both the above described ratios are as follows:
Profitability ratios Formula Calculation Result
Gross profit ratio Gross profit / sales *
100
208000 / 360000 * 100 57.78%
Net profit ratio Net profit / sales * 100 26800 / 360000 * 100 7.44%
From the above calculations it has been determined that Gross profit of the coffee shop is
very high which is around 57.78% and the net profitability ratio is comparatively low which is
7.44%. It shows that position of business is stable but the number of operating and non operating
expenses is very high therefore it is very important for the management to formulate strategy to
deal with them (Tinc and et. al., 2019).
Liquidity ratios: In order to determine liquidity of business these ratios are calculated. Current ratio: It is calculated to analyse that the company will be able to meet all its
short term obligations with the help of current assets.
 Quick ratio: Organisations calculate it to analyse that all the current liabilities will be
paid off with the help of core current assets or not.
Calculations of both the liquidity ratios are as follows:
Liquidity ratios Formula Calculation Result
Current ratio Current assess /
current liabilities
35400 / 6200 5.71
Quick ratio Quick assets / current
liabilities
27400 / 6200 4.42
Above calculations are showing that liquidity of the organisation is very good because of
very high current and quick ratios. Both the ratios may leave positive impact upon expansion
decision because of good financial position of the Marvin and Smith's Coffee shop.

QUESTION 5
Summary
While collecting all the answers for the questions it can be concluded that Marvin and
Smith’s coffee can expand their operations in Netherlands. Many factors are in favour of entity
like the growth of economy, increasing market, purchasing power of local public and support of
government. Hank and Patty made an elaborated marketing mix plan in accordance with the
results attained in the market research (Wahdiat and et. al., 2019). They conducted market
research, set their targets accordingly, planned their stores interiors and services they needed to
provide to their guests for providing them utmost experience. They focused on their marketing
strategies so that Marvin and Smith’s coffee can be positioned properly in market. Also,
managers of Marvin and Smith’s coffee concentrated on their staff, they motivated them to
perform well and indulged in company by supporting their opinions which made them more
effective for Marvin and Smith’s coffee. All of these actions and research is in favour of
company and it suggest that Marvin and Smith’s coffee can expand overseas and efficient results
are expected.
CONCLUSION
Above assignment answers some questions for a company and it is related with the
actions and importance of business essential. These are the set of actions which are needed for
companies to take for assuring its success. The economy and market conditions of Netherlands
are in favour of the company and most of its factors are beneficial for it. Organisation can
expand their operations overseas as there is lot of opportunities and doors which can be explored
by entity. Their financial conditions are stable and supporting their decision of expansion
overseas.

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