Coffee Shop Expansion in France

This assignment examines the key factors influencing a coffee shop's decision to establish a new branch in France. It analyzes relevant financial ratios like profitability and liquidity, while also exploring the impact of the marketing mix on business development. The assignment delves into the strategic considerations involved in entering a new market, emphasizing the need for thorough research and planning.

CASE STUDY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1) RESEARCH AND JUSTIFICATION FOR CHOOSING FRANCE FOR BUSINESS
EXPANSION...................................................................................................................................1
2) MARKETING MIX....................................................................................................................2
3) IMPLICATIONS OF NEED FOR HANK AND PATTY COFFEE SHOP...............................4
4) FINANCIAL POSITION OF COFFEE SHOP...........................................................................5
5) SUMMARY.................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INDEX OF TABLES
Table 1: Profitability ratio................................................................................................................5
Table 2: ROCE.................................................................................................................................6
Table 3: Liquidity ratio....................................................................................................................7

INTRODUCTION
Expansion of entity is effective for increasing its profitability, marketability at maximum
level. It is helpful for appropriate decision making and to expand business effectively. Present
report is based on understanding the key factors impacted on expansion of Marvin and Smith's
coffee shop. It is the coffee shop run by Hank Marvin and Patty Smith of UK. The firm is
planning for setting up its new entity in France. In this regard, justification for choosing France
to establish new entity as its coffee culture and others tools will be discussed. Moreover,
marketing mix elements for development of entity will be introduced. Further, implications of
need for the coffee shop will be understood in this assignment. Likewise, actual financial
position of the entity on which decisions are made regarding coffee shop's expansion will be
highlighted.
1) RESEARCH AND JUSTIFICATION FOR CHOOSING FRANCE FOR
BUSINESS EXPANSION
It is recognised that both partners of Marvin and Smith's coffee shop are planning for
business' expansion in other country. Therefore, research is conducted on culture, people's
lifestyle and environment to make appropriate decision and systematic planning for the new
creation. In this regard, they are planning for establishing its new branch in France whose culture
and people's standard is to be found. It is observed that there is different region's people available
including Christian, Muslim and others (Grissemann, Plank and Brunner, 2013). However, it is
spread around 640679 kilometre square in area and its population is about 67158000 according
to analysis done in 2017. Including this, its GDP is around 2833 million in 2017 which is quite
effective in comparison to other countries of the world. Besides this, on analysing its culture and
people's standard in food and coffee culture, it is quite developing and attractive. Therefore, it
can be forecasted that establishing new entity of Marvin and Smith's coffee shop in France will
be a success in the future.
In addition to this, coffee drinkers of country are in wide range as its income earning in
food and coffee sector is getting increased at higher level in comparison to previous years.
Similarly, drinking coffee is in trend in France which attracted people on a large scale
(Laukkanen and et.al., 2013). However, demand for coffee and fast food is getting increased
which demonstrates high standard and economic position. Thus, business expansion in France
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will be effective and profitable for Marvin and Smith. However, coffee shop's goodwill in
market will be improved impacted on customers' loyalty towards variety in coffee and services of
the entity.
It is also required to consider ethical considerations for the expansion of business in terms
of ethical considerations. For instance; considering ethical norms to access data which is
restricted during analysing other competitive entity's performance, collecting accurate and right
information only etc. Similarly, working on its legal formalities as of differences in legal system
of different countries (Grønholdt and et.al., 2015). However, all these ethical considerations are
needed to be considered for the expansion of coffee shop and appropriate decision making.
Apart from this, for decision making in relation to set up a new branch of Marvin and
Smith's coffee shop, other business operations related factors are to be considered. It includes
supplier’s delivery, customers' interests and so on. Therefore, variety of ideas are generated for
establishment and marketing of goods and services. For example: advertising of coffee shop and
its unique services in French language, creating compatibility with customers including
suppliers, creditors and other business entities will be effective for the coffee shop (Cao,
Thompson and Triche, 2013). However, it is good for establishing and maintaining healthy
relations with people as increasing in demand for coffee and services at maximum level. On the
basis of analysing all factors impacted on business' expansion, it will be good for the coffee shop
to increase sales revenue, profit level and so on.
However, it is analysed that coffee culture and trend in France is good a therefore its
expansion will be effective. Including this, people will be attracted towards variety in coffee and
demand for it on a large scale (Pavlou and Stewart, 2015). Hence, Marvin and Smith's coffee
shop should plan for its expansion through establishing new branch in France for coffee and its
services.
2) MARKETING MIX
Marketing mix are elements on which decisions are made regarding products' decision
making and their advertisements. In accordance with this, several factors are analysed for
product's quality, quantity, pricing and method of advertising and so on (Helm and Gritsch,
2014). According to the case scenario, for expansion plan of Marvin and Smith's coffee shop in
France, below mentioned marketing mix elements are to be discussed as:
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 Product: It is analysed that Marvin and Smith contracted with fair trade supplier in
Uganda for finest coffee beans. Likewise, high quality of tea is used for creating
uniqueness in its products and services. Including this, marketing mix element as product
includes planning regarding quality of resources and materials for coffee and gaining
people's attraction towards it at maximum level (Donndelinger, Joseph and Scott, 2017).
As it is recognised that entity uses good quality of coffee beans and materials for coffee
and its services. Similarly, for expansion of the coffee shop, it is needed to emphasise on
product's quality and attracting tool for encouraging people. It put a direct impact on
pricing and promotion of goods and services linked with entity's productivity and
profitability at maximum level. Price: It is determined on the basis of cost incurred in manufacturing, production and
advertisement process. Including this, it also involves price incurred on taking approval
from other country's government for expansion from other f the coffee shop (Giordani
and et.al., 2014). Likewise, cost incurred in export and import of products as well on
concluding training programs to trend workers according to country's culture etc.
Therefore, on the basis of considering all these factors, adequate price of coffee and
services of Marvin and Smith's coffee shop is determined. Place: It is decision making tool for meeting customers and maximizing their satisfaction
level with coffee shop's services. In accordance to this, it is considered that how far the
shop is from people and contacting with them. Including this, it is also identified that how
people can get information of variety in coffee and unique services of Marvin and Smith's
coffee shop. Along with this, decisions are also made regarding putting resources and
materials as machinery equipment and inventories etc (Cengiz, Combs and Samy, 2017).
Therefore, wastages of resources and fund can be reduced which impacted on demand
and supply of goods. Similarly, it is beneficial to manage production and distribution
system of the coffee shop. Thus, appropriate decision can make regarding analysing
location for establishing coffee shop and implementing its business operations
effectively.
 Promotion: Under this marketing mix element, advertisement and promotion of goods
and services is identified. However, different promotional techniques are used for
encouraging people towards coffee and services of Marvin and Smith's coffee shop. For
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instance; advertisement in newspaper and magazines, organising promotional campaigns,
using social networking sites and information technologies (Grissemann, Plank and
Brunner, 2013). In this regard, the best and appropriate technique is decided for
expansion of business and providing information to people in wide range. In addition to
this, it impacted on public relation and customers' loyalty towards coffee shop's services.
Therefore, promotion of goods and services is created to encourage people for variety in
coffee and its services on large scale.
3) IMPLICATIONS OF NEED FOR HANK AND PATTY COFFEE SHOP
For planning and decision making in relation to expansion of Marvin and Smith's coffee
shop, critical evaluation on its factors is needed. It included as; information systems, organisation
culture, management structure, competitive advantages, personnel and staff issue and so on (Cao,
Thompson and Triche, 2013). Therefore, deep knowledge towards business' expansion can be
increased impacted on its operations and further activities. However, implications and methods
to solve them are to be discussed as below: Information systems: Information systems are sources for exchanging ideas, data,
information etc from one place to another. On which, appropriate decisions are made
regarding future business operations and new creations in them. On analysing
information system for marketing and spreading information related to coffee shop in
France, some implications are occurred (Pavlou and Stewart, 2015). For example;
differences in languages, lack of understanding in terms of business operations and so on.
However, these implications are occurred during information processing for setting up
new entity of Marvin and Smith's coffee shop. It is essential to reduce this implication to
achieve its effectiveness and getting success in new creation. As providing training to
employees in terms of learning French and culture of the country impacted on good
relationship with customers to provide coffee and related services. Including this,
grabbing business and culture of France in terms of business and marketing of coffee
shop will be effective for improving its goodwill and appropriate decision making in
context to business operations effectively.
 Competitive advantages: As it is recognised that there are already large number of
entities who provide coffee and food services in France. Therefore, high level of
competition is identified for operating business in other country. Including this, it is
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considered as challenging task for Marvin and Smith's coffee shop to attract people
towards its services. In addition to this, people's choice and interests get changes from
time to time which impacted on demand for goods and services as well its production
(Helm and Gritsch, 2014). However, it is needed to analyse actual market position in
food and catering industry of France critically and further preparing planning for
competitive advantages. For this purpose, different factors are essential to be considered
as choosing the best approach for advertising variety in coffee, speciality of tea etc.
Along with this, contacting with people in accordance to culture and people's living
standard in France. Similarly, preparing future oriented strategies will be effective for
maintaining business performance and improving its quality services on larger scale.
Therefore, for gaining competitive advantages for Marvin and Smith's coffee shop,
business partners should implement these strategies impacted on further implementations
and enhancing efficiencies at higher level.
4) FINANCIAL POSITION OF COFFEE SHOP
For appropriate decision making to expand Marvin and Smith's coffee shop's new branch
in France, it is required to identify its monetary position. As at which cost, entity can invest for
its growth and improving operations. It can be done through analysing its profitability, liquidity
and return on capital employed (Donndelinger, Joseph and Scott, 2017). However, different ideas
are generated for business' expansion and incurring expenses for new creations. In this regard,
actual business performance of the coffee shop is to identified as follows:
 Profitability ratio: This monetary tool is appropriate for analysing financial position of
Marvin and Smith's coffee shop. It includes gross and net profit margin by which profit
earning capacity of the entity can be identified (Giordani and et.al., 2014). However,
profitability ratio for identifying profit level of the coffee shop is evaluated as:
Table 1: Profitability ratio
Particulars Formula Amount
Sales 360000
Purchases 152000
Gross profit 208000
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Gross profit
margin [(Gross profit/sales)*100] 57.77%
Net profit 26800
Net profit margin [(Net profit/sales)*100] 7.44%
Interpretation: It is recognised that Marvin and Smith's coffee shop incurred 152000 on
its business operation on which sales revenue is gained as 360000. However, gross profit of the
entity is gained as 208000 which is quite effective and favourable for the coffee shop. In this
regard, gross profit margin is evaluated as 57.77% demonstrates good profitability and increasing
in profit level for business operations. Likewise, organisation's net profit is identified as 26800 as
deducting gross profit with additional expenditures. In accordance to this, net profit margin is
calculated as 7.44% which is adequate and effective on which further decision can make related
to business' growth. On the basis of this profitability ratio, it can be forecast that entity has good
profitability and organisation has ability to invest on business operations in the further years as
its expansion.
 ROCE: Return on capital employed is for analysing return profit and revenue on capital
incurred in its operations (Laukkanen and et.al., 2013). However, ROCE for decision
making regarding expansion of Marvin and Smith's coffee shop in France is calculated
as:
Table 2: ROCE
Particulars Formula Amount
Earning before tax 360000
Total assets 113000
Current liabilities 6200
ROCE
[Earning before tax/(total assets-
current liabilities)] 3.37
Interpretation: It is evaluated that return on investment is 3.37 which is effective and
remain favourable for entity.
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 Liquidity ratio: This ratio is analysed for identifying liquidity position of Marvin and
Smith's coffee shop. It includes current ratio and quick ratio by which different ideas are
generated for entity's effectiveness and growth at higher level (Pavlou and Stewart,
2015). However, Liquidity ratio for decision making in context to establish its new entity
in France is to be identified as follows:
Table 3: Liquidity ratio
Particulars Formula Amount
Inventories 8000
Current assets 35400
Current liabilities 6200
Current ratio (Current assets/Current liabilities) 5.7
Quick ratio
[(Current
assets-inventories)/current
liabilities)] 4.41
Interpretation: It is interpreted that current assets and liabilities of Marvin and Smith's
coffee shop are as 8000 and 35400 respectively. However, current ratio of the entity is evaluated
as 5.7 which is quite high. As ideal current ratio of any company is considered as 1. On this
factor, it is to suggested for coffee shop to reduce incurred expenditures on current assets.
Similarly, quick ratio of the entity is 4.41 which is moderate and can balanced as systematic
management of its production and distribution system. Therefore, coffee shop can expand its
business as considering balance of cost incurred in operations effectively.
5) SUMMARY
It is analysed that Marvin and Smith are planning for expansion of coffee shop in other
country of the world. In accordance to this, they research for 1 year in terms of decision making
as establishing new entity, different countries' coffee culture, people's standard and so on.
However, analysis on France's geographic area, people's attitude towards coffee and related
services are analysed. Including this, its financial and liquidity position are evaluated on which
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appropriate decisions can be made regarding further implementations (Grønholdt and et.al.,
2015). On analysing monetary performance, it is quite effective and favourable for the entity's
expansion. Likewise, coffee culture in France is also attractive and developing. Therefore, new
branch of the coffee shop can be established in other country which will impact on its
profitability and business operations positively.
CONCLUSION
It is concluded that analysing factors which impacted on expansion of entity is needed for
Marvin and Smith's coffee shop's growth. In this regard, coffee culture of France in terms of
geographic area, people's standard towards goods are discussed. Including this, actual business
performance of the entity in terms of profitability and liquidity ratios are identified. However,
marketing mix elements considered for business' development plan has been introduced for
appropriate decision making and further implementations. Overall, factors involved in decision
making for establishing new branch of coffee shop in France has been understood in this
assignment.
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REFERENCES
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Helm, R. and Gritsch, S., 2014. Examining the influence of uncertainty on marketing mix
strategy elements in emerging business to business export-markets. International Business
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Donndelinger, Joseph, and Scott M. Ferguson. 2017. "Design for Marketing Mix: The Past,
Present, and Future of Market-Driven Product Design." In ASME 2017 International Design
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splines of financial ratios. Journal of Financial and Quantitative Analysis. 78(4). pp.1071-1099.
Cengiz, H., Combs, A. and Samy, M., 2017. An Analysis of how Financial Ratios of Companies
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Online
Business performance. 2016. [Online]. Available through:
<https://www.tvp.zcu.cz/cd/2012/PDF_sbornik/108.pdf>.
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