Expansion Plan for Coffee Business in Spain

This assignment focuses on the expansion plan of the coffee business of Hank Marvin and Patty Smith in Spain. It includes an overview of the market, logistical consideration, targeted market, ethical consideration, structural changes, marketing mix plan, wide coverage of geographical area, and financial decisions. The plan also incorporates a marketing mix plan in order to facilitate the coffee shop business in Spain. The plan will also incorporate financial plan for the coffee business in the new country.

Running head: BUSINESS STUDIES
Business Studies
Name of the Student:
Name of the University:
Author’s Note:

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Executive Summary
The main purpose of this assignment is to prepare a plan for expansion of the coffee
business of Hank Marvin and Patty Smith who have already established their business
in London and wants to expand the scope of the business in international markets. The
country which has been selected for the purpose of expanding the business is Spain.
The assignment will be also incorporating a marketing mix plan in order to facilitate the
coffee shop business in Spain. The plan will also incorporate financial plan for the
coffee business in the new country.

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Table of Contents
Introduction........................................................................................................................3
Overview of the Market..................................................................................................3
Logistical Consideration.................................................................................................4
Targeted Market.............................................................................................................4
Ethical Consideration.....................................................................................................5
Structural Changes........................................................................................................5
Marketing Mix.....................................................................................................................6
Wide coverage of Geographical area................................................................................8
Financial Decisions..........................................................................................................10
Conclusion.......................................................................................................................11
Reference........................................................................................................................12

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Introduction
The assignment will be focusing on the expansion plan of the coffee business.
The business has already been established in the market of London and opened more
than one shop in different areas of London (Abrams 2017). The business model of the
business is to use the best quality of coffee beans which is supplied by Gumutindo
Coffee which is from Uganda (Casadesus‐Masanell and Zhu 2013). The shops also
have refreshments options that is different kinds of beverages along with pastries,
eatables which goes with beverages.
Overview of the Market
For the purpose of expanding the business the owners Hank Marvin and Patty
Smith has chosen the country of Spain. Spain is widely known for its culture, football
clubs, refreshment centres. In early 2009 when the economic crisis hit the markets of
many countries, Spain was also one of the countries which was affected by the
economic crisis. But eventually the markets of Spain recovered by 2013 stabling the
markets and attaining a sustainable growth. As per the research conducted by the
owners, the city of Barcelona will be the most suitable place to start the coffee shop
business. As per the research the city is one of the highest gross earning cities in Spain
and provides around 19% towards the GDP of the country. In addition to this, the city
has a diverse population which is reflects the culture of Spain. It is also a known fact
that the people of Spain prefer mostly street food and beverages and refreshments
which are available from the local markets (Carvalho, Paiva and Vieira 2016). The
choice of Spain is because of the countries rich culture and love for street foods and
beverages. The owners of the shop are of the view that they will be able to tap into the

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market with their beverages and fast food items. In addition to this the flavour and the
quality of coffee which is provided by Marvin and Smith’s Coffee Shop will be a rare
product in the new market.
Logistical Consideration
As per the plan of the owners they will be operating from a shop which will be in
the market area of Barcelona and which will be able to attract local customers. The
business will be following more or less the strategies which was adopted by the store in
London markets with certain useful additions as well (Morozova, Postan and
Dashkovskiy 2013). The raw materials which consists of coffee beans will be imported
from Uganda as per the previous policy of the business and raw materials which are
necessary for preparation of snacks will be resourced from the neighbor markets which
can ensure the freshness of the raw materials such as potato, tomato, and certain other
ingredients as well. The raw material as will be required in bulk will be transported by
delivery trucks which will be purchased for such purpose only (Kotabe and Helsen
2014). The shop will be baking and preparing the snacks in the store itself therefore the
owners plan to hire few of the local chefs and support staff for the coffee shop.
Targeted Market
The targeted market of the coffee shop will be the younger generations of the
population. As per the research conducted by the owners of the business, the demand
for the beverages and refreshments from the street markets are mostly from the
younger generations and school and college students. However, the shop will also be
considering the needs of working class and households and others as the business
plans to have variety of choices for its customers.

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Ethical Consideration
In order to start the business, the owners need to incur certain start-up costs
which includes buying a shop or selecting a shop location, furniture and fixture
requirements and also the legal costs (Patton, Sawicki and Clark 2015). The owners of
the company have incorporated a certain amount of cost which they expect will be
incurred on getting the license for opening the shop. In addition to this, there are
instances where ethical checkup on the food quality is made by the authorities for public
interest and the owners expects such activities in the initial months of starting the
business which also might involve certain costs. The staffs will be trained to behave in a
respectful and polite manner with the customers and the owners also wants to promote
ethical standards of equal treatment and honest behavior in the business.
Structural Changes
The new market will be requiring the business to adopt to the culture of Spain.
The designing of the shop and the atmosphere has to be set up accordingly. The
business will be offering three to four types of coffee with complementary cookies for
the initial months. The choice for the cookies will be on the customers. In addition to this
they will be offering cakes, burgers, ice creams sundae and a variety of baked products
for the customers. The business model of the company is to provide best quality of
products at lowest possible price. As in the case of the London shops, the shops in
Spain will also have free Wifi services, charging areas for phones and laptops. There
will be a candy counter as well for kids which will not be much costly. The shop will also
keep board games where people can enjoy and spend time with friends and family
during the evening time.

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Marketing Mix
The marketing mix refers to the different factors which can be controlled by the
business to market the products of the business. There are 4P’s of marketing mix which
was initially introduced and later on 3 P’s were added more to the mix Armstrong et al.
2015). The marketing mix for the expansion plan of the coffee shop is given below:
1. Product: The products which will be provided by the shop are beverages like
coffee, stevia, tea. The coffee will be of three or more types mainly cappuccino,
normal milk coffee and cold coffee items (Huang and Sarigöllü 2014). The main
attraction will be the normal coffee and the cappuccino with the younger
generations. In addition to this, the shop will be offering cookies, pastries,
sandwiches, finger snacks and different variety of baked food products. As the
shop is importing coffee beans from Uganda, the coffee products of the shop will
be different in taste and flavor in comparison with the competitors of the shop.
The plan of the owners is to incorporate a product which is popular among the
locals.
2. People: This refers to the targeted group of customers which the shop will be
focusing on for maximum sales of their products (Khan 2014). The targeted
customers of the shop will be college students and high school students who
normally hang out in a café with friends. The shop is also putting up board games
for evening so the business can expect all variety of customers. The products list
will also be containing food products for the working class who need quick bites
before work. Therefore, as per the plan of the management, the shop will have
something for every customer.

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3. Price: The prices of the products are expected to be kept at minimum so that the
business is able to make a place for itself in the competitive market (Fan, Lau
and Zhao 2015). The raw materials for the snack are to be purchased from the
local markets and therefore the cost might be less. The coffee beans which are
being imported will be costing less as the purchases will be in bulk and also
subjected to discounts.
4. Promotion: This means all those activities which can draw the customers and
increase the sales of the business (Fine 2017). The activities as per the plan of
the owners will be involve local market advertisements which can involve
television advertisements, distribution of posters and other methods as well.
Even the plan of the management to provide complementary cookies as per the
choice of the customers also forms a part of the promotion activities of the
business. The evening board games set up will also be one of the promotional
activities of the business.
5. Place: The place which is selected for opening the store is the city of Barcelona
in Spain. The place has diversity of culture and is a popular tourist attraction
mainly due to the football club and street market of the city. The plan of the
owners is to attract such tourists and also spread the name of the coffee shop.
6. Process: The process involves various activities which the shop engages in for
the purpose of making the food products and also involves the promotional
activities of the business (Davari and Strutton 2014).

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7. Physical Evidence: The physical evidence refers to the physical characteristics
which the customers can feel such as the furniture, the food products provided
and similar other stuffs.
Wide coverage of Geographical area
The plan of the management is to ensure that the area coverage of the shop
around the market of Barcelona is maximum. The main advantage of the wide coverage
of markets are given below:
1. Gaining Competitive Advantage: The business of the shop will be built on the
ability of the shop to access customers and resources and therefore for such a
purpose the owners of the shop need to select a shop location which can give
the business the advantage of a wide spread access to maximum area
(Ghapanchi, Wohlin and Aurum 2014). In order to operate in the new market
freely withstanding the competition the owners of the shops will be needing to
apply extensive advertisement techniques which can attract potential customers
of the market and increase the sales of the market. The advertisement
techniques which will be used by the management to attract customers widen the
market range of the shop and also the area which is covered by such
advertisement is immense which will help the business to create a name for itself
in the new market. In addition to this, the possible shop location of the shop
should be such that it gives the business the access to wide range of people.
This location as per the plan of the management can be a popular tourist
attraction which will then enable the shop to attract such foreign customers into
the shop and develop a customer loyalty and a brand name for the business.

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Such activities of the business will help the business to gain competitive
advantage (Urbancova 2013). The competitive advantage for the shop is
important as this will be providing a means for the business to survive in the new
market where there will be tough competition among the existing coffee shops
and cafes.
2. Supply Chain: The supply chain of a company refers to the process in which raw
materials are purchased from the suppliers and ultimately final products are sold
to the customers. The supply chain involves all those processes which can help
the goods move from the suppliers to the final consumers (Christopher 2016). In
the case of coffee shop, the owners have decided to purchase all the raw
materials from the local market and import special items like coffee beans from a
supplier in Uganda. For the purpose of purchasing raw material in bulk the
business also plans to purchase delivery trucks which can deliver the raw
material in the shop itself. Moreover, there is a requirement of storing the raw
materials and also the baked foods in suitable conditions. For such purpose the
business plans to have a separate room where raw materials and stocks can be
stored and a refrigerator for storing the baked products as well as the
sandwiches and pastries. In addition to this, the business also plans to start up a
delivery van which can distribute food items which can be ordered online or by a
telephone. This will result in wide range coverage of the area of the city of
Barcelona. The business will be able to have access to more customers and
thereby spread a name for the coffee business in parts of Spain which does not
know about the shop. This would help the business to create a brand loyalty and

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brand name for the products of the business. The supply chain of the business
should be such that it can benefit the customers at the same time make the
process transferring the final products to the customers easier for the business
(Monczka et al. 2015).
Financial Decisions
The financing decisions of the company would involve estimating the start up
cost of the new business in the market of Spain and also estimating the profits which
can be earned from the business. In addition to this the management of the business
also needs to decide what are the sources through which they will be acquiring the
initial capital needed for supporting the start-up expenses as well meeting with the day
to day obligation of the business (Brigham and Ehrhardt 2013).
As per the plan of the management the initial capital requirements of the
business will be fulfilled by taking funds from family members, friends and internal
sources. In addition to this, the owners have established four shops back in London
from where the funds can also be accumulated and used accordingly for the
requirements of the business (Arrondel, Debbich and Savignac 2013). The net profit of
the shops operating in London shows a profit figure of 26,800 which is fairly decent. If
the raw material costs of the London shops are to be considered similar for the new
shop which is to be established in Spain is 1,52,000. The cost can increase a bit for the
new market and the required quantity for the startup will be more as the business is
positive that the shop will be successful in Spain. The current business performance of
the shop in the market of London show that the business has no liquidity issues and
moreover there has been no requirements for loans which shows that the business is

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progressing in the markets of London. The owners of the business are expecting similar
results from the shops which is to be established in the market of Spain. The liquidity
requirements will not be an issue, however if there is a requirement to finance activities
relating to advertisement, promotion of the business than the owners can apply for a
loan (De Visscher 2016).
Conclusion
As per the analysis of the market and other factors the expansion strategy which
is to be applied for the coffee shop business seems promising. The overall market
structure of Spain, its culture and the diversity of people who visit the country not just for
its culture or sport but also for its street food market which makes it a destination place
for tourists makes it favorable to establish a coffee shop. In addition to this, the targeted
customers of the company which are younger generation are attracted to food stuffs
which are will be offered by the business. The activities as per the plan of the owners
will be involve local market advertisements which can involve television advertisements,
distribution of posters and other methods like offering cookies with refreshments in initial
months, board games arrangements in the evenings for the customers of the shop. The
financing requirements of the business will be internally sourced between the partners
or owners of the business. The business is expected to earn profits and establish itself
in the markets of Spain.
Spain is a developing nation and it is growing in markets which will be attracting
new business to establish itself in the markets of Spain. The expansion strategy which
has been prepared by the owners of the coffee shop is a sound one. As the business
has already attained success in the markets of London, therefore it is high time that the

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business tap into the opportunities which are offered by international markets and built a
brand name for itself in the market of fast food chains. Therefore, the owners of the
business must accept and implement the business plan as soon as possible and
prepare the funds which the business will be requirement for the start-up expenses.

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