Coffee Shop Expansion in France

The assignment examines the feasibility of expanding a coffee shop business to France. It delves into financial aspects like profitability ratios, legal considerations relevant to the French market, and structural challenges of setting up operations in a new country. The report also highlights the importance of competitive advantage, supply chain management, marketing strategies (using the 7 P's), and understanding government policies, economic conditions, environmental regulations, and legal frameworks specific to France.

Coffee Shop Fair-Trade

INTRODUCTION
Coffee is one of the best drinking alternatives available in the market today. In US about
330 million cups of coffee is consumed every day. Thus, it is most attractive business now days
with low starting cost in comparison to other business. Thus, Elma Filiz and Henry Smith
planning to open the coffee shop in France so they require plenty of planning and research
related to best location in the target market, capital required, key competitors and suppliers who
are available within the country to supply the coffee beans regularly. This report gives the brief
description about the expansion of the coffee business in the target market and ensures the
achievement of profitability objective(Lyon, S., 2010)
Elma and Henry are very keen towards the quality of the coffee beans and thus contracted with
the Kenya women to supply the beans and in return satisfy them with fair wages so that they
could not only improve their living conditions but also improve their productivity too because
according to Maslow's theory once the basic needs of the individual is satisfied he is motivated to
give his best in the workplace. Therefore, for this purpose detail research has been made on the
grounds of logical and ethical consideration (Harrison, J.L., 2011)
Q.1
There are various challenges which Elma and Henry need to face to choose an ideal
country for business. They need to deeply analyse the internal and external environment for the
selected country. They have chosen France to set up new coffee shop and made the detail study
of the following:
Government Policies: They need to have detail study of their government policies which
encourage the new business entities to enter the country and expand their business in their
markets.Government of France is providing various incentives and relaxations to new business
entities to encourage the more vibrant economy. Many bureaucratic hurdles have now reduced
or eliminated by the government to enhance new business entities. They also provides various
cost advantages and relief in taxes to set up new entities. In recent international survey, France
was rated the third most attractive country in the developed world to start a business. Thus, Elma
and Henry choose France as new market to grab the incentives and opportunities offered by the
government in reference to low cost wages, transport, and fuel(Brown, K.R., 2013).

Legal and environmental factors: Renting Property offers various fiscal advantages which
enhances the new business entities to set up in France.
Elma and Henry also need to take into account various ethical views because it is the
social responsibility of the entity to ensure the Fair trade coffee which build a better quality of
life of farmer's families and their communities. This motivates the farmers to improve the
productivity and quality. Fair trade coffee supports farmers to fight the challenges they may face
like changing climate, low and unpredictable incomes. Some communities completely depend
upon the the coffee productions for their livelihood so sometimes they need so it is very difficult
for them to predict their income and makes budget for their family needs. So, Elma and Henry
considers this as its basic ethics to enhance the social image of the entity in the new
market(Lekakis, E., 2013).
Elma and Henry wants to expand its business in France so they will face following structural
challenges to stand and develop in their markets:
1. Securing construction permits is most tough task in France as it takes about 184 days to
clear all the formalities and completion of lengthy legal procedures. It takes about 79
days to get water and electricity connection which is very time consuming.
2. Elma and Henry also requires planning certificates, a cadastral certificate, a non-
encumbrance certificate and mandatory environmental reports for registering property
which is also the lengthy procedure and takes about 59 days to obtain.
3. It is not an easy task to access the finance from various financial organisation in France,
thus, Elma and Henry need to rely on their sources of finance for the expansion.
4. Elma and Henry need to examine the taxation policy of France where government has cut
the capital gain tax to attract business but restores seven taxes payment per year.
5.France is very passionate toward the good food and drinks thus businesses which
appreciate their etiquette, approach and style are likely to succeed so Elma and Henry need to
also work on it(Davies, I.A., Doherty, B. and Knox, S., 2010).
Q.2
Elma and Henry had used 7 P's marketing strategy to develop their market in France
which could be explain as follows:

1. Product : Since,France is very passionate towards the good food and drinks so Elma and
Henry need to focus on the best quality coffee beans and need to serve the best services
which could appreciate their etiquette, approach and style. They can also provide a
wide range of products such as coffee, tea, snakes and fresh drinks.
2. Price: Price is the essential element which could affect the business positively and
negatively both. Thus, Elma and Henry need to analyse price in the light of competing
pricing strategy and value pricing strategy. Competing pricing strategy is the strategy to
analyse the competitive prices in the market so that it can easily stand and face the cut
throat competition prevails in the market. Value pricing strategies means to provide value
to the customers which could differentiate their product with the competitors available in
the market.
3. Promotion: Elma and Henry need to develop the effective promotional strategy keeping
in mind their etiquette, approach and style. This could be done with the help of electronic
and printing media. Today social media is also playing effective role as one of the
promotional strategy. Installing stalls in the fairs like social, cultural or book fairs is also
the one of the promoting strategy now days.
4. Place: Place in business ensures its profitability and failure to large extent thus, place or
location of the business requires deep analysis keeping in mind the coffee habits of the
individuals and its demand. They need to consider various stripmalls ,foot traffic, main
streets and square footage to analyse the demand of coffee in every field and take
effective step in this concern.
5. Positioning: Elma and Henry need to analyse its position in the hearts and minds of the
consumers in the market by free distribution of coffee cups in the places picked above
after deep research. Elma and Henry could also offer low cost coffee cups to stand in the
relative markets and face the competitors.
6. People: Elma and Henry need to analyse the customers to which they need to target.
They need to study their taste ,habits,etiquette, approach and style which could help them
to differentiate their product from that of customers(Jaffee, D. and Howard, P.H., 2010)
Q.3

Competitive advantage means the situation which keeps the business entity in favourable
or superior position. Here, Elma and Henry wants to expand their coffee business in France
where coffee is one of the favourite drink for large number of population. So Elma and Henry
need to keep an competitive advantage to face the cut throat competition and maintain its
profitability in new country also. Elma and Henry could gain competitive advantage in its
business in following manner:
 Quality Differentiation: Elma and Henry needs to ensure the high quality coffee and it
need to be checked at every stage starting from sources of coffee beans to the equipment
use to store grind, brew and serve. It also need to keep in mind the effective services
deliver by its staff.
 Experience differentiation: Since Elma and Henry has the experience of 12 years in the
field of coffee shop business .Thus,By offering a specific atmosphere, theme, or
entertainment, your shop can stand out even with relatively standard products(Schuler,
D.A. and Christmann, P., 2011). This gives an competitive advantage to the Elma and
Henry in this concern
 Price Differentiation:Once the Business entity forms its good image in the eyes of
customers that the coffee shop delivers its products on low cost with less profit margin
with good quality then consumers will have faith on the entity regard to its pricing and
thus Elma and Henry could easily get the competitive advantage over other competitors
in the market.
Supply Chain
Supply chain is another prospective need to be analyse to expand business in France
because it could also decrease the operational cost and thus produce and deliver the cost
effective product to the consumers. Since, Elma and Henry are exporting good quality coffee
beans from Kenya and every country has its own import and export policies thus, Elma and
Henry need to study the import and export policies of France and need to take effective steps
accordingly. France has declared various incentives and subsidies to the new business entities
to explore their economy. Supply chain includes every person from the sources of the coffee
beans to the staff delivering the product to the consumers. Elma and Henry needs to analyse
the wages policy of the government in France to decide the best effective wages to their
staff .There are different types of coffee available , which also includes the milk coffee

keeping in mind the preferences of the consumers. Thus, Elma and Henry need to find the
best possible sources of milk which could be powdered milk as well as cow milk within the
country which also fulfils the quality criteria of the business men. Supply chain also includes
the promotional staff whose objective is to promote the product in the new market. Thus,
Elma and Henry need to motivate their promotional staff to effectively reach to the
consumers through various means like electronic media, printing media and social media .
Social media in todays world is the most effective means to reach to large population by just
one click i.e. through U-tube, Whats up, twitter, blogs etc (Goodman, M.K., 2010) .
Q.4
Elma and Henry need to also analyse its financial capability to start its business because
relying on financial assistance from outside is very tough in France because its loan policy is
very complicated and strict for the outsiders, Thus Elma and Henry need to analyse its
liquidity and profitability capabilities which are as follows:
 Current Ratio: This ratio reveals the ability of the concern to meet its short term
obligations and analyse the short term financial soundness of the concern. Here,
Current Ratio=Current assets/Current Liabilities
=35400/6200
=5.7:1
This ratio interprets that entity could easily meet its current obligations and could expand the
business elsewhere.
 Liquidity Ratio: This ratio assures the ability of the firm to meet its short term
obligations without relying on the inventories because inventories are the raw
material of the concern and can’t be easily discarded.Here,
Liquidity Ratio=Liquid Assets/Current Liabilities
=27400/6200
=4.42:1
This ratio interprets that firm cannot easily meet its short term obligations in time if
its current assets include doubtful debts and slow moving debtors.
 Net Profit Ratio: This ratio is the symbol of the profitability and efficiency of the
business .
Net Profit Ratio= Net Profit/net sales*100

=26800/360000*100
=7%
This ratio depicts the efficiency of the business entity to invest money in new
business entity. It also depicts the sound management of the firm.
CONCLUSION
Elma and Henry has taken the effective decision to open the coffee shop in the France.
France is one of the developed and growing economy in the global market. Above report gives
the detail Scenario about the financial, legal, and structural challenges required to expand the
entity in the country selected. Elma and Henry had focus on the competitive advantage and the
supply chain to make its product cost effective so that it can easily stand in the cut throat
competition in market. Elma and Henry had took up the effective marketing strategy of 7 P’s to
promote and establish its product in new market. Elma and Henry has also completely focus on
various government, economical, environmental and legal policies of the countru before taking
decision regarding setting up of the business in the newly selected country.

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