Factors Affecting Business Expansion in Europe: Analysing Bold Street Cafe

This report analyses the major factors affecting the expansion of Bold Street Cafe in Europe, including Porter's five force model, Porter's diamond model, and macro factors such as culture, Brexit, COVID-19, and more.

RESIT MODULE ASSESSMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Porter's five force model..............................................................................................................3
Porter's diamond model...............................................................................................................4
Major factors that are affecting the expansion of business in Europe.........................................5
Analysation of the macro factors that impacts the business............................................................5
Culture.........................................................................................................................................5
Brexit...........................................................................................................................................6
COVID-19...................................................................................................................................8
Labour Law..................................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
......Business expansions means the end point where the company thinks of growth and want to
expand itself to generate more profit. Expansion of business is important because it attracts new
customer's in the new market or using new products or service. This report will discuss about the
bold street cafe is an active private limited company, which is incorporated on 4th march 2019
and it is an unlicensed café. This study will discuss about the expansion of bold street cafe in
Europe, and how some major factors like- inflation, covid-19, labour law, brexit and culture will
affect the expansion of the business in UK. It will also show the five forces model of Porter's on
bold street cafe and the mode of entry in the international market of German.
MAIN BODY
Porter's five force model
It is a business model analysis that explain, analyses or identifies five forces that helps in
determining industry weaknesses and strength. These five forces are necessary to know the risk
that will may occur in the upcoming times. The five forces model includes five main forces,
these are Competitive Rivalry, bargaining power of buyers, Bargaining power of suppliers,
Threats of new entrants, Threats of substitutes. Let's discuss the effect of these forces on Bold
street cafe: -
Competitive Rivalry
There is a high competition in this market despite of being doing the best in the city the bold
street cafe has so many competition, in every 2-3 months there a cafe make innovation or open
one more cafe which cause high disturbance in smooth running of bold street cafe, it is important
to know that both local and international chain affect the bold street cafe
Bargaining power of buyers
The bargaining power of buyers in this coffee industry is so high because of large number of
suppliers available in the market without any big difference, street cafe has the customers with
good loyalty but the behaviour of switching in the employees is very high (Gorynia, M. 2019.).
Bargaining power of suppliers
The bargaining power is very low in this market because the company are very strong and they
have the multiple number of suppliers in their touch who provide them with whatever they want.

Threats of new entrants
The threats of new entrants in this industry is very high as compared to another industry,
whenever someone thinks of a small business the first thought come in their mind is restaurant,
cafe or coffee shop these are the market which can be captured very easily through the taste.
Threats of substitutes
The threats of substitute are also very high in this industry as all the cafe or stores have tea,
drinks and many more that can substitute the coffee.
Porter's diamond model
This is mainly the diamond shaped model consisting of six factors which is also said as the study
of national competitive advantage of firms. It is the structure that tells that why some industries
that are running a country are competitive internationally. This diamond shaped framework
include Chance, Firm strategy, structure, rivalry, demand condition, factor condition,
government and related and supporting industries (Diliana, 2021.).
Firm strategy, Structure and Rivalry
...The national structure in which a company works directly knows that how the firms are made,
organized and controlled, it affects the strategy of the firm and how they frame rise themselves.
The more the rivalry in the domestics is the more innovation will develop and improve itself in
the order to maintain the competitive advantage. At the end, it will help the bold street cafe in
entering the foreign market (Chon, 2019).
Factor conditions
...It refers to the availability of natural resources, capital resources and the human resources that
are available in country to make them use for the firm, advantage of competitiveness results from
the existence of world level institutions that first create specialised factors then frequently works
to enhance them (Valdo’s, 2019.).
Demand condition
The demand of home highly affects how good an industry within a certain nation is, the
larger market means the higher competition but it also has the high number of opportunity to
stand in that cut throat market.
Related and supporting industries

The presence of a supporting industry to the industry is seen as the fuel to car the
supporting company is the indirect reason of the succeed of the business as it's create better
customer values and it becomes more competitive in the market.
Government
The government plays a vital role in the success and failure of the business, government
always encourage or push the limits of SME's so that they can grow faster and give some hand of
theirs too in the growing GDP of the country.
Chance
The writer of model has never written about chance or luck but there may some
happening like pandemic or war may occur will make a big negative impact on the industries
running in the market or may give benefit to country this is all based on the firm’s luck or by
chance.
Major factors that are affecting the expansion of business in Europe.
Analysation of the macro factors that impacts the business
Culture
This refers to that macro factor that is consists with the belief and faith of the people. It
has also been considered as the important factor of the consumer behaviour as well. This factor is
directly linked with the faith and belief of the employees therefore; it provides the higher impact
over the business. Thus, it is highly required to make a keen analysation over this and the actions
has to be taken in such manner that the negative impacts over the business can be managed. In
order to expand the Bold street coffee cafe in the Europe it is highly important to know the faith
and belief that are concerned with the customers so, the decision can be made according to that.
For example: Some customers prefer tea or some may prefer the Coffee. These are the different
taste of the customers that has been derived from the background and religion of the customers.
The decision-making scenario of the cafe is highly affected by this element (Arsawan and et.al.,
2020). As the decision has to be made within taking consideration of the key factors that are
related to the culture of the people. If the cultural element has been ignored by the business then,
it provides the direct impact over the success rate of the business. Culture is a part of ethics and
when a customer feels that their culture is not being valued by the businesses then, there is a
threat to the business in terms of getting loss.

In similar manner, there is a threat for the bold street coffee cafe. Therefore, it is
important to analyse all aspects that are related to the culture of the people. Furthermore, the cafe
should not use such content in order to promote the business that leads to affect the sentiments of
the cultural aspect. Thus, it has been proven that in order to internationalise the business it is
highly important to look upon the cultural differences as the cultural difference is directly linked
with the pattern of consumer behaviour. Hence, there is a threat to the business if the cultural
aspects have not been taken in consideration while expanding the business. Furthermore,
analysing the pattern of the culture that can increase the value of the customers also plays the
vital role as it assures the higher contribution of customers in the business (Cheng, Zhong and
Cao, 2020). Thus, for the bold street coffee cafe it is highly important that, the cultural difference
has to be analysed and the decisions has to be made on the basis of that.
Brexit
Brexit refers to the withdrawal of the UK from the EU. The Brexit has completely
changed the formal relationship that exist among the UK and the EU. This is the keenest factor
from numerous macro factor. As it assures the direct impact over business that is expanding in
the Europe. Due to this, the Europe has limited the ability of the British citizens. The biggest
threat of the Brexit is that, the business is not able to gather the personal data from the European
union without assuring the correct and systematic arrangements. In similar manner, this can
impact the expansion of the bold street coffee cafe in the Europe. Therefore, it is highly
important to perform the systematic procedures that has been introduced by the government in
the Europe (Crafts, N., 2022). So, in the expansion of the cafe the difficulties cannot be arrived.
The major threats from the Brexit are, no availability of the labours at the cheap rate, more
investment has to be assured by the cafe in terms of expanding the business. At initial level, it is
hard for the cafe to make the higher investment.
Therefore, performing the systematic procedure that assures the less restrictions are
highly important this includes the mandatory process of licensing and following the policies of
the government. As a result, it ensures the smooth running of the business. It has been found
from various studies that, due to Brexit the trade among the UK and EU has showed the large
number of negative results. Thus, considering this macro factor in terms of internationalizing the
business is excessively important. Furthermore, Brexit has increased the cost of production
especially for the small scale industries and this provides the over-all impact over the final profit

of the business (Bloom and et.al., 2019). In same manner, the bold street coffee cafe is the small
scale business there is a threat to the business which involves, increase in the cost of production
of the cafe and it will provide the direct impact over the prices of the products and services of the
cafe.
Analysing the another major element that is required to make a keen focus for
internationalising the business:
As discussed above the major macro factors that may impacts the expansion of the bold
street coffee cafe in the Europe. Apart from this, there are another element that can provide the
impact over the expansion of the Bold street coffee cafe in the Europe. Here is the description of
the another factors that may impact the expansion of the business:
Infrastructure- In order to expand the business at new place it is highly important to create the
effective infrastructure so, the customers can be attracted towards it. The business has to be
expanded in the Europe and a cafe needs to well-structured so, the customers can have the
memorable experience. It has been found from various studies that, it is important to analyse the
preference of the customers in order to add the glory in the business (Bosma, Sanders and Stam,
2018). Therefore, this element has to be taken in consideration by the bold street coffee cafe and
the analysation over the taste of the consumers has to be done. So, the expansion the effective
infrastructure can be developed.
Tax barriers- It is highly important for the bold street coffer cafe that the proper analysation of
the tax rate has been done as when the business has been expanded in another country then the
tax policies that has been adopted in that country has to be followed. It has been evaluated from
the various studies that, In European countries the scenario of paying taxes is difficult to
understand and sometimes it creates the situation in which the business has to pay the high taxes.
At initial level, it would be difficult for the bold street coffee cafe that they can pay high taxes
(Putra, 2019). Therefore, the proper analysation of the tax policies that has been adopted in the
Europe has to be done in order to ensure the smooth running of the business. Paying fair taxes
from the starting leads to solve the issues related to the tax barrier for the cafe.
Fluctuation in currency rates- This has been considered as one of the vital challenge that comes
in the path of expanding the business. Fluctuation in currency refers to the changing in the rate of
currency. Sometimes it becomes higher and sometimes it becomes lower. In both the situation it
provides the impact over the business that has been expanded in another country rather than the

home country. In similar manner, this will provide the impact over the expansion of bold street
coffee cafe in the Europe. This is the small scale business that has the mission of exploring the
business at other place. The fluctuation in the currency rate leads to increase the cost of
production for the business (Delmar, 2019). As a result, the prices of the products and services of
the cafe becomes high. This will provide the direct impact over decreasing the customers for the
business. It is the initial stage for the cafe as the cafe is performing expansion and higher prices
at the initial stage impacts the interest level of the customers. Therefore, a keen observation over
analysing the market has to be made and effective strategies regarding managing the fluctuation
rate in the currency has to be made. So, the business does not have to face the loss while
expanding.
COVID-19
The foremost major factor that will affect the bold street cafe during its expansion in
Europe is corona virus pandemic. This pandemic has shuttered the life of many businesses within
a month or a year. This has been seen as worst pandemic ever happened on the earth (Anker,
2021).
While, expanding the SME bold street cafe the owner should study the forces of covid -
19 in Europe. As the world knows that the small and medium enterprises are the lifeblood of
European economy. But during the covid times the economy completely went down because of
lock down. The first wave of covid has disastrous effects on the economy caused the decrease in
over 40% of sales of maximum enterprise (Lucaci, A.., 2020).
Even after the lock down the economy is not in the boost as the peoples are afraid to buy outside
products or service because of death causing harm of covid-19. In the current situation if the
owner expands its business in Europe there is not even 50% chances of the cafe to work on there,
the owner will only occur the loss if the pandemics 4th wave returns, the owner have to shut
down the business and may have to return to its old city where the cafe is already operating
previously, this may cause the lack in capital or huge losses leading the owner to drown in debt
(Albers, S. 2020).
Even the shutdown of export and import may occur at any time which will give harsh effects to
the organization. Although it takes time for every new business to create a magic of their
services on the society and during the magic time if the pandemic restarts there are no chances of
business to be alive in the market as the oldest ones are also suffering so how can a new one can

suffer and the biggest problem is being a sole proprietor, the owner of bold street is a sole
proprietor and will have to suffer all the liability alone and all of his capital may got vanished
because of this effect of covid-19 pandemic.
Labour Law
The labour law of every country is different because of differences of minority and
majority, culture and many more. These factors are the reason that why every country has its
own labour law rather than using the common labour law, during the expansion of the old street
cafe from Liverpool, Manchester to Europe they have to seek the labour law factors as these
factors are the ones that a company has to follow up strictly to remain in the market of country,
exploiting the labour law may harm them in the upcoming country. Labour laws defines some
major rights of employees or workers so there can never be any kind of discrimination among
them (Liukkunen.U,2021).
The labour laws represent the minimum wages for the worker. Work time and policies are also
there in the labour laws which helps the employees by giving them the right of justice in every
centre of the country. The laws of protecting employees is also important as this describes the
necessity of safety insurance of employees of the organisation, in opening a firm of bold street
cafe the owner has to study all these factors to run the business activity smoothly, effectively and
efficiently(Kirk,2021). Labour law protects the right of employees that mostly employer doesn't
follow (Menegatti. 2020).
CONCLUSION
From the above report it has been concluded that, the macro factors such as, COVID,
Brexit, Culture and labour laws provides the higher impact in the internationalization of the
business. This has been considered as the external factors that influences the internal
environment of the business. Therefore, it is highly important that the business must perform a
keen observation over these factors as this provide the impact over the success rate of the
business. Along with this, the report has highlighted the porter's five model that is needed to be
analysed in terms of identifying the competition in the market. This model helps in analysing the
major factors that are related to the business. Also, the current competition in the market can be
evaluated with the help of this model. Lastly, the report has evaluated the another factors that has
to be taken in account for the expansion of the bold street coffee cafe in the Europe. Effective
analysation of all the factors leads to assure the success rate to the business.

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