Business Strategy for Cafe Expansion

This assignment explores the development of a comprehensive business strategy for a cafe seeking expansion. The focus is on identifying effective strategies to generate revenue, capture a larger market share, and achieve substantial growth. The text delves into various aspects of the cafe's operation and outlines potential avenues for success.

Hank Marvin and Patty
Smith

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1. Providing research on European Union country to impart benefits to coffee shop............1
2. Producing marketing mix for the organisation...................................................................2
3. Issues and impact faced by the firm...................................................................................4
4. Calculation of profitability and liquidity ratios..................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Expansion is always beneficial for the business so that it may be able to garner profits in
effectual way. The enclosed report deals with Marvin and Smith's coffee shop which is engaged
in providing quality coffee to customers in UK and now planning to expand business in EU. The
report is based on selecting Austria as the nation of Europe for expansion purpose. Financial
ratios are computed to assess financial condition and along with this, marketing mix is also
presented. Various issues related to expansion are also discussed. Benefits for expansion to
Austria is discussed as well.
1. Providing research on European Union country to impart benefits to coffee shop
Market research plays an important role for the company so that it may be able to cater
the needs and demands of customers' in effective way. Without market research, firm will not be
able to form proper marketing tasks and as such, customers' demand will not be met. This will
impact organisation in adverse way as tastes and preferences of consumers' is required to be
carefully analysed so that it may flourish in the market with much ease. In relation to this, it is
essential for Marvin and Smith's coffee shop to analyse new market for the betterment of it. The
European Union (EU) country where firm can flourish up to high extent is Austria.
For selecting the location, market research is required to made. Moreover, culture and
lifestyle of people is required to assess as well. The selected country in EU is Austria. It is the
best option for the coffee shop as the nation highly consumes coffee which provides several
benefits to the firm for expanding in the country (Austria’s central location provides advantages
for companies, 2018 ). In addition to this, it is fifth largest nation which consumes coffee more
than tea. This is the main reason which will provide enough customer base and greater market
share as people like to have coffee. This will be beneficial for firm as it will be able to generate
more revenue in the best possible way.
Furthermore, culture and lifestyle plays important role to decide whether to enter new
market or not. The culture of people of Austria is good enough towards coffee as they prefer to
have coffee more than other beverages. This is the plus point for Marvin and Smith's coffee shop
to expand their business to the nation. This will provide with increased benefits and greater
market growth and share in effective way. Moreover, climatic conditions also play crucial role in
the country. The weather conditions of Austria remains neutral or no cold and no hot throughout
1

the year which is the positive point for the coffee shop as it will be able to sell cold as well hot
coffee to customers as climate remains almost same throughout the year.
Ethical considerations are also required to be analysed with regards to fair trade so that
coffee is supplied to various nations in effective way. Apart from this, staff welfare facilities
should also be provided so that employees may work with much ease (Shamsudeen, Keat and
Hassan, 2017). Now taking into account, logistical considerations of Austria which are good
enough and as such, suppliers of coffee beans are able to provide the same with much ease as
transport facilities are quite adequate in the nation. Facilities consists of cable cars, rollers which
are sophisticated and coffee beans are managed effectively. This will help coffee shop to quickly
gather raw materials and may be able to provide quality coffee to consumers in effectual manner.
This will help to garner more profits and customer's satisfaction will be enhanced as well.
Location also plays an important role while expanding out reach to new markets. It is
required by Marvin and Smith's coffee shop to analyse adequate location so that customers may
easily reach out to drink coffee without any hindrance. If location is not in the heart of the city,
then customers will not be attracted to the shop and as such, good location should be chosen to
attract customers. In relation to this, it is required that structure and layout of the shop should be
appealing so that customers may be lured to consume coffee with much ease. Thus, by carrying
out the exact location and layout, shop will be successful in the new market and may be able to
satisfy coffee consumers as well in the easiest way.
2. Producing marketing mix for the organisation
Marketing mix plays essential role so that customers may be easily lured to organisation
by implementing well-structured marketing strategies for the betterment of it (Wulansari and
Fernando, 2018). The coffee shop will be able to attain good market share by satisfying people of
Austria. The tailored marketing mix for the coffee shop is as follows-
Product mix
The coffee shop has the ability to sell the finest coffee to the customers so that they may
enjoy the same in the best possible way. The coffee beans which are used for preparing coffee
are purchased from Gumutindo coffee which is fair trader in Uganda. This makes the taste of
coffee immensely good and as such, customers are attracted to drink the same. Moreover, the
2

finest flavour is mixed in it with the essence of preferences of Austrian people which makes
coffee worthwhile to drink. In relation to this, coffee beans extracted are natural enough and are
free from any type of chemicals as well. In addition to this, several other eatables such as snacks,
soft drinks will also be provided to them along with varied coffee such as hot one, cold coffee
and ice coffee. Thus, perfect advantage can be taken out by the firm with much ease.
Price mix
Prices of the products are the main reason which attracts people up to high extent. In
order to sell coffee and ancillaries, it is required that Marvin and Smith's coffee shop should
achieve market share by penetrating prices. By implementing this strategy, it will be able to
inject sales in the best possible way and as such, more revenue can be generated. However, in
initial stage, revenue will be less but by reducing prices, sales can be garnered. The loss should
be recover in UK based shop so that it can place slightly higher price in UK and lower price in
Austria. Then after capturing market, it can slightly increase prices with much ease. Thus, it will
be able to attain market share in effective way by reduction in prices of coffee and ancillaries
quite easily (Viceira, Nolan, Rogers and Runco, 2018).
Place mix
Place is essential feature that attracts customers up too much extent. It is discussed that
exact location should be selected by Marvin and Smith's coffee shop so that it may be able to
lure more of consumers with much ease. It is also required as board night game along with chat
with Nanna will be provided as well. Moreover, the place of the shop should be at such location
where apart from local customers, international tourists may also be attracted. This will help
coffee shop to be able to garner more profits with much ease (Larsson, 2018). It is also required
that customers should be attracted to the location and as such, shop should be located in the heart
of city so that major portion of people may visit with family and friends.
Promotion mix
Promotion is required so that customers may be attracted towards coffee shop in effective
way. There are certain tactics which will be used by Marvin and Smith's coffee shop are that free
Wi-Fi facilities to visitors, providing power point socket for charging electronic gadgets such as
mobile phones and laptops. Apart from this, advertisements in television and newspapers are also
3

effective way of promoting one's business. Thus, these services will help coffee shop to lure
customers quite effectually.
3. Issues and impact faced by the firm
The issues faced by the firm are described below-
Organisation culture
The organisation culture is required to be maintain in effective manner as it consists of
various stakeholders which have varied impact on organisation (Azhar and Lin, 2017). It mainly
includes consumers, employees etc. Starting from customers, it is required that Marvin and
Smith's coffee shop provide quality coffee and other ancillaries to them so that they may become
loyal to the shop with much ease. If quality services and products are not provided to people of
Austria, then they will be attracted to rivals. This is essential that coffee shop should provide
high quality products and that too at low cost to satisfy customers up to maximum possible
extent. Thu, needs and demands of them should be carefully analysed else firm will lose on
potential customers to rivals which will have adverse effect on revenue of the firm.
Furthermore, employees are another important stakeholders which have both positive and
negative impact on firm's growth. This is essential as in new market, employees will be hired
from varied geographical areas and as such, there might be difference in opinions and they may
indulge in conflicts. It is required that adequate work atmosphere should be maintained so that
workers may not indulge in any kind of conflicts that might affect overall productivity.
Organisation culture is essential so that employees may freely work and efficiency can be
maintained. Moreover, brand image of Marvin and Smith's coffee shop will also be enhanced and
as a result, more of the customers will be attracted to the cafe.
Gaining competitive advantage
Competitive advantage is required to be gained so that it may be able to garner more
profits in effective way (Curott, McClure and Thomas, 2017). It has several issues such as
employees may not indulge in conflicts which is not adequate for firm as it impacts overall
productivity and efficiency of workers in effectual way. This is important as Marvin and Smith's
coffee shop will hire employees from distinct geographical areas which has high chances of such
disputes because of difference in opinions. One of the key goal of the coffee shop is to provide
4

customers all the benefits so that it may be able to provide greater satisfaction to them. This
includes power point sockets for charging electronic gadgets, East African inspired snacks, cold
drinks and other ancillaries so that they may become loyal to organisation in the best possible
way.
The ancillaries will add to marginal profits as sales will be injected and as such, Marvin
and Smith's coffee shop can become ahead of rivals in the best possible way. It will also prefer to
provide services in unique style by reduction in prices so that customers may be attracted in a
better way and as such, more profits will be injected quite easily. East African and Uganda tastes
will inspire customers to shift towards quality and taste provided by Marvin and Smith's coffee
shop in effective way (Langbein, 2017). Thus, these all factors will provide competitive
advantage in effectual way.
4. Calculation of profitability and liquidity ratios
Profitability ratios
It can be interpreted that profitability position of the firm is remarkable as it is shown by
calculations made in the above computation of profitability ratios. Net sales generated by
5

Marvin and Smith's coffee shop is 360000 which is good enough. On the other hand, gross profit
and net profit comes to 208000 and 26800 respectively. By using this information, profitability
ratios have been calculated. It can be seen from the table that gross profit ratio is 57.78 % which
means that Marvin and Smith's coffee shop is able to generate good profit. On the other hand, net
profit margin ratio comes to 7.44 % by implementing the formula. This implies that firm is able
to garner good net profit as after deducting all the indirect expenditures, net profit is quite good
(Strategy, 2018).
Furthermore, it can plan to expand in Austria as it will be able to gain competitive
advantage with much ease and profitability condition of the cafe is good as well. Moreover,
ROCE (Return on Capital Employed) is calculated as well. This ratio means that how effectively
firm is generating profits from the capital employed in the business. From the computation, the
value of ratio is 25.09 % which implies that firm is able to utilise all the capital employed. In
simple words, optimum utilisation of resources are found in effective manner. Thus, profitability
position of Marvin and Smith's coffee shop is good enough and can expand in Austria for
increased benefits with much ease.
Liquidity ratios
6

It can be interpreted that liquidity position of cafe is extracted. The liquidity ratios are of
two types such as current ratio and quick ratio. Both of them are computed for the firm to assess
liquidity position with respect to payment obligations to creditors. The table interprets that
organisation is able to generate good revenue and is able to pay outstanding obligations in the
best possible way. This is shown by current ratio which has come to 5.71 : 1. This shows that the
cafe is able to pay off liabilities in the best possible way (Benna, 2018). This is evident from the
fact as current ratio should be at least 2 : 1 which is preferred by market analysts. But in this case
study, current ratio is highly good of the coffee shop and as such, it is able to pay liabilities with
much ease. This implies that liquidity position of Marvin and Smith's coffee shop is quite good.
Furthermore, another liquidity ratio calculated is quick ratio. The ideal quick ratio as
preferred by market analysts is 1 : 1. However, in this case study, quick ratio of Marvin and
Smith's coffee shop is 4.42 : 1 which shows that firm will be unable to pay off extreme short-
term liabilities which lapse within one year. Quick ratio does not include inventory and as such,
it is deducted along with prepaid expenditures to get extreme liquidity of the firm. Thus, firm has
not good liquidity position.
CONCLUSION
Hereby it can be concluded that Marvin and Smith's coffee shop will be able to achieve
success in expanding to European Union in effective way. Austria is highly consuming country
of coffee and as such, coffee shop will be able to garner more of the profits in quite effectual
way. This is evident from the fact that business has effective marketing mix and as such, it will
7

be able to garner profits quite easily. Moreover, it will provide various facilities such as free Wi-
Fi to customers along with power point socket for charging mobiles and laptops. Thus, by
providing these extra facilities, it will be able to capture market with much ease. Furthermore, it
has good profitability position as gross profit and net profit margin ratios along with ROCE are
good enough. On other hand, it has good liquidity position as well in effective way. This implies
that it will be able to satisfy customers of Austria in effective way and good quantum of revenue
will be generated by the cafe quite effectually. This will help to attain greater market share and
immense growth up to maximum possible extent.
8

REFERENCES
Books and Journals
Azhar, A. and Lin, C. W., 2017. The fundamental business strategy for state owned mobile
provider company enter the regional market community. In Information Management
(ICIM), 2017 3rd International Conference on(pp. 16-20). IEEE.
Benna, A. U., 2018. Collaborative Consumption as a Tool for Agricultural Expansion in
Developing Countries: Enriching Farmers by Delivering Value to Consumers.
In Crowdfunding and Sustainable Urban Development in Emerging Economies(pp.
39-59). IGI Global.
Curott, N. A., McClure, J. and Thomas, D. C., 2017. Austrian Business Cycle Theory and Sticky
Consumption: Reconciling Hayek, Mises, and Schumpeter.
Langbein, J. H., 2017. Absorbing South Australia's Wills Act Dispensing Power in the United
States: Emulation, Resistance, Expansion. Adel. L. Rev.. 38. p.1.
Larsson, M., 2018. The Circular Economy and Business Challenges. In Circular Business
Models (pp. 27-39). Palgrave Macmillan, Cham.
Shamsudeen, K., Keat, O. Y. and Hassan, H., 2017. Entrepreneurial Success within the Process
of Opportunity Recognition and Exploitation: An expansion of Entrepreneurial
Opportunity Recognition Model. International Review of Management and
Marketing.7(1).
Strategy, S. B., 2018. Radical Transparency and Brand Equity as Key Factors for Successful
Business Strategy.
Viceira, L., Nolan, P., Rogers, T. and Runco, A., 2018. Could the Big Technology Companies of
Today Be the Financial Advisers of Tomorrow?. MIT Sloan Management Review.
59(2). pp.116-122.
Wulansari, P. and Fernando, Y., 2018. Developing Global Supply Chain Manager for Business
Expansion. InEncyclopedia of Information Science and Technology, Fourth
Edition (pp. 5327-5334). IGI Global.
9

Online
Austria’s central location provides advantages for companies, 2018 [Online] Available Through:
<https://investinaustria.at/en/business-location-austria/central-location.php>
10