M&S Coffee Shop Expansion Strategy

This study provides an analysis of M&S coffee shop's expansion strategy in Italy. The company has effective strategies that help raise profit in London, which can be beneficial for expanding business in Italy. The report suggests building strong relationships with suppliers to secure quality raw materials at affordable prices. It also highlights the importance of adapting culture and supply chain management strategies to succeed in the Italian market.

HANK MARVIN AND PATTY
SMITH

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
Q1 Country in which M&S coffee shop will be expanded........................................................1
Q2 marketing mix elements........................................................................................................3
Q3 Impact of geographical location business.............................................................................5
Q4 Impact of decision making on profitability and liquidity of M&S coffee shop....................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Hank Marvin and patty Smith have decided to expand their business in the new location.
M&S coffee shop is able to provide quality products to the consumers. But in order to enhance
its revenues it will have to expand its business in the new place. Present study will discuss need
of expansion of the coffee shop in the European union. Furthermore, it will explain marketing
mix element of the coffee shop. In addition, study will discuss impact of decision making on
financial performance of M&S coffee shop.
TASK
Q1 Country in which M&S coffee shop will be expanded
The main agenda of Marvin and Smith is to enhance profit of the firm and sustain in the
market for longer duration. In order to accomplish this objective it is very important for the
business that to expand its operations in other location so that it can offer its product and services
to more consumers and can gain their loyalty. For that M&S coffee shop is planning to enter into
the Italy (Gasperazzo, Toffanin and Larese, 2017). It is the country which is most popular in
European Union in respect to new business. Many new firms enter into the Italy and get
established. It is the location where climate is very good. Many tourist come to Italy to enjoy
seasonal changes of this place. Local people of Italy like to have coffee and tea. They have
coffee and tea in breakfast, in lunch and in evening as well. They are found to have this products.
Italy is popular for variety of coffee products. Most popular drinks are cafe latte, latte macchiate,
milky coffee etc (Godos and et.al. 2014).
Italian people start their day by having tea and coffee thus, M&S coffee shop has high
chances to get established in this market easily and earn more profit. Espresso coffee is very
famous in the Italy. Statistical records show that one person have 3-4 cups of coffee in a day in
the Italy (Caporaso, Civitella and Sacchi, 2014). This is the location which has huge potential for
the coffee shop. If new firm offer quality drinks to the consumers then it can gin success in this
market surely.
In the London M&S coffee shop have relationship with the local suppliers, where it
orders its raw material such as beans etc. From the Uganda farms. They provide the finest coffee
beans to the company due to which entity becomes able to offer amazing flavour of coffee to the
consumers (Mos and Palatini, 2015). M&S coffee shop is planning to open new coffee shop in
Italy where also it will order coffee beans from the same place. They are independent farmers
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thus, they provide quality raw material at lowest prices. This helps the firm in saving cost and
earning more profit. Italy is the place where only espresso coffee is made available in the
destination otherwise all other variety of coffee products are being imported from other location.
Thus, if M&S coffee shop enter into the Italy then this would be correct decision for the firm
(Heizer, 2016). There it will be able to make more profit because it has its own suppliers and
people like to have coffee here. This will increase demand of the products which will help the
organisation in earning more revenues and sustaining in the market for longer duration. But
Brexit has affected overall economic of the Italy to great extent. Now companies are unable to
import raw material easily thus, M&S coffee shop will have great choice because it imports its
material from Uganda. But still cited firm has to look upon various factors so that it can establish
in the country easily (Mahadevan, 2015).
Logistic consideration
It is very important to considered logistic operation of the business carefully. It is related
with the supply chain activities ad resource management. It is very essential for the M&S coffee
shop that to order raw material from the correct place which can offer them quality raw material.
This will help the cited firm in proving quality coffee products to the consumers of Italy
(Doppelt, 2017). It is very important to conduct survey and analysis needs of consumers before
starting its coffee shop in Italy. It has to hire skilled employees those who can manage logistic
operations well and can communicate well with consumer and suppliers. This will help the
organization in gaining success and accomplishing its objective.
Ethical consideration
Before starting the new business M&S coffee shop need to take care ethical aspects. It
has to follow ethical factors carefully so that no further complications get arise in the business in
Italy. It has to market its products in correct manner, there would not be any word that can hurt
to the culture of Italy (Formentini and Taticchi, 2016). There should not be any misinterpretation
of information. Employees are required to give respect to the consumers and have to behave with
them ethically. Company needs to provide quality products to the consumers so that they can feel
valued and like the f services of the firm.
Structural challenges
There are many challenges that can be faced by M&S coffee shop when it enters into the
Italy market. Structural challenges in the business are as following:
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Pricing strategies: It is most essential issue that need to be resolve carefully. Company is
required to make effective pricing strategy so that people get attracted towards M&S coffee shop
in Italy. It has to conduct survey and has to analysis market condition of Italy. Accordingly, firm
has to set its prices (Law, 2016).
Foreign law: As M&S coffee shop is entering into new place thus, it is essential follow legal
aspects of the country. Foreign law of Italy are flexible thus, it would be easy for the to open its
coffee shop in the market easily.
Q2 marketing mix elements
Marketing mix elements are considered as one of the effective tool that needs to be
considered by each firm before expanding its operations in other location. It helps ion analsyisng
needs of consumers and making effective strategies so that entity can gain profit and can sustain
in the market for longer duration. There are 4P's and 7P's that need to be looked upon by M&S
coffee shop before entering into Italy (Marketing mix, 2017).
Products
It is most important part of the business, it is essential for the firm that to offer high
quality products to its consumers so that people like its products and feel satisfied., There are
many other coffee shops those which are running operations since long time. Thus, it is very
important for the M&S coffee shop that to provide unique coffee and tea products to the
consumers so that they feel satisfied and enjoy its services (Law, 2016). For that it is essential for
M&S coffee shop that to identify needs of consumers and accordingly provide them coffee
products. People of Italy like to have cafe macchiiato and espresso coffee. M&S coffee shop
will import its raw material beans from Gumutindo coffee plantation in Uganda. This will help
the firm in offering flavour coffee cup to the Italian people. Apart from this entity will offer Wi-
Fi facilities, home delivery, laptop charging facilities to the consumers. This will help the
organization in establishing its business effectively (Formentini and Taticchi, 20160.
Place
It is another element of marketing mix, M&S coffee shop will open its coffee shop at
most visible place. This will help in gaining attention of mass audience. It will open the shop
near to offices so that consumers can come to this place and can enjoy quality time here
(Gasperazzo, Toffanin and Larese, 2017).
Price
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Price is the major factor that influence decision of the person to great extent. There are
many other coffee shops those which offer coffee material to consumers. There are various
pricing strategies that can be used by M&S coffee shop such as competitive pricing, skimming
pricing etc. As entity is going to open is shop at high street location and its main motive is to
earn more profit. For that it will adopt skimming pricing strategies (Godos and et.al. 2014).
M&S coffee shop will keep its product's prices low at the initial phase and will enhance later on.
This strategy will help the organization in attracting more people towards the firm.
Promotion
Over all success of the firm is highly depended upon its promotional strategies. If entity
promote its brand in accurate manner then it will be beneficial for the firm to enter into the new
market and get established easily. M&S coffee shop will take support of social media channel in
order to promote its brand in Italy. It will communicate with the young people through social
networking sites (Mos and Palatini, 2015). Facebook, Twitter, Instagram etc. are the various
social networking sites that help the firm in making effective communication with consumers
and influencing their decision as well. Furthermore, entity will develop its website on which it
will give all its details of products and benefit for consumers. This promotional strategy will help
the M&S coffee shop in attracting more people and making them positive towards the brand.
Physical evidences
M&S coffee shop will take care of its physical evidences. It will provide more comfort to
the consumers and will arrange tables and chairs in appropriate manner so that people can get
adequate space in the shop (Gasperazzo, Toffanin and Larese, 2017).
People
This is another most important element of marketing mix. Employees plays significant
role in the success of business unit. M&S coffee shop will hire skilled people those who can
deal with Italian people well. It will give proper training to its staff members so that they can
treat consumers well and can fulfil their desires. This will help the entity in enhancing
satisfaction level of customers and sustaining in the market for longer duration (Godos and et.al.
2014).
Process
Overall process of operation of M&S coffee shop will be smooth. There will be less
waiting time so that consumers feel happy and come to this place frequently (Doppelt, 2017).
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Q3 Impact of geographical location business
Each place has its own advantage and drawbacks. Geographical location impact on the
culture of the business and its supply chain activities to great extent.
Culture of organization
Culture of the organization plays significant role in the success of the business. If culture
is good then employee can feel happy and they will perform their duties well. But is culture is
nor good then people will leave their jobs soon and they will not deal with consumers well
(Gasperazzo, Toffanin and Larese, 2017). As M&S coffee shop is planning to expand its
business in the Italy. In order to gain success in this market it is very important for the entity that
to cover broad range of geographical location of Italy. Company is required to make changes in
its culture so that it can deal with Italian people well. It has hire local people those who can
communicate with the consumers well (Formentini and Taticchi, 2016). Furthermore, it has to
make changes in its values as per the requirement of Italy so that staff members feel conformable
and deal with clients properly.
Supply chain
It is another essential business activity that impact on the business, changes in
geographical location impact on supply chain management of the firm to great extent. M&S
coffee shop is recently operating its business in the London where it has to order raw material
from specific suppliers. But due to Brexit M&S coffee shop may get failed to order raw material
from the Uganda in Italy. In such condition it may create difficulty for the business to get quality
raw material at affordable prices (Law, 2016). Company needs to develop strong relationship
with its consumers so that it can get quality raw material and can satisfy needs of consumers.
This will be helpful for the growth of the business in Italy. It will have option to order raw
material from Venice, Florence and Amalfi Coast.
Q4 Impact of decision making on profitability and liquidity of M&S coffee shop
M&S coffee shop is conducting its operations in the London successfully. Company is
able to generate reasonable revenues and recovering its cost easily. One of the major best aspects
that helps the firm in earning high profit in London is that entity does not have any kind of
formal loan. This limits its liabilities. By this way its expenses get reduced and it becomes able
to get more net profit (Caporaso, Civitella and Sacchi, 2014). If any firm has formal loan then it
has to pay instalment every month which decreases its revenues. Recently M&S coffee shop
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does not have any kind of loan which helps the firm in gaining fund raising option. In order to
expand its business in the Italy, cited firm can apply for loan from the financial institution. By
looking at its profitability and liquidity ration bank will easily grant loan to the firm. This will
help in investing in for the expansion of business unit (Godos and et.al. 2014).
In the year 2016 overall sales of M&S coffee shop was 360000 and it has earned gross
profit of 20800. Net profit in the year 2016 was 2680. This reflect that decision of the firm is
very good which helps the firm in increasing its profitability frequently. Company has good
control over its liabilities and able to generate more profit by utilizing its assets well. This
supports the organizing in generating more profit and gaining competitive advantage (Formentini
and Taticchi, 2016). M&S coffee shop analysis strategies of competitors in London and
according to their strategies it makes contingency plan which help the organization in attracting
more people and increasing sales of the business. These strategies will be used in Italy as well
which will help the cited firm in establishing its business in the new market.
Total assets of M&S coffee shop is 11300 as per tits financial report of 206 and its
liability is 106800 (Caporaso, Civitella and Sacchi, 2014). That means company has strong
control over its liabilities. It makes investment carefully so that it can get more return and can
control over its expenses. Recently entity has good assets' management strategy which helps the
firm in gaining high return over its assets and minimizing its expenditures. As it has invested
5000 for coffee machines but it is able to recover this amount by offering quality coffee products
to its consumers (Doppelt, 2017). M&S coffee shop makes correct decisions that helps the firm
in increasing its profitability and this can also be beneficial for the cited firm in entering into
Italy and gaining more profit.
CONCLUSION
From the above study it can be concluded that company has effective strategies that help
the firm in raising its profit in London. This decision and strategies can be beneficial for the
M&S coffee shop in expanding its business in Italy as well. People of Italy like to have coffee
three times in a day, thus company has high opportunity to increase its sales revenues if it offers
them products as per their needs. M&S coffee shop needs to build strong relationship with its
suppliers so that it can get quality raw material at affordable prices. Positive changes in culture
and supply chain management strategy will be beneficial for the cited firm in gaining success in
the Italy.
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REFERENCES
Books and Journals
Caporaso, N., Civitella, A. and Sacchi, R., 2014. Neapolitan coffee brew chemical analysis in
comparison to espresso, moka and American brews. Food research international. 61.
pp.152-160.
Doppelt, B., 2017. Leading change toward sustainability: A change-management guide for
business, government and civil society. Routledge.
Formentini, M. and Taticchi, P., 2016. Corporate sustainability approaches and governance
mechanisms in sustainable supply chain management. Journal of Cleaner Production. 112.
pp.1920-1933.
Gasperazzo, A., Toffanin, P. and Larese, F. F., 2017. Green coffee been exposure and symptoms
in dock workers in Trieste (Italy). La Medicina del lavoro. 108(5). pp.6224.
Godos, J., and et.al.. 2014. Coffee components and cardiovascular risk: beneficial and
detrimental effects. International journal of food sciences and nutrition. 65(8). pp.925-936.
Heizer, J., 2016. Operations Management, 11/e. Pearson Education India.
Law, J., 2016. A dictionary of business and management. Oxford University Press.
Mahadevan, B., 2015. Operations management: Theory and practice. Pearson Education India.
Mos, L., and Palatini, P., 2015. 1c. 04: Coffee Consumption Is A Predictor Of Cardiovascular
Events In Young And Middle Aged Hypertensive Subjects. Journal of hypertension. 33.
pp.e10.
Online
Marketing mix. 2017 [Online] Accessed through
<https://www.scribd.com/document/292738656/7-Ps-of-Starbuck-Services-Marketing-
Strategy>
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