Business Expansion and Management Strategies

The assignment discusses the importance of regular market analysis and taking actions based on recent trends in business operations. It highlights the role of market research in understanding components affecting business organizations and emphasizes the need to adapt to changes in the business environment. The marketing mix is also explained as a tool to promote business in the industry, along with financial data providing knowledge about the economic condition and financial position of an organization.

Coffee Shop Report

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK ..............................................................................................................................................3
1. Market research for business expansion.............................................................................3
2. Marketing mix....................................................................................................................4
3. Implication faced by Marvin and Smith's coffee shop.......................................................6
4. Interpretation of financial data...........................................................................................7
5. Summary:-..........................................................................................................................8
CONCLUSION................................................................................................................................9
REFRENCES.................................................................................................................................11

INTRODUCTION
Business includes commercial activities that consist of purchasing of material from buyer
and after processing deliver it to ultimate customer to attain profits. It is essential to frame
policies which helps to satisfy customers. To run business successfully, there is requirement of
various resources so it is responsibility of manager to plan all the activities (Hair, 2015). These
days, there are many changes taking place in business environment, so it is essential to business
organisation to alter their working style. To make long run in industry, there is requirement of
acceptance of change which are significant for growth of business organisation. This report is
based on Marvin and Smith's which is famous coffee shop. Hank and Patty are owner of Marvin
and Smith's Coffee Shop wants to expand their business in Germany after gaining good image in
London and other European Country. In this report, there is discussion about marketing mix,
analysis of financial data and overall summary of viability for expansion of business.
TASK
1. Market research for business expansion
As per the provided case, Marvin and Smith are working collectively from some years in
food and catering industry. After acquiring a good experience, they want to open up their new
coffee shop in EU nation. They are researching and planning for around 12 months to collect
data and information about coffee shop. These details consists of selection of most appropriate
location, initial requirement of capital, determination of target market, selection of best supplier,
key competitors etc. after gaining high recognition in London, Marvin and Smith are looking
forward for their business expansion in another EU nation in order to gain high competitive
advantage in international market place and increase their market share (McBride and Tietze,
2015). After conducting research, they have decided to establish their coffee shop in France. The
principle reason behind selecting this specific country is that it has very strong and entrenched
coffee culture. Young people of country drink coffee regularly. As, France is a popular visitor's
destination, large number of people comes every year to visit the country. It provides an
opportunity to Marvin and Smith coffee shop in terms of increasing overall sales.
France is one of the largest coffee consuming country. As per the data of study in 2015,
per person in France consumes approximately 5.1 kg of coffee each year. The nation has mature
and large coffee market with long coffee consumption tradition. People like to drink different

types of coffee. People in France are used to have their espresso coffee. The country has about
515 coffee stores and the market of coffee is growing constantly.
Facts related to lifestyle, culture and coffee drinkers of France:
Approximately 30% of population of France is aged between 20 to 28 years who love to
drink coffee very much. Large number of people are willing to spent their money in consuming
good quality of coffee. Economic condition of country does not put any impact on consumers.
French people are always ready to pay a good price in turn of getting quality coffee. Large
number of population prefer to drink coffee which is the main reason that the country has
numerous coffee shops (Pearson, 2017). In terms of ethical consideration, it is required by Smith
and Marvin to adopt fair trade standards related to coffee. Welfare of staff is the another essential
factor that needs to be taken into consideration by firm. They are also required to administer
training programme to French employees in order to ensure delivery of quality products and
services. Some other factors are also there which needs to be taken into consideration by Hank
and Patty while open up a new coffee shop in France. Availability of proper transportation
facilities must be ensured by cafe. The main target of company is to gain high customer loyalty
by providing high quality coffee. This will help firm in attracting large group of customers and
maintaining their sustainability in market. In order to retain customers for long period of time,
they need to offer a new concept like theme evening which helps them in attracting more coffee
drinkers. Availability of suppliers like in this case, Gumutindo Coffee, a Fair-trade supplier that
supplies finest coffee beans must also need to be taken into consideration so that high quality of
coffee can be produce and offer to customers.

This statistics depicts per capita volume of coffee that is consumed in France from 2010
predict to 2021. Instant coffee volume is predicted to remain steady within consideration period
at approx. 0.6 kg per individual per year on an average. While roast coffee consumed volume is
expected to rise from 3.3 kg in 2010 to 3.7 kg by year 2021.
2. Marketing mix
Marketing mix refers to the combination of various elements which are control and
manage by company to promote their product and services in order to influence the consumers
for make purchases (Anderson, Sweeney and Williams, 2011). Marketing mix used by Marvin
and Smith's Coffee Shop is as follows:
Elements Description
Product Product refers to a physical entity which is used to satisfy the need and want of
customers. As per the given case study, Marvin and Smith's Coffee Shop want
to expand their business in European country and they decide to set up their
coffee shop in France. The reason for selecting France is that it is the fifth
Illustration 1: Per Capita Coffee Consumption Volume In France

largest importer of coffee and they easily get ingredients of high quality which
support Hank and Patty in maintaining the quality of their coffee. Company
uses the Gumutindo coffee beans in their coffees for serving their customers
with best quality. Marvin & Smith's coffee shop should also provide snacks,
pastries and cold drinks along with coffee in order to attract more and
customers.
Price Price refers to the monetary value of product or the money paid by the customer
for purchasing the product and services. Residents of France prefer to drink
coffee rich in taste as well as quality and are ready to pay high price but on the
other hand the market is also having huge competition. So, Marvin and Smith's
Coffee Shop must use competitive pricing strategy in order to achieve market
share and to attract customers.
Place Place is a location from where the customers can purchase the product and
services. Hank and Patty are expanding their business in Europe and want to
increase their market share in over seas market (Anthony and Garner, 2016).
France is best place to start a coffee business as it is top most country where
large number of tourist visits. Another major advantage of selecting France is
that it has 66 million inhabitant of coffee which means it covers 13% of total
European consumption.
Promotion Promotion refers to the process used by company for communicating and
making customer aware about the availability and benefits of product &
services. It is the most essential element of marketing mix which help company
to position its business and to capture the market share within France. Marvin &
Smith's coffee cafe is first time opening in France so Marvin and Smith's
Coffee Shop should more focus on promoting their brand in order to generate
awareness within the market (Baron, 2014). They can use sources like TV
commercials, social media in order to promote the shop as well as its offering
using advertisement. Hank and Patty can also use hoardings and pamphlet as a
medium for promotion. Company can also use sales promotion for attracting
more and more customers toward their shop by providing either coffee at low

price or by twining the coffee with snacks which are free.
3. Implication faced by Marvin and Smith's coffee shop
Marvin and Smith's coffee shop face various issue while expanding their business
operations in new country. Following are the implications that assist Hank and Patty in
performing their business operations most effectively as well as in growth of their coffee shop:
 Gaining competitive advantage:- Every firm aims to achieve success in their
marketplace and in order to get succeed in market, it is very essential for a company to
remain competitive. In the case of Marvin and Smith's coffee shop, they want to expand
their business in new country i.e. France which provide a greater market opportunity to
them as the residents of country consumes more coffee. But the market is already involve
number of competitors so to remain competitive, Marvin and Smith's Coffee Shop
performed research over that market for 12 months before starting their business for
identifying the viability of market (Burke and Friedman, 2011). They put more emphasis
over formulating plans and policies by collecting relevant information related to the
customers demand and competition present in market and strategies to deal with
competitors.
In order to achieve competitive advantage in new marketplace, company uses
Gumutindo coffee beans to offer quality and good taste in their coffees along with this they also
started providing snacks, pastries and cold drinks in their outlets to attract customers. They also
provide training to their staff members to enhance their standard of offering services so that they
can provide a relaxing and positive environment to their customers.
 Management structure:- The management structure refers to a systematic arrangement
of a company which outlines how the tasks are allocated, communication flow of
organisation and the role & responsibilities of the employees. The proper management
structure is very essential as it assist firm in maintaining the proper functioning of
business operations (Guffey and Loewy, 2012). Marvin and Smith Coffee Shop follows
flat management structure which refers to the structural arrangement that involves very
few or no level of management among employees. Under this managers can directly
communicate with their employees without involving any other person or ordering

supervisors to convey their message to staff members. This help Marvin and Smith in
taking better decisions and formulating strategies related to business operations.
Flat management structure assists Marvin and Smith in bringing coordination between
the personnels of coffee shop which in turn will assist in maintaining efficiency in business
activities. Further it also reduce the levels of management which results in circulation of
information more speedy and decision can be taken much quicker. These all help Marvin and
Smith in achieving greater success and growth within the marketplace.
4. Interpretation of financial data
As per the given case, Marvin and Smith have decided to establish their new coffee
venture in France. For analysing whether the firm generates decent profits or not, they decide to
interpret financial statement which depicts about whether to open up coffee shop in France
proves to be a right decision of not (Simon, 2014). By interpretation of income statements,
Marvin and Smith's Coffee Shop can easily determine the overall performance of their coffee
shop. Based on the given Statement of financial position and income statement, liquidity and
profitability ratio of company can be calculated effectively.
Income Statement of company:

Profitability ratio:
Generally, this ratio is used by firm to determine overall efficiency and performance of
business throughout the year. It involves:
Gross profit margin: In this, gross profit of firm is compared with its sales revenue. It
depicts about of earning of business by considering required costs to develop products and
services. Increase in gross profit shows high efficiency of operations of business that means firm
is still giving net earning by covering dividends, fixed cost, depreciation and operating cost.
Whereas, decrease profit margins demonstrates low sales or tough competition. This ratio shows
about how well inventory cost is controlled by firm.
Net profit margin: It demonstrates the revenues of business after deducting expenses
from sales. It shows extracted amount of profit from total sales. Increased net profit ratio depicts
that firm is generating high profits (Sundareswaran, 2011).
Gross Profit 208,000

Net Profit 26,800
Sale 360,000
Ratios Formula Results
Gross profit
Margin
Gross profit / Total Sales *100 208000/360000*100
= 57.8%
Net profit Net incomes / Total Sales *100 26800/360000*100
=7.4%
From the above calculated ratios, it is observed that firm enables to maintain its good
position in market as well as yield adequate profits (Sungur and et. al., 2014).
Liquidity ratio:
This ratio is utilized by Marvin and Smith to determine the ability to pay back its debt.
This ratio demonstrates that whether current assets of enterprise will be enough to meet its
obligations. It involves:
Current ratio: It demonstrates the ability of to pay back its liabilities by using assets.
2 : 1 is the ideal current ratio.
Liquid ratio: It measures ability of firm to utilize quick assets in order to retire their
current liabilities. 1 : 1 is the ideal liquid ratio.
Current Asset 35,400
Current Liability 6,200
Liquidity ratio:
Current ratio Current assets / Current liabilities 35400/6200= 5.7
Liquid ratio Liquid assets / Current liabilities 35400-8000/6200=4.4
ROCE Operating expenses /Capital (26800/ 106800)*100 = 25%

employed *100
From the above calculated ratios, it is observed that liquidity ratio of Marvin and Smith's
Coffee Shop is good in comparison to its competitors. It shows that they use their current assets
very well (Tyson, 2014).
5. Summary
This report contains a case study of Marvin and Smith's Coffee Shop who operates food
and catering business and they want to expand their business operation in a country of European
union. But before expanding a business there are certain factors which must be consider by the
Marvin and Smith such as location, capital requirement, transportation facilities, infrastructure,
resources and competitors. France is the best suitable country for establishing a coffee shop as it
has large number of coffee drinkers i.e. 66 million residents which means around 13% of total
European consumption and stands at third position after Germany and Italy in coffee business
(Coffee in France, 2018). Hence, it provide greater business opportunity to Marvin and Smith;'s
coffee shop for expanding their operations and to achieve higher growth in this marketplace.
Apart from this there are number of reasons that are determined by Marvin and Smith's
Coffee Shop after conducting a research of 12 month over the market of France in order to
establish their coffee shop without any difficulties. First of all the tourism attraction of country is
very high which provides a greater market share to Marvin and Smith's coffee shop and it also
assist them in creating awareness about their brand. Another advantage is that the country is the
fifth largest importer of coffee beans hence they easily get the high quality beans which help
them in maintaining the quality in their offerings.
Marvin and Smith can achieve competitive advantage by using various strategies such as
they provide additional snacks and pastries along with coffee in their coffee shop. They also
provide training to their staff members so that they can provide a positive and relaxing
environment to their customer for serving better than their expectations. Marvin and Smith's
Coffee Shop also uses flat management structure in their business which brings coordination in
their firm and also help them in taking quick decisions. Firm can get higher market share by
using competitive pricing strategies which help in achieving competitive edge over rivalry and in
attracting larger number of customers. Hence, through examining the overall review and

management structure, this can affirm that the entire plan is viable for the purpose of business
expansion as this can assist in proper establishment of business in the other economy in more
ideal manner.
CONCLUSION
As per the above mentioned report, it has been concluded that manager has to regularly
analyse market and take actions according to recent trends. Market research is essential
component which helps to know about components which affects business organisation. As there
are many changes taking place in business environment, so it is essential to perform business
operations in appropriate way. Marketing mix helps to know about areas which helps to promote
business in industry. Financial data of company helps to know about economic condition of
business. Financial data helps to deliver knowledge about financial position of organisation.