Case Study Assignment: Opening a New Coffee Shop in the European Market

This case study explores the process of opening a new coffee shop in the European market. It covers country and store analysis, marketing mix, implications, and financial evaluation. The study suggests that Germany is a good location for the new store and that the business has a positive outlook in terms of profitability and liquidity.

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Contents
Introduction.......................................................................................................................3
Country analysis and store analysis..................................................................................3
Marketing mix of coffee shop...........................................................................................4
Implications of coffee shop..............................................................................................5
Financial evaluation..........................................................................................................7
Conclusion........................................................................................................................9
References.......................................................................................................................10

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Introduction:
Hank Marin and Patty Smith both are entrepreneurs who are administrating a coffee
shop in the Wandsworth in the market of South London. The case explains that these people
are planning to open new coffee shops in the new market to diversify the business and
improve the profitability level of the business. Hank Marin and patty smith worked together
to evaluate the market and recognize the future performance of the organization in the new
marketplace. Both of them have researched on the market for around 12 months to begin the
new stores. Meanwhile, they have also started 3 new coffee stores in the London market.
The theme of the coffee shop also attracts the foreigners and it has helped the business
to improve the footfalls and the turnover of the business. These improvements have helped
the partners to open new stores as well in the same market. And due to it, they have made a
decision to open their chain in the European market as well. The report mainly concentrates
in the new coffee store in the European market.
Country analysis and store analysis:
The case study explains that both of the partners, Hank Marin and patty smith have
made efforts to evaluate the European market to open their new coffee stores. The European
market consists of 28 countries along with their political and economical aspects that are
located in the area of Europe. The European Union is one of the largest unions and the study
says that the German is one of the best locations to open the new coffee shop. The
economical factors, culture, changes in the perception of the customer, taste of citizen, their
demand, internal position and the political stability are the main factors due to which the
German has been chosen among the 28 countries of European Union. The overall economy of
the German has been enhanced by 0.8% in June 2018 from previous quarter as well as the
overall economy of the country has also shown an improvement of 1.2% in the current year
(trading economics, 2018).
The political factors of the country have also been measured and it has been found
that the political changes are stable in the country. The German citizen is quite simple and
they follow to their culture and the values which makes them simple. The German people are
also connected to their cultural food and the food is amusing which attracts the foreigners as
well. Though, along with the time, German citizen are also getting attracted towards the
different cuisines from different countries and they have also started looking for the different

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places with peaceful environment and the great place to hang out with their nearest and
dearest ones (Focus economics, 2018). The research on the German market explains that the
citizen have great love for coffee.
The above evaluated factors are few points which have attracted the Hank Marin and
patty smith to open their new coffee store at German in European Union. It has been studied
in the given case study that the raw material would be exported by the store from the Uganda.
A fair-trader of Uganda would help the business to get the beast raw material directly from
the Uganda’s farmers. The ethical consideration of the business would also be higher in case
of buying the raw material from the fair traders. So, if the company wants to start in the
German market than also the raw material would be sell abroad from the market of Uganda
only. The Hamburg, Germany is the best place to open the store. The store would be opened
at Dofour crossing.
The logistic factors of the German have been studied and it has been found that the
material could easily be transported from the Uganda in German and the cost and the time
involvement is also lower. The transportation from Uganda could be done through the sea
ways (Agility logistics, 2018). The unethical involvement of the business would also be
lower in case of opening a new coffee store in the German market. The main client of the
business would be the youth who is getting attracted towards the new culture and want to
enjoy the new cuisines with a great ambiance. The working hours of the coffee shop would
be from 9 am to 11 pm. The employees of the coffee shop would work in 2 shifts.
Five waiters and two chefs would be required for the coffee shop out of which 1
waiter would work for 9 am to 11 pm and rest would work in two shifts. The salary would be
paid them according to their efficiency and the experience. A proper training would be given
to the waiters of the coffee shop. The coffee shop would offer the competitive price to the
customers. At initial level, the margin of the business would be lower to attract more
customers. The main menu of the business would include variety of coffee, pastries, herbal
tea and ice creams to the customers.
The crime rate of German citizen is also lower which explains that the German could
be a better option for the partners. The structural factors have also been studied and
recognized that for entering into a new market, structure must be decided by the business.
The business could start the new business with a partnership contract with a local business

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there so that the entry could be easier as well as no legal factors could affect the business and
its performance (Entri consulting, 2018).
Marketing mix of coffee shop:
Marketing mix are the structural set of marketing factors and the procedure that is
used by the small and big organizations to meet the common objectives and goal of the
business and meet the common target of the business in a particular time period. The
marketing mix refers to the great level marketing process and the decision that mainly
contains the 4 P’s which are (place, price, promotion and product). The marketing mix of
Hank Marin and Patty smith’s new coffee shop in Germany are as follows:
Product:
In marketing mix, a product is an item which is built, produced or delivered to meet
the demands of the target customer of the company. Product of a business is the main aspect
which decides the sell, profitability and other factors of the business. In case of partnership
business of Marin and smith, the main product of their new coffee store would be various
types of coffees. The main focus of the business is on the quality of the coffee. For improving
and maintain the level of quality, the business would directly export the raw product from the
farmers of Uganda. The coffee shop would also offer the east inspired snacks, high quality
tea, herbal infusion etc to meet the demand of their respective customers.
Price:
In marketing mix, a price is the amount which is charged by the business to customers
against the product or the services which has been offered to the customers. In case of
partnership business of Hank and Patty, the pricing strategy must be decided by the business
in such a way that the customers feel worth to pay that amount. The company should follow
the penetration strategy. For improving and maintain the level of customer footfall and the
business, business should charge an average price.
Place:
In marketing mix, a place is the main aspect which decides the logistics and the other
factors. In case of partnership business of Marin and smith, the business would be set by the
partners in the German and the raw material would be exported by the business from the
Uganda farms. So it becomes important for the business to set proper logistics consideration

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to manage the transportation, time and cost of the business. The evaluation explains that the
company could take the help of Sea sides to transport the raw material from Uganda to
German.
Promotion:
In marketing mix, promotion is the most crucial factor of the business as it includes
various factors to promote the product and the brand of the business. Promotional factors
include advertising, sales promotion, public relations, mouth publicity etc. In case of
partnership business of Hank and Patty, the business must choose the aspects and strategy
through which they could easily communicate with the target people. The main focus of the
business must be on the theme and the taste of the cafe.
It explains that the overall performance of the business would be better in terms of
marketing.
Implications of coffee shop:
Further, the implications strategy has been done by the company to evaluate the need
to maintain and cover the entire geographical area of Smith and Marvin. The management
culture and the organizational culture of the business have studied to recognize the business’s
performance in the German market.
Information system:
Information system is an organized set of system which is used by an organization to
collect, store, communicate of information. More specifically, information system is the
study of corresponding networks which organizations and people use to filter process, create
and collect the data. All the business leaders, entrepreneurs etc are requisite to measure,
assess and collect all the connected factors and data of the business to maintain the on the
whole performance of the business.
The evaluation on information system explains that the main focus of the business is
to evaluate and identify the taste buds of the target customer and set a system where the
details of each customers could be saved so that the relevant offers could be shared with them
with time to improve the customer relationship management and the total turnover of the
business. It has been found that the current information system of the business is quite better
and it would help the business to improve the overall performance of the business.

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The various information system such as inventory management (it would help the
business to maintain the minimum inventory), customer relationship management (it would
help the business to maintain better relations with the customers), Security system (would
help the business to manage the privacy and security) etc would be applied by the business in
the Hamburg market to improve the performance and manage the additional performance of
the business.
Competitive advantage:
Competitive advantage are few condition in a business which allows the business of
the country to produce a great service and the goods of equal value in more desirable fashion
or in lower price in the industry. These few conditions allow the productive business to
generate more sales or enhance the overall margin if the business as compared to the
competitors of the business. All the business leaders, entrepreneurs etc are required to
measure, evaluate and identify the competitive advantage in the market to set a better
goodwill and performance of the business. Porter’s 5 forces analysis has been done to
measure the competitive performance of the company:
Threat of new entrants:
The threat level of the new entry of the business would be higher as it is easier for the
company to enter into this industry and run their business so the business is required to set
some USP to make it different. USP of the business includes the new and unique ambiance,
different taste, quality products and better services.
Threat of substitute:
The threat level from the substitute product of the business is higher and after the
opening of coffee store, it would be higher as various stores and cafes are offering the same
products to the customers of the industry already. It explains that the company has to manage
the new strategies.
Bargaining power of suppliers:
Further, the bargaining power of the suppliers of business has been studied and it has
been found that the bargaining power is bit higher. But the company is managing good
relations with the fair trade suppliers and thus the company is not required to be threatened
from it.

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Bargaining power of buyers:
Further, the bargaining power of buyers of the business has been studied and it has
been found that the bargaining power of buyers is higher as various cafes are offering the
same services and products. But the company is managing unique selling strategies which
would make it easier for the business to maintain the performance.
Industry rivalry:
Lastly, the industry rivalry has been studied and it has been found that the industry
rivalry is also higher as there are various coffee shops and cafes which are existing in the
market and thus the business is required to set new policies to attract the customers.
Financial evaluation:
The financial evaluation is a process which helps the business to measure the relevant
performance of the company in context with the financial figures. In the given case, financial
evaluation of new store has been studied. The overall liquidity level and the profitability level
of the business have evaluated on the basis of case. The liquidity level and the profitability
level of the business have been measured to identify the overall financial performance and the
position of the business. The given profit and loss account and the statement of financial
position of the coffee store explain about the financial performance and the financial position
of the business. The calculation explains that the overall gross profit level of the business
would be around 57.78% that would even be similar in the German market as the raw
material delivery charges and the raw material charges would be same at both the places.
The profitability level and performance of the new business has been calculated on
the basis of the net profitability level of the business. The net profitability position of the
business explains about overall net profit of the business against the total turnover of the
business. The calculations of the net profit % explain that the net profitability level of new
business would be 7.44%. It discovers that the business would be able to make 7.44% of total
sales as profit amount. It further adds that the new business of the partners would be better in
terms of profit making.
Profitability ratios
Net profit 26800
Sales 360000

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Net profit % 7.44%
Gross profit 208000
Sales 360000
Gross profit % 57.78%
In addition, the study has been done on liquidity position of the new coffee store
according to the given balance sheet in the case study. The balance sheet and the liquidity
evaluation explain that the current liquidity position of the business is 5.71:1 that is more than
the market and industry ideal ratio. It says that the business could repay the amount easily to
all the short term debtors of the business. It further adds that the working capital of the
business is quite huge.
Further, the quick liquidity position has been calculated through the available
liabilities and quick assets. Quick assets are those assets which could instantly be turn into the
cash amount. The quick ratio liquidity calculation of the business explains that the liquidity
level of the business is 4.42. The liquidity level of the business explains that the quick
position of the business is also higher than the expected level.
Liquidity ratios
Current assets 35400
Current liabilities 6200
Current ratio 5.71
Current assets - inventory 27400
Current liabilities 6200
Quick ratio 4.42
It explains that the new store of the business would be better in terms of financial
performance. The company is just required to manage the current assets level as it would
imply huge cost to the company and the reduction in the level would not affect the lqiuditiy
level of the business.
Conclusion:
To conclude, the Marvin and Smith are the entrepreneurs who have run a small
business of coffee store and gradually they opened three new coffee stores in London. Now,

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they both are planning to expand their business in Union territory and thus they have opted
German to start the new coffee store. The various economical, political, logistic, cultural
factors have been evaluated of German and it has been found that the German is a good
option for the business to expand. The overall factors have concluded that the expansion in
the German market would be beneficial for the business and improve the entire performance
of the business.
In addition, the marketing performance and the position of the coffee store in German
have been studied and the marketing mix and the strategies of the business explains that these
factors are quite impressive and it would improve the overall performance of the business.
The overall marketing feasibility of the business is quite better.
Further, the study has been done on the financial factors of the business and
recognized that the liquidity level and the business’s profitability level are quite better. The
company would be able to generate better profits. The implication study further adds that the
activities and the operations would also be administered in better manner by the business.
Thus, it could be said that the new coffee store would offer huge return to the Marvin and
Smith. This is a good idea to open the new coffee store at Hamburg, Germany as well as on
the basis of the financial analysis, it has been recognized that the company would not have to
take loan from financial institutes to start the business. the available funds are enough to start
the work.

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References:
Agility logistics. 2018. Market entry. [online]. Available from:
http://www.agilitylogistics.com/EN/countries/Pages/Uganda.aspx (Accessed 04/08/18).
Andreasen, A.R., Kotler, P. and Parker, D., 2008. Strategic marketing for nonprofit
organizations (pp. 44-53). Upper Saddle River, NJ: Pearson/Prentice Hall.
Entri consulting. 2018. Market entry. [online]. Available from: http://www.entri-
consulting.com/en/market_entry (Accessed 04/08/18).
Focus Economics. 2018. German. [online]. Available from: https://www.focus-
economics.com/countries/german (Accessed 04/08/18).
Trading economics. 2018. German GDP growth. [online]. Available from:
https://tradingeconomics.com/german/gdp-growth (Accessed 04/08/18).