Business Essentials: Marvin & Smith Coffee Expansion in Amsterdam

This report details the expansion strategy of Marvin & Smith Coffee, a UK-based coffee house, into Amsterdam, Netherlands. It begins with an introduction to the business's goals and the rationale for choosing Amsterdam, highlighting the city's favorable business environment, tourism, and existing coffee culture. The report then delves into the marketing mix (product, price, promotion, and place) tailored for the Amsterdam market, considering the unique aspects of the local coffee scene. Furthermore, the report examines the challenges related to information systems and organizational structure during the expansion, including communication, cultural barriers, and the need for adapting the business model to the local context. The report emphasizes the importance of understanding the target market, adapting to local preferences, and leveraging the city's existing coffee shop culture, including the potential for cannabis-infused coffee, to ensure the success of the business venture.

Business Essentials

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................3
TASK 3............................................................................................................................................4
TASK 4............................................................................................................................................6
TASK 5............................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Any business existing in the market go through various ups and down because of
the uncertainty in the market. A time comes when situation is favourable and a period
comes when things don't go according to their will. Such type of conditions can lead to
crisis if it is not handled properly. To make sure that all things are going according to
plan, an analysis on the factors affecting its business can be done. For this all scenario
we will be consider Hark and Marvin coffee house (Hair, 2015). They are successful
running their business and now wanted to expand their footprints in one of the EU
country. This will help them in giving a global identity.
TASK 1
Hank Marvin and Patty Smith are known to each other from years and today they
are business partners. After success of their shops in UK, they want to expand their
business in another country. On analysing the different European countries(EU), it was
decided that Netherlands was the best option available to them. There are lots of
reason for this and will be discussed in the task. Netherlands was one of the nation who
supported the idea of free trade after Brexit. Both countries shares a strong political and
economic partnership. Netherlands – British Chamber of Commerce was started so that
ease of doing business in both can be easy (Wilson, 2014). Dutch is the UK's fifth
biggest export market and trade between them is easy due to good relation, transparent
legal laws and better transport links. This means that their will be no impact of Brexit on
the coffee business of Marvin & Smith in Holland. This country is known for its beautiful
environment and is business friendly. Its capital city Amsterdam would be the best place
for their new coffee shop. Their are lots of advantages of choosing this location because
it is the most populated city of this country with approx. 8,50,000 people. It is considered
as one of the Alpha World city by Globalization & World Cities study group (GAWC).
Amsterdam is also the best city to live in by a survey of Economist Intelligence Unit
(EIU). While talking on tourism point of view, it has lots of sites which attracts almost 5
million international visitors per year (Laudon and Laudon, 2011). Someone could easily
find museums, theatres and other entertainment centres. Rijks museum, Anne Frank
Museum,Van Gogh Museum, West Church, Royal Palace, Stedelijk and Port of
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Amsterdam comes in top places to visit. Thinking of opening a coffee shops here is a
great idea, as the city is known for its cannabis coffee shops. It would be a great idea to
debut in oversea with location like this. According to the data released by government
nearly 10 to 17 million traveller visited this beautiful city between year 2012 to 2015. As
demand for Ugandan style coffee house increased in UK, so Hank & Smith should
maintain their identity. Although they can do some sort of modification according to the
needs of visitors and environment of that place (Guffey and Loewy, 2012). Amsterdam
is flooded with lots of coffee shops, so it would be a difficult task to establish their own.
They have to first plan and design strategies to stand unique in the market.
Marvin & Smith coffee houses uses finest coffee beans of Gumutindo Coffee
company based in Uganda. Gumutindo coffee beans are know for their excellent quality
all over the world. Tea & herbal infusion are sourced from Fairtrade registered
foundations in Eastern Uganda. So to import the coffee beans, tea and other herbal
components they have look what are all options available to them. It is true gateway to
Europe and has 900 distribution centers. Amsterdam is well connected with rest of the
world through all ways of transport. It has seaports, airports and has fifth largest seaport
in all Europe. All the companies or businesses available in the city has benefits of
logistic infrastructure and top notch service providers. Marvin and Smith Coffee house
do not need to worry about logistics because there are also multinational companies like
Coca-Cola and IBM also exists in the market.
For the success they introduce cannabis coffee also because tourists comes
here for consuming cannabis. They can register their coffee house from chamber of
commerce and get necessary permits. Marvin and Smith Coffee has to take care of the
laws made by the government. They should not allow a person who is below 18 years
and make sure that people visiting their shop should posses passport with them
(Anderson and et. al., 2014). A proper record of the person has to be maintained so
they can restrict a person who is coming second time in a single day. Alcohol and
cigarettes are not allowed in the coffee houses.
Before starting a business in Amsterdam they should take care of structural
setting. As the city is famous for its architecture, so a coffee shop near those would give
benefits. A group of skilled people should be hired so that they can quickly set their
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footprints in the mainstream market. There might be language and cultural barriers so
they should try to make menus in two different languages.
TASK 2
Marketing Mix is the combination of marketing tools that an organisation uses to
achieve success in their marketing plan. As Marvin and Smith coffee is keen on
expanding their market in Netherlands. So through keeping 4 P's of marketing mix they
can gain success in the competitive coffee business. They can find loopholes and gaps
in the market and can work upon them (Cobanoglu and et. al., 2011). Through building
a marketing strategy which emphasis on fulfilling requirements of the customers, they
can yields better results. 4P's of the marketing involves product, price, promotion and
place. A description of these are given below:-
 Product: This defines what kind of menu should be there and will they be able
to meet the demands of the customers in Amsterdam. There should be reason
behind why they are selling these coffee and what value these items have in
their business. Marvin and Smith shop have their specialization in Gumutindo
coffee and eastern African snakes & pastries. In addition to this they can
introduce coffee related accessories like t-shirt of the company and mugs. They
can add herbal teas, lemonades and different juices.
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 Price: It briefs about the cost of the items or it is the manufacturing cost. How it
influence the customers and does it relevant in market. This is an important
factors in expansion because it is important to have price which will attract the
consumers in Amsterdam. By pricing strategy they can gain competitive
advantage in the new market. Before coming out of the price they should
analyse it. This is important because through this they will see what all costs are
spend for a unit production (Hsu, 2011). They can use different pricing methods
like competitive pricing, value pricing and cost plus pricing. As rise in the cost of
the coffee beans, they have to increase the price of their products.
 Promotion: There are lots of coffee houses exists in Amsterdam, so people
might don't know about the new opening. For this they have to communicate
with the customers through various media channels. Different promotional tools
like advertisement, words of mouth, charity events and organising a cultural
festival would help them in introducing their business to targeted audience. They
can use social media and make people engage on this.
 Place: This gives details about where are consumers coming to consume
coffee. It will cover the information of coffee shop. Amsterdam has beautiful
architectural sites and are known for its canals situated across Amstel river.
These sites are listed in UNESCO world heritage list, so they can rent any shop
near those. This will also assist them in maintaining their Ugandan style
(Johnson, 2014). Things which has to be considered while deciding the location
are geographical importance of that place, space for parking, near to market and
environment.
TASK 3
When a company thinks of expanding their business into a new market it has to
face various issues of that area. These factors widely effects the growth of their
business, so they should make sure that they are well prepared for any situation.
Growing business in different geographical area impacts the its information system,
culture, management structure, staff and its supply chain (Woiceshyn, 2011).
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Information system and organisation culture are the two things which will be discussed
here.
 Information System: It can be called as communication system and is a
informal and formal processes. In this there is passing of the information between
the managers and employees of Marvin and Smith coffee. It can also be in
between the business and the external customers. Information system greatly
impact any enterprise. A idea comes in the mind of individual and he send that to
the receiver. The message transmits from a channel and depending upon sector
various organisation use different modes. The basic aim of the information
system is to clearly make people understand the message (Four and Five, 2015).
But due to change of the geographical location their can be breakdown in this
system. For this they have to analyse the hurdles which are coming in the way of
business growth. Due to lack of language skills, difference between the
perception of the sender & receiver and lack of technology are some of the
factors which can hamper the development. In the case of Marvin and Smith
coffee, it will be a challenging task for them to set a effective communication
system in Amsterdam because people out there normally speak Dutch language.
So they should hire service staff which could be expert in Dutch and as well as
English. They can appoint a translator who is well versed with lots of languages,
as large number of tourists travels to Amsterdam from different nations. Menu
should be created in different languages fro the consumers. For coordination
between the staff and management they can use phone and emails. For order
system they can use words of mouth (Arasti, Zandi and Talebi, 2012). If they
want to use a more modern and flexible approach, they can include technology in
it. While customer comes in the coffee house they should be given a tablet and
this process is to introduce digital menu. On regular basis training should be
given to the service staff and train them on communication skills.
 Organisation Structure: With the expansion of Coffee house comes new
responsibilities. Organisation structure is basically the method by which it for their
cannabis coffee. A touch of cannabis can be given to their coffees and they
should be open to any change. By keeping customer needs things can be
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modified like the service and sitting system. communicates, distributes
responsibility and adapts to change. Marvin and Smith should properly use their
resources so that they maintain pace in their business. Structure of Marvin and
Smith impacts their growth, customer needs and technology. When it was
started, they didn't thought that they will reach at this level. Now they again need
to modify their strategies and make sure a dynamic system (Kimbell, 2011). They
have to build a hierarchy in which different staffs are assigned various roles
according to their skills and ability. As Marvin and Smith coffee house has
Ugandan style theme, so it may happen that this theme does not succeed in
Amsterdam. For this they can research other successful coffee house and what
concepts they use. It is seen that Amsterdam coffee house are known for their
cannabis coffee. A touch of cannabis can be given to their coffees and they
should be open to any change. By keeping customer needs things can be
modified like the service and sitting system.
TASK 4
From the specified case situation of Marvin and Smith's café its money related
proclamations are demonstrating a picture of execution of his business in UK. As it has
watched that they are creating a sound Net benefit of 26800 in their business. Salary
proclamation of Marvin and Smith are certain in December 2016 (Linnenluecke and
Griffiths, 2010). They are offering in great amount with the cost of 360,000 of item and
different things. Be that as it may, they are causing more costs in doing as such. With
measure of - 181,000. subsequent to making all its modification they are giving Net
benefit of 26,800 out of one year. For the benefit examination they have to compute
Gross net revenue and Net overall revenue.
Profitability as per income statements:
Gross Profit = 208,000
Net Profit = 26,800
Sale = 360,000
Gross profit Margin = Gross profit
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Sales
= 208,000
360,000
= 0.5777*100 =57.8%
Net Profit Margin = Net profit * 100
Sales
= 26,800/360,000*100
= 7.4%
From the said case situation of Marvin and Smith's café its money related proclamations
are demonstrating a picture of execution of his business in UK. As it has watched that
they are creating a solid Net benefit of 26800 in their business. Pay articulation of
Marvin and Smith are certain in December 2016. They are offering in great amount with
the cost of 360,000 of item and different things (Abramowicz and et. al., 2012).
However, they are bringing about more costs in doing as such. With measure of -
181,000. in the wake of making all its alteration they are giving Net benefit of 26,800 of
every one year. For the productivity examination they have to ascertain Gross net
revenue and net revenue.
Liquidity position of company:
Current assets: 35,400
Current Liabilities: 6,200
Inventories: 8,000
Current ratio: Current assets
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Current Liabilities
= 35400/6200= 5.7
Liquid ratio: Liquid assets
Current Liabilities
= 35400-8000/6200= 4.4
From above computation of liquidity proportion of Marvin and Smith's, it have been
watched that present ratio are in proportion of 5.7 : 1 which implies organization have
enough measure of benefits accessible to cover liabilities that are emerges amid
monetary year. While fluid resources of organization are in the proportion of 4.4 : 1
which is more as contrast with liabilities of the organization. Since the perfect
proportion's of fluid resources are 1:1. Subsequent to assessing all gainfulness and
liquidity part of specify organization are producing fitting outcome to build up new shop
in Amsterdam showcase (Bakke,2010). It will be useful for them two preceding going
into Amsterdam advertise. Since in the event that they need to bring capital up in those
market they have to demonstrate their money related solidness before speculators.
TASK 5
Marvin and Smith Coffee house has analysed all the coffee market of Amsterdam
and came out on the result that it is the suitable city for overseas expansion. They have
chosen an European Union county which has strong relation with UK. History has
witnessed various economic tie up programs between two nations. After Sweden,
Netherlands was the nation who supported the idea of free trade after the Brexit. It can
be relief for Marvin and Smith coffee because they don't have to pay taxes and can
easily carry out their business (Singh and Khanduja, 2012). Choosing Amsterdam for
the new coffee house is great decision because a lots of foreign tourist visits the city. It
is known for its infrastructure and great architectural monuments & buildings. By
keeping all the factors in mind which could affect the growth of Marvin and Smith coffee
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house can gain competitive success. Expanding business operations in overseas brings
more profits and better results. This is a chance for them to give tough competition to
their reviles. As they now are doing business on bigger platform, so expectations are
also greater from them (Li, Lai and Wang, 2010). HR teams should make sure that all
the resources are properly used by the organisation and make note of the legislation
regarding coffee house. If they will follow laws, this will attract more customers and
bring credibility in them. Marketing mix is the best way to analyse the resources and
sketch all the important factors which could give them high success. Whatever products
they are offering should be relevant and should fulfil the requirements of the consumers
(Mendling, Recker and Reijers, 2010). If there will be proper flow of the messages then
it will bring effectiveness in the business activities. As all their cafe is based on Ugandan
style so they should also maintain this in Amsterdam, with some modification in menu.
From the above mentioned tasks it has to be concluded that for any business
there are important components will should be included in the enterprise for
organisation growth. Marvin and Smith has chosen a city which has great significance
as tourist point of view (Poelmans and et. al., 2010). They have analysed location,
target market, capital available to them, key competitors and suppliers for this
expansion.
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