Business Case Study: Marvin & Smith Coffee Shop Expansion in UK

This case study examines Marvin & Smith coffee shop's planned expansion into the UK market. It begins with an overview of the UK coffee market and the logistical, ethical, and structural challenges involved. The study then analyzes the tailored marketing mix, including product, place, promotion, and price strategies. It also explores the impact of information systems on business operations and the achievement of competitive advantages. The study further evaluates the profitability and liquidity of the business through financial ratio analysis, highlighting their impact on decision-making. The case study provides a comprehensive analysis of the factors influencing Marvin & Smith's expansion strategy and financial performance, offering insights into the complexities of international business ventures.

Business Case
Study

Table of Contents
INTRODUCTION...........................................................................................................................1
1. RESEARCH AND DESIGN OF A COUNTRY.........................................................................1
2. TAILORED MARKETING MIX FOR EXPANSION OF COFFEE SHOP IN ABROAD.......2
3. IMPACT OF INFORMATION SYSTEM AND GAINING COMPETITIVE ADVANTAGES
..........................................................................................................................................................4
4. EVALUATING THE PROFITABILITY AND LIQUIDITY WHICH MAKE IMPACT ON
DECISION.......................................................................................................................................5
5. SUMMARY.................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business is a working place where goods and services are produced and sell to others. In
the present report, Marvin and Smith coffee shop is taken as organisation who want to expand
their business in UK. It also describes the research and design which are related to the UK
country where business expand itself (Yin, 2013). It also considered the logistical and ethical
consideration, structural challenges for growing their business. It present a Tailored marketing
mix in relation to the coffee shop plan in abroad. It also present the impact of information system
and advantage of gaining competition. By evaluating the profitability and liquidity analysis, Firm
analysis the impact in decision-making process.
1. RESEARCH AND DESIGN OF A COUNTRY
Marvin and Smith coffee shop want to expand their business in UK so that they can
establishes their business in a new higher level. To establish the coffee shop in UK, they take this
country because it is a routine of a British people to visiting the coffee shop. In UK, the coffee
shop market enjoys their growth in 2008 when market was valued at 2.2 billion pound. The
owner of Marvin and Smith coffee shop found that in next two year, the market of coffee share
goes increases. There are large number of working class people which adopt the habit of drinking
coffee. As per the, market share of coffee in UK Firm decided to expand their business in UK.
There are various factors which are considered by the Firm to enlarge their business:
Logistical Consideration: This consideration factors make great impact in business
activities. It include one of the most important factor like location of retailers and sources of
supply to the business. It also consider the location of plant, sourcing of raw materials, standards
customers services etc. In addition to this , Marvin and Smith coffee shop make connect with the
supplier in UK which give high quality of coffee beans to them. They also focus the taste of
customers so that they can produce as per their need. To formulate the business strategy, Firm
need to focus in government rules and regulations, transportation system, energy, techniques etc.
so that they can produce high quality of products (Thomas, 2015). Hence, after establishing the
branch in London and also analysis their current profit condition, Firm also expand their product
by using innovative techniques, modifying strategies etc. Logistical consideration include
various process like forecasting, order processing, finished good transport, warehouse facility,
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distribution centre, packaging, planning, plant storage, control on raw material, procurement etc.
which are followed by the Marvin and Smith coffee shop.
Ethical Consideration: It include all the employment, culture, corruption, human rights,
pollution etc. factors are involved in it. Marvin and Smith coffee shop need to follow all these
factors to work fairly in a new country (Stake, 2013). Firm gives effective employment practice
and hire the individual by following set of standard. They also focus in right of employee so that
employees can share their ideas and work freely in their workplace. Firm also behave ethical in
work without making any corruption with the UK government. Here, Marvin and Smith coffee
shop expand their business in UK as per the the country 's rule and regulation. Firm also work
fairly and without making cheating with their customers. To expand the business in UK, Marvin
and Smith coffee shop also focused to make any environmental pollution in their activity. For
example: For roasting the coffee beans and use of disposal glasses for coffee are to be work in an
appropriate manner.
Structure Challenges: While expanding the business in UK, Marvin and Smith coffee
shop faces various structural challenges like HR issues and employment management. It include
training to the employees so that it will expand skill sets, loosing staff motivation and pay. Firm
also face the new competition and unfamiliar marketplace, contingency plans which make
protection against business expansion risk (Poulis, Poulis and Plakoyiannaki, 2013).
2. TAILORED MARKETING MIX FOR EXPANSION OF COFFEE SHOP
IN ABROAD
Marketing mix is a marketing plan of four P's which consist of product, price, place and
promotion which are adopted by Marvin and Smith coffee shop.
Product: Marvin and Smith coffee shop create such a product which satisfy the demand
of the targeted market. In addition to this, product means anything which are consume by the
consumer because it have some value for them. Product consist product, packaging, brand and
name etc. In term of service it can be intangible in nature (Krajewski, Ritzman and Malhotra,
2013). Hence, all the services which are provided by the Marvin and Smith coffee shop are
intangible in nature and can not be transported or stored. It contain the customer value, actual
value and associated services. For example: Marvin and Smith coffee shop offers coffee drinks
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which have the value to thirst customers. Shop also offers various services like Wi-Fi,
newspapers, music, mugs etc.
Place: The another factors which are considered in a marketing mix is place. Place
is a location where products or services are provided to the customers. It consist physical
location as well as virtual location like website, networking sites etc. Marketing manager of the
coffee shop must determine the location so that they can provide the products or services easily
in a particular place (Kantor, 2013). Location also considered the want and demand which are
generated in a particular areas to the related products. It also essential to provide right products
into right time in a right place. Thus, Firm make agreement with the suppliers which give high
quality of raw material like coffee beans in an proper time. In this way, commonalty ensure the
availability of the product and try to attract the customer in UK in a large level. Marvin and
Smith coffee shop offers their customers books and through websites customer also visit their for
buying the books in soft copy. Owner of the coffee shop also expand their business by
establishing their stores in a centre of UK where there are high demand of coffee products.
Promotion: Marvin and Smith coffee shop decide the promotional media so that they
can make communication with the customers. Firm also select the way by which they can share
the information of the coffee to the target market. Owner also communicate with their product
value by using of media, television, radio, social media etc. Firm also use various promotional
activity like advertisement, keeping public relation, sales promotion and personal selling by
which they can increases their sale. Marvin and Smith coffee shop use this activity to reach their
customers and also explain the feature of coffee to them. Store also make the Facebook page so
that they can reach the customers in world wide level.
Price: Price include the value of product which are rendered to the customers. Marvin
and Smith coffee shop maintain their coffee price so that they can attract the customers in a large
scale. They also give quality of products with an affordable price. To setting the price, Firm's
owner use different pricing methods like price skimming, with premium etc. They also analysis
the competitor's position and their pricing strategies so that as per the competitor's price Firm
also set the product's price. There are various types of policies which are followed by the Marvin
and Smith coffee shop like giving discount in first visiting, buy one get one free etc. In this way,
they attract their customers in a large level (Jedrzejewsk and Jedrzejewski, 2013.).
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3. IMPACT OF INFORMATION SYSTEM AND GAINING COMPETITIVE
ADVANTAGES
Marvin and Smith coffee shop want to expand their business in UK. To work in a
geographical area in different country is a tough task for every business organisation. There are
two factors which make great impact in business operational activity, which are as follows:
Information system: It include various systems like internet-based information system
which help to expand the business by using of networking sites. It is a organized system of
human, hardware, software, data resources which help to collect the information related to the
organisation (Hollensen, 2015). Hence, Marvin and Smith coffee shop should appoint people
who work as a software developer, hardware origin which include machines, computer, optical
scanner, software resources which include program operating system, data resources like product
description, making customer record and at last network resources like communication media,
processors. All these information system help the Marvin and Smith coffee shop for speeding up
of flow of capital, people, products, image. It also help to increase the knowledge, provide
cheaper products and also increase the competition.
Marvin and Smith coffee shop expand their business in UK by using business
information system. They prepare complete record of order, bill, receivables, inventory, purchase
in an appropriate system. For example: Firm make full record of beans which are received by the
suppliers. They also ascertained the complete record of purchase of coffee and their total sales by
using of information system. Information system also make impact in Marvin and Smith coffee
shop activity. By using networking techniques firm can find the best way to accomplishing their
work. It also make impact in services which are rendered by the firm to the customers. It turned
the raw material into an entity by using effective manner (He, Zha and Li, 2013).
Gaining competitive advantages: Marvin and Smith coffee shop achieve the
competitive advantages by increasing the market shares, improving price realization, neutralizing
local competitors. By increasing the market share it include that Firm offer standard products and
services like provide new flavoured coffee or add new taste so that they can attract their
customers. By using innovative techniques or providing special services like discount in first
visiting, coupon facility also increase the market share of Marvin and Smith coffee shop. Firm
also analysis the price strategies of their competitors. By making analysis of market position firm
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can establishes their own pricing strategies. In addition to this, to expand their business in a new
country, Firm need to explore the taste, demand and preferences of the customers that what they
want or want kind of taste they prefer. In this way, producing coffee as per the taste of customers
help to achieve the competitive advantage. By giving unique selling option like discounting,
giving coupon or also providing fast food they also make some changes in the services which are
rendered by the organisation. For example: Marvin and Smith coffee shop also provide coffee
with different flavour and they also provide Wi-Fi, music, fast food facility too (Hancock and
Algozzine, 2015).
Marvin and Smith coffee shop also use the social networking sites like Facebook,
Google to promote their business. They also influence the customer by giving questionnaires so
that customers givers feedback related to their product or services. As per the receiving feedback,
Firm make some improvement and achieve the competitive advantage. Hence, Marvin and
Smith coffee shop achieve the competitive advantages by minimizing the cost and make global
presence in a market.
4. EVALUATING THE PROFITABILITY AND LIQUIDITY WHICH
MAKE IMPACT ON DECISION
As per the given balance sheet and income statements of Marvin and Smith coffee shop,
Firm can evaluate the profitability and liquidity ratio by which firm can analysis their actual
financial position.
Profitability Ratio: This ratios shows the ability of a business to generate the earning by
making comparison with the expense and cost during the period (Hair Jr and Lukas, 2014). Is is
divided into two parts:
Gross profit ratio: It is a profitability ratio which are calculated by dividing gross profit
by net sales. It helps to evaluate the Firm's performance and level of activity. The formula of GP
ratio is:
Gross Profit ratio= (Gross Profit/ Net sales)*100
Here, the net sales of Marvin and Smith coffee shop is £360000 and gross profit is
£208000. Hence, the GP ratio is:
(208000/ 360000) * 100= 57.77%
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Its means that the Firm is in good condition and by increasing the sales revenue Firm are
able to expand their business in UK.
Net profit ratio: It shows the relationship between net profit and net sales. Here, the net
profit is £26800 and net sales is £ 360000. The NP ratio is:
Net profit ratio= (Net Profit/ Net Sales) * 100
(26800/ 360000) * 100= 7. 44%
It shows the inefficient management of affairs in a business, so that Firm need to improve
their efficiency by which they can increases their profit.
Return on Capital Employed: It is a ratio which help to measure the profitability and
efficiency by which capital are employed in a business. It can be calculated as :
ROCE= Earning Before Interest and Tax/ Capital Employed
26800/ 106800= 0.25
It means that every pound invested in capital employed is lower because Firm maintain
higher asset.
Liquidity Ratio: It shows the ability of a Firm to meet their financial obligation (De
Weerdt, Schupp, Vanderloock and Baesens, 2013). It can be two types:
Current ratio: It shows the ability of firm to pay their current liability from its current
asset. It can be calculated by:
Current Ratio= Current asset/ Current Liabilities
35400/ 6200= 5.70
The standard ratio is 2:1 which means that Firm is in good position to pay the current
obligation.
Quick ratio: The purpose of this ratio is to check how well Firm meet their short- term
obligations with most liquid asset. It can be calculated as:
Quick Ratio= ( Cash & Cash equivalent+ Short-term Investment+ Account Receivables)/
Current Liabilities
(27400+ 8000+0)/ 6200= 5.70
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The standard ratio is .5:1, which means that Firm is in good position to meet their short-
term obligation. Hence, as per the above analysis of shop, it is found that Firm is in good
position and eligible for expanding their new business in UK.
5. SUMMARY
As per the above detailed report, it have been summarised that to expanding a business in
a new country, business have to face various factors that make great impact in their operational
activity. It is discovered that information system and competition make great impact in business.
As per Porter's 5 P's model of marketing mix, business also get the biggest advantage to make
grow in UK geographical areas by maintaining their product's rice, promotions, place etc. By
using effective strategies and techniques Firm can analysis how to take positive advantage in the
future. By analysis the ratio, it is found that Firm is in good position so that firm can expand their
business activity in new competitive market (Battistella, Colucci, De Toni and Nonino, 2013).
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REFERENCES
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beginning researchers. Teachers College Press.
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study in the pizza industry. International Journal of Information Management.
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Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
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Bialowieza Primeval Forest as a case study (Vol. 135). Springer Science &
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Kantor, J., 2013. Harvard business school case study: Gender equity. New York Times, 8, p.1A.
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international business perspective. International Business Review. 22(1). pp.304-
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Stake, R. E., 2013. Multiple case study analysis. Guilford Press.
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Online
Liquidity Ratios. [2017]. Available through: <http://www.myaccountingcourse.com/financial-
ratios/liquidity-ratios> [ Accessed on 22 June 2017].
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