Marvin & Smith Coffee Shops: Business Development Case Study Analysis

This case study analyzes the business expansion plans of Marvin & Smith's coffee shop, focusing on their potential entry into the French market. The assignment begins with a market research and justification for choosing France, considering its high population, strong economy, and the existing demand for coffee. It explores logistical and ethical considerations, as well as the structural challenges of establishing a new business. The study then delves into the marketing mix, examining the product, price, place, promotion, people, process, and physical evidence strategies needed for success. Finally, it discusses the implications of covering a new geographical area, emphasizing the importance of gaining competitive advantages through pricing, quality, and effective strategies to ensure the company's survival and growth in the market. The case study provides a comprehensive overview of the challenges and opportunities involved in business development and expansion.

Case and study assignment
Marvin & Smith’s Coffee
Shops’

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK1.............................................................................................................................................1
1)Research and justification for the chosen place for expansion...........................................1
2)Marketing mix for expansion of coffee shop......................................................................4
3)Implications of need to cover geographical area.................................................................6
4)Evaluation of profitability and liquidity..............................................................................7
5)Concluding summary........................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business development is an activity which is used by companies so as to
develop and expand itself in market. Business development is an concept that implies
all those tasks and operations that are required by a company which will help it in
growing in market and will be able to survive appropriately. This is a long term value
based aspect that has to be managed by company so that it can attract new customers
and it will help in maintaining in healthy relationship will clients (Achtenhagen, Melin and
Naldi, 2013).
Marvin and Smith's coffee shop has been established by Hank Marvin and Patty
Smith got influenced and motivated by where they have worked together for 12 months.
This study is about business expansion that they want to do. Along with this several
market aspects will be considered by them to get into a new market.
TASK1
1)Research and justification for the chosen place for expansion
Marvin and Smith's coffee shop is very effectively carrying out its operations and
functions in most appropriate manner. It is focusing upon the ethical considerations and
are concerned more about customers and they want to fulfil the needs and wants of
customers. They are also implementing effective code of conduct, which is very
essential for them to survive and grow. As now they are planning to expand their
business in new market they want to research for market place which will be very
profitable and suitable for them.
Company's aim is to develop their business in such a way which can efficiently
capture a major portion of market share and could help them to effectively survive and
grow (Herr, 2010). According to the present situation France market is very much
suitable for Hank Marvin and Patty Smith to start a new business as population is very
high. Economy of France is listed in fifth largest position in entire world. It shows the
GDP rate as 1/5th of the Euro. At present services sector is contributing in large number
of nation's economy that is 70%. Henceforth, for expanding the coffee shop in France is
very feasible. Coffee drinkers are very much demanding in market as for coffee. 67%
1

are pretty demanding and 215 are really demanding as they are very much concern to
have coffee twice or thrice a day.
According to the data, GDP of the country is very effectively growing and is able
to maintain a good economy in market. So as Marvin and Smith's coffee shop can be
able to expand in this area as customers are in very high rates who are affording for
coffee.
2

As per the previous records it has been analysed that most of the people of society are
very much fond of visiting such places and wish to spend money more on coffee
products and other related items. It is very effective as it will help in following
approaches-
 Logistical consideration- It is one of the major issue that any of the company will
face while starting a business at a new place. So considering it is very essential.
It is the approach where company uses various channels of distribution for
procuring raw material and other required materials for their operations and
functions so that firm can to provide quality products timely to customers. If
France based location is being chosen by Hank Marvin and Patty Smith then it
would become very easy for them to manage all its logistical aspects (Jenkins,
2013). In less time and cost the materials and things that are required in a coffee
shop can be procured and served by them.
 Ethical consideration- Ethical considerations can be explained as the most
essential part. Nowadays Ethical considerations are treated as major issue but if
company chooses to establish its business in France then they can resolve it and
they can deal with many other things such as it will help the company to treat
their employees fairly. The ethical approach is used to aid in promoting the
employment which helps in improving the employee’s well-being and it will help
in providing healthy and safe environment at work place (Zaitseva, 2013). Hank
Marvin and Patty Smith when start operating in France then they can help the
employees in availing wages in advance which will help them in emergency
cases. They mainly have to focus on their working process by which less
environmental pollution occur. France is a nation where issues and problems
regarding environmental safety are concerned, company's motive is also to
perform in ethical manner. It is very important to have good relationship with the
suppliers which will aid the company to get connected with them for long time
and this will help in maintaining the quality for long period. The customers will
also get attracted if they will get good and quality products.
3

 Challenges regarding structure- Many times while establishing a new business in
market, structure of it plays a very important role. Owner of the company faces
several problems regarding the entire management system, loyalty has to be
build, these are some of the problems that are a challenge that are to be very
appropriately managed by the company. The selected nation that is France, it is
very suitable for them, it will help in facing these issues in more appropriate
manner (Kumar, Gaur and Pattnaik, 2012). In the cited country, wages are paid
as per the work done on hourly basis, so accordingly organisation’s structure has
to be made. This is very suitable as burden of work will get reduced and proper
management can be done as the structure will become more flexible and
effective. Also, the structure will also get influenced by the market area that has
been chosen. Customers are very much fond of the products so that company
will get an added advantage and according to that organisation can make its
structure so that more customers can get attracted.
2)Marketing mix for expansion of coffee shop
Marketing mix are those aspect and function of an organisation through which it
can control all the factors that can influence buying and purchasing of products and
services by clients. There are basically four elements of marketing mix- Product, price,
place and promotion, these are concern for products and physical items (Achtenhagen,
Melin and Naldi, 2013). There are three more aspects that are included with these they
are people, process and physical evidence. These three aspects are considered when
service are availed to customers.
As Hank Marvin and Patty Smith are willing to expand their coffee business in
new market it has become very essential for them to focus upon the marketing mix and
their business is basically of service sector then they need to follow all the seven
elements which will help them in establishing their firm in new place in an appropriate
manner. It is very necessary for them to do an effective marketing for their new start in
market so that customers will get awareness about the products and services that
company will be offering. Also with attractive strategies customers will get pulled
towards their services. Following are the seven marketing mix strategies that company
can adapt for expanding in new area-
4

1. Product- It is the major aspect that has to be focused much. Products has to be
very effective that can meet customer's needs and wants. Company's main
offered item is Coffee, there are many other brands which are providing same
items to customers. So it is very essential for them to offer very different products
that can draw in attention of clients. With main products company also need to
serve many more related products so that they can get the maximum satisfaction
out of the products and services that consumers will be using (Herr, 2010). The
core value has to be availed to them. Hot chocolates, cold drinks, sandwiches
and other foods must also be provided, this will help company to get settled in
new place.
2. Place- It is also an important part as this will help in gathering more customers.
To choose a correct place is very vital part for a company, a wrong selection will
make it suffer in future (Jenkins, 2013). It is very must for Hank Marvin and Patty
Smith to do a proper research where they can be able to identify the right place
for their operations and functions along with that they can be able to know which
place is the perfect, where large number of customers can be targeted.
3. Price- Pricing strategy is very important as to set into a new market. Customers
are very rationale they are not willing to pay high amount for products and
services they want to get satisfied by paying less amount. Concerning about that
and to sustain in a market, company at its initial stage need to keep the prices
very low, so that they can draw attention of customers.
4. Promotion- It is very essential to convey information about a new start of a
business to customers. Until and unless communication is not done it become
tough to sustain and develop a company. With help of several techniques like
advertisement, public relation, etc., company can promote all the things
regarding products and services that are to be availed to clients.
5. People- As being a service sector it is necessary to have good and
knowledgeable stuff (employees), so that they can provide effective services to
customers. By providing training employees can be able to handle many
situations that can be faced by clients.
5

6. Process- The method that company will use must very appropriate so that a right
time and to right person correct and effective services can be availed. To adapt a
straight technique and process is very must for new business that Hank Marvin
and Patty Smith are establishing.
7. Physical evidence- These are the aspect which shows the evidence and proof of
being a part of a service industry. It is very essential to have a stamp or a logo
that can help customers to recognise and make difference (Kumar, Gaur and
Pattnaik, 2012). Basically the bills and receipts that paid are said to be as the
physical evidences.
3)Implications of need to cover geographical area.
As to enter into a new geographical area it is very must that Hank Marvin and
Patty Smith to consider few aspects as they have to be well planned then only a
company can be able to develop itself and can survive in tough and competitive market.
Following are some element that are to be considered-
Gaining competitive advantages
It is one of the most vital aspects, this will help a company to sustain in market.
For this a firm need to make several strategies. There is different method through which
company can gain competitive advantages in market. Pricing is one of the factor
through which company will able to get settled and can get benefits from marketplace
(Singh and Khanduja, 2012). Setting low price for products and services is one of the
best option to sustain and grow in new place. Customers will get more attracted toward
a company this will help in competing with other brands and will get benefit to survive in
market.
Other aspect is quality, all those products and services that are availed to
customers has to be in effective and qualitative manner. This will help company to give
tough competition to other firms dealing with same items and administrations. Quality is
also an aspect that is considered by several consumers. For them priority is quality of
products rather than price. So, concerning these people company has to provide
qualitative services to clients so that they will more afford for the offerings and will help
in availing competitive advantage.
6

Social welfare, introducing new concept will provide benefits to public of the
nation will definitely be able to get benefits in market (Zaitseva, 2013). Customers are
always in support of those who are providing them better services along with that more
benefits if availed to them then they become loyal to that particular organisation this will
help company in attaining advantages in new market.
It is very essential for company to consider all these factors otherwise firm will face
issues and could not be able to sustain and develop in market. This will also hamper
entire process, time, money and many other resources that are required by company to
carry out all its activities
Personnel and managing staffs
This is also one of the factors that has to be considered by organisation so that
they can be able expand their current business in new market. As a new place has been
chosen to perform activities and operations so too is very necessary to have people as
they are one of the most important resource in a company (Achtenhagen, Melin and
Naldi, 2013).
The major issue that will be faced by firm is the manpower as because entire
culture and values will differ due to new place. It became very difficult to manage all the
employees and to make them retain for long. Managing them effectively and to make
them work in appropriate manner is very much required. New people will be carrying out
all the operations so a trust factors must be there. Concerning for manpower will provide
good and positive returns. This will also help in availing better services to customers.
Many times workforce of the company faces several issues regarding culture, norms
and also regarding salary and wages.
It is very essential for company and its management team to consider them and
make it resolve as quick as possible otherwise chances may occur where large number
of employee turnover may get face by firms. These are the aspect that has to be
considered by company so that they can be able to expand their business activities in
more effective manner so that
4)Evaluation of profitability and liquidity
In the present case the sale of the company is £3,60,000 and purchase is
£1,60,000. in this condition organisation is gaining profit after considering other
7

expenses. Total Gross profit of £2,08,000 and Net profit of £26,800 is gained by them
in present situation. When organisation achieve great profitability and liquidity then it
has direct impact over decision making. Major decisions are based on funds that are
available in organisation (Mendling, Recker and Reijers, 2010). Technology and new
up-gradations are required to be adopted by business so that they can be more
effective.
When organisation has sufficient funds then they can be able to adopt such
factors in more effective manner. New technology is required to be adopted for training
programmes. This is related to hire skilled and knowledgeable employees, use of
effective technology and adoption of recent changes. With the availability of fund, they
can take major decisions to expand the business in new area, new product and services
can be offered by them. This helps to enhance the market share of the company and
enhance its productivity. When profitability gets enhance then Marvin and Smith’s coffee
shop can take better quality measures in their operation that will help to attract large
number of customers toward them. Financial liquidity state of the company
 Gross profit margin= Gross profit/Sales*100
20800/ 360000* 100=5.78%
 Net profit margin= Net profit/sales*100
26800/ 360000* 100= 7.44%
 Quick ratio=Current assets- inventory/ current liabilities.
35400- 8000/ 6200=4.42%
 Current ratio= Current assets/ Current liabilities
35400/ 6200= 5.71%
 Return on capital employed= EBIT/ total assets- current liabilities
181,200 /113,000- 6200= 1.7%
8

As the income statement of Starbucks it can be seen that being a brand in
market stability of operations and activities are very effective but Hank Marvin and Patty
Smith's coffee shop's financial statement if too very strong enough to expand its
business in new market. Gross profit of Starbucks is $3457000 so it is high as
compared to Hank Marvin and Patty Smith's gross profit. Although difference is large
but capability to establish its business in France is also very high.
9
Income statement of Starbucks

5)Concluding summary
Hank Marvin and Patty Smith are willing to expand their current business of
coffee in new European Union. There were many aspects that has to be considered by
company so that they can be able to set and introduce in a new marketplace. As to get
into a new place it is very essential for company to carry out a market research which is
very helpful as to know the requirements of customers (Herr, 2010).
They have carried out effective marketing mix plan so that a proper strategy can
be prepared by them. This will assist a company to perform all their operations and
functions in appropriate manner. Hank Marvin and Patty Smith, with help of proper
research they have determined all those factors that can affect their activity and also
they got help in identifying the right place where they can perform and establish their
business. As to expand in new place competitive advantage and managing the issues of
personnel are very important to consider by them. This will help both of them to perform
in an effective and approachable manner.
10