Business Essentials: Marvin and Smith's Expansion in Italy Report

This report analyzes the business expansion strategy of Marvin and Smith's coffee shop into the Italian market. It delves into the rationale behind selecting Italy, considering factors such as the Italian people's coffee consumption habits and the size of the cafe market. The report examines the logistics involved, including inbound and outbound logistics, and the ethical considerations, such as staff training and adherence to cultural norms. Furthermore, it addresses the structural challenges faced by the company, such as the preference for home coffee consumption, and proposes solutions like interior design to create a relaxing environment. The marketing mix, including product offerings (herbal teas, hot and cold coffees, pastries, and snacks), pricing strategies (price skimming and mark-up), place considerations (Milan as a strategic location), and promotional activities (discounts, free samples, and social media advertising), is also thoroughly discussed. The report concludes with an overview of how Marvin and Smith's can leverage organizational culture and information systems to expand their geographical reach, thereby achieving a competitive advantage.

BUSINESS
ESSENTIALS

TABLE OF CONTENTS
BUSINESS ESSENTIALS..............................................................................................................1
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Reason behind selection of country, logistics used, ethical considerations and structural
challenge.................................................................................................................................1
TASK 2............................................................................................................................................4
Marketing mix of company ...................................................................................................4
TASK 3............................................................................................................................................8
Marvin and Smith's cover the wider geographical area by the two ways one is organisation
culture and information system..............................................................................................8
TASK 4............................................................................................................................................9
Interpretation of financial data...............................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES .............................................................................................................................12

ILLUSTRATION INDEX
Illustration 1: Fact about consumption of coffee in the world.........................................................2
Illustration 2: Interior of cafe...........................................................................................................4
Illustration 3: Types of hot tea.........................................................................................................5
Illustration 4: Types of cold coffee .................................................................................................6

INTRODUCTION
Business opportunity uplifts the existing condition of an entity. This project is all about
the expansion of coffee shops by two partner, that is, Marvin and Smith. They select Italy for
expanding their businesses because they find it a suitable environment for their coffee shop
(Singh, 2013). They grab the opportunity and make interior according to the culture of Italy and
promote their business by providing additional services like customer care system,
complementary drinks, etc.
TASK 1
Reason behind selection of country, logistics used, ethical considerations and structural
challenge
Reason why company selected Italy
Italy has been selected for the expansion of coffee shop by Marvin and Smith. They have
been influenced by Italian people's love for coffee. He recalls that once he visited a Milan coffee
shop in 1994 and his desire was to replicate the that structure in relation to a sense of
community, delightful drink and friendly baristas in Italy. So, he decided to expand his coffee
shop in Milan (Italy) (Zhong and Huang et.al., 2013). Reason that influenced them to expand in
this country are given as below:
a) Italian people like coffee as they are certainly passionate about the that and consume 4.6% of
the total world’s supply.
b) Large number of customers in Italy are having $10 billion cafe market that is the biggest in the
world.
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A Billion Dollar
Illustration 1: Fact about consumption of coffee in the world
(Source: Biggest cafe market by country, 2016)
Graph states that Italy has the biggest cafe market in world that is 10,267 million dillar
c) Competition and price in Italy is full of coffee shops as compared to other parts of the world
as competition is high which influences an entity in order to generate quality oriented products in
facilitating its clients (Mintz and Currim, 2013). The average price of coffee in Italy is 0.90 euro
which is affordable by the average income people.
Logistics used by company
The logistics consideration in expansion of Marvin and Smith's cafe includes two types,
that is, inbound and outbound logistics.
a) Inbound logistics: It includes the purchase and movement of material, parts and
finished goods from supplier to the manufacturer. Raw material i.e. the finest coffee beans of
Gumutindo coffee are being purchased from Uganda in accordance with fair trade agreement
with the supplier ensures about the fair trade practices adopted by an entity that includes tariff
and non-tariff barriers (Lindsay and Norman, 2013). Way of transport and rules and regulation
regarding the transport.
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b) Outbound logistics: It includes the procurement of logistics, distribution logistic, after
sales logistics and disposal logistics. This logistics include purchase of coffee beans from
Uganda which require proper transportation facility (Lin, 2013). It also requires various
documents like bill of insurance, letter of credit and bill of lading as well as they need proper
warehouse and proper environmental condition to keep the beans in reducing its spoilage. After-
sales services include creating customer care system in which customers give feedback related to
their problems and there are company representatives who solve customer problems on
immediate basis. Company adopts a proper disposal logistics that reduce their cost and helps in
maintaining proper hygiene for all customers.
Ethical considerations by company through Berista
Company appoints the barista, which is an Italian word that represents male and female
who typically work behind the counter and serve hot and cold drinks as well as coffee. Company
trains barista in such a way that they respect the values and believes of customers (Kuperman,
Gardner and Pryor, 2013). It helps in promoting the culture of customers at workplace that
creates ethical environment in the coffee shop premises and follow all the ethical rules. Every
country has their rules, regulation, culture and norms, staff should follow the rules made
by the company so that they cant halm the customer values
Structural challenge faced by company and way to overcome
The structural challenge faced by company was culture of Italy. The people of that
country like to have coffee at home. As in the year 2011, 75% of the coffee consumption by
Italian people was drunk at home. So, company will adopt the strategy to make interior in such a
way that they can able to relax and have coffee. People of Italy used to consume coffee after
their working hours to reduce their stress and laziness.
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Illustration 2: Interior of cafe
(Source: Interior of cafe, 2016)
Marvin and Smith will adopt the interior shown above which would make feel customers
as they are sitting at home and having coffee. It will help in making them feel stress-free.
TASK 2
Marketing mix of company The marketing mix includes product, price, place and promotion
made by company.1. Product: The product mix of company includes:
a) Herbal tea: It includes lemon, green , black, ginger, peppermint , lavender , lemon
balm , black beery leaves, dandelion and hawthorn tea (Hui and Suher et.al., 2013).
b) Hot tea: It includes espresso, macchiato, latte, flat white, long black, mocha, doppio
and cappuccino.
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Illustration 3: Types of hot tea
c) Cold coffee: It includes cappuccino, dry-cappuccino, americano, affogato, dreve,
mocha breve, mocha, cafe con hield, cafe bombom, con panna, flat white and black eye.
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Illustration 4: Types of cold coffee
(Source: My corner of Italy, 2017)
d) Pastries: They offer angel wings, baxin, bruttiboni, barbajada, cassata, budino, biscuit
tortoni, crostata, cavalluci, gelato, cucidati, cannoli, italian ice and marron glance.
They also offer fresh mango juice which is supplied by Uganda:
e) Snacks: The snacks offered by company includes ortolane, ortelloni, armonica,
casatiello, hot dog, margherita and parigina. 2. Price: The strategy adopted by company is mark
up and price penetration. Initially, company will use price skimming according to the interior and
quality offered by them which would make customers feel unique (Claycomb and Martin, 2013).
They will be attracted by the differentiate strategy used by company and become ready to pay the
skimming pricing. After sometime, company will focus on mark-up price to meet with the
competitor’s prices. As competitors will also try to grab the market share by coping the same
interior then in that case, company will need to lower down its prices so that they would be able
to gain competitive advantages by offering the same quality of product.
3. Place: Company has selected Milan in Italy as there are various factors that are in favour to
business. These are given as follows:
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a) Proper transportation facility for customers: Customer can easily come to the coffee
shop and easily can go back to their home.
b) Warehouse facility: Raw material (beans) are supplied by Uganda to Italy and so, there
will be requirement of storehouse to keep the raw material. So Milan has the facility of store.
c) Human resource: They are the key person for company, availability of the quality
human resource will help the company to produce the quality goods.
4. Promotion:
In order to have better promotion within market, business firm must consider diverse
standards. For example, effective consideration of promotional mix is also beneficial because it
assists in improving the brand image in the. As Marvin and Smith's café is looking for business
expansion in the new market, it means that business entity must create better awareness in the
market. It will assist in attracting more customers and lead business firm towards an impressive
level of success. There are number of methods which can be employed by the management of
Marvin and Smith's café in order to have effective promotion of products and services (Eriksson
and Hansson, 2013). For example, company can have effective reference of discount policy in
order to attract customers.
There are many restaurants and café in the market that focus on the long term discount
policy to attract a large number of customers. Company can also introduce number of tactics like
one on one free policy. In this, Marvin and Smith's café can offer free casatiello with a purchase
of Mocha. It will attract customers who are looking for drink as well as snacks within limited
budget. Pricing policy also play a critical role in promotion of because in competitive market the
standards can be set out by offering services as per pricing need of customer. For example, if
competitors of Marvin and Smith's café are offering budino at the price of 20 Euros then in order
to have sustainability, business firm can offer the same product at a scale of 15 Euros. It will also
create a tendency among customers about products and services of Marvin and Smith's café.
Along with this, it has been noticed that using advertising on different platforms is also
beneficial because it might affect the perception of target customers in a positive manner. By
having print media advertising in any local magazine might help in creating awareness about the
business entity. Free sampling at fair and food exhibition can also help business firm to attract
more customers and accomplish expansion goals effectively. It will also help in creating a strong
brand image among diverse business suppliers which is beneficial for sustainability (Claycomb
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and Martin, 2013). In addition to this, it can be stated that there are few other methods of
marketing which can be employed to have effective promotion. Social media advertising and
promotion is a tactic which allows to have effective development of customer base. It also assists
in attracting a wide range of customers within limited time period. Customisation over social
media sites can also benefit more effectively to the Marvin and Smith's café.
Moreover, mail order marketing use is also advantageous for businesses because it
facilitates in creating awareness about products and services. In this, information about products
and services will be mailed to different customers through database in order to create familiar
environment. With an application of such technique, company can easily target audience and
accomplish objectives. Customer referral promotion technique is also efficient which can be
employed by Marvin and Smith's café for sustainable promotion (Allegranzi and Donaldson
et.al., 2013). For example, company can provide discount and premium services to customers, if
they have word of mouth advertising with respect to café among friends. It will also create a
positive environment and ensure that brand is being promoted effectively in the competitive
market. Local market campaign can also be benefited for the organisation. It will also promote
business with an engagement of local community which might offer sustainable promotion. It
will help in improving the customer base and generate better market share.
TASK 3
Marvin and Smith's cover the wider geographical area by the two ways one is organisation
culture and information system
Company gains the competitive advantage and cover a wide geographical area by
following ways:
A) Organisation culture: The culture of people in Italy is that they prefer to drink coffee
at their home as they consume coffee after their working hours so as to feel stress-free and for
reducing their tiredness. Company will make organisational environment in such a way that they
would feel that they are sitting at home and having coffee. Along with that, firm will also gain
sustainable advantage over their competitors by adopting a unique concept that is making interior
of coffee shop in such a way that would make the customers feel that they are at their home only.
B) Information system: Company had updated their software in such a way that
computers of all branches are connected to each other (Hui and Suher et.al., 2013). This
software provides proper inventory management that there should be maintenance of the
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minimum inventory in store and outlet so that there will be no shortage. The Company has made
client care system where they give comments about their trouble and organisation representatives
are there to solve their difficulty on immediate basis. This helps the firm to retain customers in
the long run.
TASK 4
Interpretation of financial data
Particulars Formula Amount
Sales 360000
GP 208000
GP ratio GP/Sales*100 57.777777778
NP 26800
NP ratio NP/Sales*100 7.4444444444
Total assets 113000
Current liabilities 6200
Capital employedTotal assets-current liabilities106800
ROCE Sales/Capital employed3.3707865169
Liquidity ratio
Current assets 35400
Current liabilities 6200
Current ratio Current asset/current liabilities5.7096774194
2016
Current ratio 5.7096774194
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