Marvin & Smith Coffee Shop: Expansion Plan in the European Union

This report details the expansion strategy for Marvin & Smith, a coffee shop chain, into the Spanish market. It begins with an introduction outlining the company's goals and background, followed by an analysis of Spain as a suitable market, considering its coffee culture, tourist appeal, and logistical advantages. The report then explores the marketing mix, including product, price, place, and promotion strategies tailored for the Spanish market. It also discusses the implications of geographical expansion, including changes in management structure, competitive advantages, and ethical considerations. Furthermore, the report evaluates the financial aspects of the expansion, focusing on liquidity and profitability to assess the viability of the venture. The conclusion summarizes the key findings and recommendations for successful expansion.

EXPAND A COFFEE SHOP IN A
COUNTRY OF THE UE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Expansion of coffee shop in Spain and impact of Brexit.................................................3
TASK 2............................................................................................................................................4
P2. Marketing mix related to coffee shop expansion.............................................................4
TASK 3............................................................................................................................................6
P3. Implications of the need for Marvin and Smith’s for covering wide geographical area in
terms of a different country....................................................................................................6
TASK 4............................................................................................................................................7
P4. Evaluating financial condition on the basis of liquidity and profitability........................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Expansion of any business is an essential part of sustaining ability of any organisation in
the market scenario. Businesses dealing in food and other drinks face a stiff competition from
other competitors in the market. Hank Marvin and Patty Smith both; working together for years
in catering and food services wish to expand their business by opening a new coffee shop in
market (Nestle, 2013). By doing some research and analysing different markets in all over the
UK they have estimated how much market capital is needed and what are the types of services
and features they can add to their coffee shop. After the surveys and analysis, they have opened
their shop in Wandsworth in south of London city (Stambo, 2013). They have a strong believe in
providing services and following ethical way of doing their business. After doing successful
business in United Kingdom, they have focussed on expending their business in Europe.
TASK 1
P1. Expansion of coffee shop in Spain and impact of Brexit
Spain will be suitable country for setting up coffee shops, from survey it has been
observed that Spain is hub for global tourist destination of European Union. It has a traditional
coffee culture and situated at third place after USA and Brazil as largest coffee consumers. It is
consumed more than alcohols and soft drinks so it will be regarded as best place for expansion.
In Spain, having a coffee machine is considered as a status symbol. Prices of coffee will increase
as most of the customers are young people.
Logistics – (supplies, inventory and storages)
Company through adopting fair trade can deliver their product in Spain as there are
many direct cargo freight from Entebbe to Spain. Country have high tech technologies so it is
easy to locate places through GPS features of cell phone. The only problem arises in Spain is
their ligations and languages. Tourists often find it difficult to read out locations. Company can
have several technological help in to ease access of their shop's location. Having a direct transfer
of their inventory will help them to grow faster in German market. This will also reduce cost of
production which will help them to add more features to their products.

Ethical consideration – (welfare of staff, adopting fair trade practices)-
Spain is among several country who have signed treaty of adopting a fair trade with
COTECA (Coffee, tea, cocoa global industry expo), Anuga trade-fairs and BioFach in Spain. By
signing treaty with these three organisations farmers in East Asian country Uganda have luxury
to earn their income independently. Uganda is known for well-known coffee seeds having all
numbers of suppliers e.g. Marvin's and Smith coffee shop deals with Gumutindo Coffee, Fair
trade regarded as best suppliers providing high level quality products.
Structure (transport, layout, locations) - Spain is regarded as heart of European Union which
is surrounded by Ukraine, Poland, France, UK and Italy. Geographical boundaries of Spain
provides a closeness with other countries (Prado, 2012). So it can be considered as one of the
tourist destination in European Union as many people have to pass through Spain to go to
another country so it is regarded as a meeting point of different destination. Spain have wider
roads, advance rail network modern airports high security and extensive lands makes it a
pleasing destination of travellers.
Brexit negotiations – With United Kingdom is going out of European union in coming days it
won’t affect must of the business of coffee as it an consumable item and a cheap commodity .
Pattern of consumption of these food item won’t change as well as business strategies. With
Brexit there will be change in policy in business as they are having fear the other company may
not leave European unions (Lachos-Perez, 2016). So in future they have plans to reduce taxes on
trade practices in all over Europe.
These are some of the important factors which are to be considered while expansion of their
businesses.

TASK 2
P2. Marketing mix related to coffee shop expansionMarketing mix comprises of 4 factors
Illustration 1: 4 Ps of marketing
Product- Maven and Smith coffee shop have targeted to expand their business in all over
Europe with east African flavoured coffee. Their product is a having a unique mixture of
ingredients extracted from finest coffee beans of Gumotind Coffee while having a fair trade
practice with Uganda. This uniqueness separate Marvin and Smith from others it do not contain
any chemicals it which brings special natural aromatic flavour which is widely accreted in
German people. They are ably to forecast demand, expectations and preference of coffee people
wish to have. They have different varieties of coffee like white coffee, black coffee, hot coffee
and ice coffee. They have adopted the marketing mix policy which helps them to define evaluate
and growth of their organisation.
PRICE - For gaining more profit in market they must have effectual marketing
strategies, hence they have planned to sell their coffee at comparatively lower rates in Spain as
compared to prices in UK. This strategy will assure them to sustain and overcome hiccups in
market place. e.g. If price of a cup of coffee is 2.5 euros in UK they can increase prices up to 2.7
and decrease price of product to 2.3 in Spain this will help them, to expand in German market as
they have a better quality of product in market. They make must make sure that they do not
lower their prices than production cost in Spain which lead to loss in their business. They can
later hiker their prices apter penetrating deep in German market.
Place- Spain have the major tourist destination like Munich and Hamburg. And target these two
cities for expansion of their business because they ate located near football grounds and have

large population. They will be helped by having an effective coffee culture of Spain. These two
cities have relatively higher population of young people so the scope also increases of gaining
profit. Developed roads and high-tech technology helps inn easier transportation even in harsh
conditions in the country. They have a very strict security in all over Spain so it is safer top do
business in several destinations of Spain e.g., they can also expand their business in city as well
as highways or inside a college campus.
Promotions- Marvin's and smith coffee shop have entered Spain with a scope of expansion for
linger term. So they must invest in promotional activities to increase their profit and loss. For
increasing their grass routes in all over Spain they must organise seminars, local events,
merchandise, sponsorship and conferences which are effective promotion policies work effective
in Spain. For extracting more customer to their businesses company can culture some evening
broad games or these nights like chat with Nanna or unknown chat rooms which are some of the
highlighted culture of Spain where new people meet. To make their business more effective they
can also provide some discounts and cashback.
For having better expansion plan ownership plan to have more staffs. They will get staffs
easily due to easing of trading practices and more young people in Spain.
TASK 3
P3. Implications of the need for Marvin and Smith’s for covering wide geographical area in
terms of a different country
Needs of expansion of business in wider geographical areas are possible when company
expand their business in terms of service delivery, staffing, promotions and regulation of
supplies. This will have more impact on competitive market.
Basic factors of implications are
Impacts on management structures – every business have their own management
structure that differs the organisation from others. Marvin and Smith Coffee shops have plans to
expand to overseas destination so they have to change their management according to need and
want of that place e.g., policies of hiring , promotions ,business are different in Spain so they
cannot apply their management policy used in United Kingdom. For expansion they require a
well-structured plan for sustaining in market as well as make profit in long run in market. For

staffing they require people who are familiars to country like there staff, accountants, IT
consultants, promotion managers. It company hire people for local area, it will be cheaper to
these as well provide better understanding (Zeng, 2012). Apart from this, analysing both the
macro factor and micro factor is also important this will help them plan better in market. They
must use different analytical tools like PESTAL and SWOT to analysis factors of organisations.
Most managers in organisations are profit sensitive they only have goals to earn more profit
discarding ethical values and welfare of their employees. So management need kind of managers
who can make coordination between welfare of staffs, requirement of business, equity and
profit as well as match up with customer need and expectations. Organisation's first agenda is to
expand globally which include effective customer care services for assisting customer in the
country. Use of technology can help in providing online services like online orders. There must
be better coordination between managers in UK and Spain which helps in better execution of
planning. This will ensures better risk handling and provides sustainability against fluctuating
marketing changes. Owners must ensure that they have equal treatment for managers in both the
countries which will reduce chances of conflicts and clashes in an organisation.
Competitive advantages – Marvin and Smith cafe already have reputation in UK and
getting better feedbacks from their customers. Since the cafe are operating in open market like
having free entry and exit in market they have chances of making changes in their sales activity
and change their style of services(Khan, 2013). They can survey a market as and set price
accordingly, this practice will help them to rout toy more people in market structure. Reduction
in prices and better promotional activities will help them to grow in market structure. In current
scenario Uganda's coffee is renowned all over Europe for its unique taste which result in
customer shift from other coffee to Uganda's coffee.
From the very beginning company focus on making goodwill among their customers by having
a good relationship and try to enhance their services according to need and demand of customers.
With strong business values and ethics, company is able to attract more customers they have
used IT very effectively like have installed free Wi-Fi and free gaming which are the source of
attraction for young people (Bixler, 2012). Students from university can have coffee and access
internet do their projects and other online activities. This helps in popularise cafe and their profit
will increase.

These are some of the factors which are very effective in UK market. They must generate some
rejuvenating ideas in German market also so that they can also get competitive advantage in all
over Spain.
TASK 4
P4. Evaluating financial condition on the basis of liquidity and profitability
Business have a good base as they have no liabilities and loans or dents. They are making
gross profit with bigger margins. Gross profit is the overall revenue business made including
expenditures. In the end 2016 company have earned a Groff profit of 208,000 euros. This
indicates a better functioning of coffee shop as well as their efficiency reinvent to profit.
Through analysing liquidity ratio and profitability criteria financial condition of the organisation
can be evaluated properly.
Analysis on net profit 0f 26800 till 31st Dec 2016. Through this, profit they can buy 2-3 more
machines and expand their business.
CalculationsProfitability:
 net profit ratio- (net income/net sales ) = (26800/360000) = 0.074
 rate of equity ratio- (net income / shareholder equity )
(26800/106800)= 0.25
 return of assert -(net income / average total assert)
(26800/113000)= 0.237
 profit-((gross profit/net sales )*100)
(208000/360000)* 100 = 57.77%Liquidity:
 ROCE (return on capital employed )- (operating profit / capital employed )* 100 Capital
employed = shareholder funds + long term bond (106800+0)
26800/106800= 0.250 =25%
 current ratio = (current assert /current liabilities )
35400/6200 = 5.70
 Acid test ratio ( current assert – inventory )/current liabilities
(35400- 8000)/6200= 4.419

Based on analysis of profitability and liquidity ratio, it is observer that company have a good
financial condition in market. They have higher amount of assert that liabilities. Say for year
2016 they have 25% increase on return of capital which is in fact a better state of a coffee shop.
They are self-reliable in funding their businesses son as well as having a good management base
this factors provide a positive sign for expansion in market place. In current scenario, they have
a very good base and reputation in UK so it will help to invest in stock exchanges. Also it will be
easier for them to call more investors to invest in their vesture.
While doing business in Spain while adapting certain financial policies like investment plans,
hiring employees, social work and managing them will help in increasing their grass roots in all
over the country.
From the start the coffee have always target to expand their business so as their financial
policies. A good market policy have always shows a better financial prosperity.
CONCLUSION
From the case study, it is being found that Spain is a better destination for doing
businesses which is a tourist destination as well as have proximity with majority of European
countries. They have habit of consuming coffee more them other drinks hence it will help the
organisation to grow Marvin and Smith are using marketing mix very effectively in their
promotion plan. For expansion in geographical area they must make changes in organisation
structure as well as make strategies and changer to develop in different market. It is also
observer that from current financial condition they have a better profit ration for the year 2016.
They have a current ratio more than standard ratio so company is gaining profit. They do not
gain much from share market so shareholders and investors do not play any role in business
activity. The shop is self-financed organisation. In expansion policy they have most importantly
concentrated on changes which can occur due to Brexit. And are ready for making policies
according to change (Amerine, 2013). There is better coordination between their managers in
UK and Spain which help in better coordination among their employees. They have effectively
used Information Technology is good effect which help them to have more competitive

advantage over other in coffee business. Another important factor is using best quality of coffee
for their business which has brought uniqueness in European market.
The company have implemented effective strategic management according to
government policies through surveys they have covered a large area of Spain including college
and highways. One of the feature of market strategy is targeting youth in an ethical manner
which help in increasing they productivity (Erickson, 2013). They have targeted to expand in
other countries to increase their market. Through this case study we have found that company is
having a better scope in expansion and sustain long term in market.

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