Expansion Strategy: Marvin and Smith's Coffee Shop in French Market

This report analyzes the potential expansion of Marvin and Smith's coffee shop from London to France. It begins by justifying the choice of France, highlighting its high coffee consumption rates within the EU and the preferences of French consumers for specific coffee varieties. The report then details a tailored marketing mix, including product offerings, pricing strategies, placement considerations, promotional activities, and process improvements. It also identifies potential organizational culture challenges, such as conflicts among employees from diverse backgrounds, and the need to establish a competitive advantage through high-quality coffee, ancillary services, and competitive pricing. Financial ratios are calculated to evaluate profitability and liquidity, providing insights into the financial performance and the impact of expansion decisions. Overall, the report offers a comprehensive business plan for the coffee shop's expansion, considering market analysis, marketing strategies, operational challenges, and financial performance.

Business Essential

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1. Choosing EU nation for the firm for expansion ................................................................1
2. Producing tailored marketing mix for the business............................................................2
3. Outlining issues faced by the coffee shop..........................................................................4
4. Impact on decisions by evaluating profitability and liquidity position..............................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business runs to earn profit and initiate growth for expanding to more locations to
maximise profits. Present report deals with Marvin and Smith's coffee shop which has existing
coffee shop in London and is planning to expand in France in order to earn profits and satisfy
customers. France is chosen for expansion purpose as coffee drinkers are more in quantum which
will be able to fruitful for firm to earn profits. Marketing mix is provided along with financial
ratios so as to analyse financial performance of firm. Moreover, issues which will be faced by
business in new location and its impact are also explained. Hence, overall analysis of expansion
is made for the coffee shop so that they may expand and garner desired profits.
1. Choosing EU nation for the firm for expansion
Business starts it operations in order to serve the society. It further helps to earn profits in
good quantum when quality products are supplied by business. Marvin and Smith's coffee shop
which has earned enough recognition and good customer base in London is planning to operate
and expand in France as it is the highest coffee consumption nation in EU. It will eventually help
firm to garner more customers and profits would be magnified quite effectually. In an research, it
has been identified that France has the largest ratio of coffee beans consumed by the people
which paves the way for Marvin and Smith's coffee shop to expand its market and earn desired
income. As per recent reports published by ICO (International Coffee Organisation), it has been
clarified that consumption pattern of France is 5.1 kg per capita per year which is being
identified in the biggest coffee drinkers in the world. However, Finland tops the chart.
It can be clarified that Marvin and Smith's coffee shop will be able to garner enough
profits and may attain good market share (Hair, 2015). French people have strong preferences for
perfect blend of coffee beans and consumes high proportion of Robusta coffee beans. This
variety alone consists of almost 50 % of the market in France. Expresso flavour of ingredient is
made in relation to the Robusta beans have effectively undergone significant change. They prefer
such type of coffee beans which makes it the highest coffee consumption nation particularly in
EU. Imports to France are also significant as in 2014, nearly 83 % of imports were being made
by all the developing nations. The rates have been increased on average annual consumption
which signifies that it is the most highly coffee consumption country.
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The ethical considerations in France are remarkable as people thinks about raw material
and further, cares about society up to a high extent. Location will be in main city which means
that more of customers will be attracted and sales will be increased up to a major extent. The
structural challenge of expanding to France is nothing as licenses can be obtained in a better
way. In accordance to the chart, it can be analysed that coffee drinkers be it instant or roast
flavour will increase quite significantly (Per capita consumption volume forecast of coffee in
France from 2010 to 2021 (in kilograms). 2018). The estimates in coming years are crucial as
Roast coffee would reach to 3.66 in 2019, 3.68 in next year and further would increase to 3.7 in
2021 as forecasted. Instant coffee will also be injected in coming three yeas as 0.59 in 2019
would be achieved. In 2020, 0.60 mark would be crossed and 0.61 in next period will be
obtained. By considering all logical, social, ethical elements and statistics, it can be said that
Marvin and Smith's coffee shop will be able to attain desired goals.
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Illustration 1: Consumption estimate per kg in France Source: statista.com

2. Producing tailored marketing mix for the business
The marketing mix is required so that firm may expand in France and promotional
activities can be accomplished. Tailored marketing mix is produced below-
Product –
It is essentially needed that better products and services may be provided so as to enhance
customers satisfaction. Products such as tapestries hot coffee, cold coffee and soft drinks are
provided by them. Moreover, tea herbal infusions are used to make product more interesting and
enhancing satisfaction level of consumers. Additional services such as night board game, sockets
are provided which will be fruitful to coffee shop in garnering customers in new country.
Price –
It is pre-requisite for the firm so as to effectively quote prices. Value based pricing
system is used because it uses organic coffee beans. Furthermore, additional services are also
provided by the firm which are not imparted by its rivals (Grebenc, 2014). Seeking all these,
high prices can be easily charged by Marvin and Smith's coffee shop and produce profits in
France.
Place –
This is an important element of marketing mix as business will be opening branch in new
nation. It is required that suitable location should be chosen to enlarge income quite easily.
International tourists will be attracted and firm will be benefited by expanding in EU country.
Packaging –
The packaging is required to be attractive and must contain all the legal requirements. It
means that labelling, manufacturing date, expiry date should be identified clearly so that
customers may be benefited. Furthermore, it will be helpful for Marvin and Smith's coffee shop
to attain more coffee drinkers (Nonaka and et.al., 2014).
Positioning –
Coffee shop will provide organic beans which are being used by it. Furthermore, Robusta
beans will also be used as French people consumers' prefers the same. This will help them in
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positioning market and customers will also be attracted in a better way. Moreover, other facilities
will also be given which would outreach competitors.
Promotion –
Promotional activities are needed to make customers know about products and services
offered by the firm. It can be said that social media, television and effective page on social media
would be used to target customers. Moreover, facilities such as Wi-Fi, charging sockets will also
help to attain good promotions (Bharadwaj and et.al, 2013).
Process-
The process involves better hiring of staff as they would provide services to the
consumers and entertain them by imparting quality products and quick services. Moreover,
obtaining raw materials and then producing coffee would be needed to be attained in fast manner
for giving customers speedy services.
Physical evidence-
The coffee shop will operate in France and quality services will be given to consumers so
that may be satisfied up to a high extent. It is a part of company as physical cues will be provided
to the customers. Hence, through above tailored marketing mix, coffee shop would easily expand
in France and make good quantum of profits.
3. Outlining issues faced by the coffee shop
Organization culture-
The organisation culture of every business differs from each other. It means that better
relationship with customers and employees may be maintained. Feedback from the customers
will be provided so as to correct upon shortcomings and thus, imparting quality services to them.
The main motto of coffee shop is to provide better quality of coffee so that higher level of
satisfaction may be provided to customers in the best possible manner (Iyer, Xiao, Sharma and
Nicholson, 2015). Furthermore, the best quality of services are given by them in London and
they want to continue the same in new country as well. Organic beans will be channelised in
France and Robusta beans also so that they may be provided with quality of coffee which they
prefer the most. The organisation culture of Marvin and Smith's coffee shop is that it purchases
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direct from farmers, all the required raw materials such as coffee beans helping them to earn
money in good quantum, thereby serving society up too much extent.
Employees are also provided fair wages and salaries so as to give them effective
development opportunities. They are crucial stakeholders of the firm which initiates positive or
negative growth in the country. In simple words, growth lies in hiring productive employees
which can provide better services in the best possible manner. As coffee shop will have new
workers that would come from different geographical areas and will be hired. It is natural that
they might engage in conflicts because of varied beliefs, cultural values etc. hence, it is needed
that conflicts should be resolved to maintain profits and achieve good working environment by
which more productivity will be achieved. Customer's will be lured towards shop leading to
maximum profits. Moreover, brand image of coffee shop would increase up to great heights.
Hence, organisation culture is main element which may have an impact on the firm due to
geographical area in new country (Lawton, 2017).
Gaining competitive advantage-
Every business starts its operational activities in order to accomplish set objectives in the
best possible manner. This is essentially required so that better profits and customer base can be
achieved in large quantum quite effectually. This eventually help to attain competitive advantage
and earn market share. Marvin and Smith's coffee shop has to earn better profits leading to
enhancement in profits. It can be said that issues will have to be consider by the firm so as to
timely resolve them. Main issue is resolving conflicts between workers as they will be selected
from wider geographical areas leading to evolve issues as different beliefs are followed by them.
Another thing is to provide consumers with high quality coffee by which they may be satisfied
with much ease. It is also required that Robusta beans will need to be purchased by it as majority
consumers prefer the same. This will have positive image in the market and customers will be
benefited in the best possible manner (Fleming and Spicer, 2014).
The charging sockets, hot coffee, cold coffee and related snacks will be imparted by
which competitive advantage may be attained by the company. These ancillaries products and
services along with tapestries and cold drinks will be provided leading to more profits to firm.
Furthermore, it is required that affordable prices should be charged so that customers may be
attracted and as a result, it would have competitive advantage in the best possible manner.
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Quality services along night board game, East-African feel will be provided leading to better
profits in the new location. Hence, to gain competitive advantage, all of above tactics is to be
consider by the coffee shop to lure consumers and earn market share.
4. Impact on decisions by evaluating profitability and liquidity position
Profitability Ratios Formula Amount
Gross profit 208000
Net profit 26800
Sales revenue 360000
Gross profit margin
Gross profit / Sales
revenue * 100 57.78%
Net profit margin
Net profit / Sales
revenue * 100 7.44%
Capital employed
(Total asset – Current
liabilities) 100600
Return on capital
employed
Net profit / Capital
employed * 100 26.64%
Profitability ratios are computed above which effectively helps to evaluate whether firm
is performing good or not. This means that firm's performance with regards to overall position in
the market can be evaluated with much ease. The sales revenue is 360000 which is remarkable
and it shows that revenue has been good enough. Gross profit margin is quite good as 57.78 % is
being accomplished by it. This shows that operational expenditures incurred on sales are
controlled in a better way. Net profit margin is 7.44 % which is lower showing that firm has not
initiated control over operational and non-operational expenses leading to decreased net income.
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Return on capital employed is calculated which shows that firm has attained 26.64 %
highlighting that capital are utilised up too much extent leading to good income. The overall
condition of Marvin and Smith's coffee shop is quite good as it provides quality products and
services in London and will be profitable in France.
Liquidity Ratios Formula Amount
Current assets 35400
Current liabilities 6200
Stock 8000
Prepaid expenditures 0
Liquid assets
Current assets -
(Stock + Prepaid
expenditures) 27400
Current ratio
Current assets /
current liabilities 5.71 : 1
Acid-Test ratio
Liquid assets /
Current Liabilities 4.42 : 1
The liquidity ratios such as current ratio and acid-test ratio are computed to effectively
assess whether it has good liquidity position or not. Current ratio is 5.71 : 1 which is quite good
showing that business will be able to effectively meet liabilities with much ease. Furthermore, it
is required that firm should use assets in that manner by which working capital may be improved
as it has more current assets. The ideal ratio is 2 : 1 and Marvin and Smith's coffee shop has just
double current ratio. It is advised to use the current assets in productive manner. On the other
hand, acid-test ratio is 4.42 : 1 which is more than ideal ratio of 1 : 1. It shows that liquidity
position of coffee shop is remarkable as it has enough of current assets to pay-off short-term
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obligations with much ease. Overall by seeking financial condition and conducting ratio analysis,
it can be interpreted that Marvin and Smith's coffee shop will be able to earn good quantum of
profits and attracts customers quite effectively.
CONCLUSION
Hereby it can be concluded that business is required to perform good so as to earn more
profit by which it may be able to expand in the best possible way. Marvin and Smith's coffee
shop is earning good profits in its existing location as profitability and liquidity position is
remarkable and further, customers are satisfied as it is providing good quality of coffee and
ancillaries as well leading to enhancement in customer satisfaction level up to a high extent.
Moreover, its East-African feel in coffee is in great demand implying that customers are
committed to the firm and are loyal as well. This means that it will be able to expand in new
location and achieve targeted objectives.
France country of EU is one of the highest consuming nation in terms of coffee. Marvin
and Smith's coffee shop has opportunity to earn profits and satisfy French customers by
providing them with quality coffee. Robusta beans are liked and preferred by them which means
that business will have to concentrate on providing such coffee so as to garner profits with much
ease. On the other hand, marketing mix will be devised in a better way so that it may easily
promote its products and earn profits in effective manner. Information system will be established
by firm so that operational tasks can be managed in streamlined way. Moreover, geographical
areas and its impact on organisation will be handled appropriately. Thus, it can be said that firm
will be successful in expanding its business to France and earn profits. The main reason for its
success would be imparting quality coffee along with ancillary services. This will lead to higher
level of customer satisfaction level and as a result, it will be able to achieve objectives.
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REFERENCES
Books and Journals
Bharadwaj, A and et.al, 2013. Digital business strategy: toward a next generation of insights.
Fleming, P. and Spicer, A., 2014. Power in management and organization science. Academy of
Management Annals. 8(1). pp.237-298.Morris, and et.al.,2015.
Grebenc, M. L., 2014. Re:“An Introduction to ‘Business Essentials’: Purposes and
Plans”. Journal of the American College of Radiology. 11(6). p .636.
Hair, J. F., 2015. Essentials of business research methods. ME Sharpe.
Iyer, G. R., Xiao, S. H., Sharma, A. and Nicholson, M., 2015. Behavioral issues in price setting
in business-to-business marketing: A framework for analysis. Industrial Marketing
Management, 47. pp .6-16.
Lawton, T. C., 2017. Cleared for take-off: structure and strategy in the low fare airline business.
Routledge.
Nonaka, et.al., 2014. Wisdom, management and organization.
Online
Per capita consumption volume forecast of coffee in France from 2010 to 2021 (in kilograms).
2018 [Online] Available Through: <https://www.statista.com/statistics/710393/per-capita-coffee-
consumption-france-european-union-eu/>
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