Business Essentials: Analysis of Coffee Shop Expansion in Austria

This report examines the business essentials for a coffee shop's expansion into Austria, focusing on the decisions of partners Hank Marwin and Patty Smith. It delves into the marketing mix, considering product, place, price, promotion, people, physical evidence, and process. The report analyzes the impact of expansion on management structure and competitive advantage, including departmental functions and strategies to gain an edge in the Austrian market. Furthermore, it evaluates the financial aspects, specifically profitability and liquidity, influencing the expansion decision. The report provides a comprehensive overview of the key factors necessary for successful business expansion, offering valuable insights for students studying business development and strategy.

BUSINESS ESSENTIALS

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Expansion Decision............................................................................................................1
2. Marketing mix....................................................................................................................2
3. Impact of expanding on two key areas...............................................................................5
4. Financial information (profitability and liquidity impacting expansion decision).............7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Business essentials plays vital role in implementing business operation. It is important for
the firm to evaluate all the basic and necessary information which will assist the management in
establishing and expanding organisational functions. The report will discuss the expansion
decision made by two business partners for their coffee shop. It will evaluate the marketing mix
factors of Austriaan country which is Austria which will assist the enterprise in recognising the
taste and preferences of interaction consumers. Besides, the report will outline key areas which
faces major challenges at the time of expansion plan. Thus, it will identify the profitability and
liquidity of the coffee shop which can impact the growth and development of Coffee shop in
Austria.
1. Expansion Decision
Hank Marwin and Patty Smith are partners since ages and serving satisfactory food
services in Wandsworth South London. Now being the market leader among all the coffee shop
the partners are planning to expand the business of one their shop in Austria for which the
individuals are focusing on analysing the market of various countries in which Austria's is most
favourable and supportive to food business. The Domestic citizen of Austria are very particular
about the food habits and heat therefore its is beneficial for the partners because in London the
organisation was growing because of its regular innovating in snack and quality of ingredients
like specially the use of the finest coffee beans. When expanding business operations the partners
need to consider following factors:
Logistic Consideration: Before expanding the market, Hank Marwin and Patty Smith
will focus on identifying various issues which can impact the growth and development of the
shop in new area of Austria. The company will evaluate competitor analysis, availability of
humans resource, market survey about taste and preferences of consumers, Strategies used by
other coffee shop, pricing strategy and most important the market area (Okoro, 2012). Thus,
thinking the logical aspects assist the enterprise in formulating strategies and making effective
decision regarding expansion.
Ethical Consideration: This is most important factors which help the individuals in
determining the laws and the regulation of Austria. The partners' will analyse the regulation by
Austriaan union which are enacted by government specially in Austria for strict regulations in
order to protect the rights of domestic citizens the rights includes, minimum wages to employees,
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consumer protection law, healthy and safety work environment, usage of quality and minimum
additive in the food items. This also comprises the code of practices which are being
implemented by the company in order to serve quality services to its consumers (Akwetey,
2015).
Structural Change: It is important for the partners to consider the changes in structure
according to new Area and new environment because working according to old structure will not
work in Austria can be risky because The functioning and strategy of South London and Austria
are completely different from each other. When expanding business the partners will focus on
segregating the functions and operation of organisation according to departments which will
reduce the confusion and complexity and will lead to smooth flow of information and operations.
The negotiation made by Brexit has not impacted on the business function which will
limit the growth of coffee shop but on the other hand it important for the enterprise to comply
with the regulations of Austriaan union which focus on protecting the rights of domestic citizens
involved in activities.
2. Marketing mix
Evaluating the marketing mix act as tonic for the business which is planning for
expansion (Yoo, Donthu and Lee, 2010). In accordance to the of Hank Marwin and Patty Smith
who are planning to expand its coffee shop in Austria need an analysis over the 7p's which will
assist the management in formulating the changes according to the strategies followed by other
rivalries of food industry like Cafe Schwarzenberg, Cafe Europa, etc. The 4p's of marketing mix
in context to Austrian coffee houses are as follows:
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Illustration 1: Marketing mix
Source: (Vincent, Boomer and Bitner 2013).
Product: The product offered by Austrian coffee houses are of various type according to
the taste and preferences of consumers which mainly includes, Coffee, tea, pastries, beverages,
frappuccino, smoothies and merchandise like, coffee mugs, biscuits, instant coffee, and dark
chocolates. Therefore, in accordance to this the partners goals an strong control over its products
as in London also the coffee also aims at serving innovated and various types of products. On the
other hand the partners will focus on making availability of merchandise because the shop in
London only offers the food products and beverages
Place: The stores of coffee houses are located in almost every locality for which the
partners will initial face the problems because in starting the individuals can not expand their
business at all location of Austria. Therefore, the services will be limited. Moreover, many
Austrian coffee houses delivers their services through online platform because which the
company are leading the market of country. In order to attain advantage over place the partners
will be focusing on establishing their shop at most populated areas like near to school, colleges
and malls.
Price: It is the criteria which attracts the consumers towards the products and services of
company (Borden 2014). The Austrian Coffee houses holds strong the control over pricing
strategy because the organisation aims at implementing various pricing strategies like,
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Market Penetration: In this the coffee houses charge low prices for new launched product
like beverages and snacks and further increase the price according to changing preferences of
buyers.
Psychological pricing: In this the coffee houses tricks the consumers like offer's beverage
products relatively at sightly low price according to rivalries.
Loss leader pricing: In this the coffee houses sell its merchandise products at relatively at
lowest price according its on the sop services of coffee and snacks which assist the companies in
earning competitive advantage (Steenkamp 2017).
In accordance to these pricing strategies followed by coffee houses Austria it can be stated that
the partners hold the strong control over its pricing strategy as it offers its products and services
at consumer friendly rates. Therefore, the both will focus on maintaining the same pricing
strategy in Austria.
Promotion: The coffee organisations in Austria make use of every possible strategy to
attract the attention of consumers like the tactics in which offers schemes like happy hours or
discount for specific period. Moreover, in promotion techniques the partners will focus on
promoting their combos and offers through social media and advertisement on newspaper,
television, radio etc.
People: The peoples at the Austrian coffee houses plays a vital role as their behaviours
with the consumers enhances the image and services of the company. Therefore, in Austria, the
coffee houses focuses on proving appropriate training to staff about the behavioural strategies to
treat their consumers as god. In accordance to this the coffee business of Hank Marwin and Patty
Smith holds advantage as the management of partners are solely focused on treating customers as
an asset.
Physical Evidence: The leading coffee houses of Austria are located in almost every
locality in order to make easy availability of snacks and relaxation area to people. Therefore, in
accordance to this, the partners will lack the availability because initially they will not able to
establish the house at all locations but the team will focus on locating shop at most populated
area of Austria.
Process: Almost every coffee house in Austria offers the transparent system of food
processing system to serve consumer satisfactory services. The process of making food and
beverages helps the organisation serving customer satisfaction and loyalty. In accordance to this
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the partners do not offer at transparent processing system but it provides every information about
the processing, ingredients used and production to its consumers which is also a good indicator
when planning an expansion across the internation boundaries.
3. Impact of expanding on two key areas
Management Structure
Hank Marvin and Patty Smith plan of opening their coffee house in Austria is with the ultimate
motive of earning profit and serving customers satisfaction. Whereas while expanding business
function the most important role in business is of management structure which assist in
maximising profit in a short time period. Further, while establishing or expanding business the
company seeks for human resources or manpower which act as a backbone to the organisation.
Hank and Patty have to will focus on following the five management functions that is planning,
organising, staffing, directing and controlling. Based on these five management functions both
will be able to grow or expand their business. Moreover, both will focus on segregating the
departmental functions in order to establish proper and smooth functioning of the organisation
should be done. Management departments can be divided into following which are as follows:
Production department: This department will focus on producing services according to
the taste and preferences like the usage of fined coffee beans and quality and healthy ingredients.
This department functions according to the analysis made by marketing team by conducting a
market survey.
Sales department: This department will look over sales services which comprises the
delivery of services to end users which impact the image of company for long term and will
assist the company in establishing good market image (Yoo, Donthu and Lee, 2010). Further, it
monitors and focus on increasing sales and the percentage of profit in order to promote growth
and development of company.
Marketing department: This department of coffee shop will focus on implementing the
use of marketing strategies according to Austrian market to attract the maximum number of
consumers towards the products and services of the shop. It comprises types of schemes like
happy ours and discounts for limited period.
Research and development: This department will focus on discovering the demand and
needs of Austrian people and further will help Marwin and Patty to implement the use of
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techniques which will help them in successful establishment of firm in new country. Austria is
the country of advanced technology which provides various easy cooking equipments for snacks
which helps the leading coffee houses in serving consumers satisfaction. Therefore, the R&D
department of the organisation will identify the technology which can help partners easy
preparation facilities like rivalries.
Thus, both the owners will ensure the smooth functioning of all departments and also at
serving employee and consumer satisfaction. Therefore, the management structure of coffee shop
will be formulated in away to establish coordination and cooperation between business
operations in order to earn profitable returns.
Gaining competitive advantage
Hank Marvin and Patty Smith's business was growing at a very fast pace in the world of
competition therefore the plan of expansion was executed in which the ultimate motive of the
coffee shop was to attain competitive advantage. Apart from all domestic competitors it is
difficult for the organisation to manage the rivalries of international boundaries. The firm will
first focus on making different marketing strategies according to Austrian competitors which are
as follows:
1. Initially the team will serve quality food with healthy ingredients and finest coffee beans
at minimum prices.
2. The team will focus on following product life cycle concept is being followed. The
product life cycle concept includes four stages that is, Introduction stage, Growth stage,
Maturity stage and Decline stage. According to these four stages, the firm will able to
determine the demand for products which will assist in future growth and competitive
advantage.
3. Effective marketing strategies will be used to attract the attention of Austrian consumers.
4. Products will be prepared according to the need and wants of the Austrian consumers.
5. Feedback of the consumers will be collected in order to evaluate the loopholes and
shortcomings.
Hence, The company will focus on adapting online marketing strategies of promotion which
assist the food business in attaining competitive advantages.
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4. Financial information (profitability and liquidity impacting expansion decision).
Profitability: Analysing Profitability index before expanding business function is
importance as it assist the company in determines its performance which is beneficial in making
future expansion decisions (Jami and Bahar 2016).
Net Profit Margin Ratio
Net Profit Sales
26800 360000 0.0744444444
In accordance to profitability index of Coffee shop it is demonstrated that per unit profit of
products is very less and expanding business in such big country can limit its growth and profits
(Khan and Safiuddin 2016). The loan of the company further implies tat when expanding firm
the partners will need more capital investment which will increase the liability and is not
appreciable companies performance.
Liquidity: The liquidity of the company is calculated to evaluate the paying ability of
organisation for its credits and liabilities (Pradhan and Das, 2016).
Current Ratio
Current asset Current liability
113000 106800 1.0580524345
In accordance to the calculated current ratio of the coffee shop it is demonstrated that the
partners have the ability to pay for its liabilities which is good sign for expansion plan. Further,
the ration represents that credit taking ability of the partners are strong and can help them in
repaying for all the liabilities when they expand the business operations.
Henceforth, according to profitability and liquidity, it is been analysed that Hank Marvin
and Patty Smith have the ability to expand its services in Austria. Implementing the use of
marketing and pricing strategies can assist the business in its growth and development (Meena
and Dhar, 2016). Fluctuation in companies performance are regular when the organisation is
developing therefore it is not the negative factor which will create hindrance in the future
performance after expanding. Effective marketing strategies, Feedback of the consumers,
product life cycle are three basic strategies which will be used by partners in overseas expansion.
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CONCLUSION
The report summarized the importance of business essential when the individual plans to
expands its business operations. Further, the report analyse the consideration factors which are
used by Hank Marvin and Patty Smith when planning an expansion in Austria. It stated that
marketing mix factors in context to Austrian coffee houses when represented the strengths,
weakness and opportunities to the partners which will assist them in their expansion plan.
Besides, the report outlined the key areas which will demand the changes in the structure to
establish stable growth and development across the international boundaries. Hence, the report
will conclude with the financial position of coffees shop by calculation of current variation and
net profit margin which demonstrated its liquidity and profitability position. Overseas expansion
is the major decision which can assist the organisation in increasing its business operation or can
limit the growth of entire organisation there expanding across the internation boundaries demand
various analysis which includes the market research, taste and preferences of consumers, ethical
consideration, legal consideration. Further, the overseas expansion demands the evaluation of
changes in key areas of business such as Information systems, Organisation culture, Management
structure, attaining competitive advantage, Supply chain and Personnel and managing staff
issues. In accordance to the scenario of report in which two partners that is Hank Marvin and
Patty Smith's holds two coffee shops in London plan an expansion for one coffee shop in Austria
for which it recognised competitor analysis, availability of humans resource, market survey
about taste and preferences of consumers and techniques implemented by rivalries' coffee
houses, pricing strategy. Further, the report found the key areas used by partners to deal with
changes of internal country that is management structure and attaining competitive advantage.
Moreover, it determined the marketing mix of coffee shop in comparison to leading coffee
houses of Austria which assisted the individuals in determining its strength, weakness and
opportunities which should be considered when expanding business overseas.
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REFERENCES
Books and Journals
Akwetey, L.M., 2015. Global Business Ventures, Foreign Direct Investment, Expansion, and
Growth Strategies. In Global Enterprise Management (pp. 19-37).
Borden, N.H., 2014. The concept of the marketing mix. Journal of advertising research. 4(2).
pp.2-7.
Jami, M. and Bahar, M.N., 2016. Analysis of Profitability Ratios to Evaluation of Performance
of Indian Automobile Industry. Journal of Current Research in Science. (1). p.747.
Khan, M.M. and Safiuddin, S.K., 2016. Liquidity and Profitability Performance Analysis of
Select Pharmaceutical Companies. International Journal of Science Technology and
Management. pp.167-177.
Meena, A. and Dhar, J., 2016. An Empirical Analysis and Comparative Study of Liquidity Ratios
and Asset-Liability Management of Banks Operating in India. International Journal of
Social, Behavioral, Educational, Economic, Business and Industrial Engineering. 8(1).
pp.342-348.
Okoro, E., 2012. Cross-cultural etiquette and communication in global business: Toward a
strategic framework for managing corporate expansion. International journal of
business and management. 7(16). p.130.
Pradhan, R. and Das, D., 2016. An Emperical Study on the Profitability Analysis: A case study
of Bhushan Steel Ltd. International Journal of Research in IT and Management. 6(1).
pp.31-39.
Steenkamp, J.B., 2017. Global Marketing Mix Decisions: Global Integration, Not
Standardization. In Global Brand Strategy (pp. 75-109).
Yoo, B., Donthu, N. and Lee, S., 2010. An examination of selected marketing mix elements and
brand equity. Journal of the academy of marketing science. 28(2). pp.195-211.
Online
Vincent V. V. Boomer and Bitner, 2013. Service Marketing Mix (7P's). [Online]. Available
through: <https://www.toolshero.com/marketing/service-marketing-mix-7ps/>.
[Accessed on 24th October 2017].
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