Business Expansion Report: Coffee Shop in Germany Market Analysis

This report provides a detailed analysis of a coffee shop's potential expansion into the German market. It begins with a justification for selecting Germany, highlighting the country's high coffee consumption and favorable business environment. The report then presents a tailored marketing mix, including product offerings (different coffee types), a penetration pricing strategy, a prime location in Berlin, and promotional strategies using discounts and social media. Key factors for successful expansion, such as human resource management (addressing recruitment and staff engagement) and marketing (adapting strategies to local culture), are identified. Finally, the report computes and assesses liquidity and profitability ratios to evaluate the financial health of the business. The report concludes by summarizing the key findings and recommendations for a successful business expansion.

Business Essentials:
Advanced

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
QUESTION 1..................................................................................................................................1
Justification regarding nation where business will be expanded by Hank Marvin and Patty
Smith............................................................................................................................................1
QUESTION 2..................................................................................................................................2
Presentation of marketing mix for the business expansion of the coffee shop............................2
QUESTION 3..................................................................................................................................4
Identification of two key factors that should be focused by the Patty and Hank while planning
to open the coffee shop in a new country....................................................................................4
QUESTION 4..................................................................................................................................5
Computation and assessment of liquidity and profitability ratios...............................................5
QUESTION 5..................................................................................................................................6
Conclusion...................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business essential are some of the key factors that are required to be focused by all the
businesses so that they can reach to desired success or goal. All of them contribute in the success
and failure of the organisation. If the management teams and other staff members will not be
able to use them properly then it may result in unmet predetermined objectives. On the other
hand, if all of them will be focused by the entities then it will help to facilitate the process of
reaching the aim which was formed previously for betterment of business (Brown, 2017).
Present report is based upon a coffee shop which is a coffee shop owned by Hank Marvin and
Patty Smith. It is located it Wandsworth, South London, United Kingdom. This coffee shop
established in 2017 and currently it is able to execute all its operational activities properly. The
owners of it planned to enlarge the business in a new country so that they can grow the business.
For this purpose, research is conducted and different aspects were analysed. These are
justification regarding the country selected, presentation of tailored marketing mix, key factors
which should be focused while expanding the business etc. Additionally, liquidity and
profitability ratios for the entity are computed to analyse the current position of business and the
way in which they can influence the decision making are also covered in this assignment.
QUESTION 1
Justification regarding nation where business will be expanded by Hank Marvin and Patty Smith
A coffee shop which is owned by Hank Marvin and Patty Smith is currently established in
London. The owners are planning to enlarge the size of business for which it will be expanded in
a new country so that business could be developed. Apart from this, they are becoming known in
abroad so most of the international tourists are seeking for them. Due to all these factors Patty
and Hank decided to expand the business in a new nation (Cooper, 2016). It has been planned by
them that they will expand the business in a nation which is the part of European Union and there
are various options available to them. Some of the nations which could be selected by them are
France, Germany, Greece, Denmark, Estonia, Ireland etc.
The country which should be selected by the coffee shop of Patty Smith and Hank
Marvin is Germany. In Germany all the people love to have coffee more than beer or water. It
has the third largest market for coffe the world first two are Brazil and USA. According to facts
and figures between the years 2010 to 2013 the portioned coffee consumption nearly doubles to
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12700 tonnes on coffee per year in Germany. On an average basis in year 2013 around 165 litres
of coffee were consumed by per German. The consumption of water and beer for the same year
was 140 and 107 respectively. It shows that all the people living in the country love to have
coffee over water and beer. The consumption of coffee was increased by 27% in 2013 which is a
great increment and with the time the consumption of coffee is increasing in Germany (Demand
of coffee in Germany, 2020). As the consumption and demand of coffee in Germany is very high
so it will be a great opportunity for the cafe of Hank and Patty to expand itself in this nation. It
will provide growth and development to the business.
There are various other factors which were also focused while selecting Germany for
expanding the business. There is a high IT sales support to all the businesses which are
establishing their business in the country. It will help the coffee shop to get this support and use
it to increase sales and number of clients in the nation. Apart from this, it is having the highly
stable trading economy which offers a very secure and properly developed legal and economic
framework which is beneficial for all the entities which will be expanding their business in the
country. The legal protection within the country very strong which protects the industrial and
intellectual property of all the businesses in Germany (Political situations in Germany, 2020).
By considering all these factors it could be justified that Germany is a right option for the café to
expand its business.
QUESTION 2
Presentation of marketing mix for the business expansion of the coffee shop
Marketing mix is a technique which is used by all the entities for the purpose of making
sure that they formulated effective strategies in context of different elements so that it can help to
meet business goals. All the elements of it, are required to be taken in to consideration by the
management of companies so that they can assure success in future. As Hank and Patty will be
expanding their business in Germany so it will be very important for the owners to make
effective strategies in context of all the aspects of marketing mix. The discussion of them is as
follows:
Product: All the offerings that are made by the entities are known as their products. It is
very important for all the organisations to make sure that they are offering such items to the
targeted audiences that are required by them. As the café of Hank and Patty will expand itself in
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Germany so it is essential for it to pay attention towards the products whether these are tangible
or intangible (Dascano, 2018). Different types of coffee which will be offered to the customers in
Germany. These are Filtered coffee, Pharisaer, espresso, americano, cappuccino, heibe
schokolade, latte macchiato, milchkaffee etc. All of them are tangible items that will be sold to
the German customers. The intangible products include the services which will be offered for
better customer experience. A proper place for sitting and enjoying coffee will be offered to
them. The USP of the cafe is that it is famous for its East African coffee shops and the coffees
which will be offered by it will be inspired by German culture which will help it to increase the
customer foot fall in the café.
Price: When an entity expands itself in new country then it is vital for it to make sure that
it is using right pricing strategy because it is one of the crucial decisions that should be taken
properly. As Hank and Patty ‘s cafe will expand itself in Germany so the owners have to
formulate new strategies (Kyeyune, 2020). The pricing policy which will be used by it will be
penetration pricing in which the prices of coffee will be low at initial level and will be increased
in future with increasing demand of coffee. It is selected because with the help of it the business
will be able to establish itself successfully.
Place: It could be defined as the place or the area where the businesses sale their goods
and facilities to the consumers. While selecting the location it is very important for the entities to
make sure that it is easy to reach for the targeted customers. As Marvin and Smith will be
expanding the business in Germany so the best place for opening the coffee shop will be Berlin
as there are various tourist places which will increase the number of customers for it (Einwiller
and Weitzl, 2016). The best location in Berlin will be Museum Island as it is the mostly visited
place by the tourists. If it will be selected for opening the coffee shop then it will help to attract
large number of customers.
Promotion: It could be defined as the process of promoting the business in the country
where it is expanded. If the entities will not form effective decisions for promotion then it may
leave negative impact upon functionality of business. As Hank and Patty will open their café in
Germany so they will be responsible for formulation of new promotional strategies. For this
purpose, the entity can offer discount to the first 100 customers. It will facilitate the attraction of
the targeted clients from the market of Germany and encourage them to engage in the market
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offerings. In order to raise awareness about the coffee shop social media could be used as it is the
most effective platform for spreading awareness.
QUESTION 3
Identification of two key factors that should be focused by the Patty and Hank while planning to
open the coffee shop in a new country
When planning to expand the business in an unknown territory it is crucial for businesses
to make sure that they are focusing towards different factors so that the challenges and threats
could be dealt in systematic manner. As Marvin and Smith coffee shop will be expanding its
business in Germany so the key factors that it should consider to manage the issues and
challenges that may arise while expansion. The key factors are as follows:
Human resource management: It can be defined as the process of managing all the
staff members who are contributing in the execution of all the operational activities. It is crucial
for businesses to make sure that they are able to manage the human resources properly
(Hampton, 2020). If it will not be managed then it may result in failure in attainment of all the
business goals. While expanding business in Germany it will be essential for Marvin and Smith
to make sure that it is managing the employees in systematic manner. The issues which may take
place in context to this factor is lack of staff engagement, challenges in recruitment and selection
etc. As Germany will be the new country so the coffee shop will have to hire new employees
which is a part of human resource management. The entity may have to face various issues in
this procedure because it will be new in the market and it will not have proper information about
the market. On the other hand, another issue will be lack of engagement of staff members which
could also be faced by coffee shop. In order to deal with these issues, it will be essential for the
owners to hire a senior manager from Germany who can handle all the human resource related
activities and mitigate the risks.
Marketing: The process of spreading awareness about all the goods and facilities which
will be sold to the clients is known as marketing. For the coffee shop of Patty and Hank it is very
important to pay attention towards this factor while expanding business in Germany. Some of the
issues which may take place in context to this factor are lack of awareness among customers,
improper marketing strategies etc. The challenges and issues that are related to marketing and
human resource management are interlinked with each other because if the workforce will not be
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skilled then it will be difficult to execute all the operational activities in systematic manner. The
marketing related issues could also be dealt properly if the owners will hire a skilled manager of
Germany who will be having detailed information of culture of the country. It will help to spread
awareness among the customers and use effective marketing strategies (Loya and Siegel, 2019).
QUESTION 4
Computation and assessment of liquidity and profitability ratios
Ratio analysis is the process of analysing actual position of business and for this purpose
all the financial statements are used. There are different types of ratios that are calculated for this
goal. These are profitability, liquidity, gearing, proprietary etc. With the help of all of them the
actual position of business could be determined. While expanding business in Germany it will be
essential for café of Hank and Patty evaluate its actual position. Following ratios will be
calculated in context of the organisation:
Liquidity ratios: All the ratios that are used to evaluate liquid strength of the
organisation are known as liquidity ratios (Perreault, 2018). Current and quick ratios are the main
parts of it so the calculation of them is as follows:
 Current ratio: It is used to analyse the relation between the short-term assets and
liabilities so that it could be assessed that all the current liabilities will be paid off with
the help of funding or not within a year. The calculation of it for café of Patty and Hank
are made below:
Formula: Current assets/current liabilities
=35400/6200
=5.71
 Quick ratio: With the help of this ratio it is analysed that all the short-term liabilities will
be paid off in less than one year with the help of quick assets of not (Pochiraju and
Seshadri, 2018). The calculation of it for coffee shop is as follows:
Formula: Quick assets/current liabilities
=27400 /6200
=4.42
Profitability ratios: All the ratios that are used to analyse profitability of the
organisation are known as profitability ratios some of them are as follows:
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 Net profit ratio: It helps to determine the percentage of net profit over sales (Valbrune
and De Assis, 2019). The calculation of it for the entity is as follows:
Formula: Net profit/ sales*100
=26800/ 360000*100
=7.44%
 Gross profit ratio: It is used to analyse the relationship between net sales and gross
profit for the year. All its calculations are as follows:
Formula: Gross profit/ sales*100
=208000/ 360000*100
=57.78%
On the basis of above calculations, it has been determined that current position of
business is very good as all the ratios are showing position condition of coffee shop.
Implication of ratios on expansion plan: As the liquidity and profitability of the entity
is very good so it will influence the decision making because the owners can increase the amount
of investment because of higher profits (Vance, 2019).
QUESTION 5
Conclusion
On the basis of above discussion, it has been concluded that when willing to establish the
company in a new nation it will be vital for all the entities to analyse different options that are
available for expansion so that best one of them could be selected. When one of them will be
selected then the choice should be justified in context of the country for future decision making.
Afterwards, the marketing mix is required to be tailored on the basis of the choice of country so
that possibility of losses for business in future could be ignored. All the key factors of it are
price, product, promotion and place. Apart from this, different factors such as human resource
management and marketing are also required to be focused so that business could be executed in
systematic manner and issues could be managed. Various types of ratios could also be used to
evaluate actual position of business and formulate decisions for future. Some of the ratios are
current, quick, net and gross profit ratios. With the help of them, profitability as well as liquidity
of the business could be determined.
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REFERENCES
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Hampton, A. R., 2020. Grammar Essentials for Proofreading, Copyediting & Business Writing.
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and Dana Loewy. Available at SSRN 3621368.
Loya, R. and Siegel, S., 2019. Business Automation Essentials for the Nontechnical Professional.
In Business Automation Essentials for the Nontechnical Professional. De Gruyter.
Perreault, W. D., 2018. Essentials of marketing. New York: Mc Graw Hill.
Pochiraju, B. and Seshadri, S. eds., 2018. Essentials of Business Analytics: An Introduction to
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Valbrune, M. and De Assis, R., 2019. [eTextbook] Business Law I Essentials.
Vance, D., 2019. Business Essentials. Cambridge Scholars Publishing.
Online
Demand of coffee in Germany. 2020. [Online]. Available through:
<https://www.nestle-nespresso.com/newsandfeatures/new-study-reveals-shifts-in-
german-coffee-lifestyle-trends#:~:text=Germans%20love%20their%20coffee%2C
%20even,and%20Brazil%2C%20according%20to%20statistics.&text=Notably%2C
%20between%202010%20and%202013,tonnes%20of%20coffee%20per%20year.>
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