Business Expansion Report: Duque Papetiers Gros German Market Analysis

This report analyzes the potential for Duque Papetiers Gros, a stationery business, to expand its operations into the German market. It begins with an overview of the German stationery market, highlighting its significance and growth compared to other European countries. The report then analyzes annual spending on writing materials in European countries, with Germany ranking second. It includes a financial analysis of sales data, using a mixed pie chart and correlation coefficient to assess the relationship between variables and forecast future trends. The report also evaluates the pros and cons of German market expansion, calculating mortgage costs for a new building and assessing customer satisfaction. The analysis suggests that Duque Papetiers Gros should expand into the German market to increase profits and market share.

Report

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Overview of German stationers market............................................................................1
TASK 2............................................................................................................................................2
2.1 Annual spending on writing materials in European countries..........................................2
TASK 3............................................................................................................................................2
3.1 Analysis of sales on the financials....................................................................................2
TASK 4............................................................................................................................................6
4.1 German expansion of business.........................................................................................6
TASK 5............................................................................................................................................7
5.1 Mortgage cost of new building.........................................................................................7
TASK 6............................................................................................................................................8
6.1 Mean value of orders........................................................................................................8
TASK 7............................................................................................................................................8
7.1 Customer satisfaction.......................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business expansion is crucial decision for organisation to expand its operations in the
best possible manner. Present report deals with Duque Papertiers Gros who is businessman and it
is planning to expand operations in German market as it is big market for stationery products. In
this report, annual sales data is being interpreted and also trend forecast is provided for next two
years. Furthermore, descriptive statistical tools are applied for making decision whether to
expand or not in new market.
TASK 1
1.1 Overview of German stationers market
The German stationers market is one of the important part of the nation as it generates
good quantum of revenue in effective manner. This market adds to GDP (Gross Domestic
Product) of the country and as such, it helps to enhance nation's growth in the best possible
manner. This is evident from the fact that writing and other related stationery product are highly
spent in the nation which means that it is more in comparison of European countries. In relation
to this, annual turnover of stationers market of Germany is 14.8 billion per year and as such, it is
increasing year by year which implies that economic growth of nation is injected up to high
extent. Furthermore, 35.2 is spent only on writing materials which clearly shows that nation is
ranked second in comparison to European nations (Bordo and Haubrich, 2017).
On the other hand, due to the digitisation in today's scenario, sales have gone down
significantly. The main product which is declined are writing materials due to computerised
world. However, growth of stationers market is due to the fact that products are sold directly by
the wholesalers to customers without any middlemen in the chain. This help wholesalers to earn
profit in effective manner as costs are reduced which lowers down revenue. Seeking the growth
of stationers market, big names in pharmaceutical sector have started selling products to
customers and as such, business are diversified in order to gain revenue. Hypermarkets and
supermarkets have also adopted this policy for attaining revenue. Hence, German wholesale
stationers market is effective for business to expand its operations.
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TASK 2
2.1 Annual spending on writing materials in European countries
Graphs eases to interpret data in effective manner and provides clarity to business for
extracting useful information with much ease. Furthermore, data is gathered of European
countries which shows annual spending on stationers market. The below graph shows spending
per capita income of nations. In accordance to graph, Switzerland is one of the highest spending
country on writing materials with spending of 35.5. On the other hand, second position is secured
by Germany that is already discussed in preceding paragraph which is 35.2 annual spent. On
third position is Austria with annual spending of 35 euros. While, fourth position is attained by
France with spending of 28.3 and on fifth position is Slovenia having annual spending of 20.4
(West and Nikolai, 2017).
Furthermore, next position is secured by Italy with difference of 1.8 from Slovenia
having 18.6 euros. While, seventh rank is provided to Slovakia having much difference from
previous nation. This means that annual spending on stationers' product is low in comparison to
Slovenia. Moreover, spending is 9.8 which is low. While, on eighth position is secured by
Hungary with spending of 9.6 euros. Furthermore, Spain is on the ninth position with 8.9
position. While, next position is imparted to Poland with spending of 8.5. Moreover, next stage
of annual spending of 7.9 by Croatia and last position is provided to Czech Republic of spending
of 7.6 euros. Thus, it can be analysed that Switzerland is one of the highest nation which spent
on the stationery products while Germany comes at second position. This means that Duque
Papetiers Gros can easily expand its reach to German market to earn revenue.
TASK 3
3.1 Analysis of sales on the financials
A)
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B) Preparation of Mixed pie chart
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Illustration 1: Mixed pie chart
C) Correlation coefficient and preparation of scatter diagram
Illustration 2: Scatter diagram
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Interpretation
It can be interpreted from the above data that correlation coefficient is good as it is 0.73.
The statistical technique which is correlation coefficient signifies relationship among variables to
understand whether perfect correlation exist or not. The value ranges from -1 to +1 which shows
relationship between two variables. On the other hand, it can be analysed that business has 0.73
value of correlation and it implies that sales are moderate and is increasing of the firm. The
correlation value should not be less than -1 as it shows clearly that there is no relationship
between variables (Correlation coefficient. 2018). Furthermore, it can be said that business will
be able to earn revenue in German stationers market as it is depicted by scatter diagram.
Moreover, sales and forecasted data shows that business would garner good amount of
revenue which means that it can expand its operations to Germany in order to earn revenue quite
effectively. Furthermore, correlation value is nearer to 1 which implies that firm may be able to
earn profits with much ease. The sales are on upward trend and it clearly signifies that firm will
be able to earn revenue in German market as well. Thus, correlation coefficient shows business
can easily expand to the nation in search of desired profits (Young, 2017).
D) Trend in future
The trend can be carried out from the equation obtained in the scatter diagram in the best
possible manner. Forecasted trend for 2018 and 2019 are listed below-
Trend in 2018
The equation is Y = 6500 x + 162000, Putting 4 in x, we get
= 6500 * 4 + 162000
= 188000
Trend in 2019
= 6500 * 5 +162000
= 194500
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It can be analysed that firm would be able to earn profits in next years in effective
manner. This is evident from the fact that trend in 2018 would be 188000 and in next year, it
would be 194500 which implies that business will enrich in German market.
TASK 4
4.1 German expansion of business
Should I expand my business to Belgium & Germany?
Pros Score/10 Cons Score/10
Maximum consumer satisfaction 3.5
Requirement of
additional capital 1
Enhanced revenue 3 More expenditures 2
large scale of business 1
Total Pros 7.5 Total Cons 3
Average Pros 2.5 Average Cons 1.5
It can be interpreted that Duque Papetiers Gros should expand its business operations to
the German market as the firm would be able to gain market share. Moreover, revenue will be
injected in the best possible manner. Furthermore, firm will be able to inject profits as sales data
clarifies that it can easily generate sales in new market. Moreover, Germany is the second
highest nation in terms of annual spending in writing materials in effective manner. Furthermore,
German stationers market is type of wholesalers and as such, without incurring expenditures on
middlemen, wholesalers earn profits with much ease (Petersson, 2018). This is the major reason
for expanding operations to the nation in search of revenue in the best possible manner.
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The above table shows the pros and cons of whether it should expand to Germany and
Belgium or not. It can be analysed that there are more advantages of expanding business reach to
German market as compared to disadvantages. This is evident from the fact that average value of
pros is 2.5 and that of cons is 1.5. It shows that business may easily expand its operations in the
market for producing more profits in the best possible manner. The pros highlighted are
maximum consumer satisfaction, enhanced revenue and large scale of business and as such, it
can be analysed that firm will generate profits and as a result, it should expand its reach to new
market. The business will be able to earn revenue by selling products to commercial purpose and
as such, new stationery commodities could be provided by the firm with much ease. On the other
hand, cons are requirement of additional capital and increment in expenditures. However, cons
are less in comparison to pros and as such, firm should reach out to German stationers market to
extract benefits quite effectually (Mucciarelli, 2017).
B) International standards
 ISO 45001- Social responsibility
This certifies that organisation should maintain social welfare by imparting better products in
effective manner.
 ISO 31000- Risk management
This international standard provides that business should provide adequate safety
standard to employees and thereby, imparting safety in case of any uncertainties.
TASK 5
5.1 Mortgage cost of new building
The mortgage cost is calculated below-
Duration = 30 years
r = mortgage interest rate
Thus, by applying formula, we get
= Loan amount / Discount rate
= 200000 / ({[(1 + 0.10) ^ 30] – 1} / [0.10 (1 + 0.10) ^ 30])
= 200000 / 9.42
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= 21215.85
In relation to this, monthly repayment comes to
= 21215.85 / 12
= 1767.8
B) Re-calculating mortgage cost
Number of days (N) = 360
r = 10 % / 12
= 0.00833 / month
= 200000 / ({[(1 + 0.00833) ^ 360] – 1} / [0.00833(1 + 0.00833) ^ 360])
= 200000 / 113.99
= 1754.55
Hence, cost of mortgage is 1754.55 for expansion in Germany
TASK 6
6.1 Mean value of orders
Here, Hypothesis testing needs to be applied
H0= There is no significant difference between mean value of orders and sample mean
H1= There is significant difference between mean value of orders and sample mean
z test,
z = (x – μ) / σ
z = 240-230 / 43
= 0.23
It can be interpreted that value of null hypothesis is accepted at 5 % significance level
and as such, there is no significant difference between both variables as value is 0.59. Normal
distribution curve has been applied and normal population is assumed.
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TASK 7
7.1 Customer satisfaction
A) Ways for improving responsive rate
The firm has low responsive rate and as such, it is required that rate should be improved
in order to attain clarity about views and preferences of customers in effective manner (Mercer,
2017). The rate is less than 5 % and as such, it is suggested that short and concise questionnaires
should be provided to customers so that quick response can be attained from them. In relation to
this, respondents should be asked for providing information and purpose should also be
conveyed to them. This way, answers can be garnered in effective manner.
B) Descriptive statistics
CUST_SERV QUAL_P&S
SALES_STAF
F PRICE_VALUE
3 3 3 3
3 3 3 2
4 4 4 2
4 3 4 1
2 3 2 2
4 4 4 2
4 3 4 2
4 3 4 2
2 3 2 2
4 3 4 1
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4 3 4 2
4 3 4 2
4 3 4 2
4 3 4 1
2 3 2 2
4 3 4 2
4 4 4 2
3 3 3 3
4 3 4 2
3 3 2 2
Arithmetic
mean 3.5 3.15 3.45 1.95
Standard
Deviation
(STDEV) 0.7608859103 0.3663475485 0.8255779475 0.5104177855
It can be interpreted that firm has good arithmetic mean and standard deviation. Price
value rating is lowest as it is 1.95. This implies that business should cut-down costs to earn
higher rating.
CONCLUSION
Hereby it can be concluded that business has effectively earned revenue as it is evident
from the past sales data. Duque Papertiers Gros should expand his operations in German
stationers market in order to garner more customers and gain profits with much ease. Firm
should expand as it will be able to sell stationery goods to commercial customers and as such, it
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