Business Expansion Case Study: Hank & Patty's Coffee Shop in Spain

This case study report examines Hank & Patty's coffee shop's expansion plans, focusing on entering the Spanish market. It begins with an introduction outlining the business context and objectives. Task 1 delves into research related to the expansion plan, analyzing Spain as a tourist destination, considering factors like transportation and ethical worker requirements, and emphasizing customer service. The report then explores the market mix (7Ps) for the expansion, detailing product, price, place, promotion, packaging, positioning, and people strategies. The study further addresses the implications of expanding into a wider geographical area, considering factors like organizational culture and competitive advantages. Profitability is evaluated using various financial ratios, analyzing the impact of these ratios on the coffee shop's financial performance. The report concludes with an overall assessment of the overseas expansion, summarizing the key findings and recommendations for Hank & Patty's success.

Case study report
Contents

INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Q.1 Research related expansion plan:....................................................................................1
Q2. Market mix for expansion plan:.......................................................................................2
Q.3 Smith and Marvin's implications to include a wider geographical area:.........................4
Q4: Evaluation of profitability through using various ratio's and its impacts........................6
Q.5 Overall visibility of overseas expansion:.........................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business becomes the crucial aspect of modern world as this is the most important
activity that support nation to emerge itself. Business simply refers to an activity which emerge
and given services on a routine basis and thereafter distribute them in a society for meeting their
requirement and economy could have its continued growth and development. As per this report,
Hank and patty is thinking to expand its business in a country where they could earn a great
return (Ellguth, Kohaut, and Möller, 2014). That is why, they need a perfect tourist destination
where they could make business for gaining financial statements of their current business. This
kind of project explains and recommend related to this plan.
TASK 1
Q.1 Research related expansion plan:
There are so many tourist attractions places throughout the Europe and many of the
locations are tourism oriented places. Spain is one of them of the most attractive destination and
have a beautiful place which attracts the visitors in a huge quantity. This is observed that Marvin
and Smith implements their best option for incorporating Hank and Petty shop in Spain (Hair,
2015). There are vast number of travellers who travel Spain as this is the most attractive places
which attracts the more travellers. Spain also have a better transportation facility which is the
best option for the firm to incorporate their branches here. As, good transportation facility is
comfortable for visitors to come there and enjoy coffee shop.
Location of the coffee shop must be at a place in Spain where vast number of visitors’
drink coffee drinks. Barcelona is the most effective tourist place; Barcelona can be a choice for
the Marvin and Smith to form their new venture. Transportation facility is also great in
Barcelona and travellers can visit there in a comfortable manner. this is one of the key crucial
option for Hank and Patty as, there is no additional requirement to invite customer and make
effort on them.
There is a need to find a place where attitude of the workers’ requirements to be ethical
and efficient. As, if individual will influence with the hospitality and services in that case, they
will regularly visit to the place and improve income for the company’s operations. For this, this
is the most important that the customer who get into coffee shop requires to be attended in an
effective manner.
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This is also to be considered that goods and services of the Hank and Petty must have
efficient quality and fascinate clients in a manner so that the clients could travel again and again.
This is the most important aspect for progress of any company, there is a strong requirement to
pay equal attention and likewise pay higher wages for their extra efforts that will enhance for
their additional and innovative events that will stimulate them to be higher polite and desperate
to the job (Grant and Taylor, 2014). Customers are ley components who can make or destroy
their business operations. Henceforth, there is great need to form strong liaison to buyers that
could assist company to produce more in order to emerge more sales. Henceforth, this can be
said that the company can render their services to more people. There is also required to have
efficient bill system and requirement to have ethical practices that could assist the firm to
efficiently following applicable laws.
Marvin and Smith must know about the various applicable laws which are related to
rules, regulations, policies and diverse regulatory laws. As this is the main thing which depends
on the components which would be more dangerous if these are not followed. However, this can
be said that the company needs to adopt all the regulatory norms that are going to address by the
company.
Q2. Market mix for expansion plan:
Marvin and Smith form a good research for extending of their concern in Barcelona.
Hank and Petty shop need to serve finest coffee beans so that the company can emerge a large
number of consumers that are going to make more profits than others (Gamble and Thompson,
2014). Marvin and Smith renders coffee shops in the UK market and includes their business
strategies so that they could make plan for expansion. In this era, they are spreading their
business activities in Barcelona, Spain. By taking help of marketing mix, firm could form
efficient business plan and likewise support internal and competitive analysis of the business
strategies. 7Ps of marketing mix are elaborated as under:
Marketing Mix Examples
Product Business plan is connected to the coffee
shop. Therefore, product is an important
element for measuring the success of the
company. However, this can be said that the
cited company use their finest coffee beans
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and highest quality tea leaves and herbal.
The coffee shop also has so many kinds of
snacks and juices such as- mojitos,
flavoured shakes, juices. Cited coffee shop
products are of great quality of coffee drinks
and others henceforth, the consumers can
demand can be met out.
Price This is most crucial task that the prices of
the cited nations should be rational and
convenient for individual who visit the
coffee shops. The price of the coffee
products must be cost efficient and revenue
increasing approach (Cross, 2013). The
price includes entire costs of the product. If
consumers are ready to take in that case,
then those products should be worth-able to
the price for which they are eager to pay.
Place This is the factor of the marketing mix
under which the coffee shop is incorporated.
The location of the coffee shop requires to
be available at such a place which is
convenient to accessible to the ultimate
consumers and must have efficient
transportation services. A marketplace is
requiring to be selected by the organisation
which are considering by it.
Promotion In order to make product and services, there
are diverse promotional tools but efficient is
selected by the Hank & Patty coffee shop.
There are diverse marketing and advertising
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tools which are used in order to promote the
company. However, this is going to attract
the visitors in order to come and visit shops
Packaging This is an effective tool which are going to
attract more customers and similar nature of
the product. Packaging plays a bigger role
for building the bigger sale (Zakrajsek,
2013). However, this can be said that
company needs to provides an effective and
attractive packaging of its products so that it
could attract more customers.
Positioning: This simply means that office drinks of
Hank and Petty stands among strong
competitors and similar nature products.
People
Member is required to select those
people who are responsible and aware
connected to their duties. They must
be lenient and includes product
attitude towards performing of their
work.
Q.3 Smith and Marvin's implications to include a wider geographical area:
As per above proposed plan of opening a coffee shop in Spain martin and smith need to
analyse the factors associated to build effective image of coffee shop in Spain. It is examined
that coffee shop market is growing day by day in western America. Basically the Mexican
culture contains brewery, cold drinks, cocktails and brewery. They took this decision by
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overviewing the existing performance of coffee shop market in Paris and UK. There is a vast
information and data reunited to collect to exploring the scope of coffee shop in Spain. It is also
required to critically analyse the data and make summarised report (Wilson, 2014). The report
should cover some certain criteria related to customer's interest, involvement, mind-set and trend
in respect of coffee products.
Geographically and physical structure of Spain is very different from other contents.
There is a warm atmosphere and climate found in Mexico and Spain. But from past years’ cold
coffee and beverages are consumed at their high level. By evaluating the geographical structure
of Spain it was seen that the land and climate is favourable subject to growing coffee beans and
reports and figures produce favourable results in respect of farming of coffee elements and
beans. Culture and trend also analysed subject to coffee shops and substitute products. Cultural
situation, economic environment and targeted objects are also considered while analysing the
factors.
(Source: consumption rate of Coffee products in Spain from 2008 to 2015)
There is a report is published in respect of consumption rate of coffee by household in
Spain from 2008 to 2015 in million kilograms. As per above records coffee products are
categorised as roasted coffee, natural coffee, coffee blend, decaffeinated coffee and instant
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coffee. As per statistics 2013 was the effective year. 23.4 million kilograms’ consumption of
natural coffee and 22.6 million kilograms’ coffee blends were consumed respectively.
Apart from it below are some areas should be analysed in respect of sustainability and
growth of business.
Organisation culture: this culture defines the probability of running the business
activities in another from one territory to another. This is type of structure made of multiple
layers and elements. As per discussed the scenario organisation culture would roam around
setting up coffee shop market in Spain. This is considered as a practice of evaluating the nature
and actions of people of organisation in respect of proposed plan (Urner, 2016). Spain is one of
the country where large number of younger generation is involved in building business structure.
It will help Marvin and smith to execute their start up plan with young managers and educated
business personalities.
Gaining competitive advantage: There is a vast scope of getting high competitive
advantages in Spain in respect of dealing in coffee products. The main challenge arises in
building the structure of company is allocation and arrangement of knowledgeable staff. They
have to train and teach the staff about the main tactics and elements of making and growing
coffee beans.
Q4: Evaluation of profitability through using various ratio's and its impacts
According to the mention case about Marvin and Smith's they are eyeing to start a new
venture of coffee shop in other parts European nation. For this purpose, they are planning to
analyse their previous financial position so that upcoming investments can be plan in an effective
manner. It presents a complete image of their shop business in last couple of year. On the basis
of last year of data, they are having prepared income statement and balance sheet. That shows
availability of funds for the further expansion of business (Romano, 2013). As per the statement,
they are in very comfortable position because of healthy selling of coffees and other items to
their customers. In this process, extra number of expenses are incurring by them to promote their
business in various parts of the market so that large number of customers can have attracted
towards them. The profitability position can analyse by using various ratio's those are helpful in
providing necessary information about current position and growth chances of coffee business.
Profitability according to the income statement:
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Gross profit: It is known as gain for the company which is attain by deducting total cost
associated with the making and selling of goods or those cost which are incur for delivering of
services.
Gross profit Margin = Gross profit
Sales
GP: 208000
Net profit: 26800
Revenue: 360000
= 208000/ 360000*100
= 0.57 or 57%.
Net profit margin: It is known as final profit of the company which is collected after
deducting all expenses and charges such as interest or depreciation.
Net Profit Margin = Net profit * 100
Sales
=26800/360000*100
= 7.4%
As, compare to total sales Marvin and Smith is generating with the rate of 7.4% during
the year. Whereas, gross profit margin of the company is sufficient enough to make expansion of
the business in Barcelona.
ROCE: It is known as financial ratio which is use for the purpose of making company's
profitability and efficiency analysis. With the help of this, it easy to find out actual capacity of
the company to generate profit during the time.
ROCE: EBIT (Earnings before interest and taxes)/ capital employed
: 26800/ 113000-6200*100
: 26800/106800*100= 25.09%
Liquidity position
Current ratio: Such kind of ratio are used to measure whether a company's ability to pay
short term or long term debts. In consists of information about current assets and liabilities those
are converted into cash in the period of one year.
Current ratio: Current assets / current liabilities
: 35400/6200= 5.7
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Liquid ratio: It is essential for the company to measure how efficiently Marvin and
Smith can meet out their short term financial outstanding debts.
Liquid ratio: Current assets- (Stock + prepaid expenses) / Current liabilities
= 35400-8000/6200
= 27400/6200= 4.4
From the above ratios which are calculated to determine liquidity position of the
company. It has been seen that current ratio is about 5.7:1. It means that Marvin and Smith is
having sufficient amount of cash to meet out short term obligations. Whereas, liquidity position
is also effective in term increasing efficiency of the company.
Q.5 Overall visibility of overseas expansion:
In the provided case, overview of expansion plan in Barcelona is elaborated. It is a place
which have manifold and diverse attributes which demonstrate the best substitute for Marvin and
Smith to expand the business operations (Prewitt and Weil, 2014). It is estimated that for making
growth and stability in European market, for this they must necessarily have a strong business
plan and effective marketing mix strategies and potential plan to implement them. This will abet
them to face issues which may arise in the future. It is important to have an overview towards the
culture of any nation, taste and interest for the framework of appropriate conditions in the market
for the firm.
Before opening any firm, it is very significant to review and analyse the market and
business environment with specific analytical tools to carve out the strength, weakness,
opportunity and threats in the market. The kind of assessment and thorough study is beneficial
for negative and positive prospect of all the internal and external factor of any economy (Lai and
et. al., 2014). Through the observation of the case it is noted that through various issues and
deviations those are essential factors to be managed by Marvin and Smith to incorporate their
business in overseas countries. This is a very tough process and fame other peculiar factors are to
be considered which are used to determine the price of Hank and Patty's shop and the operations
overseas. There lies complexity to identify price of products and services so that high cost can be
reduced to a very efficient manner. These are some of the important facts which are important
component by which the coffee shop can have the sustainable development in desired market.
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CONCLUSION
From the above project report, it has been concluded that idea for expansion of coffee
business in other location can be beneficial for the company. They are planning to open new
shop in Barcelona for this purpose both of them has conducted a well organise research. The
study provides essential information about the marketing strategies and current financial position
of their business. With the help of these data they can plan various requirements according to the
demand of customers. Analysis of viability of market at international level and certain
implication those are affecting the performances of their business.
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REFERENCES
Books and Journals:
Online
Consumer goods and FMCG. 2015 (Online). Available through:
https://www.statista.com/statistics/448471/coffee-consumption-in-spanish-households.
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