Business Essentials Advanced: Romania Market Entry Strategy

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Business Essentials Advanced
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Table of Contents
Introduction...................................................................................................................... 3
Q1. Justification for the chosen country...........................................................................4
Q2. Tailored Marketing Mix for the selected country........................................................6
Q3. Implication for covering a wider geographical area for expansion and the issues
related to these factors.....................................................................................................8
Q4. Impact of profitability and liquidity on the decision-making......................................10
Q5. Concluding Summary..............................................................................................11
Reference List................................................................................................................ 13
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Introduction
“Hank and Patty” is one of the well-known coffee and beverage firms in South London
that has been established in year 2017. It has been found that Hank Marvin and Patty
Smith have started business in UK for gaining productivity and popularity. This study will
discuss about various factors that can help in raising the business strategy of coffee
shop. Hank and Patty is planning to expand their business in a new location that is
Romania for maximising the profit level in business. Hence, this study will discuss about
the marketing mix that will help in presenting a clear idea about the benefits and
challenges that the company might face in its business expansion.
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Q1. Justification for the chosen country
In order to develop their business in the Romanian market, it is important for “Hank &
Patty” to understand the nature of the country in terms of their behaviour in different
aspects. This will help the organisation to develop their business in an authentic manner
and understand the requirements of Romania. As a result, they will be able to take all
the necessary measures that are needed for expanding their business successfully.
They have to identify a certain area that will allow them to create their customer base
and operate in a flawless way (Krugman, 2017). Understanding the marketing
requirements in a global environment will allow the higher authorities of “Hank & Patty”
to make the right decisions for enabling the success of the organisation.
In a recent study, it was observed that the revenue generated in the year 2019 was
nearly $1829m. Besides this, there is expected growth in the coffee market in terms of
their sales increases annually. The increase in the market sales will rise by 4.4% by the
end of 2019 (statista.com, 2019). Therefore, it is important for the higher officials of
“Hank & Patty” to ensure that they are making use of the available opportunities in the
Romanian market. This will allow their business to grow and they will be able to operate
in the best possible manner. Besides this, another statistic shows that the Romanian
population is mainly attracted towards roast coffee and therefore, it is significant for the
management of the company to include the items that tops the preference list of the
consumers. It was noted in a study, that the sale of roast coffee amounted to a
mammoth $1658m in the year 2019 (Potrafke, 2015). As a result, the organisation will
be able to provide the customers with their desired products and ensure that they can
easily meet with the level of customer satisfaction.
The Romanian population is used to consumption of coffee on a regular basis. The
amount of coffee consumed by the citizens was around 2.7kgs in the recent years.
Therefore, it is noticeable that there is enough scope for “Hank & Patty” to expand
their business in Romania. This will also lead to the generation of profit in the market
and they will be able to develop the functioning of their different departments. As a
result, it will be easier for them to meet with the expectations of the customers and
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develop their consumer base in a hassle free manner. Romania ranks 30 in terms of the
world’s coffee consumption. As a result, it provides enough scope for the company to
expand their business in the Romanian market. Therefore, it will provide “Hank &
Patty” to enhance their business and operate flawlessly.
Figure 1: Romania’s Rank in terms of coffee consumption
(Source: statista.com, 2019)
However, it is important to understand that despite the positive impact on their coffee
shop, “Hank & Patty” might have to deal with certain challenges and issues in their
workplace that might create hindrance in their process of business. It is important for
them to develop numerous strategies that will help them to eradicate the challenges and
enable smooth functioning of the workplace (Huang and Sarigöllü, 2014). Besides this,
it is essential for the management of the organisation to identify these issues in the
workplace and overcome them in the best possible manner. Apart from this, the
organisation should look to provide the Romanian population with some better options
for consumption of coffee. As a result, it will help to increase their sales and operate in a
better manner.
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Figure 2: Revenue generated by coffee companies
(Source: statista.com, 2019)
Q2. Tailored Marketing Mix for the selected country
The marketing mix of a certain location allows the management of the organisation to
ensure that they are able to understand the market requirements and perform in a better
way. Besides this, it will help them to achieve the business objectives and provide the
customers with their required products. The marketing mix of “Hank & Patty” has been
done below in a detailed manner:
Product
In order to develop their products in an authentic manner, it is important for the
management to include important flavours that helps to attract the attention of the
customers. It is important for the management of the organisation to develop their USP
in order to gain the customers’ attention. The coffee seeds that they use are considered
the finest seeds in terms of their sale in the market. As a result, it becomes easier for
the organisation to work according to their business strategy (Wasan and
Tripathi,2014). Besides this, “Hank & Patty” should look to make sure that they have a
wide variety of products that should be offered to the customers. Therefore, it becomes
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easier for the organisation to increase their generation of profit and enhance their
functioning in the market. Apart from this, they should look to offer some benefits to the
customers, as it will help to gain permanent customers in a competitive marketplace.
Price
The management of “Hank & Patty” should look to analyse the Romanian market
before pricing their products. This will help them to have a clear idea about the prices
that they should offer to their customers. They have to make sure that the prices are
neither too high nor too low. If their prices are low, they will not be able to increase their
generation of profit in the market. However, if the prices of the products are too high,
then they will not be able to create a strong customer base (Resnick et al., 2016). This
makes it immensely important for the organisation to price their products in a suitable
manner. Therefore, the management should look to implement the economic pricing
strategy that helps to analyse the price range in the market. As a result, it becomes
easier for the organisation to increase their sales, despite the competition in the market.
Place
It is important for the coffee shop to ensure that they are selecting the right place in
order to expand their business in Romania. Therefore, the place that the company will
look to expand is Bucharest that is one of most populated cities of Romania. As a
result, it will provide enough scope for the organisation to excel in terms of developing
the functioning of their organisation (Khan, 2014). Opening the shop at the right place
will allow “Hank & Patty” to have access to different types of customers that are used
to consuming coffee on a regular basis. Therefore, it has a direct impact on increasing
the sales of the organisation. Besides this, it is important for the organisation to know
about the preferences of the customers in the market, as it will provide assistance in the
process of products development.
Promotion
The use of promotional strategies is considered highly essential in terms of promoting
their products in the competitive market. This will allow the company to gain the
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attention of the customers and they will be able to boost their sales. However, it is
important for them to ensure that they are making use of social media for reaching out
to their potential customers (Londhe, 2014). They have to display the wide range of
products that they offer and ensure that it leads to a great deal of customer satisfaction.
Q3. Implication for covering a wider geographical area for expansion and the
issues related to these factors
In terms of expanding in wider geographical location, it is evident that the organisation is
faced with numerous issues and challenges that hamper the functioning of the
workplace. This section discusses some of the major issues faced in terms of human
resource management and operations management.
Human Resource Management (HRM)
The human resource management is considered one of the most important aspects that
is required for the smooth functioning of “Hank & Patty” in the Romanian market. With
the aid of the HRM, the organisation is able to manage the functioning of their
employees in the right manner and ensure that they are functioning according to the
requirements of the workplace. It is the duty of the HR manager to make sure that they
are providing adequate training to their staffs and making them capable of performing
the business activities in a better manner (Armstrong and Taylor, 2014). There are
instances, when the employees find it difficult to complete the tasks that have been
assigned to them. This happens when the employees face issues in the workplace.
Having an effective HRM team will allow the organisation to understand the challenges
faced by the employees and they will be able to provide them with adequate training to
overcome the challenges.
It is the duty of the HR department to recruit and select skilled labours for the
workplace, so that it becomes easier for them to achieve their business objectives.
Besides this, they have to make them understand about the ways in which they are
supposed to perform their job roles. This acts as an important element to boost the level
of employee morale and they can understand the needs of the customers. Apart from
this, the implementation of important policies and legislations of the government might
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create difficulties for the employees in terms of executing their roles in the workplace
(Bratton and Gold, 2017). As a result, it is important to develop a flexible workplace and
enable collaboration amongst the employees, so that the issues of workplace diversity
can be resolved in the workplace. Besides this, the HR department should ensure that
the labour laws are being applied in the workplace that helps to provide adequate
benefits to the employees.
Operations Management
It is important for the organisation to development their process of operations
management for gaining success in terms of their business process. With the help of
proper management of their operations, it becomes easier for “Hank & Patty” to
enhance the quality of their services and products that they offer to the customers. They
have to analyse all the minute details that will help them to understand the preferences
of the customers and develop their products accordingly (Heizer et al., 2017). As a
result, one can understand that the level of total quality management is enhanced in the
workplace. Operations management can be highly useful in terms of resolving the
issues and challenges that have developed in the workplace. There are instances, when
the organisation has to manage the feedbacks of the customers, so that the areas of
mistakes can be eradicated in the workplace.
Another importance of operations management is that it helps to develop the level of
organisational productivity and it eases the process of meeting with the business goals.
It is important to eradicate the issues of workforce diversity amongst the employees and
encourage collaborative functioning in the workplace. Therefore, the achievement of the
goals becomes easier and permits them to provide for the needs of the customers. It
helps the organisation to make use of their raw materials and use them to enhance their
business process (Stevenson and Sum, 2014). However, operations management helps
to resolve the issues related to the organisation and therefore, it helps to enhance the
functioning of the different departments.
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Q4. Impact of profitability and liquidity on the decision-making
For expanding in the competitive market, Romania, it is important to analyse the
financial aspects of the company. The below mentioned points are calculated where
important financial data are provided as per the case study provided in the study:
Gross profit
Gross profit is calculated by using the following techniques for understanding the
business value in the Romanian market:
Gross profit= GP/Sales * 100
Thus, it is found that Hank and Patty is found to gain 57.8% of GP
Net Profit
The mentioned formula can be used for calculating the net profit of the company
Net profit= NP/Sales * 100
Hence, the net profit for the company Hank and patty is calculated as 7.4%
Return on capital employed (ROCE) value
ROCE is found to be calculated using the below mentioned formula:
[Net profit/ (Capital + Reserves)] * 100
Hence, ROCE for Hank and Patty has been calculated as 25.1%
Acid Test ratio
This is done by dividing the total asset with current liabilities of the enterprise
Hence, the ratio of Acid test is found to be 4.4:1
Profit margin of the company is found to be 58% and therefore, it can be said that the
company can be able to meet the demands and necessities of the consumers in the
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competitive market. Hence, Hank and Patty is able to fulfil the requirements of the
market and implement business activities effectively.
Current Ratio
Ratio of current business has been calculated using the following formula:
Current ratio = (Assets/liabilities)
The ratio of current ratio of the company is found to be 5.7:1
It has been observed that total profit margin of the company is bit low and hence, they
require developing suitable tactics in order to gain productivity and profit. Apart from
this, the product price needs to be aligned with the standard price of the market in order
to perform better.
Hence, the profit margins needs to be high as it would help the company to operate in
Romania market effectively. The significance of liquidity and profitability ratios can help
the organisation to develop competitive advantage in the chosen international market.
As it has been evaluated that the company is not having other outstanding debts, this
helps them to operate in the new business market effectively.
Q5. Concluding Summary
It can be concluded from the above discussions that the organisation should understand
the requirements of the Romanian market and enable their functioning. This might
assist them in terms of understanding the issue and challenges prevailing in the
workplace. Besides this, they should communicate with the employees more frequently
for understanding the problems that they face and they should look to minimise the
negative impact on the employees. They have to focus on the recent statistics that have
been provided in the above sections. This provides assistance to them in terms of
understanding the preferences of the customers in the market and provide for their
desired products. Apart from this, the study helps them to understand the conditions
prevailing in the country in terms of political stability. Therefore, the management of
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“Hank & Patty” should be able to analyse the political factors and function as per the
requirements.
Moreover, they should also focus on the functioning of their human resource
department, as it helps in the management of their employees. As a result, the overall
performance of the workplace can be enhanced and they are able to perform in an
authentic manner. Maintenance of the operations within the workplace enables them to
increase the level of efficiency in the workplace. Therefore, the organisation is able to
gain better business outcomes and perform in a better way.
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