Business Essentials Advanced: M&S Coffee Shop Italy Expansion Strategy

This report examines the expansion plan of M&S Coffee, a London-based coffee shop, into the Italian market. The analysis considers the suitability of Italy, evaluating factors like climate, coffee culture, and the impact of Brexit. It delves into the marketing mix, detailing product, place, price, promotion, physical evidence, people, and process strategies. The report also assesses how the geographical area influences organizational culture and supply chain logistics. Furthermore, it evaluates the impact of the expansion on the profitability and liquidity of M&S Coffee, providing a comprehensive overview of the challenges and opportunities associated with entering the Italian market. The report highlights the sourcing of coffee beans from Uganda, ethical considerations, and structural challenges like foreign law and pricing strategies. The marketing mix section details the 7Ps, including product quality, location, pricing, promotion, physical evidence, people, and process. Finally, the report discusses the impact of geographical location on organizational culture and supply chains, along with the financial implications of the expansion.

Business Essentials Advanced

Executive summary:
The report will be covering Marvin and Smith who are owing 2 coffee shops in
London and now planning to get the best location for their new setup. They are both
planning to open the new coffee shop Europe and finding Italy the best option. They are
ordering their coffee beans from Uganda which is famous for its finest and best quality
of coffee beans. For this they need to evaluate the marketing mix of Italy to see what
are the promotional activities which they need to do.

Table of Contents
INTRODUCTION......................................................................................................................2
Q1 Justifying Italy would be best suited for M&S coffee shop by considering all the
factors and assuming that Brexit will not be causing any difference to trading....................2
Q2 Marketing mix of M&S coffee shop................................................................................4
Q3 How will the geographical area impact Organisation culture and Supply chain on Italy?
...............................................................................................................................................7
Q4 Evaluation of the impact on decision making of profitability and liquidity of M&S
coffee shop.............................................................................................................................8
CONCLUSIONS........................................................................................................................8
REFERENCES.........................................................................................................................10
1

INTRODUCTION
The present case study is based on the Coffee shop which Marvin and Smith
need to expand in the European Union and at present they are situated in London by
the name M&S Coffee. They are planning to open the shop in Italy where they think
that people will be liking the tailor made coffee and tea. The report will be covering
marketing mix of M&S coffee shop, structural challenges in expanding their business
in Italy and what will be the geographical area which they would be covering.
Q1 Justifying Italy would be best suited for M&S coffee shop by considering all the
factors and assuming that Brexit will not be causing any difference to trading.
Marvin and Smith are planning to expand their coffee shop in European Union
and thinking that Italy will be the best for this choice (Bertuzzi and Pietri,2017). As
Italy is situated in Europe and having temperate seasonal and Mediterranean
climate. The people of Italy are very much found of coffee and tea they drink
cappuccino, caffe latte, latte macchiate or milky form of coffee every morning and
they never prefer after meal. Mainly Italians start their day with a cup of coffee a
cappuccino with their breakfast, caffe macchiato as in afternoon and espresso after
dinner. They are also found of Italian roasted coffee and alike all the other cultures in
Italy the coffee culture is also very mysterious law. Throughout the whole day and
one an average Italian drink 3-4 cups of coffee and this is the main reason as to why
M&S coffee shop would be happy to offer all sort of coffee to the people of Italy. Just
like in London Marvin and Smith are ordering their coffee beans from the farms of
Uganda to earn an independent income that is from Gumutindo Coffee to use the
finest coffee beans (Rosi, Tassotti and Mena, 2017). In Italy also they are planning to
2

order the coffee beans from Uganda or Gumutindo they are the independent small
farmers in eastern Uganda. In Italy coffee plantations are having very bad
economical or environmental conditions but the people there are growing coffee as
an indoor plant as no coffee are grown in Italy. Only the roasted coffee are made
available in Italy for espresso rest are all imported from other countries. So if they
are choosing Italy as their expansion plan of coffee shop this would be the best
option for M&S coffee shop.
In the year 2015 Britain decided to leave the European Union by the mid of
2019 and this affected the relationship of Britain with that of other countries of
Europe. The idea or plan of Marvin and Smith in regard to their expansion of coffee
shop in Italy will not be affected by this negotiation in the trading environment. As
this is very small part of economy of UK and will not be very much under the
pressure of Brexit (Gasperazzo, Toffanin and Larese, 2017). Italy will be the best
choice as M&S coffee shop would be importing their coffee beans from Uganda and
mainly employing the staff from Italy only. But they need to have some
considerations before they start to expand or make the planning of establishing their
coffee house.
Logistic consideration
This relate to the process of planning and organisation of those factors which
need to be kept in mind to do the resourcing. Form where the resources would be
arranged, in what quantity they will be made available. The resource are mainly
labour, capital and raw materials which are used in the setting up and running the
coffee business (Godos and etal, 2014). Before starting the coffee shop Marvin and
Smith need to analyse the whole market of Italy where they need to set up the shop
like in Italy they will be choosing Rome which is the capital of Italy and hear people
majorly like to prefer coffee. They both are planning to get the staff or employ the
people of Italy only so that they can consider more of the authentic taste of coffee.
They will be investing the funds which they are having and also are planning to take
a loan from bank to set up the coffee shop and as already decided they will be
importing the coffee beans from Uganda only.
Ethical Consideration
3

They are very important considering factor which need to be kept in mind
before starting any business. This distinguish between what is right and what is
wrong in doing a research or planning for something. As the people of Italy are very
much found of coffee so the ethical consideration which M&S coffee shop should
keep in mind (Caporaso, Civitella and Sacchi, 2014). They must be aware of the fact
that people of Italy like to drink coffee in breakfast, in afternoon and after their dinner.
They also prefer the tailor made coffee as they need the coffee in their own way.
Structural Challenge
There will also be some type of challenges opening the coffee shop at Italy
which they need to consider before they establish there. The challenges are:
Foreign law- as after the Brexit decision of Britain this will be affecting the
relationship of UK with that of the other countries at Europe. But the foreign law of
Italy are very much leant so they can easily open the coffee shop there.
Pricing strategies- they also need to set up the price of their all types of coffee which
they would be offering in Italy. This can be done by analysing the market and the
economical conditions of country.
Q2 Marketing mix of M&S coffee shop.
Marketing mix are the element which all the business need to follow in order
to make profits and increase the sale of the product or services. This marketing mix
mainly increase the marketing skill of the company so that they can sustain in the
market for a longer duration of time (Özen, Pons and Tur, 2014). Marketing mix are
all the action, tactics or practice which the company need to use in promoting the
product or service of the company. Initially there were 4P's of the marketing mix i.e.,
product, place, price and promotion and now there 7P's of marketing mix which all
the company need to follow i.e., physical evidence, people and process added in
4P's.
Marvin and Smith coffee shop planning to grow their coffee shop in Italy and
before this they need to make a marketing mix which will be including all the 7P's of
it. This will be helpful for the company to promote the brand, product or the service
which they are offering to the people. The following are 7P's of M&S coffee shop
which will be helping the coffee shop in promoting their brand in market of Italy.
4

Illustration 1: Marketing mix
[Source: Marketing mix. 2017]
Product or service
In order to start the new business of shop coffee shop in Italy M&S need to
provide the best quality of product and service to the customers. For this they firstly
need to understand the importance of coffee to the people of Italy and then providing
them the best coffee of a kind. They would like to prefer cup of coffee a cappuccino
with their breakfast, caffe macchiato as in afternoon and espresso after dinner. So
M&S will be planning according to this habit of Italians and this will ultimately help
them to grow in the market (Cardoso and Shikida, 2016). M&S will be importing their
finest beans of coffee from Gumutindo coffee plantation Uganda. This will also be
including core service of the coffee shop will be uplifting coffee experience of
customers in M&S coffee shop. Other experience include: accessing to power point
sockets for mobile and laptop charging, free Wi-Fi in coffee shop and arranging
themed evenings for board games and chat show.
Place
M&S coffee shop will be having a good and direct relationship with customer
and suppliers. As they are setting up their coffee shop in Italy so they would be
having the distribution chain from Uganda where they need to import coffee beans.
The place mix of M&S will also be including atmosphere and environment of the
coffee shop and proper customer handling and attending the special request from
them.
Price
5

This is the value of product or services offered by company to its customer in
this process they will be offering them the best quality of service and product. M&S
will be buying the best quality of coffee beans from Uganda and making sure that
staff of coffee shop is very efficient (Mos and Palatini, 2015). Price of all types of
coffee which they would be offering should be different from one another and must
be set after keeping certain factors in mind. The factors like:
 Competitors price,
 Location of shop,
 Non price related cost like that of time,
 Revenue and profit of the company and
 Value based pricing and fixed or variable cost.
Promotions
Before starting the coffee shop they need to promote their product which is
coffee to the customer of Rome where they will be establishing their first coffee shop.
They need to invest a lot of money in this process of promotion as having new entry
in Italian market. In promotion mix they not only need to invest in promotional activity
but also in finding and acquiring the best place for their outlets (Bertuzzi and Pietri,
2017). Many tactics could be used by M&S coffee shop in doing promotion of
product like organising an event, promoting by the means of their website or online
promotion, putting the ad in newspapers or on TV could be a good source of
promotional activities.
Physical evidence
This include physical aspect of M&S and tangible communication as well as
exterior attributes like parking, landscape etc. and interior attributes like design,
layout, equipment and décor of the shop. This also include both tangible and
intangible which are having the physical evidence in growth and development of
coffee shop in Italy.
People
6

This include the people or the staff which are related to company and the way
they are treating customer. People in all organisation play very important role in
making the progress of company.
Process
The coffee beans which will be imported from Uganda, they will be supplied to
all the distribution chain and then coffee is made from that beans and served to
customer is the process of making a coffee (Rosi, Tassotti and Mena, 2017). This
process should be very good and coffee made must be pure and authentic.
Q3 How will the geographical area impact Organisation culture and Supply chain on
Italy?
Organisational culture
M&S coffee shop need to start their coffee shop in Rome Italy and then
afterwards they need to expand their coffee shop to wider area of Italy. To cover
wider geographical area of Italy they need to consider certain factors which will be
affecting them. The organisational culture of M&S will be affecting the growth and
development of coffee in Italy. But for Italy they need to make certain changes in the
organisational culture of M&S like they need to select the staff from same country
only so that they can sustain in market. The organisational culture of M&S coffee
shop will be impacting geographical area in Italy (Gasperazzo, Toffanin and Larese,
2017). The culture of organisation will be including way staff of M&S coffee shop are
interacting with customer and way in which management of company will be
interacting with supplier and other clients of firm.
Supply chain
M&S coffee shop is London base coffee shop and they are setting up their
coffee shop in Italy which is the part of European Union. After Britain's decision of
leaving EU the relationship of many countries with that of UK was disturbed. So
before they are entering in to market of Italy they also need to consider this effect on
the relationship. They will be supplying the raw material like coffee beans from
Uganda and having a very good relationship with this East African country. This
supply chain will be affecting geographical area in term of Italy and growth of M&S
coffee shop as well (Godos and etal, 2014). M&S coffee shop should be covering the
wider geographical area in Italy just to earn higher profit in country and this will also
7

help them to grow in other country of Europe other than Italy. In Italy also they will be
covering all the other cities like that of Venice, Florence and Amalfi Coast as well.
Q4 Evaluation of the impact on decision making of profitability and liquidity of M&S
coffee shop.
The best thing about the coffee shop at London is that it is not having any
formal loan or external debt in their name. So this will be easy for them to get the
loan from bank for them to invest in Italy. The sale of M&S coffee shop in the year
end of 2016 was about £360000 and having a gross profit of about £20800 from the
sale. The net profit for year end 2016 was about £26800. This profit of the shop in
London will be impacting the profitability and liquidity in Italy to form the valid
decisions. By the financial statements of M&S in London shop show that they can do
better in Italy also just by identifying the core competitor of the firm in Italian market.
So far from the time they set up their business in London they have been doing very
well and earning profit as well (Caporaso, Civitella and Sacchi, 2014). As in now they
want to open their coffee shop in Italy this profit will be helping the firm to grow even
more.
Among people of Italy coffee is very famous as they love to drink coffee every
day so this will be helping M&S to preform in a better way. They also need to identify
all competitors in market, their strategies and price of their product all these are
important to evaluate the profit in Italy. This will also help them to decide the best
location for their coffee shop and decide what are product and service which they will
be providing to the customer (Mos and Palatini, 2015). They are also having the
assets with them of about £113000 which will be helping them to decide the future
planning in London as well. All the shop of M&S are having two coffee machines
which is costing £5000 each and the other equipment which are been used like that
of Wi-Fi computers.
CONCLUSIONS
From the above case study on Marvin and Smith coffee shop which is
operating in South of London and having 2 outlets. They are planning to open a new
coffee shop in Europe and likely in Italy. As this was set up in January 2016 and
since that time they are doing very good business in London and earning sustainable
profits. But the idea of them growing their business in Italy will be a very quick
decision so this will not be very correct time to set up the coffee shop in Italy rather
8

they must wait and analyse the market of Italy on a wider depth then plan. The given
information about people of Italy preferring coffee and having 3-4 cup of coffee every
day is not sufficient for the company. Rather, they need to have more information
about the rival firm who are operating since very long time in Italy and their strategies
as well. They need to train their staff to maintain high standard offer wage and
development opportunities that are above and beyond their competitors.
9

REFERENCES
Books and Journals:
Bertuzzi, T., and Pietri, A., 2017. Survey on acrylamide in roasted coffee and
barley and in potato crisps sold in Italy by a LC–MS/MS method. Food
Additives & Contaminants: Part B. 10(4). pp.292-299.
Rosi, A., Tassotti, M. and Mena, P., 2017. The Pocket-4-Life project,
bioavailability and beneficial properties of the bioactive compounds of
espresso coffee and cocoa-based confectionery containing coffee: study
protocol for a randomized cross-over trial. Trials. 18(1). p.527.
Gasperazzo, A., Toffanin, P. and Larese, F.F., 2017. Green coffee been
exposure and symptoms in dock workers in Trieste (Italy). La Medicina del
lavoro. 108(5). p.6224.
Godos, J., and etal. 2014. Coffee components and cardiovascular risk: beneficial
and detrimental effects. International journal of food sciences and nutrition.
65(8). pp.925-936.
Caporaso, N., Civitella, A. and Sacchi, R., 2014. Neapolitan coffee brew
chemical analysis in comparison to espresso, moka and American brews.
Food research international. 61. pp.152-160.
Özen, A.E., Pons, A. and Tur, J.A., 2014. Consumption of functional foods in
Europe; a systematic review. Nutricion hospitalaria. 29(3).
Cardoso, B.F., and Shikida, P.F.A., 2016. The Italian coffee import: a gravity
model analysis. Rivista di Economia Agraria. 71(1). pp.127-133.
Mos, L., and Palatini, P., 2015. 1c. 04: Coffee Consumption Is A Predictor Of
Cardiovascular Events In Young And Middle Aged Hypertensive Subjects.
Journal of hypertension. 33. p.e10.
Online
Marketing mix, 2017 [Online] Accessed through
<https://www.scribd.com/document/292738656/7-Ps-of-Starbuck-Services-
Marketing-Strategy>
10