Marvin and Smith's Coffee Shop: Belgium Expansion Case Study Analysis

This case study analyzes Marvin and Smith's Coffee Shop's (MSCS) decision to expand its business into Belgium, focusing on the country's coffee culture and market potential. The study justifies the choice of Belgium, considering its high coffee consumption and cafe culture. It then details the proposed marketing mix, including product offerings, pricing strategies, location selection, and promotion methods. The case study also explores potential challenges in Human Resource Management (HRM) and marketing, highlighting the influence of political, economic, and cultural factors on the business. Furthermore, it examines the impact of profitability and liquidity ratios on the business's success. The analysis provides a comprehensive overview of the strategic considerations and challenges MSCS faces when entering the Belgian market, offering insights into market entry strategies and operational considerations.

A CASE STUDY

Table of Contents
1.JUSTIFICATION OF THE CHOSEN COUNTRY ....................................................................3
2.MARKETING MIX ....................................................................................................................4
3 POTENTIAL CHALLENGES IN HRM AND MARKETING AND THEIR
INTERLINKAGE ...........................................................................................................................6
4. INFLUENCE OF PROFITABILITY AND LIQUUIDITY RATIOS ON A BUSINESS..........7
5. SUMMARY.................................................................................................................................9
REFERENCES..............................................................................................................................10
Books and Journals...................................................................................................................10

1.JUSTIFICATION OF THE CHOSEN COUNTRY
Marvin and Smith's Coffee Shop's(MSCS) are deciding to take decision on the expansion
plan. After studying and analysing the scenarios of coffee culture in different countries Marvin
and Smith have decided to expand their business in the country of Belgium as it is the 8 th largest
coffee consumer in the world. Belgium's coffee consumption is 6.8 kg per capita and people
drink approx 1.35 cups of coffee per day.
Cafe culture, lifestyle and coffee culture in Belgium
Paris and Vienna comes to the mind when talked about cafe culture but Belgium is
having its own culture of cafe. Every person goes to the cafes on an average five times a week
which is quite high than other countries. People of Belgium are joyful and love to celebrate even
small events with friends and loved ones. There are several coffee house in the country which
shows that people have deep interest in the coffee also the people of Belgium are chocolate
lovers and love to have combination of chocolate and coffee(Kotler and et.al., 2015).
Ethical Considerations
People of Belgium are ethical and are also attentive towards the code of ethics followed
by any cafes and restaurants. MSCS should enter into the expansion by having clear agreements
and ensure that they follow trade agreements made with other partners or the other local
authorities. Belgium also have various benefits for the staff working in the cafes and restaurants.
MSCS also have to follow code of ethics to have good customer base and satisfied employee. It
also have to consider staff w(Trivedi and et.al., 2016)elfare as satisfied staff will serve people
nicely and to retain good staff in the cafes as they will also project the image of the cafe outside.
For having a good image in the Belgium MSCS has to do business ethically and with loyalty.
Structural Considerations
Before anything MSCS will have to decide the place for opening the cafe. Among the
selected ones Wolvengracht, Brussel is the best place to open a cafe-house as it is surrounded
with nature and is near the heart of the city(Kotler and et.al., 2017). Verdant landscapes, majestic
trees attract many coffee and nature lovers when the sun starts going down. People in the locality
are traditional but love to have modern and different tastes. There are many hotels in the nearby

areas which can also help in attracting tourists visiting the country. Because of hotels it had
became a commercial place too as a result the transport facilities are also available for the
general public to the place. It is also near the station therefore people will not have the
conveyance or arrival problem.
Logistics
It is also important for the MSCS to ensure that the location does not costs much in area
of logistics and supplies and for this reason it has also researched on the supplies and logistic
facilities available in the region. The coffee farms are situated at 5 minute distance which will
reduce the transportation costs as well as the cafe can have its supplies directly from the farmers .
The location is also near the city which will attract the town side people as well the deliveries
could be made to the customers quickly(Kotler and et.al., 2018).
2.MARKETING MIX
Marketing mix deals with keeping a combination or a product at right place , at reasonable
prices and at the exact timings. But for achieving the success in doing this part MSCS will
require to have an efficient and effective business plan. In the business it will have to consider
four main elements of the marketing mix which are products to be served, price that it is going to
charge place to choose for running it successfully and at last but most important is the promotion
of the cafe and the speciality of the products served by the cafe-house.
Product
Product means the item which the cafe is going to serve the people of Belgium. Here the
product is not only restricted to the physical things but also the intangibles like services it is
going to provide to the customers and how well they are treated all these things will be covered
under the product. MSCS is deciding to offer European inspired coffee plus chocolate products.
It will also serve soft drinks and British snacks. These products has made cafe already a well
known place in the UK. Belgium Coffee with a touch of UK will attract many customers. It will
provide the traditional people of Belgium a foreign taste(Chaffey and Ellis-Chadwick, 2019).
MSCS is also going to offer different different and traditional service in the modern architecture
and amenities. A tie up with a delivery chain will provide the cafe with professional customers
who cannot visit the shop during office hours. Product from different culture will attract various
customers and the excellent customer service will help out the cafe in creating place in the hearts
of the Belgium people.

Price
The coffee shop will have to keep in mind that it is not the only cafe which is trying to
open the business in that locality. There are already established cafes in the location therefore
competing with them in prices will not be a easy task. MSCS will face a challenging
environment. Cafe will have to use strategy of price penetration as the shop is new and from a
different culture. Cafe has to manage and beat the extreme market forces of competition of
competition to establish and sustain in the market. Cafe will have to sell its product at
considerably low prices such that it could manage to bear its cafe expenses without the
expectation of the profits for few time(Ambler, Witzel and Xi, 2016). A coffee which is new and
unique and will attract people when people will see that investing in it will not cost them much.
As people tend to move in shops which are providing coffee in which they have established
interest at the same prices. Therefore it is important for the coffee shop to keep its prices low
from the competitors to grab the customers.
Place
Place plays an important part in the success of any business therefore the place chosen by
the MSCS is picked after analysing various facts and considering various factors which will help
the business to expand successful and where it will face least disadvantage. It is situated near the
heart city of Belgium in the lap of nature, it will enhance the coffee experience of the people and
will also attract nature lovers to have a different taste. It is also situated at a five minutes distance
from the corporate buildings which will also help the coffee shop to attract professional
customers and also the delivery services will be cheaper for the MSCS. Coffee farms near the
cafe will facilitate the supplies at cheaper rate reducing its transportation costs and other related
factors. The place chosen by the MSCS is the best place for it to start its new business and to
survive even in unfavourable conditions(Wüstenhagen and Boehnke, 2017).
Promotions
Belgium is a place where quality is at a high priority. Country has a numerous avenues by
which it can promote the notion of cafe, products to be offered by it and the qualitative services
which it will provide. There ate numerous ways by which it can make promotions of its coffee
shop. People of Belgium are high internet users therefore promoting the business through social
media platforms like Facebook, Instagram would be the best most effective way(Marketing mix,
2019). Coffee shop can promote its business through exhibitions , having promotional sales for

attracting the people. Advertising through commercials hoardings flyers etc. will also attract the
attention of the people. Use of such mediums will make the potential consumers of its opening.
These sources are the fastest and most successful sources from promoting the business of the
coffee shop(Ward, 2016).
3 POTENTIAL CHALLENGES IN HRM AND MARKETING AND THEIR
INTERLINKAGE
For achieving the success in any business in relation to its goals and objectives it is
important to have an effective human resource management strategy. Factors which influence
HR activities are not stable. Coffee shop in order to increase its retention and for reducing the
employee issues will have to monitor factors influencing the working of the cafe.
Political Factors
The change in the government of Belgium is issue of concern for the coffee shop as it
will influence the establishment concern of the cafe in a new locality of Belgium. The
government will bring new trade issues and other compliance procedures for the new businesses.
It will affect the human resource management as well as the marketing department of the
business enterprise. Human resource management may face problem regarding the labour laws
and other establishment issue(Trivedi and et.al., 2016)s. Government may raise the the minimum
wage rate which rate. This will have an influence over the selection procedures of the cafe it may
prove to be a costly factor as the labour rates will be raising because of the new laws. New rates
will also affect the marketing factor of the cafe as the because of the high labour rates it may not
be possible for the company to have a effective marketing team who can promote sales of the
cafe. Also the cafe will not be able to provide efficient services to the client satisfying
them(Gygli and et.al., 2019).
Coffee shop will have to consider the government regulations of the Belgium as it will
effect the HRM decision making process it will have to consider the labour laws and without
considering such factors it can be difficult for the coffee shop to survive in the Belgium and
having the penal provisions in its initial stage can affect the marketing of the cafe.
Economic Factor
MSCS will also have to consider the economic condition of the country it plays an
critical role in the new start-up in a new country .The country is having a stable growth in

economy which means that the country has not having developing opportunities in the country .
Stable growth shows that the established entities are very strong and performing very excellently.
Economic factors will affect the human resource as it will have to put extra efforts in selecting
new expert candidates as the specialists are already well established. It will influence the Human
resource as the economy sets the budget for the people. If the economy is downturn it will not be
beneficial for the coffee shop to start it business over their and in a down economy marketing
will not be effective. In a down economy cafe will not be able to give incentive and extra
benefits and the staff will not have the motivation to promote its business with extra efforts.
Marketers will have to select target customers for its expansion in the new economy. Despite a
having a stable economy people of Belgium never sacrifice their habit of going to coffee
shops(Obstfeld, 2015).
Cultural Factors
Belgium is a traditionally rich city with the modernised people, so it is possible that the
people may not like the different culture over their own. People of Belgium respect their culture
very much. Therefore it Marketing mix. 2019is important that the HRM do not hurt the religious
sentiments of the employees working in the cafe. People of Belgium are highly embedded with
culture and it is important for the coffee shop to consider the cultural issues in the business as it
will help the business to connect to the people. Satisfied employees will project a positive image
of the coffee shop in the new locality which will automatically promote the business. Marketing
department can connect their products with their culture to help them to connect the people of
Belgium(Rupert and Smith, 2016).
4. INFLUENCE OF PROFITABILITY AND LIQUUIDITY RATIOS ON A
BUSINESS
Profitability Ratios
Gross profit ratio = Gross Profit / Net Sales
= 208000/360000 = 0.57:1
Net profit ratio = Net Profit / Net Sales
= 26800/360000 = 0.074:1
Gross Profit Ratio – . It is calculated every year by every firm for the analysis of the financial
statements and to compare the growth over years as well as the competition. GP ratio should

have a consistent growth which means that the business is growing (Camin and et.al., 2016).The
Marketing mix. 2019above GP ratio show that the company's is having enough profits to carry
out its expenses. Also the gross profit is more than 50% which shows that the company is having
good revenues showing it is having strong status in the market.
Net Profit Ratio – NP ratio is also an tool for identifying the soundness of the enterprise. It
measures the overall profitability of the business(Petruzzo and et.al., 2015). There is not set
standard for the net profit ratio. Higher the net profit ratio higher the efficiency in managing the
operations of the business. It depicts that the coffee shop is not managing its managerial and
operational affairs with excellence and the shop is not having enough profits for its expansion
plan. Coffee shop will have to improvise its operations to raise its profits.
Return on Capital Employed = EBIT / Capital Employed *100
=26800/106200 = 25.24 %
It is used for measuring returns over the capital employed in a business. T is generally calculated
in terms of percentage. It depicts the how well the company is utilising its resources to attain the
desired profitability. The coffee shop is having a return of 25.24% over its capital employed
which shows that the company is utilising its resources in an efficient manner and is working
actively to achieve its objectives(DeBord and et.al., 2017).
Liquidity Ratios
Current Ratio = Current Assets / Current Liabilities
= 35400 / 6200 = 5.7:1
Acid Test Ratio = Current Assets – Inventory- Prepaid expenses / Current Liabilities
=35400-8000 / 6200 = 4.4:1
Current Ratio – It measures the ability of the firm to pay off its short term liabilities over a
through its current assets. Current assets should be twice of the current liabilities as per the
standards. The current ratio of coffee shop is 5.7 :1 which means it has assets more than five
times to meet its liabilities. It is having enough ratio and is not depending on outside debts to run
its business

Acid Test Ratio – It is a financial ratio to measure a company's liquidity status. It shows the
availability of current assets against its current liabilities. Coffee shop is having a quick ratio of
4.4:1 which means it is having current assets more than 4 times to meet its current liabilities.
5. SUMMARY
Carrying out the overall above study Marvin and Smith can come to a point that the
expansion plan of the company it has to consider several factor. The coffee shop has carried out
studies for deciding the country for expansion. Finally the company selected Belgium as a place
for its expansion considering various factors which will help the organisations to grow. Belgium
is the 8th largest coffee consumer country in the world which means that the shop will anyhow
manage to survive in that country. Second important factor is the location it has chosen the area
near the city which is surrounded with nature and hotels and also near the corporate houses.
Nearby availability of the coffee farms will reduce the transportation and other supply costs of
the coffee shop. A business has to also consider cultural factors of the country in which it is
planning to expand. BelMarketing mix. 2019gium is a culturally rich city with the modernised
people who love to experience new things. MSCS has established an effective market plan
considering all the factors of the marketing mix like product, penetrating pricing strategy for its
business in the inintial stage ,place of the business chosen by the coffee shop is also beneficial
from all the views. Belgium is planing to expand but it has to consider other factors also such as
the political issues affecting the business, economic factors affecting the management decisions
and marketing and the cultural factors will have the most significant issue over all the other
factors. Also before considering the expansion plan it also have to analyse its present financial
conditions such as the company having high liquidity ratios which means that the shop is not
having high external debts and it is surviving on its own funds. Coffee shop is also having a
return of 25.24 % over its capital employed which means that the coffee shop is having returns
over its investments. The company is efficient in managing its operations therefore it can expand
its business in the Belgium. Marketing mix. 2019

REFERENCES
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Kotler, P. and et.al., 2017. Marketing for hospitality and tourism.
Kotler, P. and et.al., 2018. Marketing management: an Asian perspective. Pearson.
Chaffey, D. and Ellis-Chadwick, F., 2019. Digital marketing. Pearson UK.
Ambler, T., Witzel, M. and Xi, C., 2016. Doing business in China. Routledge.
Wüstenhagen, R. and Boehnke, J., 2017. Business models for sustainable energy. In System
Innovation for Sustainability 1(pp. 80-89). Routledge.
Ward, J., 2016. Keeping the family business healthy: How to plan for continuing growth,
profitability, and family leadership. Springer.
Gygli, S. and et.al., 2019. The KOF globalisation index–revisited. The Review of International
Organizations. pp.1-32.
Obstfeld, M., 2015. Trilemmas and trade-offs: living with financial globalisation.
Rupert, M. and Smith, H., 2016. Historical materialism and globalisation: Essays on continuity
and change. Routledge.
Camin, F. and et.al., 2016. Stable isotope ratio analysis for assessing the authenticity of food of
animal origin. Comprehensive Reviews in Food Science and Food Safety, 15(5), pp.868-
877.
Petruzzo, P. and et.al., 2015. Outcomes after bilateral hand allotransplantation: a risk/benefit
ratio analysis. Annals of surgery. 261(1). pp.213-220.
DeBord, J. and et.al., 2017. Profiling of heroin and assignment of provenance by 87Sr/86Sr
isotope ratio analysis. Inorganica Chimica Acta. 468. pp.294-299.
Trivedi, M. and et.al., 2016. Gas chromatography-mass spectrometry based isotopic abundance
ratio analysis of biofield energy treated methyl-2-napthylether (Nerolin). American
Journal of Physical Chemistry. 4(5). pp.80-86.
Online
Marketing mix. 2019. [ONLINE]. Available. Through<https://marketingmix.co.uk/>