Business Expansion Report: Marvin & Smith Coffee Shop in the EU Market

This report examines the potential for Marvin & Smith's coffee shop business to expand into the European market, specifically focusing on France. The report begins with an overview of the business and the rationale for choosing France, considering its strong economy, tourism, and favorable business environment. It then details a tailored marketing mix, including product variations, premium pricing strategies, strategic placement, and promotional activities, such as digital marketing and loyalty programs. The report further analyzes key factors for expansion, including human resource management, marketing challenges, and the need for market research. Financial information, including income statements and balance sheets, are provided, along with profitability and liquidity ratio analyses. The report concludes with an overall assessment of the viability of overseas expansion, highlighting opportunities and challenges for Marvin & Smith's coffee shop business in the EU market.

Business Essential

Table of Contents
Question 1:.......................................................................................................................................1
Overview of coffee shop and rationale to choose a specific country for expansion..............1
Question 2:.......................................................................................................................................2
A tailored marketing mix in relation with coffee shop expansion plan in overseas market. .2
Question 3:.......................................................................................................................................3
Key factors that Marvin & Smith need to consider for expansion of coffee shop in abroad. 3
Question 4:.......................................................................................................................................5
Financial information of Marvin & Smith's Coffee Shops.....................................................5
Question 5:.......................................................................................................................................8
Overall summary of viability of overseas expansion of Marvin & Smith's Coffee Shops....8
REFERENCES................................................................................................................................9

Question 1:
Overview of coffee shop and rationale to choose a specific country for expansion
After successful opening of two cafes in London, Marvin & Smith plans for an overseas
expansion of business, by opening one or two outlets in European market within next three
months (Ozuem, Howell and Lancaster, 2019). These partners have first time launch cafe in
London market, with investment of £100,00 capital through personal loans, with effective
business plans in terms of quality of coffee products which are sourced from Fair-trade registered
Foundation in Eastern Uganda, relaxing environment, extra accommodations and more. Potential
of these entrepreneurs can measure by fast opening of two more outlets in just a gap of 3 to 6
months (Khoo, 2019). Along with this, coffee shop of these entrepreneurs has a strong ethos to
promote fair trade and equality, where it concerns more on buying coffee beans from those
farmers who have grown the same ethically. So, measuring the ability of business, it is
recommended to Marvin & Smith to open new outlets in one of the famous market of EU i.e.
France. It is third-largest nation of Europe and second most populated one, where having a
strong economic condition, shows high level of income (Tournois and Forterre, 2019). France is
also a home of multinational or foreign companies. Therefore, considering France as top FDI
recipients in EU, opening outlet of cafe will prove beneficial for Marvin & Smith to gain high
profitability.
Marvin & Smith entrepreneurs currently focusing on targeting the tourists because they
demand more for East-African inspired coffee shops, which are themed with evenings (Vijayan,
2019). In this regard, France market seems to fit for them, because it is also known as leading
tourist destination of the world which helps Marvin & Smith in reaching out its targeted audience
easily. Other factors that make this place best location for opening of new cafe outlet, includes
labour, facility costs, transport, utility costs and corporate tax. These start-up costs as compared
to other 20 globalised countries is much low, where within 7 days, foreign entrepreneurs can
easily start their businesses (Liu, 2019). France also allows access to over 500 million
consumers, who are able to purchase good quality of products on any costs (Why Start a
Business in France, 2020). Moreover, the highly qualified and trained labours of France gives
opportunity to present cafe owners to get skilled workforce, for achievement of its objectives.
Similarly, other factors which shows importance of opening business for foreign companies are
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strong economy with near about USD 2,762 billion, registration of more than 28k global
companies, well-developed infrastructure and so forth (Sabbadin and Aiolfi, 2019). Along with
this, merger and acquisition; licenses and permits, trademark registration etc. provide good
opportunity to Marvin & Smith to meet its capital and resource demand, for opening new outlet
in foreign market.
Question 2:
A tailored marketing mix in relation with coffee shop expansion plan in overseas market
After successful opening of cafe outlets in UK market, for business expansion in foreign
marketplace, it is essential for Marvin & Smith, to concern on tailoring the marketing mix (Dyer
and et. al., 2020). It includes product, price, place and promotion techniques, that helps in
reaching targeted audience as well as developing competencies of business, in following way -
Product: The main product of this firm is coffee, where to meet demand of targeted
audience (tourists) in new marketplace, Marvin & Smith needs to introduce a range of varieties
(Berkhout, 2019). It includes hot chocolate, special drinks, cold coffee with blend ice,
sandwiches and other supplementary beverages and fast foods that give compliments to its
coffee. Along with this, to develop marketing strategy, it needs to identify taste and preferences
of targeted audience, which helps in developing more competencies in business.
Price: To offer wide variety of coffee products with richness of taste and quality, present
entrepreneurs also need to adopt premium pricing strategies. It has a already a great presence in
London marketplace, where customers instead of price concern on taste and delivery of good
quality of coffee (Hanlon, 2019). Therefore, considering the price as second choice of customers,
offering coffee on premium price on new marketplace, will help Marvin & Smith to add more
advantage in its business.
Place: Opening three outlets within nine months, shows the capabilities of present
owners of cafe to sustain their business long term in beverage industry (Vijayan, 2019). They are
currently targeted people who are concerned with ethical sustainability of business before,
consuming their products, therefore, modifying its menu as per new location i.e. France market,
will help in reaching towards targeted audience more easily. This will also add to raise its
position within existing and new market of EU.
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Promotion: Currently, it has been identified that Marvin & Smith haven't do much for
marketing or promoting outlets in existing market of London (Tournois and Forterre, 2019). This
may put negative impact of they won't adopt effective promotional strategies for branding
awareness in new foreign market area. As France is considered as the major hub point, where
tourists of different-different places come to see its beautiful infrastructure. Therefore, to target
such people, present owners need to make investment on promotional activities, because to start-
ups in foreign market, they cannot rely on word of mouth publicity. For this purpose, they need
to focus on digital and social media to promote its brand and reach targeted audience (Khoo,
2019). They can also run loyalty programmes which will allow its customers to get attractive
discounts on products, as well as earn points on every purchase within its outlet.
Focusing on these tactics of marketing strategies, will help Marvin & Smith in
developing effective coffee shop expansion plan, in marketplace of France. For this purpose, it is
also essential for these entrepreneurs to raise its funds, by taking bank loans. This will help in
increasing its credit score and give opportunity to get adequately fund in future for further
expansion in overseas marketplace (Ozuem, Howell and Lancaster, 2019). Other than this, as
France is one of the leading global centre of finance with four French banks, so this factor also
attract foreign investors to make investment in new start-ups. It would give opportunity to
Marvin & Smith as well, to gain their interest in new project of overseas business expansion.
Question 3:
Key factors that Marvin & Smith need to consider for expansion of coffee shop in abroad
In order to make effective plans for coffee shop expansion in overseas EU market (i.e.
France), Marvin & Smith are required to consider on business functions as well. It includes
human resource management, finance & accounting, marketing, operations or logistics and more,
because expansion of business in overseas market highly affect these activities of business (Liu,
2019). It also arises the challenges in front of present entrepreneurs to manage entire process
effectively. Human resource management is considered as one of the important function, where
workforce are developed and managed to work as per business requirement. With expansion of
business in overseas market or France, present entrepreneurs have to give employment to new
employees who belongs to diverse community but are acknowledge with understanding the
demand of domestic customers and know how to tailor needs of tourists (Hanlon, 2019). This
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would bring diversity in its coffee shop, but also arise conflicts among workers due to linguistic
issues, knowledge and skills gap etc. To overcome from this challenge, entrepreneurs of this
coffee shop needs to make prior plans for development of effective organisational culture
(Sabbadin and Aiolfi, 2019). For this purpose, they need to make effective employment
strategies, with training procedures to reduce skills, language and experience gap among new
and existing staff members. This would help in developing better workforce and gain high
commitment of them to work in collaboration for achievement of business objectives.
Furthermore, another main function where Marvin & Smith's need to consider more is
marketing activities, because expanding business in foreign market, create challenges also for
this division (Vijayan, 2019). It includes identifying taste and preferences of new customers of
France market, which gives highly challenging role because this cafe operates at small level,
therefore, determining and meeting their demands seems to be most difficult job. In order to
become premium brand in beverage and food industry, it cannot rely much on only word mouth
publicity (Tournois and Forterre, 2019). Therefore, to bring awareness among international
customers mainly tourists, they need to develop effective marketing campaigns that it is not just
providing the coffee, but experience too with good ambience and relaxing environment. For this
purpose, entrepreneurs of this cafe, need to offer free samples of its products to new customers,
in order to get their review and increase purchase intention of them (Khoo, 2019). To reach
potential buyers, this cafe also needs to adopt digital media where it can define product range
and offers, that helps in attracting them and increasing their footprints in new outlet. Along with
this, as main challenge of business expansion on marketing is to identify political, economic and
other system of overseas market. Therefore, to cope up from this issue, marketing team of
Marvin & Smith’s Coffee Shop needs to conduct a proper market research by using a number of
techniques, like PESTLE analysis, Porter Five Force model and more (Ozuem, Howell and
Lancaster, 2019). This would help in analysing current market situation of new area, so that
effective plans and policies can be developed accordingly.
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Question 4:
Financial information of Marvin & Smith's Coffee Shops
Income statement for Marvin & Smith's Coffee Shops' for the period of 31st Dec. 2017
£ £
Sales 360000
Less Cost of goods sold
Purchases 160000
Less Closing inventory 8000 152000
Gross Profit 208000
Less Expenses
Electricity 32400
Salaries & Wages 34000
Rents and Rates 80000
Telephone 8400
Other expenses 8000
Depreciation – Equipment 6400
Depreciation – Fixtures 8000
Depreciation – IT Equipment 4000
181200
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Statement of Financial Position for Marvin & Smith's Coffee Shops at 31st Dec. 2017
£
(Starting Value)
£
(Depreciation)
£
(Ending Value)
Non-Current Assets
Equipment 40000 6400 33600
Fixtures and Fittings 40000 8000 32000
IT Equipment 16000 4000 12000
96000 18400 77600
Current Assets
Inventory 8000
Cash 27400
35400
Total Assets 113000
Capital 100000
Profit 26800
Drawings 20000 6800
106800
Current Liabilities
Trade Payables 6200
Total capital and
liabilities
11300
To analyse the current business situation, profitability and liquidity ratio can be
evaluated, which helps in capabilities for business for further expansion, especially in overseas
market. This would also help Marvin & Smith’s Coffee Shop in evaluating where company
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needs to make changes for enhancing business performance, to meet current and future demands.
From given income sheet of this café, profitability and liquidity ratios can be evaluated in
following way –
Profitability Ratio -
PR1 = Gross Profit x 100
Sales
From above income statement, Gross Profit = 208,000 and Sales = 360,000
therefore,
PR1 = Gross Profit x 100
Sales
= 208000/360000 x 100 = 57.78%
PR2 = Net profit x 100
Sales
where, Net profit = 26,800
therefore,
PR2 = Net profit x 100
Sales
= 26800/360000 x 100 = 7.45% Operational expenses are high
Liquidity ratios -
Current Ratio = Current Assets
Current Liabilities
= 35400 / 6200
Current Ratio = Current Assets - Expenses
Current Liabilities
= 35400 – 8000 / 6200
= 26800 / 6200
By measuring the gross profit ratio, which is calculated as more than 50%, so, it shows the
good condition of business, with low procurement costs. Therefore, Marvin & Smith’s Coffee
Shops is in good condition to meet its expenses, with availability of cash in effective amount.
But since net profit ratio is much low, due to high operational costs. In this regard, it is essential
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for this café to control the operational expenses, so that profitability can be maintained in
business, for expected growth and expansion in future.
Question 5:
Overall summary of viability of overseas expansion of Marvin & Smith's Coffee Shops
From all over discussion, it has been identified that for expansion of Marvin & Smith’s
Coffee Shops, France is considered as the best marketplace. The reason behind this is its good
economic conditions, including tourist attraction area. This would help in reaching potential
buyers and offering them products on premium price. Furthermore, other factors that attract this
café for launching new outlets is gaining interest of foreign investors in its new project. Through
support of them, owners of this café shop get advantage in meeting its resource requirements.
This would help in getting enough funds for expanding business successfully, in foreign
marketplace. In addition to this, respective café also requires to determine intensity of
competition in overseas market. For this purpose, identifying political stability and legal factors
help in developing effective policies as well.
This firm also requires to make effective plans for expanding business in France, it includes
development of workplace through effective employment process; organising marketing
campaigns and promotional plans for increasing awareness among potential customers about its
range of products; controlling and managing operational functions for maintaining profitability;
and so forth. Moreover, to develop competencies of business, this café also requires to make
balance in retaining the existing customers and attracting new ones. For this process, developing
tactics as per marketing mix components like product development, place distribution,
promotional plans and pricing strategies, also lead to enhance capabilities of business to meet its
requirements. Including all these procedures, measuring performance on each stage of business
expansion in overseas market, also help in reducing risk factors like marketing challenge, diverse
workforce and more.
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REFERENCES
Books and Journals
Hanlon, A., 2019. Digital Marketing: Strategic Planning & Integration. SAGE Publications
Limited.
Dyer, J. H. and et. al., 2020. Strategic management: Concepts and cases. John Wiley & Sons.
Berkhout, C., 2019. Assortment and Merchandising Strategy: Building a Retail Plan to Improve
Shopper Experience. Springer.
Sabbadin, E. and Aiolfi, S., 2019. The Strategic Evolution of Fashion Flagship
Stores. International Journal of Business and Management, 14(9).
Liu, Y. Y., 2019. Exploring the Importance of Behavior during Personal Interactions and
Customer Relationship Management: Case Interviews. International Journal of
Organizational Innovation (Online), 11(4), pp.135-144.
Vijayan, G., 2019. Organic Food Certification and Marketing Strategies. Agrihortico.
Tournois, L. and Forterre, D., 2019. The extremes of franchising in a post-communist
country. Journal of Business Strategy.
Khoo, G. C., 2019. The Hansik Globalization Campaign: A Malaysian Critique. Gastronomica:
The Journal of Critical Food Studies, 19(1), pp.65-78.
Ozuem, W., Howell, K. E. and Lancaster, G., 2019. The impact of digital books on marketing
communications. Journal of Retailing and Consumer Services, 50, pp.131-137.
Online
Why Start a Business in France. 2020. [Online] <https://www.lawyersfrance.eu/why-start-a-
business-in-france>.
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