Expansion Strategy for Marvin and Smith Coffee Shop: Case Study

This case study examines the expansion plan of Marvin and Smith coffee shop, focusing on establishing a new location in Ireland. It begins with research on the Irish market, considering socio-cultural and geographical factors, and analyzes the suitability of Ireland for coffee shop expansion. The study then delves into the marketing mix, including product, price, place, and promotion strategies tailored for the Irish market. It explores the implications of the business plan, addressing challenges such as management structure, competition, and personnel issues. Furthermore, the case study provides an analysis of the financial position of Marvin and Smith, including profitability ratios and return on capital employed to assess the financial viability of the expansion. Overall, the report offers a comprehensive overview of the factors involved in the expansion plan, providing valuable insights into market analysis, strategic planning, and financial management for the coffee shop.

CASE STUDY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1) RESEARCH ON COUNTRY FOR EXPANSION OF COFFEE SHOP...................................1
2) MARKETING MIX IN RELATION TO COFFEE SHOP EXPANSION PLAN......................2
3) IMPLICATIONS OF THE NEED FOR THE BUSINESS PLAN.............................................4
4) FINANCIAL POSITION OF MARVIN AND SMITH COFFEE SHOP...................................5
5) SUMMARY RELATED TO EXPANSION PLAN....................................................................7
CONCLUSION................................................................................................................................8
REFERENCES ...............................................................................................................................9

INTRODUCTION
Business expansion is a development process and growth opportunity for any entity
which impacted on its effectiveness and goodwill in market. This influences on profit level of
enterprise and expansion in different ranges. Present report is based on a case study related with
Marvin and Smith coffee shop planning for establishing new coffee shop in Ireland. In this
regard, reasons behind choosing this country for expansion plan as its socio-cultural,
geographical factors etc. are taken under consideration. Including this, marketing mix elements
regarding expansion plan for the coffee shop will be introduced. Moreover, implications of
factors occurred in plan is to be discussed in this assignment. Apart from this, monetary position
of the coffee shop can be identified for appropriate decision making to develop entity's
performance. Overall, factors related to expansion plan for the coffee shop are to be discussed in
this report.
1) RESEARCH ON COUNTRY FOR EXPANSION OF COFFEE SHOP
According to the given case scenario, it is identified that Hank Marvin and Patty Smith
are operating their business in London in food and catering industry. The business is getting
growth and its profit level is on large scale in terms of using quality of materials for coffee and
tea. In accordance to this, the finest coffee beans from Gumutindo coffee are used for creating its
unique variety and attracting people in wide range (Grissemann, Plank and Brunner, 2013).
Besides this, highly efficient workers are recruited and selected for the entity and dealing with
customers more efficiently. However, as analysing constant growth in business, both of them
planning for establishing new coffee shop in Ireland. For this purpose, it is required to evaluate
critically on factors for setting up new entity in the selected country including social and coffee
culture, ethical considerations and legislation for the business plan efficiently. In this regard,
considerations and factors required to business expansion in Ireland are as follows:
Ireland: According to statistical data of Ireland, its population is around 6378000 in 2011
and density is about 73.4 kilometre square. Including this, people speak English, Irish and Ulster
Scots languages in trend for daily routine. However, its geographic area is 84421 kilometre
square which is quite effective and developed in terms of business expansion (Laukkanen and
et.al., 2013). Likewise, on analysing social and cultural factors of the country, it is recognised
that there are large number of coffee shops and people like to take coffee generally. Including
1

this, social standard and income earning level of people also remain affordable for new tastes in
coffee. Besides this, it is also recognised that coffee is highly demanded in culture and people are
fond of it in wide range. On behalf of this, it is analysed that Ireland is suitable country for
establishing new entity of Marvin and Smith coffee shop (Grønholdt and et.al., 2015). Apart
from this, it is forecasted that Marvin and Smith will get success to attract people towards its
unique featured coffee at maximum level.
Logistical considerations: On analysing all the factors of Ireland entirely including
geographic area, people's choice, social and culture in coffee, it observed that setting up Marvin
and Smith coffee shop will be succeeded. Including this, as people are fond of taking coffee, they
will be also attracted towards unique coffee of the entity (Cao, Thompson and Triche, 2013).
Therefore, choosing Ireland as country for business expansion and establishing its new coffee
shop in it will be effective.
Ethical considerations: There are some ethical considerations regarding business
operations and decisions regarding its development. For instance; collecting accurate data and
critically evaluating coffee culture in Ireland. However, it is essential to consider ethical
considerations of the selected country for establishing new coffee shop in it (Pavlou and Stewart,
2015). Along with this, taking care of people's trend and lifestyle as well pricing on coffee
should be according to business norms. Apart from this, ethics related to business activities and
other factors should be considered in relation to business expansion effectively.
Structural challenge of expansion into Ireland: It is required to consider challenges and
difficulties may occur during establishing new entity of Marvin and Smith coffee shop in Ireland.
As challenges are determined like; encouraging people towards coffee, technological
advancement, highly competitive market in cafe, differences in people's attitude and standards in
comparison to UK and so on (Helm and Gritsch, 2014). Therefore, structural framework of
challenges can be identified for expansion of business in Ireland therefore, business growth and
success can be achieved in plan efficiently.
2) MARKETING MIX IN RELATION TO COFFEE SHOP EXPANSION
PLAN
Marketing mix elements are those factors which are helpful for decision making
regarding product, price and method for promotion of goods and so on. As Marvin and Smith are
2

planning for setting up its new coffee shop in Ireland, it is essential to make appropriate decision
in relation to its marketing which are discussed as below: Product: For considering this marketing mix element, product related decisions are made
in relation to quality and quantity of materials. However, it is evaluated that Marvin and
Smith use high quality of coffee beans and tea products. Including this, it plans to use the
best quality of materials to prepare unique quality of tea and coffee to attract people at
maximum level (Donndelinger, Joseph and Scott, 2017). On the basis of determining
product's quality and used materials, further decisions are made regarding pricing,
marketing and business performance of the coffee shop. Price: Under this marketing mix element, cost incurred in purchasing materials, labour
cost and so on are analysed. Therefore, suitable price should be set to provide coffee and
its services. Including this, pricing decision is created for appropriate business operations
and improving its performance (Giordani and et.al., 2014). However, cost is also
determined on the basis of market trend, competitiveness and demand for its services.
Therefore, on analysing these factors, cost incurred in business expansion process as
establishing its new entity in Ireland is forecast. In this regard, various ideas are
generated for cost effectiveness also impact on financial position of the company. Place: It is essential to consider market element as place for providing coffee and
services of the entity. In accordance to this, decisions are made regarding Ireland that it is
suitable place for setting up Marvin and Smith coffee shop. Moreover, in which area of
the country, business can set up and all are identified. However, it is related with
production and distribution channel that can customers reach to the coffee shop.
Likewise, will it be convenient for users to visit the place appropriately (Cengiz, Combs
and Samy, 2017). In addition to this, it is also planned that by which method, coffee shop
can be established in the selected country. Therefore, according to place as marketing
mix element, different ideas are generated for business expansion plan and maximizing
customers' satisfaction level with coffee and its services at higher level.
 Promotion: It is advertising technique for marketing of products and encouraging people
towards Marvin and Smith coffee shop. It is considered that various sources are identified
for promotion of goods such as; social media, advertisement through newspaper,
3

magazines, TV, radio, conducting promotional campaign and so on (Grissemann, Plank
and Brunner, 2013). Therefore, which of will be the best source for advertisement and
attracting people is recognised. However, it influences on public relation and contacting
with them in Ireland at most. Thus, marketing mix element as promotion emphasis on
creating contacts with people and promotion of unique variety of coffee is analysed.
3) IMPLICATIONS OF THE NEED FOR THE BUSINESS PLAN
Implications are considered as difficulties occurred in business operations by which
appropriate success can get in its plan. However, different implications are occurred during
business expansion and working for its growth as; differences in languages, culture, social and
legal rules of various countries. In addition to this, it remains challenging for any entity to
expand its business as establishing its new branch in other country. Due to changes in
information sources and lack of communication in relation to business plan affects its expansion
adversely. It is occurred due to differences in languages, culture, systems of business operations
and so on. However, communication barriers affect business operations and systems negatively.
Thus, it is essential to work on this implication and getting success in business plan effectively.
As culture is varied from country to country also affects business operations and its growth
negatively (Cao, Thompson and Triche, 2013). For reducing this implication between UK and
Ireland, it is necessary to analyse other country's business culture for its expansion.
Implications occurred in setting up new entity of Marvin and Smith coffee shop are as
follows:
a) Management structure: Business operations between two or more countries emerges
imbalanced management structure in terms of production and distribution system. It also
includes managing resources and fund for business, coordination among its workers etc.
Therefore, changes in management structure obtains which is related with setting up new entity
of Marvin and Smith coffee shop in Ireland. Gaining competitive advantage: It is recognised that
there are large number of coffee shops in Ireland who provide coffee and effective services to a
million people (Pavlou and Stewart, 2015). In order to this, it remains challenging facing
competition and sustaining its place in new market as Ireland. However, this issue is required to
reduce for establishing new entity of Marvin and Smith coffee shop effectively.
4

b) Personnel and managing staff issues: It is very common to occurrence of personnel
and staff issues during business operations. However, creating coordination among workers is a
difficult task which impacted on entity's environment and its effectiveness (Helm and Gritsch,
2014). Therefore, for reducing this issue, it is essential to conduct meeting with its personnel and
managing them efficiently to get success in business expansion plan for Marvin and Smith coffee
shop. Imbalanced demand and supply of goods and services provided by entity affect its
management system and growth adversely. As creating balance between production and
distribution system is difficult for coffee shop and managing supply chain. Thus, it is essential
for entity to prepare and implement strategies to create balances and enhancing its effectiveness.
4) FINANCIAL POSITION OF MARVIN AND SMITH COFFEE SHOP
Monetary position of any entity is identified by analysing its profit and loss account,
balance sheet, income statement and so on (Donndelinger, Joseph and Scott, 2017). Therefore, its
profitability is analysed as well generate variety of ideas for fund and increasing it. For
establishing new entity of Marvin and Smith coffee shop, it is needed to identify its economic
position can identify as follows in terms of ration analysis as:
 Profitability ratio: This ratio is to identify profit level of the coffee shop on which
appropriate decisions can make regarding its expansion (Giordani and et.al., 2014). In
accordance to this, gross profit and net profit margin are evaluated. However,
profitability ratio of Marvin and Smith coffee shop is identified as:
Table 1: Profitability ratio
Particulars Formula Amount
Sales 360000
Purchases 152000
Gross profit 208000
Gross profit
margin [(Gross profit/sales)*100] 57.77%
Net profit 26800
Net profit margin [(Net profit/sales)*100] 7.44%
5

However, entity got appropriate profit in its business operations for coffee and its
services at higher level. Therefore, it can work on establishing new coffee shop and will increase
profit level effectively in the future time.
 Return on capital employed: Under this financial ratio, return on capital incurred in
business operations. In this regard, variety of ideas are generated for further
implementations and appropriate business plan for the entity (Laukkanen and et.al.,
2013). As ROCE of the coffee shop is identified as:
Table 2: Return on capital employed
Particulars Formula Amount
Earning before tax 360000
Total assets 113000
Current liabilities 6200
ROCE
[Earning before tax/(total assets-
current liabilities)] 3.37
It is recognised that ROCE of the coffee shop is 3.37 which is moderate and shows
adequate fund and resources of the coffee shop. On behalf of this, it can be forecast that Marvin
and Smith can achieve success in expansion plan.
 Liquidity ratio: It includes current ratio and quick ratio which demonstrates liquidity
position of the entity (Grønholdt and et.al., 2015). Including this, it is related with
inventory management and productivity of the organisation. However, liquidity ratio for
the organisation is identified as:
Table 3: Liquidity ratio
Particulars Formula Amount
Inventories 8000
6

Current assets 35400
Current liabilities 6200
Current ratio (Current assets/Current liabilities) 5.7
Quick ratio
[(Current
assets-inventories)/current
liabilities)] 4.41
Current ratio is evaluated by divided by current asset to current liabilities for identifying
entity's liquidity position. As ideal current ratio for any entity is considered as 1 and determined
this ratio of the coffee shop is 5.7 which is required to control over. Including this, quick ratio of
the entity is calculated as 4.41 which is not good for the entity. Therefore, it is required to
manage inventories and balancing between demand and supply of resources used in preparing
and serving coffee.
5) SUMMARY RELATED TO EXPANSION PLAN
In accordance to this case scenario, it is evaluated that Marvin and Smith are business
partners who operate their business in food and catering industry. However, their business is
growing at higher level in terms of producing coffee and its services. As they plan for business
expansion through establishing new entity in Ireland therefore all related factors are analysed.
For this purpose, they observe country's coffee culture, environment and other related things. On
behalf of which, it is evaluated that coffee culture of the selected country is quite effective and
people like to take coffee in their daily routines (Pavlou and Stewart, 2015). Likewise, critical
evaluation on its expansion plan is created that which problems may occur in expansion plan for
the coffee shop. Similarly, variety of ideas are generated regarding its further implementations
and getting success in expansion of the business. In this regard, information system, management
structure for appropriate decision making and establishing new entity. Along with this, financial
performance of the coffee shop is evaluated as of ratio analysis including profitability, liquidity
and return on assets. However, positive outcomes are recognised.
On behalf of analysing all these factors, it is to suggested for Marvin and Smith that they
should work on coffee shop's expansion. As it is forecast that its business performance and
7

goodwill in market will be enhanced in next upcoming years. Including this, Irish will demand
for unique featured coffee that will be effective to increase its productivity and profitability at
higher level (Business performance, 2016). Thus, expansion of business plan for coffee shop will
be succeed in Ireland and appropriate for its longer term sustainability in global market.
CONCLUSION
It is concluded that setting up new coffee shop for Marvin and Smith will be effective
also its profitability and competitiveness be increased. In this regard, actual business
performance is identified in terms of ratio analysis including profitability, liquidity and return on
assets. However, coffee culture and environment of Ireland is also recognised where they are
planning for start up new entity. Including this, implications occurred during business expansion
are evaluated on which appropriate decisions can make. Besides this, marketing mix elements
are identified which involved in planning procedure and expansion of the organisation
effectively. However, business expansion related tools and factors are identified in this report
for which entity should involve in its planning.
8

REFERENCES
Books and Journal
Cao, Q., Thompson, M.A. and Triche, J., 2013. Investigating the role of business processes and
knowledge management systems on performance: A multi-case study approach.
International Journal of Production Research. 65(18). pp.5565-5575.
Cengiz, H., Combs, A. and Samy, M., 2017. An Analysis of how Financial Ratios of Companies
in Turkey Are Affected by National Standards, and IFRS. International Business
Research. 78(12). p.183.
Donndelinger, Joseph, and Scott M. Ferguson. 2017. "Design for Marketing Mix: The Past,
Present, and Future of Market-Driven Product Design." In ASME 2017 International
Design Engineering Technical Conferences and Computers and Information in
Engineering Conference. 76(5). pp 2-7.
Giordani and et.al., 2014. Taking the twists into account: Predicting firm bankruptcy risk with
splines of financial ratios. Journal of Financial and Quantitative Analysis. 78(4).
pp.1071-1099.
Grissemann, U., Plank, A. and Brunner-Sperdin, A., 2013. Enhancing business performance of
hotels: The role of innovation and customer orientation. International Journal of
Hospitality Management. 6(5). pp.347-356.
Grønholdt and et.al., 2015. Customer experience management and business performance.
International Journal of Quality and Service Sciences. 6(1). pp.90-106.
Helm, R. and Gritsch, S., 2014. Examining the influence of uncertainty on marketing mix
strategy elements in emerging business to business export-markets. International
Business Review. 67(2). pp.418-428.
Laukkanen and et.al.,, 2013. The effect of strategic orientations on business performance in
SMEs: A multigroup analysis comparing Hungary and Finland. International Marketing
Review. 67(6). pp.510-535.
9

Pavlou, P.A. and Stewart, D.W., 2015. Interactive advertising: A new conceptual framework
towards integrating elements of the marketing mix. In New Meanings for Marketing in a
New Millennium. 67(5). pp.218-222.
Online
Business performance. 2016. [Online]. Available through:
<https://www.tvp.zcu.cz/cd/2012/PDF_sbornik/108.pdf>.
10