Marvin and Smith's Coffee Shop: Germany Market Entry and Expansion

Desklib provides past papers and solved assignments. This report analyzes Marvin and Smith’s coffee shop expansion into Germany.

BUSINESS ESSENTIALS ADVANCED

Table of Contents
Introduction...................................................................................................................... 3
Question 1........................................................................................................................4
Question 2........................................................................................................................6
Question 3........................................................................................................................8
Question 4......................................................................................................................10
Question 5......................................................................................................................12
Conclusion..................................................................................................................... 13
Reference list................................................................................................................. 14

Introduction
In the modern era, business is playing the most important role in developing the
economy of the UK. The study aims to provide guidance on the essential skills that are
required for enhancing the efficiency of business operations. An organisation needs to
understand the needs of the customers so that they can match the expectation level of
their customers. High quality customer service helps to enrich the corporate image of
the brand and earn global recognition. The discussion will be conducted on the Marvin
and smith’s coffee shop.
Marvin and Smith’s coffee shop was established on January 2017 in Wandsworth at
south London. The company has achieved a reputation for serving high quality products
and services to the customers. The essential business skills will be analysed to provide
guidance to the company.

Question 1
The Marvin and Smith should expand their coffee shop in the market of Germany for the
following reasons: Germany is one of the top three coffee importers in the Europe
Germany imports coffee over twenty percent of the total imports globally. The country
has an efficient and large coffee processing industry (Cardoso et al., 2016). Germany is one of the main distributors of green coffee in Europe
Germany is the most significant importer of green coffee in Europe. In 2017, over a
million tonnes of green coffee were delivered to Germany. Germany’s most popular beverage
Coffee is the most popular drinks in Germany. A survey of the German Coffee
Association showed that coffee consumption per head is 162 litres in 2017 that is
higher than mineral water, 143.2 litres and beers, 105.9 litres. Culture and Lifestyle of Germans drive the Coffee Market
The 27.6% of the population, between 18 to 30 years of age, consider the coffee
machines as the status sign maker in comparison to the 17.7 % of old people. Due to
that, most of the German people enjoy drinking coffee at home. Almost 47.1 % of the
young aged drinkers search for different types of aromas and coffees in the capital
cities, Berlin. Again, the price of coffee beans fluctuates in a limitation in the coffee
market in Germany. Germany is the second largest coffee market in Europe certified by Fair trade,
Rainforest Alliance and UTZ
Germany represents Fair trade-certified coffee sales around seventeen percent globally
and that is over sixteen thousand tonnes in 2014. The important places for Germany’s
supplies of Fair trade certified coffees are Peru, Honduras, Tanzania and Mexico
(Andorfer and Liebe, 2015).
Over forty Germany-based coffee supply chains are certified by UTZ in 2018. List and
Beisler, Bernhard Rothfos GmbH are some of the UTZ certified importers in Germany.

Rainforest Alliance certifies more than thirty Germany-based traders, retailers, brands
and coffee shops in 2017. Some of them are Roestfein and Tchibo and retailers like
Kaufland and Lidl (de Jesús-Crespo et al., 2016).
 The sales of coffee continuously grow with sustainability certifications in Germany. A
growth rate of thirteen percent was recorded for sustainable coffee and that is over
15700 tonnes. The main reason for the growth of the coffee market is the German
customers increasingly request the varieties of coffee products (Belz and Binder,
2017).
Germany sourced over 96% of the coffee imports in 2016 from the developing countries
through the main port of Hamburg.
Some of the main suppliers are Brazil, around 32% of entire German imports, Colombia,
almost 8.2%, Peru, 5.1%, Ethiopia, 3.6% and Honduras, about 8.2%. Again, suppliers
from Vietnam increased in their volume at a rate of 1.2% per year between 2012 and
2016. Honduras decreased its supplies by 9.7% in terms of value (Wierling, 2017).
 Two segments divide the coffee sectors in Germany:
In-home Consumption: most of the consumption in Germany takes place at home and
it is become assorted with innovative ideas like capsules and coffee pods.
Out-of-home Consumption: in 2016, over 32% of coffee consumption in Germany
occurred outside the household.

Question 2
The marketing mix framework will help Marvin and Smith’s coffee shop to evaluate its
natural strengths and exploit from it. The elements of the marketing mix will help the
company to develop strategies that will be beneficial for grabbing the major market
share of the market. The elements are listed out below:
Products: The Marvin and Smith coffee shop offer their customers with a wide range of
serving. The company has earned reputation for using the finest coffee beans. The
main serving of the company is coffee but the company also serves other products such
as tea, cold drinks, finger foods and others. The wide range of product variety has been
beneficial for attracting the customers. The company uses different strategies to
promote their products.
Price: The coffee shop uses the competitive pricing strategy for the pricing their
products (Nagle and Müller, 2017). There are other competitive companies in UK, which
provide the customers with the same facilities so that the company uses the competitive
pricing strategy. This strategy has helped the company to attract more customers. The
company delivers best value to their customers in a reasonable price so that it has been
able to attract the teenager customers of UK. The numbers of teenagers has been
increased by 1.4% from the previous year, which unlocks such opportunity for the
company (statista.com, 2019).
Promotion: The coffee shop uses the push strategy for promoting their products. The
company is new in the markets of UK so that it has started the aggressive marketing
process to create brand awareness (Yan et al., 2015). The above the line and below
the line marketing strategy has helped the company to generate more online
customers. The coffee shop has created audiovisual advertisements for attracting the
customers. Different social media platform has also been beneficial for generating more
customers. Marvin and smith coffee has also promoted their brand by conducting the
promotional campaigns and investing in the sponsorships of sports activities.
Place: It can be said that the company is a new entrant in the markets of UK, so that it
has less than five branches in UK. The coffee shop is located at South London. The
presence of this company in other countries is very limited as the fees of entering new

market is very high. The company has achieved popularity in the other regions of the
country as well, so that the company will be able to expand their business in other
places of UK. The company also operates online business and provides the customers
with the facility of ordering online. The company is present at the top urban city of
London so that it has been able to build strong customer base.

Question 3
Firstly, the Marvin and Smith Company should manage the human resource
department. The human resource management is the main part to grow a successful
company in any country. The department is responsible for the selection, training and
development, compensation and benefits and rewards in the organisation. The human
resource department of the Marvin and Smith Company should build up an appropriate
hiring process through which the best employees can be acquired for the expansion of
the coffee business (Noe et al., 2017).
In addition to that, the employees must be provided a proper training for the particular
position in the company. The manager selects the best and efficient employees among
them and put them into the workforce. The management should fix a target for the
company to be achieved to expand its business in Germany. Well-trained employees
give their best performance to increase the productivity of the company. Based on their
performances, the management decides to reward the best performers in the company.
The management is also responsible for giving the sufficient facilities and benefits to the
employees. The employees put their best efforts into their works only when they meet
their satisfaction with their improvement. Hence, the company should provide all such
facilities to meet their expectations. The employees also become committed and loyal to
the company when the services provided to them are well planned (Larsen, 2017).
The company may face several issues in the workplace in the company. The employees
may not be satisfied with the terms of the Marvin and Smith Company. As a result, the
company will face a problem regarding the decline of work force. In addition to this,
there may not build any interconnection between the management and the employees
that creates a coordination problem and there may not be any development in the
business. Hence, the management and the employees should communicate their
problems and expectations and that helps to understand the concept of the company. In
addition to that, the manager and the leaders should motivate their workers so that they
can give their best efforts in the work to increase the productivity of the Marvin and
Smith Company.
Secondly, the managers should think about the sale of the products and services. In this

context, the marketing department of the Marvin and Smith Company should build up
marketing strategies for the sale of the products. Marketing strategies include various
steps. First, the marketing department has to build up a sales structure that includes
fixing a brand name, proper designing of the products, fixing the price of the products,
and promotion of the products and the right places for the sales of the products
(Hempelmann and Engelen, 2015).
The brand name is a specific identity of the company by which the customers can get
the idea of the products. Brand name should be unique so that, the company can gain
the customers in the first step. The marketing department should launch an
advertisement related to the products. The experts should design the advertisement so
that the advertisement becomes attractive. In addition to that, the marketing department
must fix an average amount of price of the products that is, the price should maintain
the profit of the company. It should be kept in mind that the price must not exceed that
the customers cannot afford the extra cost for the purchase of the products.
The management of the Marvin and Smith Company must arrange a proper promotion
of the company. The people can get the information about the products through the
promotional method. The details of products include price, the name of the
manufacturer, brand name, and others. After completing the promotion of products, the
marketing department has to select the right places for constructing the cafe and sales
of the products. Profitability of the company depends on the location where the products
are being sold (McDonald and Wilson, 2016). The places should the popular and the
people can use the services and products more. The manager should also think about
launching a different online website and various mobile applications. It will be easy for
the customers to use the products of the Marvin and Smith Company. The customers
can pay the price online, order the products online and can check information on the
new products of the company. It will be an easy and fast method to deliver the products
and services of the company (Buratti et al., 2016).
Hence, the Marvin and Smith Company has to select the proper techniques of the
human resource management and marketing department to select the best employees
among all and that will help to expand the business in the German market and above-
mentioned marketing techniques to deliver the products and services rapidly in the

customers’ hand.

Question 4
Profitability ratio
1. Gross profit ratio = Gross Profit/Net Sales * 100
= 208,000/ 360,000*100
= 57.78
2. Net Profit Ratio = Net operating Profit/Net Sales * 100
= 26,800/360000*100
= 7.44
Liquidity ratio
1. Quick Ratio = Current Assets – Inventories/Current Liabilities
= 35,400 – 8,000/ 113,000
= 0.24
2. Current Ratio = Current Assets/Current Liabilities
= 35,400/113,000
= 0.31
There are several things that these figures say about the current state of the
business, all of which have been elaborated here down below:
 As per the evaluated gross profit ratio that has been provided above, it can be
said that the company is making over 57% over profits on the sales that it is
making. This profit is reasonably enough and through which an expansion can
justified.
 Net profit ratio is determined to be over 7%, which is relatively low, with core
profits like this only the internal managerial heads, and employees can be paid
and there would not be much left for other aspects (Brigham et al., 2016).
 The Quick Ratio indicates that there is a moderate balance between the

inventories that are present in enterprise and the liability. A perfect balance
would indicate that there is 1% in the ratio but that is not the case here.
 The Current Ratio similarly indicates that there is medium balance between the
assets that are present in organisation and the liability. An ideal balance would
point to there being 1% in the ratio but that is not the scenario here (Williams and
Dobelman, 2017).
The way in which the above calculated ratios effect the decisions making of Hank and
Marvin has be has been detailed here:
 The gross profit that the company must focus on other aspects of the enterprise
than only in sales, as the sales made by the organisation is more than
satisfactory.
 The Quick Ratio indicates that there could be more balance present with the
liability of the company and the inventories and assets that are present
The implications of the above-calculated ratios in the expansion plan have been
discussed here down below:
 It would lead to the company taking more strategic deploying higher research
and labour implementation so that the profit increases.
 Liabilities of the company must be paid off quickly and more investments must be
made so that there is a more balanced current ratio.