Business Case Study: Marvin & Smith's Expansion into the Paris Market

This case study examines the potential expansion of Marvin & Smith's coffee shop from London to Paris. It begins with an introduction outlining the context of the expansion, followed by an analysis of the country's suitability and structural challenges, emphasizing the importance of understanding the target market and ethical considerations. The report then delves into the marketing mix (product, price, place, promotion), highlighting strategies for market penetration. Furthermore, it explores the implications of expanding to a wider geographical area, focusing on information systems and organizational culture. The study also assesses the impact on profitability and liquidity through financial ratio analysis. Finally, the conclusion summarizes the overall viability of the overseas expansion, providing a comprehensive overview of the factors influencing the decision.

Business Case Study

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
1) Country for business expansion and structural challenges .....................................................3
2) Marketing mix ........................................................................................................................4
3) Implications of need for wider geographical area ..................................................................5
4) Impact of profitability and liquidity .......................................................................................7
5) Overall viability of overseas expansion .................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11
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INTRODUCTION
Businesses sight an opportunity to expand when excess of profits are acquired and the
owners explore modes of investment. Any strategy would work in global markets if its unique
and socio-culturally acceptable. This report will help in creating an understanding regarding the
different aspects which need to be evaluated before implementing business expansion strategy.
The uniqueness of coffee shop of Marvin and Smith has led them acquire huge profits. In this
report, the feasibility and viability of Paris as the future destination for expansion of Marvin and
Smith's coffee shop has been provided.
1) Country for business expansion and structural challenges
Marvin and Smith have been earning huge profits through their coffee shops in London.
Their need of business expansion can be fulfilled if targeted location is France, specifically Paris.
The geographical conditions of the place attract a lot of tourists from across the globe. This
country is a member state of European Union, business expansion will become much more easier
due to flexibility in legislations provided by the EU constitution (Huang and Sarigöllü, 2014).
Before implementing a strategy, it is important to understand entire environment of the place
where target customers exists. Paris is one of the renowned tourists destination with large travel
turnover every year. The taste and culture of people residing in France is inclined towards artistic
creations and fashion.
Logical considerations: Market exposure and aim of expansion for a small scale
enterprise can be easier if near by countries and places are targeted. Paris has a population of
about 18.5% of the total citizens in the country. This depicts that large number of opportunities
for store expansion in Paris itself can be sighted by Marvin and Smith, once the business is
established and growing. The transportation facilities in this place are very efficient with
connectivity to suburbs and near by cities (Peter and Donnelly, 2011). Moreover, an international
airport is situated in the city which makes it easier for gathering raw materials from Africa.
Ethical considerations: Culture and society is something that changes from place to
place. Every country has its own set of rules and regulations which need to be followed by
business organisations while delivering their products and services (Gordon, 2012). The ethical
considerations for business expansion in France include acceptance of products given by Marvin
and Smith's coffee shop. Since, this business is based on ethical working and loyalty of
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employees, the chance of unfair or illegal activity is minimum. Henceforth, there is no problem
in ethical acceptability of the company. It is important to note that there may be certain business
practises in UK which might be offending in France. Therefore, it is important to analyse and
imply those strategies which are respectful for the consumers of targeted country. Other ethical
considerations include human resource management and employment legislations (Luan and
Sudhir, 2010). All the rules and regulations of coffee shop must be in accordance with national
policies and labour laws of France and EU.
Structural challenge of expanding: The major structural challenges which can be faced
by the company while developing the business expansion strategy are Keeping up the market,
maintaining cash flow and finances, effective problem solving and correct use of skills and
attitudes (Armelini and Villanueva, 2011). It is possible that business of Marvin and Smith might
not function in France due to lack of stability. Ineffective labour or inappropriate cash flow can
be some dominant structural challenges. Henceforth, a full-grown action plan must be
implemented for getting a clear view of the structural challenges which can hinder progress in
the near future.
All these considerations and challenges which have been described in this report, depict
that Marvin and Smith should expand their business in France and specifically in Paris so that
more profit share and market recognition is obtained.
2) Marketing mix
Marketing mix is a principle tool that is used for implementing efficient and effective
marketing strategy by the company (Powers and Loyka, 2010). There are 4Ps which comprise of
the marketing mix. Marvin and Smith's coffee shop expansion plan when aided with this
marketing mix can help in gaining better customer share and also accomplish the aims and
objectives of the company.
Product: The product is a coffee shop with different varieties of ethnic coffees and some
short meals. Marvin and Smith have developed their business on the principles of ethical
working which has helped them in gaining a brand reputation within short time span. The
attribute that has attracted customers over London is innovative theme and a different taste in
coffee (Chan, Finnegan and Sternquist, 2011). The use of authentic raw materials in the coffee
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has helped in acquiring consumers effectively. This product can be used by the company in its
expanded business for gaining more customer share.
Price: One of the most important factor which needs to be considered while marketing a
product is price. Current market structure of the food industry depicts that competition is fierce.
This means that new entries or small scale enterprises have a large threat of vanishing from
international markets if products and services are not effortless (Santos-Álvarez and García-
Merino, 2010). Therefore, prices of products and services must be kept affordable and
standardised so that individuals with variable living standards can choose Marvin and Smith's
coffee shops as one of their destinations to spend money over a coffee. Competitor prices must
also be verified so that effectiveness of current pricing strategy can be judged.
Place: The availability of products for the consumers is another important factor of a
marketing strategy. Distribution channels of a company must be strong enough to provide
products and services on time to customers and clients irrespective of their place of operation. In
case of Marvin and Smith's coffee shop, the stock that is acquired by the company must be in
sufficient quantity so that no customer goes empty handed (Reus-Smit, 2011). Moreover, the
channels for acquiring raw material must be efficiently established in France so that business
expansion strategy is not hindered.
Promotion: Considering marketing of a product and service, promotion helps in
identifying techniques which will be implemented for advertising the company's strategies.
Marvin and Smith's coffee shop can develop their promotional strategy by using internet
marketing techniques like search engine optimisation, social media marketing and use of digital
communities. This will help in saving a lot of money and fulfil the purpose for which the
technique has been applied (Wu and et. al., 2011).
3) Implications of need for wider geographical area
Marvin and Smith's coffee shop already has an information system in London. But its
efficiency is quite low. Hence, there are certain needs which need to be evaluated and analysed
for understanding the related issues and so that targeted geographical area is covered smoothly.
Information systems
Business organisations that aim to expand their operations overseas must have an
efficient information systems. The communication channels that are developed in this system
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help in transferring information from one place to another with a consistent flow. The use of
information technology and certain scientifically advanced software can help in accessing
information of business operations that are taking place in France without actually travelling to
the place (Liesch, Welch and Buckley, 2011).
The information system is just not limited to use of computers or other electronic devices
but it also includes the people, procedures and resources which are implemented in acquiring an
information. When sighting business expansion in overseas market place, the entire strategy has
to be revised. A new and modified business model has to be implemented so that invested
resources and capital can give appropriate returns (Abner, 2015). Hence, Marvin and Smith's
coffee shop has to be planned and developed at a place where information system can be
efficiently implemented.
A systematic arrangement for connectivity and transfer of data regarding supplies and
resources must be produced. It can be enabled through use of information and technology. Only
issue that arises with use of information systems is usage. The company must hire a person who
is able to manage and operate this system without creating further problems (Reus-Smit, 2011).
If business expansion strategy fails then company's reputation in global markets is affected.
Organisation culture
Culture is made up of the beliefs and values which are portrayed by individuals in a
society or community. Organisational culture plays a vital role in determining its profitability
and productivity. Since, Marvin and Smith is planning a business expansion in France, the labour
that will be employed in coffee shop will have different cultural upbringing as compared to the
one in London. The chances of conflicts and clashes amongst diverse cultural group can be a
problematic situation for the company (Wu and et. al., 2011).
In order to avoid such consequences, it is important to have a balance in the working
atmosphere. Ethical functioning is based on giving mutual respect to individuals irrespective of
their lifestyle, culture, religion, sex, age, etc. The management has to keep focus and monitor the
activities of the company so that no discriminatory actions takes place. The impact of
organisational culture over the functioning of a business is quite deep (Liesch, Welch and
Buckley, 2011). If an unhealthy culture persists in the coffee shop then, employees won't be
happy to work with the firm. Moreover, their efficiency and interest levels will decrease.
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This will have a direct impact over the customers and their choices. To avoid such
consequences, it is important that Marvin and Smith's coffee shop must have balanced
organisational culture. Incorporation of corporate social governance and ethical functioning shall
help in devising a working atmosphere that doesn't allow discrimination on any basis.
4) Impact of profitability and liquidity
In order to take decisions in the company following aspects can be measure at workplace:
Profitability ratio
For attain profitability ratio the cited firm need to analysis their outcomes through gross
profit ratio and net profit ratio.
Gross profits ratio
It is the amount which enhance revenue which company occur through subtracting
expenses associates with revenue. To attain gross profit ratio following formula can be used:
Gross profit/ sales*100
Gross profit= £208.000
Total sales= £360.000
£208.000/£360.000*100 = 57.77% ans.
Net profit ratio
Net profit of the company is determines difference between total revenue and expenses.
In expenses includes overhead, interest payment and taxes. It can be evaluates from following
formula:
Net profit/ sales*100
Net profit = £26.800
Net sales = £360.000
£26.800/£360.000*100 = 7.44% ans.
Liquidity ratio
It is the ratio between liquid assets and liabilities of the cited firm. In this aspect, the
organisation need to determines following ratio:
Current ratio
Current ratio determines ability of the organisation to pay their liabilities with the help of
current assets. It can be calculates as follows:
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Current ratio = current assets/current liabilities
Current assets = £35,400
Current liabilities = £6,200
Current ratio = £35400/£6,200 = 5 :1 Ans.
Acid test ratio
For assess acid test ratio following formula can be used within the organisation:
current assets (Exclude inventory)/ current liabilities
£27,400/£9,200 = 4 : 1 Ans.
With the help of following analysis, Marvin and Smith’s coffee shop can easily assess
their financial performances which assist to take decisions at workplace. In this aspect, following
elements can be taken:
 Expand business operations: In order to promote the business products Marvin and
Smith’s coffee shop has opportunities to expand their operations in new areas. In this
aspect, they have effective liquidity position which make successful operations to
ascertain results within the environment. It will helpful to take decisions regarding new
places. As results, the chosen organisation can make decisions to exceed their functions
and operations which assist to maintain profitability and liquidity within the company
(Legal & Ethical Issues in International Business Expansion, 2017).
 Focusses on carry development program: In addition to this, Marvin and Smith’s
coffee shop has also opportunity to focusses on development of business programs. Thus,
they can easily measure performances for maintain their outcomes through ascertain
results at workplace.
 Assess market: It is very important to analysis market which can be develops through
ascertain business results. In this aspect, the cited firm can measure their performance
through maintain profitability at workplace. Hence, they will capture whole market to
attain objectives and goals in systematic manner.
 Enhance investment: Marvin and Smith’s coffee shop has effective liquidity position so
that they are able to demonstrate various benefits regarding objectives and goals. It is
essential to determines expansion of performances through measuring fund at workplace.
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In addition to this, the cited firm can also analysis overseas plan which enable to make
sustainability and perform various functions of market.
5) Overall viability of overseas expansion
The idea of overseas expansion is a good use of opportunity from Marvin and Smith's
perception. According to the given financial statistics, the company has developed its operational
chain from one coffee shop to 4 within 2 years. This depicts that the company is flourishing and
expanding on a large scale. Hence, business expansion opportunities do exist for this coffee
shop. The plan to expand the coffee shop business in France is viable and feasible. The
advantages that are related with this expansion include easy accessibility of raw materials and
machinery that needs to be settled in the shop (Lane, 2011).
The ethical considerations which are provided in before, help in understanding the
different aspects which need to be verified before implementing any strategy. The development
of efficient information systems and organisational culture will help in gaining an advantage
while operating in foreign markets. It is important to develop these foundational systems so that
inefficiency is not obtained in the strategy planning process. The financial analysis which has
been conducted in this planning process helps in understanding the needs and requirements a
company has to focus before spreading its roots overseas (Novak and et. al., 2017).
There is a need to gather funds and certain resources to aid the planning process. Marvin
and Smith's coffee shop can develop into large coffee chain like Starbucks or Costas if proper
management and planning of resources with efficient distribution is implemented. The
company's liquidity and profitability for this business expansion plan has been presented before.
It can be considered for determining the economic feasibility of this strategy with its durability in
foreign markets (Reus-Smit, 2011). The situation of competitive advantage can be gained only
when each and every action is efficiently planned and enacted.
CONCLUSION
Through this report, one can easily understand the points that need to be considered while
planning a business expansion and that too in a foreign country. Marvin and Smith's coffee shop
is advised to explore the markets of France in the city Paris. The different considerations and
challenges which can be faced by the company during execution of their strategy have been
demonstrated in this report. Moreover, certain financial judgements are also provided in the
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assessment to gain an understanding about profitability and liquidity of the business plan. The
need of information system and organisation culture is also depicted.
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