Business Expansion: Marvin & Smith Coffee Shop in Romania Report

This report evaluates the feasibility of Marvin & Smith's coffee shop expanding its operations to Romania. It begins with an introduction outlining the report's objectives, focusing on Romania's suitability as a European market for coffee consumption. The main body of the report addresses key questions, including the rationale for choosing Romania based on market research and consumer behavior, the development of a tailored marketing mix (product, place, price, and promotion), and the identification of potential challenges such as financial and human resource management issues. The report further analyzes financial ratios related to profitability and liquidity to assess the business's financial health. Finally, the report concludes with a recommendation on whether Marvin & Smith should proceed with the expansion, based on the findings of the analysis.

COURSE WORK

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
QUESTION 1...................................................................................................................................1
Discussing the choice of country in which business should expand to.......................................1
QUESTION 2...................................................................................................................................3
Producing marketing mix of the business for expanding to country..........................................3
QUESTION 3...................................................................................................................................4
Identifying any issues that may be faced by business.................................................................4
QUESTION 4...................................................................................................................................6
Computation of financial ratios of company...............................................................................6
QUESTION 5...................................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Expansion decision from one country to another is crucial decision which needs to be
taken by firm after conducting market research. Present report deals with Marvin and Smith's
coffee shop which is planning to expand to Romania for accomplishing more customer base and
increased profits. Report will discuss about feasibility of Romania as choice of country in
European nations. Moreover, tailored marketing mix will be produced for business. The global
issues which affects operations will also be explained. Financial ratios of profitability and
liquidity group will be calculated. Lastly conclusion will be provided whether firm should
expand to Romania or not.
MAIN BODY
QUESTION 1
Discussing the choice of country in which business should expand to
The expansion decision plays a crucial role for the company so that it may be able to
enhance its profits with ease. For accomplishing this, conducting market research is equally
important for familiarising with demands and needs of customers in the best manner possible. It
is required that company should conduct proper marketing research by which better avenues may
be attained by it. Analysing demand and needs of customers become essential as it cannot
achieve task in effective manner. European countries are the highest coffee consuming nations
for which firm can expand into (Winarno, 2018). In addition to this, Romania has been chosen
for expanding operational activities.
Romania has been chosen as culture and lifestyle of people are to be analysed so that
demands can be met. The country is suitable for the coffee shop to initiate operations as it will
help it to garner good amount of profits. This is evident from the fact that Romania come at 26th
position among the highest coffee consuming European nations. Per person average of 2.3 kg per
capita is consumed which makes suitable for Marvin and Smith's coffee shop to expand its
operations into Romania so that stated objectives can be met in the best manner possible.
Moreover, more than 2 coffee cups/day is consumed in Romania which provides clarity that
people are highly addicted to coffee making it suitable for coffee shop in effective manner
(Coffee consumption in Romania – what the data tell us. 2018). It can be analysed that firm may
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be able to enhance its revenue as Romania has the highest caffeine consumption nation in the
best manner possible.
On the other hand, culture and lifestyle has immense importance for Marvin and Smith's
coffee shop. Culture of people of Romania is inclined more towards coffee in comparison to
other similar beverages. This becomes plus point for firm as it will be able to effectively attain
profits and satisfy citizens of Romania quite effectually. It can be analysed that climatic
conditions are also to be taken into account (MOHAMAD, MOHAMMAD and ANDREA,
2017). It can be seen that Romania have temperate continental climate as influenced by Central
Europe characteristics leading for hot summers and cold winters and snowfall from December to
Mid-March. This means that climatic conditions are moderate and Marvin and Smith's coffee
shop would be able to accomplish profits in effective manner. Moreover, both hot and cold
coffee can be sold by it suiting climate of country.
Ethical considerations are required to be taken into account for engaging in fair trade in
the best manner possible. It includes staff welfare should be key factor so that workers may be
satisfied by maintaining work-life balance. Logistical considerations are to be assessed. It can be
analysed that coffee beans suppliers are available and transportation facilities are appropriate by
which firm may be able to provide coffee to customers in an timely manner. Cable cars, rollers
for handling bulk of coffee beans are being available by which firm could be able to attain good
customer base.
It can be analysed that location is also crucial way for firm for achieving benefits in
effective manner. It is needed that location of the coffee shop should be in heart of city so that
maximum customers may visit and grab cups of coffees (URSACHI, 2018). The location is
important as it is not located nearby within people's reach, customers will not be attracted up to a
high extent. Thus, Bucharest, capital of Romania has been chosen as it is most populous city of
country and with that more customer base can be accomplished. Hence, by conducting market
research, it can be said that Romania is favourable for Marvin and Smith's coffee shop to expand
into.
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QUESTION 2
Producing marketing mix of the business for expanding to country
The marketing mix lists down well-defined strategies with the help of which maximum
customers may be attracted towards coffee shop. This will help firm to attain good quantum of
profits by satisfying consumers with ease. Tailored marketing mix is prepared below-
Product-
The coffee shop will provide quality coffee to consumers of Romania and finest quality
coffee beans will be imported. Coffee beans used for preparing coffee will be taken from
Gumutindo coffee, fair trader in Uganda. This will provide superior taste of coffee for consumers
by which it may be able to lure and make them loyal to shop (FÂNTÂNĂ, 2016). The Finest
flavour will be mixed with taste of Romanian people which will give them good level of
satisfaction in the best way possible. Moreover, physical products and service will be imparted
such as snacks, soft drinks leading to broadened product portfolio. These additions will have
wide choice for consumers along with coffee. Cold, hot and ice coffee will be offered as per the
seasons for attracting them.
Place-
The place is one of the important factor for coffee shop as location should be within the
reach of customers so that they may easily visit. Bucharest, capital and highly populous city of
Romania has been chosen by which more customers will attract and avail services in effective
manner. It will also attract international tourists as they visit Bucharest more often for seeing
attractions. Moreover, familiar atmosphere for consumers will be imparted so that they can visit
with family, friends and enjoy their meals with ease. It can be analysed that board night game
will also be offered to customers so that they can enjoy game as well with their coffee leading to
maximum satisfaction (Vinter, 2018). Hence, Marvin and Smith's coffee shop would produce
good profits in Bucharest.
Price-
It can be analysed that price plays crucial factor by which customers are attracted. Lower
prices are always preferred by them but with superior quality. It can be analysed for gaining
market share in Romania, coffee shop will opt and apply penetrating pricing strategy. This has
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several benefits as by seeing lower prices of coffee and related ancillary products, customers will
often visit with friends and family in effective manner. This will produce lower profits in initial
stage but will be fruitful for coffee shop in the long run as customer base will be enhanced. By
injecting good amount of sales and establishing position in market, prices would be slowly
increased so that profitability health could be maximised. Hence, more customers will be
attracted to firm.
Promotion-
It is another significant factor which helps firm to effectively garner customer's attention
towards it (Picu and Dinu, 2016). Promotion will be made through social media channels such as
Facebook, Instagram and Twitter and discount offers will be published on them for achieving
customer's attention. On the other hand, free Wi-Fi facilities, free socket for charging gadgets
will be given to consumers at no cost which will give them immense level of satisfaction quite
effectually. Moreover, advertisements on newspapers and TV sets are also good ways for
promotional purpose. This means that complying with all such tactics, firm will be able to attain
good share in the market and expansion will prove beneficial for it.
QUESTION 3
Identifying any issues that may be faced by business
There are various issues which arises as firm expand into unfamiliar territory. These are
to be analysed in a better manner so that it may not harm operational activities (Pfeilstetter,
2017). It can be handled by implementing well-structured strategies which will help Marvin and
Smith's coffee shop to increase its profits in Romania and attain good customer base. Two main
issues are listed below-
Finance and Accounting-
It is an important issue which needs to be taken into consideration by firm. Romanian
standards of accounting follows Fourth and Seventh EC directives and IFRS (International
Financial Reporting Standards). All domestic companies are required to use IFRS who are listed
on stock exchange and as adopted by EU in preparation of consolidated financial statements in
effective manner. For foreign firms, IFRS standards if adopted by home country should produce
consolidated statements as per the same. It becomes important for coffee shop to prepare
financials as per IFRS standards for complying with regulations.
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Accounting is an art of collecting, classifying and summarising financial data for
preparation of reports and produce final accounts. This provides clarity about financial health of
concern business. There will be good number of transactions on per day basis in coffee shop
which should be recorded as per its nature and as a result, accounting reports could be prepared.
It can be assessed that The Body of Expert and Licensed Accountants of Romania, accounting
regulation body of Romania has to be complied with (Accounting and accounting rules in
Romania. 2018). Bookkeeping records are bifurcated into debt and credit, former being broken
into long-term and short-term debt. Results makes emphasis on production and classify
expenditures by its type. Thus, Marvin and Smith's coffee shop will have to prepare accounting
records and financial statements such as income statement and balance sheet and notes detailing
figures in the report.
Human Resource Management-
It is another important issue for enhancing overall staff so that people being hired are able
to initiate desired productivity being required out of them. It can be assessed that HRM is liable
for recruitment and selection of efficient employees which could work for the benefits of
company in the best manner possible. It can be analysed that profits are required to be garnered
that is possible only when competent workforce is hired. The culture, beliefs and background of
people of Romania is different from UK that is the biggest issue with Marvin and Smith's coffee
shop affecting operations. This is evident from the fact that they will differ in their opinion
which will have negative effect on atmosphere of coffee shop. Conflicts might arise needed to be
resolved by HR as problem-solving skills are possessed by them. Resolving conflicts will
enhance atmosphere and competent services would then be offered to customers quite
effectively.
In addition to it, recruitment and selection of candidates should be based on their skills
and talents most suitable for role in accomplishing productivity in an desired manner. It can be
analysed that HRM has to place effective policies and rules so that pressure of work may not be
created on minds of employees (Crăciun, 2017). If it gets created, they will leave the job and
productivity will get hampered up to a high extent. In simple words, work-life balance should be
imparted by firm which will increase employee satisfaction and they will be more productive
leading to achievement of goals for the business. It is required that employees should be
provided with increased benefits which posses in the hands of HRM and as a result, maximum
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benefits could be attained by firm. Thus, these issues must be perfectly handled by Marvin and
Smith's coffee shop so as to attain good quantum of profits in market.
QUESTION 4
Computation of financial ratios of company
Particulars Formula 2017
Profitability Ratios
Gross profit 208000
Net profit 26800
Revenue 360000
Gross profit margin Gross profit/ Revenue * 100 57.78%
Net profit margin Net profit/ Revenue * 100 7.44%
Liquidity Ratios
Current assets 35400
Current liabilities 6200
Stock 8000
Current ratio
Current assets/ Current
liabilities 5.71
Quick ratio
Quick assets/ Current
liabilities 4.42
Interpretation-
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It can be interpreted from above table that profitability and liquidity health of Marvin and
Smith's coffee shop are carried out in effective manner. Profitability ratio includes gross profit
and net profit margin. The gross profit comes out to 208000 and revenue attained is 360000. By
applying formula, gross profit margin comes to 57.78 % which shows that firm is able to initiate
control over its cost of goods manufactured which has provided firm with higher profits in
effective manner. Furthermore, sales are accomplished in a higher quantum which shows that
firm will be able to enhance profits in effectual manner. Moreover, it can be analysed that net
profit comes to 26800 and ratio comes to 7.44 %. It shows that firm is required to initiate control
over its operational and non-operational expenditures in order to maximise net profit quite
effectually.
On the other hand, liquidity position of Marvin and Smith's coffee shop shows that
current assets are 35400 and current liabilities are 6200, current ratio comes to 5.71 which is
more than ideal ratio of 2:1. This implies that firm has good ratio showing that firm is able to
pay-off its short-term obligations within period of one year. It can be said that liquidity position
of Marvin and Smith's coffee shop is good as current assets are more than current liabilities.
Furthermore, quick ratio is also calculated which shows whether firm could pay out of its
extreme liquid assets or not. Liquid or quick assets is arrived by deducting stock and prepaid
expenses from current assets. Thus, ratio calculated is 4.42 signifying that firm has better liquid
position as liquid assets are in excess than current liabilities. Thus, it can be assessed from both
profitability and liquidity position that financial health as depicted by these two group of ratios
are good. Marvin and Smith's coffee shop will accomplish profits in Romania and customers
will get satisfied up to a high extent.
QUESTION 5
CONCLUSION
Hereby it can be concluded that expansion decision is crucial for firm so that it may attain
desired profits in effective manner. It can be analysed that Marvin and Smith's coffee shop has
good chance to serve coffee to people of Romania in order to attain higher amount of profits. It
can be assessed that financial health of business is good as depicted by profitability and liquidity
ratios for the year ended 31st December 2017. Both liquidity position and profitability health are
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good making it favourable to expand into nation. Moreover, coffee consumption in Romania is
high which suits firm for expanding to country in the event for increased profits.
Romania is feasible option for the coffee shop as it will be able to earn good amount of
profits as people are fond of drinking coffee. Moreover, ancillaries will also be imparted to them
such as snacks, soft drinks which will increase their satisfaction level quite effectually.
Moreover, it can be analysed that it will provide free Wi-Fi services, socket for charging gadgets
which will make customers loyal to it. It can be said that Romania is perfectly viable option for
firm as coffee drinkers are large and profits will be attained in a better manner.
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REFERENCES
Books and Journals
Crăciun, C., 2017. 'Writing from Within': Jewish Romanian Writers on Jewish Life in Interwar
Romania. In Re-contextualising East Central European History (pp. 90-105). Routledge.
FÂNTÂNĂ, R. S., 2016. THE EXCHANGE ACTIVITY AND QUANTIC
ECONOMICS. Revista Economica. 68(2).
MOHAMAD, A. S., MOHAMMAD, A. B. and ANDREA, F., 2017. DESTINATION
ATTRIBUTES AT AJLOUN NATIONAL PARK AS PERCEIVED BY LOCAL
EXCURSIONISTS.Agricultural Management/Lucrari Stiintifice Seria I, Management
Agricol. 19(1).
Pfeilstetter, R., 2017. Startup communities: Notes on the sociality of tech-entrepreneurs in
Manchester. Journal of Comparative Research in Anthropology & Sociology. 8(1).
Picu, C. G. and Dinu, A., 2016. Research on the current telecommuting trends in United States
and European Union Markets. Management and Economics Review. 1(2). pp.194-202.
URSACHI, D. D., 2018. THE CHARACTER MIMI FROM THE OPERA" LA BOHÈME" BY
GIACOMO PUCCINI. THE RELATIONSHIP BETWEEN THE LIBRETTO, STORY
AND CHARACTER, AS A MEANS OF COMMUNICATION.International Journal of
Communication Research. 8(1).
Vinter, A., 2018. Compounding in Romania. In Solutions for Business, Culture and Religion in
Eastern Europe and Beyond(pp. 129-135). Springer, Cham.
Winarno, P. S., 2018. The Effects Of Product Quality And Price On Buying Decision For Coffee
Product At Strada Coffee, Semarang.
ONLINE
Coffee consumption in Romania – what the data tell us. 2018 [Online] Available Through:
<https://www.serban-zodian.com/2018/05/22/coffee-consumption-in-romania-what-the-data-tell-
us/?lang=en>
Accounting and accounting rules in Romania. 2018 [Online] Available Through:
<https://www.nordeatrade.com/fi/explore-new-market/romania/accounting>
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