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Business Essentials: Advanced - Assignment 1- University Of Roehampton

Introduction

Business organization who perform their operations in order to fulfil the needs of their customers. They perform their activities in order to accomplish their objectives such as to improve the growth and to generate more revenues. In order to fulfil these goals, they have to face some of issues related to the competition and high cost in market (Omachonu and Einspruch, 2010). The present report in based on the case study of hank marvin and patty smith who want to open their coffee shop at different places. Below mentioned report is based on business essentials who explains the country in which they are expanding their business. It is focused on the elements of marketing mix so that business can be established. Further, how their profitability and liquidity can affect the decisions of the Hank and Patty.

Tasks

1. The country in which marvin and Smith’s coffee shop could expand

When any organization expand their business operations in another country then they have to focus on some of the factors such as political, social, economical, legal, environmental and so on (Young and Dhanda, 2012). After analysing these factors they can establish their business into another country. Here, hank marvin and patty smith can expand their operations in France so that their profitability level can be improved. They can offer their services at this place due to some reasons such as:

The people of the country prefer to drink coffee in the cafeteria so this will be a great opportunities for the new small business to offer their services to the customers (Jaggia and et. al., 2016). By establishing their business in such place they will be able to attract number of customers towards their services.

The economy of France is the 5th largest in the world so it will be helpful for the small business enterprises to improve their growth. Along with this, the GDP rate of the country is constant from the last three years so they can generate more revenues.

France is also a leader in the automotive and manufacturing industries so their overall brand image is also good. The company will be able to get the labour at low cost so that they can get the competitiveness in the country.

France is one of the largest exporter in the farm products and the political stability is also their in the country so hank marvin and patty smith can open their coffee shop in the country. Due to the high level of export and import their relations with other countries are also good and there is less channes of terrorist attack.

The country is also following the ethical system so their image is different from other places (Hugos, 2011). They are more focused on the rights of human and their freedom. So, here they can perform their operations in ethical manner by following all the rules and regulations that are made by the state government.

There are no trade barriers when any business organization of France perform their operations in other country of European Union. So this will be a benefit for the marvin and smith to expand their business in EU.

The small business enterprise can buy their resources from the local suppliers of the country so there is no transportation cost and sue to this the expenses of the firm get reduced. Through this their overall performance can be improved and they can increase their profits.

France is a good tourist place as there are many people who come to visit the place. They can open their shop in the country where more people come so through this they will be able to attract number of customers towards their products (Tavitiyaman, Qiu Zhang and Qu, 2012).

2. marketing mix

To open a new coffee shop in the market of France, Marvin and Smith have to adopt the 4p of marketing effectively (Ebert and et. al., 2014). So, that they can increase their sales and can be able to survive in market. The 4p are as follow:

Product: So, their product is no new for their consumers. Customers already going in coffee shops with most of their time. So, they have to produce a unique composition of their coffee. It helps them in the increment of their product. Also, they have to maintain their quality. If their quality became poor, so their range of customers also get reduced.

 

Price: They have to set their price according to their customers preference. They have to set their unique concept price high (Hollensen, 2015). And the price of other things also have to get according to their customer range. Prices have to be settled down to keep customer variation in mind and also keep in view their competitors price. They have to maintain their price as relatively low and cheap then their competitors. So, consumers are getting attracted towards them. With price is not just a thing, with low and cheap prices they have to maintain quality of their product.

 

Place: It is one of the biggest factor for them. If their place is convenient for every one then large range of customers are going their but if it is not then they have to suffer heavy loss. So, with this their location is also to be at well establish and good place so, they are attracting more and more consumers. Also they have to spent some money over on their coffee shop with some innovative idea of making their coffee shop with some designs and use other things for attraction.

 

Promotion: they have to use more acceptable promotion strategy. So, that they can attract more and more people (Blumberg, Cooper and Schindler, 2014). They can use social media as promotion place by making pages, events etc. this helps them in attracting large range of target customers. They can use newspaper as a source for all these things. By providing newspaper coupons and rebate coupons over on any product. They can make their own app for their consumers through that their customers can get discount vouchers. Another important thing in promotion is tag line. If they have attractive tag line in innovative manner so large consumers are getting satisfied through that. All these factors help them in their survival.

 

Peoples: Marvin and Smith have to use their local peoples as a employees in the coffee shop, it is helpful for them to communicate with the customers to analyse the demands of them (Xia, 2011).

 

Process: They have to use an appropriate process to make coffee which helps them to manage taste and quality in the coffee.

 

Physical Evidence: It is having huge impact on the customers, they have to use attractive coffee mugs and as well as they have to use attractive colour theme in their shop which helps them to attract customers towards them (Tavitiyaman, Qu and Zhang, 2011).

 

3. Implications of the need for Marvin and Smith’s to cover a wider geographical area

There are many factors which may affect the performance of the marvin and smith when they expand their services in another country. Some of these issues are related to management structure and competitive advantage.

Management structure: In order to perform well in the another country, the small business organisation have to follow organizational structure. Through this, a proper directions can be established in the firm so they will be able to achieve their objectives (Askhatova and et. al., 2013). All employees will be able to know about their targets that what they have to follow so that their growth can be improved in an efficient manner.

Some of the structure that are followed by the business organisations are divisional, functional, matrix and hierarchal. Here, marvin and smith can follow functional organization structure so that all members will be able to know about their roles and responsibilities. There are some of the functional units in the enterprise such as human resource, financial, resturant executives, research and development. If all these department perform well then their overall goals can be achieved.

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Through these, all managers of the different departments will be able to manage their activities or operations so that their growth and positions can be improved in France than any other market leader.Through an effective management structure, the manager of coffee shop will be able to improve their communication with their subordinates. A transparency can be created among all the members of the different departments so they will be able to improve their performance.An employee in the firm will be able to get an opportunity to do the work as per their interest.Communication channel can be improved that can build a trust among all the employees who are working at the workplace.

Gaining competitive advantage: When organization perform their operations in their external environment then they will be able to get an opportunities so that they can gain the competitiveness in the market. In order to improve their position in the market, marvin and smith have to offer quality products to their customers (Anderson, Sweeney and Williams, 2011). Through this, they will be able to create a strong base of consumers. Along with this, they can use some of the strategies in order to gain the competitive advantage such as:

Cost leadership: This is the strategy that can be used by the business organization in order to gain the leadership in the cost of the products. There are some people who are price sensitive so they will not be able to but the high cost products. So manager have to make some pricing strategies so that their overall satisfaction of the customers can be improved.

Differentiation: This is an another strategy that is used by the organization so that they can offer quality products to their service users. Through quality and innovative products, firm will be able to attract the people who want to buy some unique services (Affuso, Capello and Fratesi, 2011). Marvin and smith can create a strong base of consumers who are brand loyal for the company. By the innovative products, they will be able to convert their regular customers into loyal one.

Focus: This is the last strategy which is the combination of cost and differentiation. In this, the manager of the company is focuses on a group of people who are looking for the unique products at the flexible cost. Through these strategies, marvin and smith will be able to gain the competitive advantage in the market of France (Teeratansirikool and et. al., 2013). Apart from these, they can hire some people from the country who have knowledge about the locations of the country. The employment rate in France is high so the spending income of the local people is also high. So, people can buy such as coffee.

Q4. Evaluate how their profitability and liquidity may impact on decisions available to marvin and smith

Liquidity ratio as given below:

 

Ratio

Formula

Result

Acid test ratio

(Current Assets - Inventories) / Current Liabilities

4.48

Working capital ratio

Current Assets/Current Liabilities

5.7

 

Acid test ratio:

This ratio is help to calculate the liquidity of the cited organisation which can help to evaluate the ability of the business unit to pay its liabilities. If a business unit have enough asset which can cover its current liabilities that firm can pay all short term obligations without sale of long term asset of the company. As per the scenario of cited business entity their acid test ration is approx 4.5 which refers that the firm having enough asset and financial resources they can pay 4.5 times their current liabilities without compromising with their fixed assets.

Working capital ratio

In this ratio a firm's can measure its working capital and make their decision accordingly. In the context of cited business unit WCR is approx. 8 which is also a good sign for the company. This shows that the company is able to operate their business operations in the long time without any hurdles.

Profitability Ratio as given below:

 

Ratio

Formula

Result

Profit margin ration

Net Income/Net Sales

26800/360000*100

7.00%

Return on Assets:

Net income/Average Total Assets

26800/(113000/2)*100

47.00%

Return on capital employed

Net Operating profit/Capital Employed

45200/(113000-6200)*100

42.00%

 

Profit margin ration:This another significant ratio for each and every business unit. This ratio help to the higher management in order to make the decision for their long term business plan. This ratio belongs to the profitability or profit margin of the company. As per the given case, cited business unit profit margin is 7 percent which is good for a small and emerging company.

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Return on capital employed:In this ratio investor are measure and calculate their return on their investments. The stakeholders of the business unit are more interested in ROCE ratio. In the context of the given business it is approx 42% which is too good for the firm. It shows that small business unit financial position is strong and they can expand their business easily.

Q5. Write a concluding summary about the overall viability of overseas expansion at this stage

Hank Marvin and Patty Smith wants to expand their business so that they can improve their brand image and their position in the market. When any organization offer their services in another country they have to face some of the issues related to political, economic, social, government laws, technological, environment factors and so on. After analysing these issues they can expand their business in France so that their growth can be improved. The economy of the country is good so owner of the company can open their coffee shop in order to enhance their brand image.

They can make their plan on the basis of the elements of marketing mix so that their overall growth can be improved. Some of the variables of the marking mix are product, price, promotion and people. These all the important for a organization so the manager of the firm have to make some strategies related to these elements so that their overall profits can be achieved. Along with this, manager can identify their profitability level and their growth level so that Hank Marvin and Patty Smith can make an effective decisions in order to achieve their goals.

The manger has to focus on their organizational structure so that their overall activities can be managed. For this, they can follow functional structure so that their overall performance of the functional units can be improved. All members will be able to know about their roles and responsibilities that they have to follow in the enterprise in order to accomplish their targets. On the other hand, they can use some of the strategies so that they will be able to gain the competitive advantage in the market. Some of the approaches are related to cost, differentiation and focus. Through these, they will be able to attract number of customers towards their services.

Conclusion

From the above mentioned report it has been concluded that all the organization perform their operations in the business environment. By performing such an operations, companies will be able to know about their strength and opportunities. Along with this, marketing mix help the firm in improving their performance in the market. Through this, they will be able to improve their growth and position. Hank Marvin and Patty Smith can open their coffee shop in France so that their overall profits can be achieved. Further, in order to gain the competitive advantage in the market, they can use some of the approaches.

References

  • Affuso, A., Capello, R. and Fratesi, U., 2011. Globalization and competitive strategies in European vulnerable regions. Regional studies.
  • Anderson, D.R., Sweeney, D.J. and Williams, T.A., 2011. Essentials of Statistics for Business and Economics, Revised. Cengage Learning. Askhatova, L. I. and et. al., 2013. Competitive Strategies Formation in High Technology Enterprise. World Applied Sciences Journal.
  • Blumberg, B. F., Cooper, D. R. and Schindler, P. S., 2014 Business research methods. McGraw-hill education. Ebert, R.J. And et. al., 2014. Business essentials. Pearson Education Canada. Hollensen, S., 2015. Marketing management A relationship approach. Pearson Education.
  • Hugos, M.H., 2011. Essentials of supply chain management. John Wiley & Sons. Jaggia, S. and et. al., 2016. Essentials of business statistics.
  • McGraw-Hill Education. Omachonu, V.K. and Einspruch, N.G., 2010. Innovation in healthcare delivery systems: a conceptual framework. The Innovation Journal: The Public Sector Innovation Journal.
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