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Impacts of Business Expansion Faced by Marvin and Smith

University: University of Roehampton London

  • Unit No: 8
  • Level: Undergraduate/College
  • Pages 6 / Words 1500
  • Paper Type: Assignment
  • Course Code: MKT601
  • Downloads: 9
Question :

Business is one of the reliable measures that is done for the purpose of operating their business transactions in a proper manner. The main purpose of this report is to organize research for analyzing and suggesting the most reliable EU country and strategies to be chosen for the expansion of coffee shops. Marvin and Smith’s started their business operation in the year 2016. They have chosen Germany for the shop and there is the various reason for this suggestion.

  • Preparation of tailored marketing mix for expansion of Marvin and Smith's.
  • Analysis of impact faced by Marvin and Smith
  • Evaluation of impacts of profitability and liquidity positions for Marvin and Smith.
Answer :
Organization Selected : Marvin and Smith

INTRODUCTION

Business is one of the reliable measures that is done for the purpose of operating their business transactions in a proper manner. This project report is based on opening a new British coffee shop chain operations in some other part of EU nations. The main purpose of this report is to organize research for analyzing and suggesting the most reliable EU country and strategies to be chosen for expansion of coffees shops. Apart for this, use of marketing mix is also being done in context to opening a new business. Implication and evaluation of various complications that are associated with the expansion of new shops is discussed under this report (Anderson and et. al., 2014).

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1.Justification and challenges of expanding business

Marvin and Smith’s started their business operation in the year 2016. After getting valuable amount of success in UK market, both the owner is looking forward to expanding their coffees shops in another potential market in European nations. Massive growth in shorter period can be valuable achievement for both the owners. Unique customer services and facilities and targets on fair trade in coffees shop makes them stand among their competitors all over the UK. The enhancement in customer preference of both the owners and their positive impression on global visitors in UK show the potential of an organisation. It will assist in attaining better growth and success in the market. As per the mentioned analysis, it has been found that maximum number of German people used to spend their leisure time by taking afternoon coffees and with some popular snacks. It will be the direct opportunity for Marvin and Smith’s coffee shop to get a decent flow of consumer on continuous basis (Bradford, 2015).

They have chosen Germany for the shop and there is various reason for this suggestion. Because of the culture and lifestyle of German people are the main factors for Marvin and Smiths. The consistent consumption rate of coffee rate in Germany is about 150 litres. Fair trade is highly ordered in every products and services that relies on particular sector in Germany because of certified and authentic products between domestic customers. As per the secondary research, Dresden would be most potential market place in Germany by Marvin and Smith’s coffees. They do have one of the reliable business and transport facilities in the world. The another important aspects of Germany economy from overall impact that is arises in economic crisis in 2009. Per capital income of country has increased from 42,235.33USD to 44,481.97 USD from 2016 till 2017. However, German GDP has attained a sufficient amount of growth with 1.8 % by the closing of 2018. It means that there are great chances of getting more reliable growth and sustainability in near future time (Jones, George and Langton, 2013).

2. Tailored marketing mix in accordance with expansion of Marvin and smith’s

This particular section of project report has been utilised in order to develop a valuable marketing mix planning for the purpose commencing business operation in more effective manner. It is essential for Marvin and smith to make proper analysis of market by using appropriate marketing mix components. Some of them are mentioned underneath:

Particular

Strategic recommendations

Product

It is essential part of coffees that is to be served in Marvin and Smith coffees shops. It must be of appropriate quality which is made out of fine beans of Gumutindo. Henceforth, café is suggestion for retaining their culture of various customer. The other important part of innovation must be done in the coffee shop is to serve snacks with coffees. They would also need to make continuous modification in their popular types and flavour of items that are mainly consumed by the Germans.

Price

It has been seen that all the coffees shops that are being served by Marvin and smith is limit with certain brand recognition in global market. Likewise, there would be various old time coffee houses located in Dresden. The prices are one think that can directly make impacts on the overall growth and profitability of the business. A standard cup for coffee is being set in between EUR 1.5 and 2 in Germany. Henceforth, both parties required to fix their costs of their coffee to EUR 1.5 so that client need to offered with appropriate quality at low prices (Patten and Newhart, 2017).

Place

Dresden is the one place which is selected by Marvin and Smith’s coffee shop in Germany. The main reasons for selecting this place is mentioned underneath:

  • It is one of the oldest place which is founded in 1934 and age-old culture of coffees and other products.
  • Maximum number of visitors are gathered at this place during the time of festival.
  • It is best known for its old cake market that draws the attention of customer that can come once in the year.

Promotion

Both partner where going to start a new outlet of coffee shop in Germany. Thus, they need to make appropriate promotion of their business so that maximum number of customers can get attracted towards them. There are various sources from which promotion can be done. Some of them are done by using Television, Social media and posting hoarding at major locations. Some basic promotional strategies must be used such as serving coffee with complementary dishes for a particular period of time. They must be use unique theme of concern culture and consumer facilities such as charging ports and Wi-Fi facilities (Scopes, 2013).

3. Impact that are faced by Marvin and Smith

There are different kind of impact that are required to be associated with owner of Coffee shop. It is essential for them to face two of the most similar impact those are faced by Marvin and Smith Coffee shops to cover wide number of terrestrial region for operating in Germany are mentioned underneath:

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Organisation Culture:

It has been found that culture is one of the important aspect for Marvin and coffee to attract maximum customer toward their business. They are majorly focused on fair trading, convenience of client and pleasant theme. They need to overlooks that there is not any kind of discrimination among staffs and employees. Equal respect to all guest of customer is one of the main target of Marvin & Smith coffee shop (Grigsby, 2012).

Gaining competitive advantage:

Attaining maximum competitive advantage is Dresden market that will also be more tough task in front of Marvin & Smith. This market is more known as for the delicious cake and loyalty between local customer (Competitive Advantage, 2018). This would make them to compete with other cafes with proper quality of their coffee because of effective use of coffee bean. Likewise, German age old cafes will be naturally having positive experience in developing tastiest cakes as per the demand of customers.

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4. Evaluation of impacts of profitability and liquidity position

In order to make proper analysis financial stability of the company, they need to make analysis of profitability and liquidity ratios of the company.

Profitability ratio:

Ratios

Formula

Results

Gross profit Margin

Gross profit / Total Sales *100

208000/360000*100

= 57.8%

Net profit

Net incomes / Total Sales *100

26800/360000*100

=7.4%

ROCE

Net operating profit / (Total assets- current liabilities) x 100

=800/(113000-6200) x100=25.09%

From the above ratio calculation, it has been found that gross profit generated by the company is with healthy rate of 57.8%. It represents effective financial strength for expanding into new market. While in case of net profit observed to be 7.44% at the closing of 2016 that is strong point for financial growth. Likewise, they are getting decent amount of return in 2016 which is about 25.09% (Tomsho, 2012).

Liquidity position:

Current ratio

Current assets / Current liabilities

35400/6200= 5.7

Quick ratio

Quick assets – (stock + prepaid expenses) / Current liabilities

35400-8000/6200=4.4

According to the above calculation, it has been found that current ratio of the company was 5.7 that indicate presence of maximum assets value within an organisation which is to be invested for global expansion. While, quick ratio would be determining with 4.42 that provide information about overall capability for making large number of investments in Germany market.

5. Conclusion

From the above project report, it has been concluded that Germany has been one of the appropriate place that is more suitable and suggested to Marvin & smith coffee shops. There is various reason for choosing that particular place which are discussed effective in context to business. On the basis of German people demand they need to included cake with coffees that is new option for them. Popularity of Dresden between domestic and global units that is effective reliable for attaining maximum growth in near future. Every aspect related with transportation, customer perception and other options are essential supporting them to start their new shop. Use of competitive pricing and integrated strategies in order to promote their business all over the market. Moreover, both profitability and liquidity position of the company is also supporting them to make expansion of their business at global market. The entire report is estimated to be reliable and satisfied for both the owners in respect to make decision regarding expanding their coffee shop outlets.

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