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Business Case Study- Marvin and Smith's Coffee Shop

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Business Case Study Of Marvin and Smith's Coffee Shop

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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 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 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 organizations that aim to expand their operations overseas must have an efficient information system. The communication channels that are developed in this system 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. The only issue that arises with the 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.

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:
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:

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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. 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 assessment to gain an understanding about profitability and liquidity of the business plan. The need of information system and organisation culture is also depicted.

References

  • Armelini, G. and Villanueva, J., 2011. Adding social media to the marketing mix. IESE insight. 9. pp. 29-36.
  • Cavusgil, S. T. and et. al., 2014. International business. Pearson Australia.
  • Chan, P., Finnegan, C. and Sternquist, B., 2011. Country and firm level factors in international retail expansion. European Journal of marketing. 45 (6). pp. 1005-1022.
  • Gordon, R., 2012. Re-thinking and re-tooling the social marketing mix. Australasian Marketing Journal (AMJ). 20 (2). pp. 122-126.
  • Huang, R. and Sarigöllü, E., 2014. How brand awareness relates to market outcome, brand equity, and the marketing mix. In Fashion Branding and Consumer Behaviors (pp. 113-132). Springer New York.
  • Lane, J. E., 2011. Global expansion of international branch campuses: Managerial and leadership challenges. New Directions for Higher Education. 2011 (155). pp. 5-17.
  • Liesch, P. W., Welch, L. S. and Buckley, P. J., 2011. Risk and uncertainty in internationalisation and international entrepreneurship studies. Management International Review. 51 (6). pp. 851-873.
  • Luan, Y. J. and Sudhir, K., 2010. Forecasting marketing-mix responsiveness for new products. Journal of Marketing Research. 47 (3). pp. 444-457.
  • Novak, J. and et. al., 2017. Do effective workplace relationships with management and an effective maintenance culture affect organisational safety outcomes?. Reliability Engineering and System Safety Journal.
  • Peter, J. P. and Donnelly, J. H., 2011. Marketing management: knowledge and skills: text, analysis, cases, plans. Plano: Business pub., INC.
  • Powers, T. L. and Loyka, J. J., 2010. Adaptation of marketing mix elements in international markets. Journal of global marketing. 23 (1). pp. 65-79.
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