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    Business Essentials Pearson BTEC Level 5

    Introduction

    Business essentials are the innovative set of tools and techniques that are used to develop and establish the business organizations in such a manner that it will turn out to be very profitable for the owner of organization. These are designed to meet the specific and key areas of the business by developing critical skills of the individuals. In United Kingdom, there is very high demand of coffee among the individuals and this is the reason that there is high competition among vendors and shop holders. Two business partners, i.e., Hank Marvin and Patty Smith are planning to expand their coffee shop in Germany in order to expand their business operations. Main aim of this report is to lay emphasis upon the factors that are important for expanding new business in the European Union countries and the forces that are need to be considered while setting up this expansion.

    Main Body

    1. Research

    Hank Marvin and Patty Smith can expand their business in the United Kingdom because there is a huge demand of coffee over there. In United Kingdom, drinking coffee is the ritual for people which they never skip. The culture of Britain's coffee shop is fully loaded with beans. Since 2008, the market of coffee shops has seen huge success in United Kingdom. As per the reports, the market value of this industry in 2008 was,  £2.2 billion approximately. In last five years, market has seen the growth of 38% approximately, the growth increased by £2.5 billion in 2011 and £3.5 billion in 2017. United Kingdom can prove to be a suitable country for Hank Marvin and Patty Smith to expand their Marvin and Smith coffee shop; it is because of the very high demand of the coffee in the country(Ovalle-Rivera2015).

    The people of United Kingdom consider coffee as the part of their busy lives and there are very huge number of coffee drinkers available in the country. There is continuous growth of this industry in United Kingdom in last few years because of its high demand. As per the reports and the findings, there are only 18% of the people available in the country who do not prefer to drink coffee out of their homes and places. The ratio is very little, if Marvin and Smith coffee shop use proper techniques to engage the interest of their potential customers than in that case they can achieve the remarkable success in United Kingdom(Yu, 2016).

    While on the other hand, it is essential for Hank Marvin and Patty Smith to demonstrate the logistical consideration for setting up business in the United Kingdom as it plays a vital role in business model and helps in managing the control and flow of goods in and out of the business. These considerations help in identifying the needs and demands of the customers in order to provide them proper satisfaction. Whenever a business expand its branches, there are several types of challenges and issues come along with it. These considerations provide various kinds of ways through which these impacts can be minimized in order to run the business effectively and efficiently.

    Ethical considerations also play a vital role while setting up business in new country as it is essential for the members of the company to understand the requirements and desires of market in which the company is planning to expand their operations. These considerations help in identifying the variations between the acceptable and unacceptable behaviour of the business organizations while practising functions in any particular country. For every country and for every society, the ethical considerations to be followed by the organizational members vary(Rid,2014).

    There are various number of Structural Challenges that business needs to faced while expanding or establishing business in the United Kingdom. Some of them are as follows :

    • Supporting the elderly
    • Boosting productivity
    • Fiscal reconstruction

    There are various number of factors that need to be keep in mind while expanding business, it is essential for the Hank Marvin and Patty Smith to consider those factors while planning their operations in order to minimize the future uncertainties and demonstrate the impact of these factors in order to run the business effectively in the new country(Grant, 2016).

    2. Marketing Mix

    Marketing mix is provides basis and foundation to the marketing techniques, these are the various set of tools that are used by the firm in order to generate the marketing objectives as per the targets and the focus of the firm. This technique is broadly sub divided into four major categories namely: product, price, promotion and place. Hank Marvin and Patty Smith are planning to expand their business function into United Kingdom, for this they can use tools of marketing mix in order to achieve the competitive edge in over seas market. Hank Marvin and Patty Smith, decided to expand their business function when they notice the demand for their East African inspired coffee and themed evenings among the International tourists and their increasing popularity over their(Chen, 2015).

    Marketing Mix in relation to the Marvin and Smith coffee shop expansion in United Kingdom:

    PRODUCT

    Marvin and Smith coffee shop, offers coffee to their customers along with some snacks, pastries and some different kind of beverages. The demand of coffee is very high in United Kingdom and the people out their like to eat some light snacks along with it. If Marvin and Smith coffee shop, serve some kind of snacks along with the coffee to their customers in United Kingdom, then in that case they can attract the attention of their customers towards their shop and offerings. Product that the company offers is up to the desires and the expectations of the customers in order to provide them maximum satisfaction and to fulfill their needs as per the desires(Datta,2017).

    PRICE

    In United Kingdom, there is very huge demand for coffee, and there are approximately only 18-19 % of the individuals who does not prefer to drink coffee outside their houses and places. While due to high demand there is also very high supply. There are various number of big and small coffee houses are available in United Kingdom, who work to fulfill the needs of the customers. It is important for the Marvin and Smith coffee shop, to keep the prices of their offering very nominal in order to gain the recognition in the market. Price of the product plays very vital role in deciding whether the customers are going to adapt it or not. It is the important aspect that helps in deciding the factors that company need to focus upon while deciding the prices of their products and services(Seo, 2016).

    PLACE

    The area area and the ambiance of the shop also plays very vital role in deciding and measuring its success. Generally the location of such coffee houses should be near work places and offices so that people can visit their in free or break hours. It is important to set such shops at busy and well known location in order to create and increase its recognition among the customers(Karunaratna, 2016).

    PROMOTION

    The demand for the coffee is very huge in United Kingdom, so on the other hand it's supply is also very huge. There are various number of outlets in United Kingdom who provides a good cup of coffee with very pleasant ambiance, so it is very essential for the Marvin and Smith coffee shop, to come up with some unique and individual features in order to increase their competitive edge. The owners of the coffee house can use their unique feature as the prominent promotion approach in order to build the certain position in the market and among customers(Vallance, 2014).

    3. Impacts

    Hank Marvin and Patty Smith can expand their business in to United Kingdom,because there is very huge demand of coffee over their. In United Kingdom drinking coffee is ritual for the people, which they never skip, the culture of Britain's coffee shop is fully loaded with beans. Since 2008, the market of coffee shops has seen huge success in United Kingdom. As per the reports the market value of this industry in 2008 was £ 2.2 billion approximately. In last five years the market has seen the growth of 38 % approximately, the growth increased by £2.5 billion in 2011 and £3.5 billion in 2017

    Gaining Competitive Advantage

    Whenever company expands its business functions, there are several number of risks associated with it. These risk factors are associated with the internal and the external factors of the business environment and it is very essential for the firm to consider those factors in order to maintain the sustainable position in the business environment. Gaining competitive advantage can be explained as maintaining unique position in the market where there is lot of competition available. Whenever there is high demand of the product is present, there are several number of supply channels are available. In order to gain the competitive advantage it is very necessary for the Marvin and Smith coffee shop, to develop some unique and individual features into their working in order to attract the attention of the customers. These unique feature will help the company in expanding their functioning in very effective manner, because customers always attract towards the new and unique features, and it has been seen that almost each and every coffee house of the United Kingdom offers same kind of product and services to their customers and the environment and ambiance of the shops is also quite similar from one another, so if the Marvin and Smith coffee shop, comes with some new and unique idea than in that case they are able to gain the competitive advantage. Gaining competitive advantage can be explained as maintaining unique position in the market where there is lot of competition available. Whenever there is high demand of the product is present, there are several number of supply channels are available. In order to gain the competitive advantage it is very necessary for the Marvin and Smith coffee shop, to develop some unique and individual features into their working in order to attract the attention of the customers(Rodrigues, 2015).

    Personnel and managing staff issues

    In Marvin and Smith coffee shop, there are total 11 members in staff, 3 cooks, 4 waiters and 4 who conduct other basic function like purchasing, cleaning, washing utensils etc., they provided a special kind of training to the staff members in order to make them deal with the customers in the more effective manner. In any firm or unit, it is very essential for their owners to keep their customers and other members satisfied and motivated. Marvin and Smith coffee shop is the small unit with only 11 members and 2 owners, so any occurrence of conflict and disputes among the staff members can lay situation of stress among the whole firm. It is very essential for the owners of the coffee house to discuss the issues and the problems that are going on at the workplace, and there are very less members so they can also conduct face to face personal sessions with each and every staff member in order to identify the problems and issues they are facing, this will help in increasing its productivity and profitability. The coffee house is planning to expand their working into United Kingdom, so it is very essential for them to develop the environment which can be used as the example by their their outlets. In order to keep the staff members motivated and satisfied and to keep the working environment positive it is very essential for the members of the firm to keep their employees involve in several kinds of activities and to boost up their motivation level by providing various kinds of financial and non financial benefits to their members. Motivated staff will give their full potential and make optimum utilization of the resources in order to bring the maximum satisfaction level of the employees and all the staff members of the organization(Ferreira, J2017).

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    4. Evaluate how profitability and liquidity may impact on decisions.

    As per the income statement of Marvin and Smith's Coffee Shop, on December 31st 2016, the total number of recorded sales was 360,000. as per the report the purchases made by the firm was 160,000 and their closing stock was 8000.(160,000-8,000= 152,000). The recorded Gross Profit of the firm was 208,000(360,000-152,000). The report also mentioned some other expenses that the firm has made:

    Electricity

    32,400

    Salaries & Wages

    34,000

    Rent and Rates

    80,000

    Telephone

    8,400

    Other expenses

    8,000

    Depreciation -Equipment

    6,400

    Depreciation – Fixtures

    8,000

    Depreciation – IT Equipment

    4,000

    Total = 181,200.

    The company can lessen their expenses on electricity by using it wisely and give strict instruction to the staff members regarding this. The firm can also reduce their telephone expenses. The overall recorded net profit of the firm was 26,800, which they can increase up to 30,000 by managing their expenses efficiently. They can also use their creativity in managing the expenses in order to increase the profit ratio of the company.

    As per the statement of the financial position of the company, the ending value of the non current assets of the company :

    Non-Current Assets

         

    Equipment

    40,000

    6,400

    33,600

    Fixtures and Fittings

    40,000

    8,000

    32,000

    IT Equipment

    16,000

    4,000

    12,000

     

    96,000

    18,400

    77,600

    The value of the current assets of the company :

    Current Assets

         

    Inventory

     

    8,000

     

    Cash

     

    27,400

     
         

    35,400

    Total Assets

       

    113,000

           

    Capital

       

    100,000

    Profit

     

    26,800

     

    Drawings

     

    (20,000)

    6,800

         

    106,800

    Current Liabilities

         

    Trade Payable

    6,200

       

    Total capital and liabilities

       

    113,000

    The expenses of the company are in their hand, it's up to the owners of the firm how they structure and manage their expenses in order to gain the maximum profit. The financial decisions are the most important decisions of any business firm whether it is small or big. It is very necessary for the firm to record their expenses and losses in order to make the most effective use of the revenues of the organisation(Moat, 2017).

    Conclusion

    From the above report it can be concluded that there are several and various number of factors that are need to be considered while practicing business in the competitive market. Hank Marvin and Patty Smith are tow business partners who are owners of Marvin and Smith's Coffee Shop, after noticing their success and popularity both of them decided to expand their business over seas. As per the research and the suggestions United Kingdom is the best suitable country for expanding the coffee shop because of the very huge demand of coffee over there. There are several number of internal and external environmental factors that are need to be considered by planning their expansion because these factors and features helps the firm members to plan their business function in more effective and efficient manner. It has also been seen that because of high demand there is very huge competition among the owners of the coffee shops, so it is very essential for the Hank Marvin and Patty Smith to come up with some unique and individual features in order to maintain the competitive edge and advantage of the firm.

    References

    • Ovalle-Rivera, O., 2015. Projected shifts in Coffea arabica suitability among major global producing regions due to climate change.PloS one. 10(4). p.e0124155.
    • Yu, H., 2016. A general reverse logistics network design model for product reuse and recycling with environmental considerations.The International Journal of Advanced Manufacturing Technology. 87(9-12). pp.2693-2711.
    • Rid, A., 2014. Ethical considerations of experimental interventions in the Ebola outbreak.The Lancet. 384(9957). pp.1896-1899.
    • Grant, W., 2016. The challenges facing UK farmers from Brexit.EuroChoices,15(2), pp.11-16.
    • Chen, M. F., 2015. The impacts of green claims on coffee consumers’ purchase intention.British Food Journal. 117(1). pp.195-209.
    • Datta, H., 2017. How Well Does Consumer-Based Brand Equity Align with Sales-Based Brand Equity and Marketing-Mix Response?.Journal of Marketing. 81(3). pp.1-20.
    • Seo, I., 2016. The Effects of Brand Personality on Service Experience Satisfaction, Price Value Satisfaction, and Repurchase Intention.The Korean Journal of Community Living Science. 27(1). pp.109-120.
    • Karunaratna, A. R., 2016. Can Country of Origin Branding be a Competitive Advantage for Agri-Products from Emerging Countries?. InMaking a Difference Through Marketing\. (pp. 167-183). Springer, Singapore.

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