In the recent times, business units lay high level of emphasis on exploring business operation with the motive to enhance customer base as well as sales revenue. Research & development is the main aspects which enable business entity to provide business entity to gain competitive edge over others by providing customers with the innovative products or services. The present report is based on the case scenario of Marvin & Smith coffee shop which provides customers with wide varieties and quality services. In this, report will provide deeper insight about the extent to which expansion plan in Italy prove to be beneficial. Further, report also shed light on the marketing mix suits to Marvin & Smith coffee shop. It also depicts the factors which have impact on the operations of M&S. Report also presents the manner in which profitability and liquidity aspects affect business decision
To develop the business in totally new area there are several challenges which were need to be faced by the professionals as to have appropriate increment in the growth and efficiency. Thus, to ascertain such needs of business Hank and Petty has to analyse the environmental conditions at Italy. Similarly, there have been various obstacles in terms of operating the business at new location and in the totally new culture. To operate a coffee shop in Italy will be challenging to the partners but it will adversely improve the profitability and market share of business at international platform. Therefore, there are several terms which are needed to be considered by the partners such as:
It is the best place known for the various dishes and beverages which determines the cultural variations. Therefore, to develop the expansion project of Hank and Patty it will be a favourable place. To develop the business in the particular location there is need to ascertain all the needs of the business (Ackley, Decker and Limb eds., 2018). It includes analysing the market with having appropriate analysis through the available suppliers of coffee and the location of the business operations. Moreover, In order to have the adequate gains through such operations there will be promptness and accuracy in business performance. Hank and Patty need to consider about the transportation mode which will be cost effective and quick in meeting the consumers demands on time.
To bring the reliability and validity to the proposed business plan there is need to have most appropriate analysis through all the required wants and desires of consumers. There is need to have appropriate licensing of the store and the ingredient used in preparations need to be fresh and good in quality. The products and services offered by the coffee shop must be satisfactory to the consumers in terms of quality and costs. There have been various food security laws inn EU parliamentary legislations (Beatty, Samuelson and Abril, 2018). Thus, it will be suggested to the owners that they must have appropriate, licensing and acquired authority to perform the business tasks.
To manage and run the business operations there is need to have appropriate workforce. Therefore, Italy is best known for its food and culture throughout the world. Thus, there will be availability of skilled and talented people who will have adequate knowledge about the services and the preparation of the coffee (Guo, Huy and Xiao, 2017). Similarly, the appointment of local people to perfume the job and duties of business which will be helpful in reaching the consumer satisfaction level. There are several duties and tasks in the business which were needed to be performed by the professionals such as managing supplies, serving, preparing the dishes etc.
In consideration with the coffee shop expansion plan there has been various techniques that will be helpful in analysing the macro level market. Therefore, in terms with analysing the external market needs the marketing mix technique such as:
Product: to fetch the attraction of maximum numbers of consumers there is needed to have uniqueness in the products and services which will be offered to them. The products offered by firm among buyers will create the brand image and identity in the market. Therefore, it is mandatory to have a unique and appropriate product which will be attractive to those buyers (Lancaster and Massingham, 2017). Similarly, Hank and Patty were planning to operate a coffee store in Italy which will be an innovative idea in terms of offering the unique recipes of coffees among consumers. These are needed to be good in quality which will be healthy to consumers.
Price: The costs levied over the products which are need to be effective and attractive to consumers. Moreover, the prices are need to be cost efficient for the buyers as well as profitable for the business. The decisions based on determine the favourable prices over the goods which will be based on after analysing the competitor’s prices (Marketing mix, 2017). Therefore, it must be challenging to the competitors, attractive to the buyers as well as effective to the firm.
Place: To give the memorable experiences to the buyers the restaurant and coffee store need to be at favourable place. It must be near to any residential area, universities, tourist places as well as commercial places (Kotabe, Jiang and Murray, 2017). Thus, it will create the unique demand in such places as the levels of people are comparatively higher and would like to have satisfactory coffee at any time. On the other side, the accommodation facilities offered by the professionals needed to be adequate and appropriate to have fruitful gains.
Promotion: The advertising will be based on presenting the business among consumers and investors. Therefore, the advertisement on newspaper, television, graffiti, hoardings, flies etc. which will be effective in promoting the brand (Datta, Ailawadi and van Heerde, 2017). If the business will have effective gains and capital with it then they can invite celebrity to inaugurate the store. It will be create the identity in the market.
People: there will be consideration of all stakeholder’s which are involved in the business activities. Thus, it plays the main role in analysing the needs of their presence in the industrial operations (Becker and et.al., 2018). There are various parties such as suppliers, Consumers, Directors, managers, waiters, cleaners etc. which has their roles and special needs in the Marvin and Smith coffee shop.
Physical evidence: To develop the adequate trust among the consumers there is need to have better place to perform the operations. Moreover, Marvin and Smith Coffee shop will have operations in Italy on which they have to select the most convenient place. On the other side, after having the acquisition of place there is needed to have proper licensing which will be effective and helpful in operating the business (Kraak and et.al., 2017). There are several laws and regulation imposed by parliamentary authorities of EU in terms of food securities. Therefore, top met such requirements there is need to have appropriate licensing.
Process: the beverages will be prepared at the workplace with the influences of various machineries, equipments as well as efforts of the workforce (Ackley, Decker and Limb eds., 2018). Therefore, in order to meet such requirements there are proper management of work and workforce.
There are various competitors available in the markets which are making the efforts in relation with attaining the business goals. Thus, to have the adequate analysis through various operations there can be use of several strategies such as unique product line, price and accommodation facilities (Beatty, Samuelson and Abril, 2018). The products offered by competitors and own business needs to have uniqueness as to bit the challenges. Therefore, Marvin and Smith coffee shop will have effective growth as if the products will have uniqueness.
Personnel and managing staff issues:
It is essentially required that the business must have appropriate growth and development of plans which will be effective and adequate for analysing the staff requirements. There is need to have proper training and development program which will be helpful in ascertaining the needs and wants of the consumers (Lancaster and Massingham, 2017). Thus, it will help in creating the favourable communication environment in the premises.
Stating the extent to which profitability and liquidity may impact on expansion decision available to M&S
Cited case situation presents that Hank and Patty has raised capital of £100,000 from friends, family and personal loan. Each partner has raised £50,000 for the business purpose and currently it has 4 shops. Ratio analysis has been done for evaluating current financial position and performance of the firm. Tool and technique of ratio analysis enables business entity to assess company’s performance under several categories such as profitability, liquidity etc. Considering the current
Profitability ratio: This measure helps in ascertaining profit generated by the firm during the accounting year over expenses.
The above depicted table shows that in the year of 2016, GP margin of M&S implied for 57.78% respectively. This aspect shows that business unit has exerted effectual control on direct expenses. However, still GP margin of M&S was not so high at the end of accounting year 2016. Further, net profit margin of the company accounted for 7.44% respectively in the period of 2016. In comparison to GP margin, net profit ratio of M&S was highly lower. This in turn indicates that due to having indirect expense level firm failed to generate high net margin in the concerned accounting period. Income statement of M&S clearly exhibits that under the category of indirect expenses electricity, salaries & wages as well as rent & rates are main variables which highly impacts profit margin. Currently profitability position of the company is good neither too high nor too lower.
In the context of M&S, proposed plan will place positive impact on the profitability aspect of firm. Moreover, firm achieves high economies of scale when it operates at large level. Hence, expansion plan in Italy offers opportunity to the business entities in relation to exerting control over expenses and thereby enhance profit level. Now, using profit margin M&S would become able to finance its operations. Such source is highly effectual which does not impose any financial burden in front of firm.
Liquidity ratio analysis
Stock or inventory
Current assets / current liabilities
Current assets - inventory / current liabilities
Outcome of ratio analysis presents that current and quick ratio of M&S accounted for 5.71 & 4.42 respectively. It presents that liquidity position of M&S is sound in the financial year ended on 31st December 2016. On the basis of standard, current ratio of the company must be 2:1. In accordance with such standard firm should maintain 2 current assets in against to 1 liability. Further, quick ratio presents the ability of company in relation to converting quick assets such as stock into cash. Ideal ratio of .5:1 shows that firm must have 1 quick asset in against to 2 current liabilities. Thus, referring overall assessment, it can be depicted that M&S was highly capable in relation to meeting obligations through current assets. Company had maintained high liquidity in against to the desired level or standard.
Hence, using such high liquidity level M&S can fulfil monetary requirements needed for expansion project. Currently, liquidity aspect of the company was too high which in turn places negative impact on the profitability aspect. Hence, using such excess funds business entities would become able to execute expansion plan more effectually. At the time of making decision in relation to using current assets concerned business entities should keep in mind ideal ratios. Hence, it can be said that current profitability and liquidity aspect have positive impact on business operations.
By summing up this report, it has been concluded that Italy proves to be most effectual country from the perspective of expansion. Further, it has assessed from the evaluation that, in Italy, hot coffee beverage is widely consumed by the customers. However, Italy is not a coffee growing country which in turn places direct impact on the operations of firm. Thus, for attaining success in the new country business unit is required to make focus on developing sound strategic and policy framework. It can be summarized from the overall evaluation that through employing suitable marketing mix Marvin & Smith would become able to entice the decision making aspect of customers reside in Italy.
Along with this, it has been articulated that by making focus on innovative aspects M&S can build and sustain competitive position. Further, for managing staff issues both the partners need to conduct training sessions. It can be seen in the report that current profitability and liquidity position of M&S is good. Besides this, it can be inferred that using profit margin and higher liquidity level Marvin and Smith would become able to open coffee shop in Italy without any difficulties. Further, in the near future, such expansion plan will significantly contribute in the profit margin of firm. Hence, it can be mentioned that expansion plan of M&S in relation to opening coffee shop in Italy is viable.
Ackley, R. S., Decker, T. N. and Limb, C J. eds., 2018.An essential guide to hearing and balance disorders. Psychology Press.
Beatty, J. F., Samuelson, S. S. and Abril, P. S., 2018.Essentials of Business Law. Cengage Learning.
Becker, S.J. and et.al., 2018. Parent preferences and experiences with psychological treatment: Results from a direct-to-consumer survey using the marketing mix framework.Professional Psychology: Research and Practice.49(2). p.167.
Datta, H., Ailawadi, K. L. and van Heerde, H. J., 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.
Guo, Y., Huy, Q. N. and Xiao, Z., 2017. How middle managers manage the political environment to achieve market goals: Insights from China's state‐owned enterprises.Strategic Management Journal.38(3). pp.676-696.
Kotabe, M., Jiang, C. X. and Murray, J.Y., 2017. Examining the complementary effect of political networking capability with absorptive capacity on the innovative performance of emerging-market firms.Journal of management.43(4). pp.1131-1156.
Kraak, V. I. and et.al., 2017. Development of a novel marketing mix and choice architecture framework for the restaurant sector to nudge customers toward healthy food environments and reduce obesity in the United States.Obes Rev.18(8). pp.852-868.
Lancaster, G. and Massingham, L., 2017. The development of a strategic approach to marketing: its culture; internal macro-and external micro-environmental issues. InEssentials of Marketing Management(pp. 11-42). Routledge.
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