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Business Essentials- Roehampton University

1853 Downloads I Published: 07 Mar ,2020

1.1 Evaluating the research and deciding on country where Filiz and Smith's coffee shop can expand into

By researching, it has been found that Filiz and Smith's coffee shop must be expanded in Germany within the range of European union. This is because of the reason there is high need of coffee shop in that area. Further, there is greater scope of expanding the business and earn high profit. Moreover, there are several suppliers of coffee beans within the Germany who are providing with high quality raw materials to the firm. Thus it will assist in developing with greater quality coffee in different flavours which can attract wide range of customers towards their organization (Aghdam, Saeidi and Marjani, 2015). Furthermore, it has analysed that in Germany people possess higher needs towards having the coffee with high quality and are ready to pay any amount for it. Thus, to comply with the needs and requirements of the customer for the efficient coffee, Filiz and Smith's can open up with their coffee shop and definitely it will benefit them in long run. Further, there is greater demand of organic fresh coffee in Germany. Moreover, the disposable income of people in Germany is high which makes them capable enough to spend large amount on buying the coffee. There lifestyle is also very good which makes them efficient enough to spend money on different things.

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Filiz and Smith's coffee shop make the promotion of their firm in an efficient manner. They adopt several technique which are made considering the ethical and structure of the firm. Further, they adopt fair trade policy in their workplace which assist in developing the trust and support of the customers for the organization. Moreover, several factors must be taken into account such as staff welfare for expanding their coffee outlet in Germany. This will help the company to ensure that the staff members are performing their task in an efficient manner and meeting the standards of the company. Further, to enhance the performance of the employees they must organize several training programs so that they can polish their skills and knowledge to provide with better services. Moreover, the ethical consideration related to the equality given to the staff members would also be ensured at a greater extent. By analysing the fact it has been evaluated that people in Germany have a greater need of special coffee shop. Thus to satisfy the customers to a greater extent, they must be provided with different flavoured coffee so that they can develop with the better taste as compared to the other competitors. Moreover, they have considered their structure into the account so that the customers will have a greater acceptance for the products and services served by the coffee shop (Auboin and Blengini, 2014).

Marketing mix for the expansion of Coffee shop

The marketing mix includes several set of actions which is been used for promoting their brand or product in the market. It mainly involves 4P's for making efficient marketing mix plan. Further, the marketing mix plan for coffee shop plan in Germany includes the following elements:

  • Product-The coffee shop should constitute a wide range of products that primarily appeal to the coffee lovers. The products to be decided should appeal to the Germany's population. The business should consider adding various products that go with coffee such as snacks for the snack lovers. They must provide with different flavours and types of coffee so that they can provide greater satisfaction to the customers. It must include caffecino, hazel nut, hot coffee, cold coffee etc. in their menu. Moreover, they must provide with organic seeds coffee so as to attract more customers (Duca, Muellbauer and Murphy, 2016). The company should seek to appeal to the target market taste along with the provision of high-quality classic coffee. The young population which is easy going should be targeted with products such as frappé in summer which is a blend of coffee and ice cream and other products such as cappuccino. So as to keep its customers, the company should provide premium products for its consumers which will provide an unforgettable experience.
  • Place-The company in its expansion plan should have a clear vision which is to create a direct and personal relationship with its customers. They must open their outlet at the place which is in the main street so that it can attract large number of customers. Further, they must have a direct supply chain which means from producers to the consumer. Depending on the success of the company, coffee bars should be opened to ensure that consumer traffic is dealt with. The firm must try to localize itself so as to create acceptance by opening stealth outlets. These outlets should adopt local names (Embrechts, Klüppelberg and Mikosch, 2013).
  • Price-The business should understand the target customer so as it will drive a business policy which will try to keep the entire customer satisfied. Price is a factor used to found out the product and as such the coffee shop should put their best to offer high product value to the customers. They must adopt the competitive pricing policy in the company so as to attain competitive edge in the market. The company should purchase the best coffee beans quality and ensure there is efficient workforce which is effectively trained. Due to the experience, it will offer to its customers; the business should use premium pricing (Gitman and Zutter, 2012). There should be the emphasis on relative pricing by providing premium items. The company should work on the idea that if premium products are offered to the customers, they will have no problems offering a little bit more. Quality should be the key and therefore ensure implementation of quality control measures.
  • Promotion-The company should avoid using costly techniques of promotion rather they should go for the ones which are cost-effective and give high impact in the market. They must circulate pamphlets to the people so that they come to know about the services which are been served by them. Moreover, they should find and acquire best-suited places for the outlet shops. This will help to attract large number of customers to avail their services. They should organize an event in the areas where they ought to open new coffee shops. They should consider having other types of promotional activities such as printing information on shirts and cups. They should also think of having local representatives who act as the ambassadors of the business brand (Gordon, 2012).

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Determining the implications of need for Filiz and Smith's to cover wider geographical area

There are several implications of the need for the Filiz and Smith's for covering the wider geographical area. Further, it comes up with several issues which are faced by the company. Some of them are stated below:

  • Personnel and managing staff issues- As the coffee shop is been opened in Germany so the recruitment for the people must be done from the nearby location. Further, with respect to this, the management of the staff becomes a greater issue for the company. This is due to the reason that, they are to provided with regular training and development so as to polish their skills and knowledge. Further, if some person is transferred to the Germany then in this situation the problem such as language barrier and the difference in culture may develop with understanding problem among the customers and the employees (Hamzah and Sutanto, 2016). Thus, this can affect the company in long run. It has been assessed that personnel issues can occur when there is differences among the people also this influence the level of coordination.
  • Supply chain- Due to change in the organizational culture, the operation of the supply chain must be dynamic. There will be increased international competition and therefore the business will need to keep pace. Due to the expansion to new markets, it will be hard to manage the supply the supply chain. There will be a variation in the supply chain process due to the global trade regulations. The business will find it hard to balancing the need for compliance and the needs of the business. The business might also be faced with inconsistent trade practices which might result in issues of compliance. If the company does not adhere to standard operating procedures in the supply chain, it can easily have problems due to the decentralized trade practices and this inconsistency will bring issues to the operations of the supply chain. Recently there has been the adoption of technology in the customs requirements with electronic systems replacing the traditional custom processes (Jachnik and Raynaud, 2015). The business needs to implement trending initiatives to the supply chain operations. The company can deal with the issues of the supply chain by the implementation of the new strategies. There need be the development of business strategies which will help deal with the challenges of engaging in international trade and mitigate possible risks.

Evaluating the profitability and liquidity

The calculation for determining the profitability of the company is been tabulated below:

Ratios

Formula

Year (2015)

Profitability ratio

   

Gross profit

 

208000

Net profit

 

26800

Net Sales

 

360000

Gross profit ratio

(GP/Net sales)*100

57.77%

Net profit ratio

(Net profit/ net sales)*100

7.44%

From evaluating from the above profitability of Filiz and Smith's coffee shop it can be concluded that the gross profit for the year 2015 is around 57.77%. Further the net profit ratio of the coffee shop is 7.44%. The gross profit margin determines the profitability ratio which involves the calculation of the percentage of sales which is highly exceeding the cost of goods sold of the company. Thus it can be concluded that the profitability of the company is highly sound. Moreover, the expenses made by the coffee shop is higher which is ultimately decreasing the profitability position to a greater extent (Menegaki, 2012).

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Liquidity ratio

Ratio

Formula

Year (2015)

Current assets

 

35400

Current liabilities

 

113000

Current ratio

Current asset/ current liabilities

0.31%

By analysing the above liquidity ratio, it can be concluded that the liabilities of the company is much higher than its current assets which is a negative sign for the company. Thus, the organization must decrease their expenses so that they can have greater profits. Further, the extra investment made by the company should be avoided as they may bear losses in the long run (Minsky, 2015).

Overall viability of the overseas expansion

This can be evaluated that the viability of the overseas expansion plan must be considered as effective element because the profitability position of the coffee shop is very high. Thus, the company can expand their business in different countries so as to increase their revenue of the business. Moreover, it has been seen that Germany has a greater potential in increasing the profitability of the firm (Info.Entreprenuers. 2016). This is due to the fact that the people residing there are having high disposable income which make them efficient enough to spend money on buying different items. The decision regarding marketing mix plays significant role towards attainment of the business targets in an effective manner within specified duration of time.

Conclusion

From the above report it can be concluded that it is important for the company to develop their development plan for increasing their business in the market. Thus Filiz and Smith's must take several steps for analysing the market and develop a new outlet so as to expand their business. It is first important to have a clear plan since such a venture comes with risks, but the adoption of the appropriate strategy can help in providing stability, security and long-term profits for the business. After the assessment of the present strengths, weakness, threats, and opportunities, and the ability to handle the business situation, it would be fine to go ahead with the plan. It is always important to have a business growth since the business has a chance of being better than their competitors. The business should be agile to increase its market share by taking customers from the competitors and attracting new consumers.

References

Journals and books

  • Aghdam, P. F., Saeidi, S. S. and Marjani, A.B., 2015. Investigating the effect of service marketing mix on increasing the sales in Special Cooperative Company of Iran Khodro. Journal of Current Research in Science. 3(3). p.47.
  • Auboin, M. and Blengini, I., 2014. The impact of Basel III on trade finance: The potential unintended consequences of the leverage ratio.
  • Duca, J. V., Muellbauer, J. and Murphy, A., 2016. Homeownership and The American Dream How Mortgage Finance Reform Could Affect Housing. The American Economic Review. 106(5). pp.620-624.
  • Embrechts, P., Klüppelberg, C. and Mikosch, T., 2013. Modelling extremal events: for insurance and finance (Vol. 33). Springer Science & Business Media.
  • Gitman, L. J. and Zutter, C.J., 2012. Principles of managerial finance. Prentice Hall.
  • Gordon, R., 2012. Re-thinking and re-tooling the social marketing mix.Australasian Marketing Journal (AMJ). 20(2). pp.122-126.
  • Hamzah, S. B. and Sutanto, J. E., 2016. The Role of Marketing Mix (7P) for Consumer Buying Decision Pastry Cake in Malang City.
  • Jachnik, R. and Raynaud, V., 2015. Sector-level approach to estimating mobilised private climate finance.
  • Menegaki, A. N., 2012. A social marketing mix for renewable energy in Europe based on consumer stated preference surveys. Renewable Energy. 39(1). pp.30-39.
  • Minsky, H. P., 2015. Can" it" happen again?: essays on instability and finance. Routledge.
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