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Essentials to Expand Business in New A Country

680 Downloads1 I Published: 13 Dec ,2019

Introduction

Business demonstrates various activities and actions through which they can achieve market share and profits. There are different types of advertisement techniques which are used and that assists to make effective cultural environment (Demil, Lecocq and Zott, 2015). Present study is based on a case scenario in which Hank Marvin and Patty Smith work together to establish coffee shop industry. Thus, they are analysing market to assess requirement for enhancing their business. To focus on this report, it covers research of country in which both person can expand their operations. Furthermore, it includes marketing mix, which relates to the expansion of coffee shop. Moreover, it also describes financial information, which evaluates profitability and liquidity having impact on decisions available with them.

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1. Justification for choosing Germany for expansion

From the provided scenario, it shows that Marvin and Smith's coffee shop has been expanding its business in London and around areas within one year only. This shows that the business is going really well and therefore they are making plans to expand its business in other nation as the financial condition of shop is good. It is recommended that quoted coffee shop should expand its business in Germany. There are many reasons for which Germany is advised to cited coffee shop. The market of this shop has witnessed an increase in turnover of about 2.2 percent yearly during the past five years (Liberles, 2012). It is anticipated the yearly average outlet growth for coffee shops will be to level at 1.1 percent. Along with this fact, the German consumers are becoming increasingly ambulant and they want convenient places to get a good coffee. This is an excellent opportunity for quoted coffee shop to expand its business in those areas, which have high footfall or in traffic hubs. There is an increasing trend, which is moving from traditional filtered coffee oriented culture to more diverse and experience oriented. Chained as well as independent outlets along with bars, cafes, smoothie bars, specialist coffee bars are anticipating to give their contribution in the growth of the sector as Germans desire to see cafes and bar as a catchy, affordable price methods of eating and drinking when they are outside of home (Grund and Breeksema, 2013.).

Apart from these individual factors of Germany, which will be a great opportunity for cited organisation, there are certain trends and challenges also which the cited firm will have to face while planning its expansion. It has to do business with adequate cross-cultural awareness. If this is not taken into account, then it might be at risk. The culture and values of German business organisation are in the roots of their economic success, which can be a reason for cross-cultural confusion or misunderstanding for the chosen coffee shop to do business in Germany. Along with this, the German business people prefer to interact in a direct way. They give their viewpoints and opinion in straightforward nature and expect same behaviour from the other people (Kolk, 2013). They do not like humour and prefers not to be used in business. Therefore, cited firm has to be aware that it would be inappropriate and unprofessional to use humour in business deals. They have to be aware regarding this cross-cultural difference otherwise it will be very blunt and undiplomatic. Also, registration of property in Germany is negatively affected by bureaucrats. The cited firm has to get an extract from Land registry and notarise transfer agreement before getting release of pre-emption rights from municipality and pay transfer tax. This may take about 40 days in completing it (Morris, 2013).

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2. Marketing mix

To expand Marvin and Smith's coffee shop in Germany, it can take use of standard marketing mix or adopt the marketing-mix, which is suitable in Germany to carry out the business activities (Lilien and Grewal, 2012). The cited coffee shop can apply the below mentioned marketing-mix, which will be facilitating the expansion plans in Germany:

  • Product: The basic concept of marketing says that the firm will be able to sell products more if it has an aim of fulfilling the wants and desires of its target market. But, if quoted firm expands its business in Germany then, it has to take into account several factors such as the cultural background of customers, their religious beliefs, purchasing habits and personal disposable income level. Under some situation, chosen coffee shop has to adapt its marketing mix strategies and products for meeting the needs and wants of locals that cannot be changed (Noori, 2015). It has to make modification in its offerings according to the preferences and tastes of local people. If the mentioned coffee shop takes use of strategies of standard products along with customised products, it will work very well for its expansion plans in Germany.
  • Promotion:For the purpose of expansion, cited organisation can either alter or standardise its strategies for promotion. The messages of advertisement in Germany should be altered due to language, political environment, cultural and attitude and religious beliefs (Jain, 2013). For instance, any promotional strategy which the cited firm has been adopting in London may not prove good for Germany. There is a religion followed in Germany called Protestant. If the cited organisation wants to target them, then it has to know their religious practices and then design promotional strategies, which should not hurt them. In UK, mostly Christianity is followed. If it adopts promotional strategies, which it has been applying to attract Christian customers for Germany also, then it may be very bad for its brand image and goodwill.
  • Pricing:The most difficult task is pricing when expansion has to be done. The coffee shop owners Hank and Patty has to consider the traditional prices consideration like fixed cost, variable cost, competition and target groups (VUKASOVIČ, 2012). In addition to this, it has also has to consider the transportation cost, tariffs or import duties in Germany, exchange rate fluctuations, personal disposal income of target customers, currency in which payments has to be done and the economical condition on Germany and its impact on pricing policies.
  • Place:This component of marketing-mix is distribution of products or services to customer's at the correct place with the correct timing. The distribution in United Kingdom market consists of products moving a chain from manufactures to wholesalers and then to retailers from which customer purchases (Lee and et. al., 2014). But this may be different in context of Germany. The cited firm can chose distribution channel, which is most suitable for their products and favoured degree of engagement in German market. The common distribution channels, which is adopted in Germany are wholesale and retail enterprises, trading houses, merchants, subsidiaries, distributors, commercial agents etc.

3.Implications of need for Marvin and Smith to cover geographical area

Germany is West Central European nation, which covers wide areas all over the world. Marvin and Smith can start their coffee shop in these areas. In this aspect, there are various elements, which create impact on their operations and outcomes (Demil, Lecocq and Zott, 2015). They are as follows:

  • Information system: Information system of Germany is very effective so the new coffee shop has advantages to target various people at workplace. This is because, they established their operations through delivering qualitative products and services to various people. In this aspect, technological advancement assists to target various people within the business environment in less time. In addition to this, the new coffee shop can also deliver products and services at less time so that the company can achieve their targets and goals in an effective way (Ellguth, Kohaut and Möller, 2014). Further, information system encourages employee to collect relevant information regarding customer and their taste preferences. Thus, Marvin and Smith can easily capture whole market through which they can establish profitability at workplace. Information also assists to find taste and preferences of people at workplace through they can easily attract various customer (Demil, Lecocq and Zott, 2015). In this aspect, all data can be ascertain that determines profitability and positive outcomes. Apart from this, information also gives positive results to make loyalty towards the enterprise. This is because, new coffee shop need to be managed at workplace for ascertain positive results and performances. In this aspect, customer comes again and again towards the company and make loyalty for generate positive results (Frizzo-Barker, Chow-White and Ha, 2016).
  • Gaining competitive advantages: For gaining competitive advantages, every business has responsibility to set their targets and outcomes through concentrate on competitive strategy. In this way, they have responsibility to use those resources which are helpful in providing products and services at low price (Ellguth, Kohaut and Möller, 2014). Marvin and Smith can target various customer with the lowest price. It can also create adverse impact on products' quality and standards. This is because, customer understand that products and produce with law quality raw material so that it is essential to demonstrate profitability at workplace with considering competitive advantages. In addition to this, to start new coffee shop various social sites can be used though promotion activities can be made at workplace. In this aspect, it is important to analyse whole market which would be develops through ascertain profitability and outcomes (Christian and Lüdenbach, 2013). With the help of competitive advantages, the chosen firm can easily develop whole market to make their products ahead from competitors. With establishing products in Germany, Marvin and Smith can easily connect with new country development which assist to gain competitive advantages through enhance products quality and performances. Moreover, product differentiation can also assist to gain competitive advantages at workplace. Consumer are most important element who consumer products and services (Urbina, 2014). Thus, Marvin and Smith need to produce their products through concentrate on each person requirement within the market.

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4.With the help of financial information, determines profitability and liquidity which create impact on decisions

In order to assess impact of financial performances, following elements can be used at workplace:

Current ratio

Current ratio can be measured through assessing liquidity position of the business (Jensen, 2015). I this aspect, following formula can be used:

Current assets/current liability

35400/6,200 = 5.7

From the following analysis it could be ascertain that the business is very good position and they have many resources through company will expand their operations easily. Thus, they have to concentrate on various activities which need to be manage for development (Demil, Lecocq and Zott, 2015). In this aspect, Marvin and Smith need to concentrate on their investment and fund which is requires perform functions and operations at workplace. Hence, the company will achieve their targets.

Acid test ratio

These ratios are demonstrates with refer quick ratio which convert liquid very soon from the assets. Purpose of this ratio is measure through company can make their short term goals and obligations (Foorthuis and Brinkkemper, 2015). It assists to convert material into liquid assets those which can be turned as soon as possible. The following formula can be used to demonstrate acid ratio:

Acid test ratio = (Cash+ short term investment + account receivable)/ current liability

27,400/6,200 = 4.41

Cash and cash equivalents refers as such things which demonstrate cash in hand, accounts checking and saving account. Short term investment are determines which can be mature within 90 days or three months (Chwastyk and Kołosowski, 2014). Thus, Marvin and Smith can easily establish their operations through targeting various people at workplace. In this aspect, they can measure performances which assist to make profits easily.

Profitability ratio

Profitability ratio assist to measure profitability that determines a way for company performances. It is very simple capacity which assist to demonstrate actual profits of the firm (Kolk, 2013). In this aspect, for Marvin and Smith coffee shop all cost would be deducted that assist to compare performance with other company. In this aspect following formula can be used:

Profits/ total capital*100

20800/100,000*100 = 20.8

From the assessment of profitability ratio, it has been analysed that the company has high profits through they can attract various customer at workplace. It will assist to measure business performance and outcomes according to market demand. Thus, Marvin and Smith can easily establish their operations for making high profits and revenue. As results, it assesses that there are various chances for them to establish their operations in Germany. It creates positive impact on customer and market of the company which demonstrate positive results at workplace (Berkowitz, 2016).

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5.Summary about overall viability

As per the present report, it has been analysed that Marvin and Smith can establish their operations in Germany. This is because, they can earn more money with spending at high level. Information system assist to make profitability at workplace through cover whole areas of the business (Lloyd, 2014). Information assist to manage resources and profitability at workplace easily. In this aspect, expansion can be managed with ascertain business results and outcomes. There are various activities which are performed by them to attract customer towards the company. With the help of market information, according to customer requirement products and services are produce. It will be helpful to ascertain profitability and manage business resources (Frizzo-Barker, Chow-White and Ha, 2016). It also makes effective supply chain that can be helpful to maintain sustainable environment for each consumer.

Gaining competitive advantage is also helpful to make effective results at workplace. In this way, the cited firm can easily maintain their operations which assist to manage functions and operations (Boschetti and Massaron, 2015). Financial information of the company ascertain profitability and positive results that need to be managed at workplace through determining effective results. In addition to this, liquidity ratio demonstrate liquid position of company which can be managed through developing ideas and opinion towards operations. With the help of competitive advantages, Marvin and Smith can easily determine their operations and outcomes at workplace. It can be lead to find profitability and good impact of the business on their revenue (Mendes, McLean and Wynter, 2013). In addition to this, decisions could be managed that are helpful to assess financial information and outcomes. It can be done through making strategies at workplace.

Conclusion

From the above report it has been articulated that Marvin and Smith has great advantages to establish their coffee shop within Germany. In this aspect, they conducted research program which manage results and performance of the company in effective manner. This is because, it identifies performances of the enterprise according to customer requirement. There are various elements that establish to operate functions and outcomes in effective way. Furthermore, with the implication of Marvin and Smith strategies it has been identified that profitability and liquidity position of the company need to be managed at workplace. Moreover, it demonstrates impact of financial performances on the business operations of coffee shop.

References

Books and Journals

  • Berkowitz, E. N., 2016. Essentials of health care marketing. Jones & Bartlett Publishers.
  • Boschetti, A. and Massaron, L., 2015. Python data science essentials.Packt Publishing Ltd.
  • Christian, D. and Lüdenbach, N., 2013. IFRS essentials.John Wiley & Sons.
  • Chwastyk, P. and Kołosowski, M., 2014. Estimating the cost of the new product in development process. Procedia Engineering. 69. pp.351-360.
  • Demil, B., Lecocq, X. and Zott, C., 2015. Introduction to the SEJ special issue on business models: business models within the domain of strategic entrepreneurship. Strategic Entrepreneurship Journal. 9(1). pp.1-11.
  • Ellguth, P., Kohaut, S. and Möller, I., 2014. The IAB Establishment Panel—methodological essentials and data quality. Journal for Labour Market Research. 47(1-2). pp.27-41.
  • Foorthuis, R. and Brinkkemper, S., 2015. Best practices for business and systems analysis in projects conforming to enterprise architecture. Enterprise Modelling and Information Systems Architectures. 3(1). pp.36-47.
  • Frizzo-Barker, J., Chow-White, P. A. and Ha, D., 2016. An empirical study of the rise of big data in business scholarship. International Journal of Information Management. 36(3). pp.403-413.
  • Grund, J.P. and Breeksema, J., 2013. Coffee Shops and Compromise.
  • Jain, M.K., 2013. An analysis of marketing mix: 7Ps or more. Asian Journal of Multidisciplinary Studies,1(4).
  • Jensen, E., 2015. Human Resources Governance and Compliance: Essentials of Compliance. In Handbook of Human Resources Management(pp. 1-23). Springer Berlin Heidelberg.
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