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Factors that Impacts the Growth of A New Business

816 Downloads1 I Published: 22 Nov ,2019

Introduction

Launching a business refers to a process by which an individual establish or start there business. For opening a new venture a person required to do various things like evaluation and analysis of market (Au and et. al., 2013). Along with this they required to prepare budget according to resources and equipments which are requirements for launching and running a business. Organisation which is selected for this assignment is Marvin and Smith’s coffee shop which is opened in January 2016 at Wandsworth, South London. Founder of respective shop are Hank Marvin and Patty Smith who worked together for many years and then decide to launch there coffee shop. They offer quality and herbal products and they use finest coffee beans. Along with this they decide to offer themed evening such as board game night, chat with Nanna for taking advice and many more. Topics covered in this report are country of European Union in which respective company can expand and marketing mix related to this. Factors which impact respective company while expanding there business and evaluation of company profitability and liquidity which influence decision making.

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Task

1. Identify a county for expansion of business and justify choice

According to given case, there are two person Hank Marvin and Patty Smith who are working at a food and catering industry form long time. Now they are planning to launch their own business in some other country. Where they can get maximum profit and customers bases. Thus, both important peoples of respective company do competitive market analysis and evaluation in order to develop appropriate and effective strategies. They spend almost 12 months for conducting research and market analysis for their coffee shop (Vogel, 2018). Before launching business they determine various factors such as total capital, resources required, target market and audiences, suppliers, competitors and many more.

After conducting research of different different countries and consumer behavior of those countries Hank Marvin and Patty Smith decide to expand their business in France. Mostly peoples or travellers visit this country to travel and visit variousattractive places and monument. This is consider as opportunities for respective company to expand in this location in order to enhance there profit and customers bases. Peoples of France also attracted and like bakes and herbal foods as well as coffee with finest coffee beans. After deciding area Marvin and Smith’s coffee shop decide various other things such as budget, target audiences, location and many more. So it is responsibilities of owners of respective company to select appropriate location which help them in enhancing there selling of products. Such as they can use area near college, tourist visiting place and many more. Along with this they also consider that location where supply of goods are easy. It is essential for respective coffee shop to plan and decide appropriate location, decision, policies which help in enhancing business in effective and appropriate manner (Gupta, Goktan and Gunay, 2014). For this company also decide various activities to enhance there customers bases such as they are using herbal and fresh products, they made coffee with finest coffee beans.

Along with this they are also plan to provide theme evening such as board game night and chat with Nanna for any advice or suggestion. Manager of respective company train and develop there employees so that they operate as well conduct there business in effective manner. Hank Marvin and Patty Smith develop as well as decide products and services according to need and demand of customers of France market. By expanding business operations and function at France market company able to enlarge there customer base, understand new market, increase profitability, market share and many more.

2. Present a tailored marketing mix in relation to the coffee shop expansion plan abroad

While expanding a business in new market, a company has to conduct marketing mix which help them in launching and running business in effective and appropriate manner. In context of Marvin and Smith’s coffee shop when they are expanding business in abroad market that is German they conduct Marketing mix (Heald, 2018). Which help them in expanding business in effective manner, along with this they also able to target appropriate customers for there coffee shop. Explanation of marketing mix in context of Marvin and Smith’s coffee shop is explained below:-

Marketing Mix:-

It refers to the process which is adopted by a company in order to attract customers and promote there company brand as well as products at a marketplace. By which they able to attract more customers base which leads to enhancement in profitability in proper manner (Pinto and Garvey, 2016). It include 4 P's that are Product, price, place and promotion. Process of Marketing mix is essential for a company because it is easy to adopt and adoptable in every situation.

Product: It refers to the item which a company going to sold to there customers. Company develop products according to customers needs and demand so they attract them in effective manner. This will help them in enhancing profit and customers bases in proper manner. In context of Marvin and Smith’s coffee shop for expanding business in German they do market analysis and evaluation which help them in knowing demand and need of customers. Accordingly they are offering products which are herbal and of good quality. Along with this they are providing theme evening such as game night, chat for advice and many more.

Price: It refers to value which a company decide for their product which they are offering to customers. The price of a product is depend upon cost of production, target customers, ability of market which they pay for particular products (Boyd and et. al., 2015). There are various type of marketing pricing strategy which a company can use. Such as in respect of Marvin and Smith’s coffee shop they are adopting premium pricing method for giving value to there offering products which they will serve at France market. It is responsibilities of respective company manager to decide appropriate price for product which is not too high and not low.

Place: It refers to place which a company decide to sell there products and services. While deciding place management of a company must consider some major things like it must be under budget of company. Area must be known and easy to achieve by customers. Along with this it must be easy and profitable for a company to run there business in effective and appropriate manner. In respect of Marvin and Smith’s coffee shop they must decide appropriate place at France which can be easy to achieve by customers. They also decide place from which they easily reach to suppliers, retailers and wholesalers.

Promotion: It refers to strategy and methods which is adopted by a company in order to promote and advertise there products in effective and appropriate manner. A company can adopt various promotional activities such as print media, social media, words of mouth and many more to attract customers (Garg and Garg, 2013). In respect of Marvin and Smith’s coffee shop they are running a coffee cafe which is more likely by young and business peoples. So attract them respective company can use promotional techniques like advertise on social media, print media and e-mail marketing and many more.

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3. What are the implications of the need for company to cover a wider geographical area in terms of a different country

When a company decide to expand there business at different geographical area of different countries they go through various process. During which they go through various issues and changes that influence business of a particular country. When Marvin and Smith’s coffee shop decide to launch there business at France they go through changes in various factors (Halinen, 2012). Such as information system, supply chain, organization culture, management structure, change in competition, staffs and many more. Major two factors which affect business decision making of Marvin and Smith’s coffee shop are explained below:-

Organisation culture:

Organization culture is refers to beliefs, values, assumptions, ways of interaction, objective and many more which a company follow in order to operate there business operations and functions in effective and appropriate manner. While developing organization culture, a company must consider several factors such as size of a company, technology they are using currently and for expansion, working style, ownership, objectives and many others (Freeman, 2012). It is necessary for a company to analysis and evaluate market when they plan to expand business in another country or location. This will help them in developing strategies, plans and rules according to requirements of location.

While expanding business Marvin and Smith’s coffee shop do market evaluation and analysis by which they get aware and understand about culture of France. This will help them in expanding business in effective manner and also they able to develop strategies, plans, policies and regulation accordingly. If respective company not evaluate culture in proper manner they not able to run their company in effective manner. This is so because company not able to develop strategies appropriately which leads to conflict situation. Understanding organisation culture help a company in creating share values and effectiveness in proper manner. By this managers of respective company can do allocation of resources and duties in effective and efficient manner. Organization culture develop by Marvin and Smith’s coffee shop are effective because it is based and consider both employees and customers.

Personnel and managing staff issues:

This factors refers to the issues which is face by personnel and managing staff in an organisation. If an employees face issues or problems it will directly and indirectly affect there performance which leads to reduction in organization productivity as well as profitability. So it is responsibility of a management of an organisation to do analysis of there organisation culture on regular basis and ensure that employees not face any problems and issues.

In respect of Marvin and Smith’s coffee shop they must do regular analysis of market as well as organisation. That help them in developing plans strategies and policies according to situations and conductions (Schilling and et. al., 2012). They develop plans or organization by collaborating both location culture so that every employees feel connected and motivated. They also provide training and develop to employees when they get new things or task which help that employees in conducting task in proper and appropriate manner. It is also responsibility of respective company manager that they communicate to there staffs in effective manner so that there employees feel free in communicating there issues and problems in effective manner (Schilling and et. al., 2012). This will help them in developing strategies, policies rules and regulation according to the issues which staffs are facing. Along with this employees also feel motivated and connected towards the company which leads to their productivity and profitability.

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4. Use financial information, evaluate how their profitability and liquidity may impact on decisions available to them

As per the given case study, it can be seen that Marvin and Smith are going to launch there own coffee cafe with the name of Marvin and Smith’s coffee shop in German market. Before launching business company do analysis of market and there budget in order to know there financial status. Along with this company also able to know there overall performance at marketplace of United Kingdom. At starting company's financial position is determine as financial statements of Marvin and Smith. It would be consider more appropriate outcome in order to generate more proper net profit of 26800 with a time period. In December 2016 respective company develop profit and loss statuette whose result is more crucial. Marvin and Smith coffee shop has to sell products and other items of costing 360000 to get appropriate profit at a market place. In this procedure respective company able to generate more expenses for generating that particular number of products ans other goods.

Profitability ratio: It refers to financial statement which is use to analysis and evaluate ability of a business to generate profit or earning by its revenue, operational cost, balance sheet assets and many more (Battilana and Lee, 2014). By this company can know there financial status at a marketplace in appropriate and effective manner. Profitability ratio of a company increase or decrease according to time and conduction of market as well as company.

Gross Profit =208,000

Net Profit = 26,800

Sale = 360,000

Ratios

Formula

Results

Gross profit Margin

Gross profit / Total Sales *100

208000/360000*100

= 57.8%

Net profit

Net incomes / Total Sales *100

26800/360000*100

=7.4%

By analysing profit and loss statement of Marvin and Smith coffee shop, company able to determine gross profit and net profit. By which they able to determine their financial status (Au and et. al., 2013). After respective company fulfil all expenses then they will reach to a effective and appropriate position which is suitable as a amount of profit.

Liquidity ratio:

Current ratio

Current assets / Current liabilities

35400/6200= 5.7

Liquid ratio

Liquid assets / Current liabilities

35400-8000/6200=4.4

From the above given ratio of Marvin and Smith coffee shop it can be analysis that liquidity position of company is effective. By which they can enhance there business and offering at marketplace.

5. Overall summary regarding viability in international expansion

According to this report there are two peoples Hank Marvin and Patty Smith who are working together at a food and catering industry. Now they are planning to launch or open there coffee shop with name of Marvin and Smith coffee shop. For which these two peoples are developing business plan to identify appropriate country for expansion. For this they conduct analysis and evaluation of various countries countries and customers behaviour (Vogel, 2018). After analysing respective company decide to launch there business at market of France. Then accordingly they make plans and strategies to launch and run business in effective manner at respective country market. For this they also conduct analysis and evaluation of financial statement. Before expanding business in another country company analysis market situation. Company also develop strategies to maintain effective organisation culture, along with this company also train and develop there employees so that they conduct task in effective manner.

Conclusion

From the above discussed point it can be conclude and analysis that for expanding business company has to do various activities such as market evaluation, study of consumers behaviour and many more. By this company able to develop strategies and plans in effective manner in order to conduct business operations in appropriate manner. While expanding business company can also conduct evaluation by using marketing mix. By this they able to identify there target customers and market in proper and effective manner. For expanding business in effective manner company also do analysis of financial statements and then develop budget accordingly.

References

Books and journals

  • Au, K. and et. al., 2013. Incubating the next generation to venture: The case of a family business in Hong Kong.Asia Pacific Journal of Management.30(3). pp.749-767.
  • Vogel, S.K., 2018.Freer markets, more rules: Regulatory reform in advanced industrial countries. Cornell University Press.
  • Gupta, V.K., Goktan, A.B. and Gunay, G., 2014. Gender differences in evaluation of new business opportunity: A stereotype threat perspective.Journal of Business Venturing.29(2). pp.273-288.
  • Heald, M., 2018.The social responsibilities of business: Company and community, 1900-1960. Routledge.
  • Pinto, C.A. and Garvey, P.R., 2016.Advanced risk analysis in engineering enterprise systems. CRC Press.
  • Boyd, B. and et. al., 2015. Knowledge transfer in family business successions: Implications of knowledge types and transaction atmospheres.Journal of Family Business Management.5(1). pp.17-37.
  • Garg, P. and Garg, A., 2013. An empirical study on critical failure factors for enterprise resource planning implementation in Indian retail sector.Business Process Management Journal.19(3). pp.496-514.
  • Halinen, A., 2012.Relationship marketing in professional services: a study of agency-client dynamics in the advertising sector. Routledge.
  • Freeman, M., 2012. To adopt or not to adopt innovation: A case study of team-based learning.The international journal of Management Education.10(3). pp.155-168.
  • Schilling, A. and et. al., 2012. Understanding professionals' reactions to strategic change: the role of threatened professional identities.The Service Industries Journal.32(8). pp.1229-1245.
  • Schilling, A. and et. al., 2012. Understanding professionals' reactions to strategic change: the role of threatened professional identities.The Service Industries Journal.32(8). pp.1229-1245.
  • Battilana, J. and Lee, M., 2014. Advancing research on hybrid organizing–Insights from the study of social enterprises.The Academy of Management Annals.8(1). pp.397-441.
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