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Order 453561 Individual Case Study Assignment Business
Order 453561 Individual Case Study Assignment Business
Introduction
Expanding a business in another country requires thorough market research and a mix of
analysis from the existing financial reports. Businesses dealing with perishable and consumable
products face a lot competition from their competitors and this requires proper management to
ensure dominance in the market. Establishing a new and unique product in a different country is
a daunting task however, with capital and favorable prevailing environment the business can
pick.
Germany is the best country to set up the coffee shops. This country is among the best in
global tourism destination in European Union countries. It also has a deep coffee caf culture and
the 3rd largest market for coffee after USA and Brazil (Bekker 2007, p.144). In Germany coffee
is highly consumed than water and alcohol. This is an indicator of a great market for the coffee
caf in the country. Most of the people with a higher crave for the coffee are the young coffee
drinkers. Its also becoming a matter of lifestyle in Germany as most people consider the coffee
machine as a status symbol. The rate of coffee consumptions is still increasing and to the
advantage of the caf, most of the drinkers are the young people who prefer exploring different
Germany is one of the countries with fair-trade adoptions with COTECA, BioFach and
Anuga trade-fairs located in Germany (ECKES 2011, n.p). By partnering with this three fair-
trades the fair-trade supplier in Uganda can have better negotiable terms in Germany to continue
enabling the farmers in Uganda to earn an independent income and to run their own farms. This
would ensure that the coffee beans supplied still have a very high quality and a unique and
BUSINESS CASE STUDY 2
desirable taste. Germany is first world country values equity and the labor rights of laborers,
Germany is at the heart of the European Union surrounded by Poland, Ukraine, France,
Italy and UK. The layout of the country is at a very close proximity to its neighboring countries
(OCSE 1999, p.79). The possibility of most tourists in the mentioned countries to pass through
Germany as they move on to the other countries is very high. Germany will therefore serve as the
meeting point for the visitors (BEKKER 2008, p.115). Germany is a very developed country
with a wide road and high speed rail network. It also has very modernized airports with extensive
landing spaces and high security personnel making it an admirable destination from the
services/products
The coffee supplies through a fair trade to Germany can be easily delivered without delay
since there are direct Cargo freights from Entebbe to Germany. Germany has many and easily
accessible locations where the customers can locate by use of GIs location technologies.
Therefore, customer demands and preferences can be met at convenience any time. The only
difference between UK and Germany under this is language and location, otherwise the
technology if favorably fair and the cafe shop would boom in this area with through a continuous
Marketing Mix
Product
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Marvin & Smiths Coffee Shops is mainly concerned with the sale of coffee with the
East Africa flavor in it. The product has a very unique mix of ingredients from the finest coffee
beans from Gumutindo Coffee a fair trade supplier based in Uganda. The consumers can opt to
take the coffee while relaxing but is also available in take away. The most unique thing about the
Marvin & Smiths tea is the taste. The supplier supplies the best and finest beans of coffee from
the region free from chemicals. It also has a very sweet aroma fringing to it the German lifestyle.
The coffee is served based on the customers preference, white coffee, black coffee, ice cold or
hot.
Price
In order to only incur profits and have better marketing strategies the coffee will be sold
at a relatively lower price in Germany than in United Kingdom. However to counter for the
expenses the price in Britain will be slightly raised. This will ensure that the Marvin & Smiths
Coffee Shops survive in the initial stages. For example if lets say, a cup of coffee was selling
at 3 euros in United Kingdom the price can be lowered to 2.7 in Germany and raised to 3.2 UK.
By penetrating the German market with a lower price but a very high quality product, there is a
high possibility of enticing customers and regulate the prices slowly as the business grows
(Tankersley 1990, p.145). However, the price will not be any lower than the production cost
price. From the research, the customers expected price and the prevailing price of the
Place
In Germany most tourists visit Hamburg and Munich (Bekker 2008, p.115). Setting up
the coffee shops in these two cities particularly, in locations near football pitches and tourist
locations where there is a high population. Also, most people from Hamburg have a caf culture
BUSINESS CASE STUDY 4
and have adopted a coffee consuming lifestyle. With a new quality product in the market, the
young people from the locations will be enticed to try and in the process market the product.
These areas have very distinctive road networks and delivery of the supplies will not be shielded
even under harsh weather conditions. In addition, security in these areas is very high and
Promotion
Businesses that do not invest on promotion make very little profits or losses and end up
closing. Partnering in major seminar, conference and local events and online advertisements
would be the ultimate promotion strategy to put the business on the map in the Germany market.
Part of the business culture is to offer themed evenings such as board game night and chat with
Nanna. To entice more customers, the themed nights would involve a discount for the first
hundred customers (Bowman & Gatignon 2010, p.132). With a discount and relatively low price,
the coffee shop would pick very fast and the profit margins would continue to increase.
Implications of the need for Hank and Patty to cover a wider geographical area in terms
of a different country
The need to expand the business to another country implies that the two owners of the
coffee caf will have to expand their service delivery, order more supplies, and require more
staff. This will therefore, have several impacts on Management structure and gain competitive
advantage.
Every business has a certain management structure that makes it outstanding from the
others. The Marvin & Smiths Coffee Shops is now expanding to overseas which means the
management will have to change by employing new staff or promoting the old staff and
BUSINESS CASE STUDY 5
recruiting others. Previously the business was managed by the owners who assumed direct
responsibilities in all the operations. With the expansion the management will require to have a
new plan to ensure that the coffee shop does not fail in the short run and long run. Still, there
requires an addition of employees with a new role on human resource, accountants, and a
marketing IT consultant. Establishing a new product in an existing market with other competitive
cafes is a big move and will require someone with better management skills and experience to
come up with better plans. Using the PESTEL and SWOT analysis the Coffee shops will have to
change everything so as to fit in with the current times and the technology.
Most managers are only profit sensitive and their main objectives ids to make
supernormal profits regardless of the staffs welfare and customers satisfaction. Dealing with
coffee cafes needs a management that will balance between making normal profits, equity and
care to the welfare to the staffs and above all quality services to the customers. The first agenda
is to brand the name of the caf and make it global. This will include an operational customer
care service for easy communication in case of delivery service. The marketing and purchasing
can also be done online and the consumables delivered to consumers as opposed to only
operating around the shops. Marvin and Smiths coffee will therefore assume the role of the
senior CEOs and employ two other managers one in UK and the other one in Germany. One
addition role of the managers will be to manage the risks and ensure there is a good balance from
the cost of production and all other expenses to the revenues accrued by the shops.
Competitive Advantage
Marvin and Smiths coffee caf is an already existing name in UK with a good rating on
customer satisfaction. Since the cafes operates on a free entry and exit market ,it will be in a
good chance to enjoy sales from the unique style of service delivery and lower cost since the
BUSINESS CASE STUDY 6
customers determine the price of the product as well. The location at places close to the iconic
stadiums that host games on weekly bases and tourist destination cities will ensure that it serves a
great number of customers. Reducing in prices means that the business will increase the volume
of sales and make profits by numbers. The unique Ugandan and East African taste of coffee will
also see most customers shift their preference to the Marvin and Smiths. With recruitment of
professional personnels in IT the marketing department and online sales will add up to the
One of the objectives for the Marvin and Smiths coffee caf is to keep the customers
happy all the time. Not so many businesses are focused at delivering great services to their
customers. With the business ethics and strong core values and understanding that the customers
is always right, the coffee shop will entice so many customers and in the process make a name to
itself. Free Wi-Fi will be a big deal especially to the young people. People will find it better to
take coffee from a caf that offers other complimentary services. University students for instance
might find it better to relax within the confines of the caf area and do their research, watch
online videos or do online jobs while drinking coffee. This will not only popularize the caf but
will also add to their marginal profits from increased sales. People like to move with the times
and the unique themed evenings will see most people flocking to the caf. All this are factors that
will ensure the business competes favorably with the existing coffee shops.
Evaluate how their profitability and liquidity may impact on decisions available to
them
Gross Profit
BUSINESS CASE STUDY 7
The business has no formal loans or any external dent. In addition, it made gross profits
with big margins. Gross profit is the total revenues the business made without any deductions on
all the expenditures. In the year ending 2016, the Marvin and Smiths coffee caf had accrued a
gross profit of 208,000 euros. This is an indicator of a well-functioning coffee shop and the
financial feasibility based on the profit is a good signal that the two can invest the money in
Net profit is the amount of revenue a business makes after deducting all the expenses and
depreciation to the machines or an obsolete technology. The caf made a Net profit of 26,000
euros as at 31st December 2016. This profit could buy two coffee machines and still remain with
some more money. It indicates that the business had capital to expand.
Return on capital refers to the financial ratio which is used to measure an organizations
efficiency and profitability with which its capital is employed. Mathematically its calculated as
ROCE = capital invested before Interest and Tax (EBIT) / Capital Employed (LOWE 1816, p.65)
Every business requires a liquidity ratio which is used to indicate the business ability to meet its
obligations when they become due using the current assets. It uses the solvency ratios namely
current ratio and the acid test or quick ratio (LOWE 1816, p.70). The current ratio compares
current assets to current liabilities through division while the quick ratio calculated by dividing
your current assets by your current liabilities while the latter is working capital ratio and does not
take into account of the inventory. It is used as an indicator of whether a firm has sufficient
short-term assets to cover its immediate liabilities. Marvin and Smiths coffee caf is at a better
BUSINESS CASE STUDY 8
chance of expanding the business using the indicators since them all yield positive financial
reports.
Using the financial reports from dated 31st December 2015 and 31st December 2016
Marvin and Smiths coffee caf has enough capital to expand its business overseas. Through
SWOT and Pestel Analysis the business seems to have favorable terms and with a proper
management its estimated to make more profits. Locating the business in Germany will increase
its competitiveness and make more sales due to the large pool of visitors in the country.
Generally its viable for expansion from the research and analysis on the existing market and
financial status.
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References
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N=180352.
BEKKER, H, 2008, Munich and Bavaria adventure guide. Edison, N.J., Hunter.
http://site.ebrary.com/id/10240603.
ECKES, A. E, 2011, The contemporary global economy: a history since 1980, Malden, Mass.
[u.a.], Wiley-Blackwell.
OCSE, 1999, Urban policy in Germany, Paris, Organisation for economic co-operation and
JONSON, G., & TENGSTROM, E, 2005, Urban transport development: a complex issue.
BOWMAN, D., & GATIGNON, H, 2010, Market response and marketing mix models: trends
Now, http://public.eblib.com/choice/publicfullrecord.aspx?p=3383745.
TANKERSLEY, C. B. (1990). Modifying the market mix: strategies for the mature consumer :
LOWE, J. (1816). A treatise on profits, discounts, and interest: explaining how to compute the
gross amount of any net sum to secure a certain net profit, after a discount has been
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http://galenet.galegroup.com/servlet/MOME?af=RN&ae=U103333771&srchtp=a&ste=1
4.