Expanding Marvin and Smith’s coffee shop in Germany

The European Union is the go-to location to grow your business. In the documentation, Marvin and Smith would have an edge to significantly grow their business in Germany. The EU is contemplated as the world’s largest market for the consumers. Germany is strategically located in the EU, and is believed to have the edge to constitute a large market value for the end users. It would be a very beneficial to venture into the market since Germany has a huge purchasing power. Germany is also known to be leading the world In terms of coffee consumption. Marvin and smith are into the coffee business, and run a coffee shop, so their expansion into the large German consumer market. The expansion will come with a number of good tidings such as the increase of market share by Marvin and Smith, increase in revenue and they will meet the global talent scarcity.

The consumption of coffee in Germany has increased steadily over the years. Compared to the previous years there was a decline in the consumption of coffee, the number has since increased. Most adults in Germany drink coffee daily as they start their day. In addition, 86 percent of the adults consume coffee regularly in their daily undertakings. In other studies, it has been shown that about 150 litres of coffee is being consumed by individual in Germany every year. This number is enormous as compared to most regions of the European Union and around the world at large. From the study, it is seen that coffee is the most consumed drink in Germany, much higher than beer and other drinks. Germany is the second biggest importer of coffee and coffee products after Italy. However, Germany is the largest market consumer of coffee.

Germany has got a rich tradition when it comes to the coffee drinking lifestyle. Germany has a say in the improvement of coffee standards around the world. The effect is changing the traditional methods of coffee consumption around the world, consequently, adding a touch of class on how coffee is to be taken. Germans have embraced coffee drinking lifestyle with the emergence of Coffee Tasting Club where fans of drip coffee converge and share their ideas of how they love their coffee. Marvin and Smith will, therefore, find ready market in Germany if they choose to deal in a variety of coffee products in their shop as the market is ready and wanting a little bit more coffee doses.

Ethical concerns are values that form a foundation for any successful business entity. It is expected that ethics in business vary from place to place, however, in Germany, there are promising concerns when it comes to business ethics. The differences in ethics is as a result of societal cultural practices. Germans take the business dress code seriously, they believe that in business appearance and presentation is everything. The conservative nature of staff will attract in more clients and retain the existing ones. Martin and Smith coffee shop should embrace this in their daily undertakings. There are legislators in Germany that ensures fair competition exists in the vast business world. Business enterprises are not allowed to promote their products disadvantaging their competitors. Moreover, Germans themselves in the business world have love for their competitors as they interact and compete in different business ventures. Marvin and Smith Coffee shop stand a chance to prosper in such good environmental conditions.

In Germany, structural considerations are at their best. Germans are considered to be masters in planning. There is thorough thought of feeder roads to bring in imported supplies. Consequently, these roads are also used in the delivery of coffee to the clients. Marvin and Smith will find it cheap to supply their coffee to the clients even in the remotes locations in Germany. The expansion of their shop in other locations within Germany is also favored.

Marketing Mix

Marketing decision for every business entity is what ensures the business remains afloat. The decision of every business should be based on the type of product offered, the price of the product, how the product is to be promoted and the place of operation is key. Marvin and Smith should employ these factors to successfully expand into Germany. These marketing tools should be properly employed so that Marvin and Smith coffee shop will meet the marketing objectives in Germany. The marketing mix elements are interrelated, therefore, a decision made on one tool will have a bearing on the rest of the tools. The result may have a positive bearing on the business or negative effect. The decision made will have an effect to the business.

Product- this is what the business offers to the prospective clients. Marvin and Smith deal with coffee products. For the coffee to sell, Smith and Marvin have to put proper consideration into the variety of coffee that they will have to provide. Germans are a big favorites in the drip type of coffee. This is seen as they have Tasting Clubs for this kind of coffee. The clubs register a high number of people partaking the product. Smith and Marvin venturing into the drip coffee business will prove to be beneficial to their business. However, they should also offer a variety of coffee products as the Germans also like the different kinds. For effective sale of the coffee shop, branding of the products offered should be taken seriously. This can be done with the help of packaging and labeling of the coffee products being sold. There are times where discounted prices will be needed so as to keep the customers in the shop. Effective management of the coffee produced by Marvin and Smith will ensure the retention of existing customers and also the attraction of even more customers.

Price- what a customer pays for a product should not be overlooked. This will be key in customer retention. Marvin and Smith should range their prices on the existing market prices. Lowering of the coffee price while making some profits will be advantageous for the business. Price discounts will send a good response to the customers as they will have value for their money. The payment modes for the coffee should also be made simple and considerable. These will include credit cards or cash among other modes.

Place- customers should have adequate access to the business. The coffee shop should be strategically located such that many customers can reach it to quench their thirst. Marvin and Smith coffee shop should have a wide market coverage. The distribution of the coffee products should be far and wide reaching the extreme location. However, this will bring into question the transportation and warehouse needs of the coffee shop. But this will be worth for the business expansion.

Promotion- the coffee shop will only be known when sufficient advertisements are done. Advertising can be done through newspaper publications, direct marketing of the coffee products among other advertising procedures. The advertising strategy should be such that the communication is straight to the point. Ambiguity of the product offered should be minimized to the lowest level possible. The mode of message delivery to the general public should also be critically figured out.

Marketing mix form the basis of a successful coffee shop expansion in Germany by Marvin and Smith.

Implications of expansion

Business expansion into foreign lands comes with exceptional risks. Expansion will have implication on the running of the business.

Information Systems

Information systems improve the performance of a business organization. Information systems does so by arranging the business organization data and distribution of data required in different parts of the organization. The organization of data is done efficiently and the operations of the business is made fast and up to date. Marvin and Smith coffee shop may employ the use of information systems to get necessary data about the frequent customers, the number of workforce, the net returns of the business in a specific financial year among other organizations data.

Marvin and Smith expansion to Germany will have a bearing on the information systems. The server to the information stored is mainly located at the current business organization. During business expansion, the server consequently has to be expanded so as to cater for the needs of the other branch of the business. This will bring along expansion costs. Moreover, the delivery of information may be slow as some time has to be taken so that information can be fed to the other location that is expanded. In some instances, there is loss of critical information that is used in the running of the business. The delivery on information may also be compromised. As the distance of information delivery is increased, so is the risk of being hacked by negative business competitors. Marvin and Smith coffee shop as a business organization has to have business secrets that make them to stay afloat. The critical information has to be secured as it is being passed from one location and fed to another. However, the distance may make this critical information to be leaked and consequently resulting to the failure if Marvin and Smith coffee shop.

Organization Culture

The culture of a business organization is an essential building block that ensures the success of the organization. The business culture is what brings the difference between the business entities. In the vast business competition, it is possible for someone to emulate the business strategy and incorporate it into their business. However, business culture cannot be copied by anyone. This is the strength of a particular business organization. The business culture is the way an organization carries themselves in the business world. It is the principles and behavior of the staff in an organization towards the clients and the general business world. The series of rituals done in the specific organization is what makes the organization stand out in the competitive business environment.

Germans adopt a unique business organization culture that makes new entry into the market distressful. Government here impose regulations that are strict and powerful. These rules are put in place to ensure that business organizations don’t exploit the clients they deal with. In Germany, business organization tend to be strict in their time, they are not so much outgoing, arrogant, authoritative, bureaucratic, petty, self-assured, humorless among other favorable and unfavorable qualities. Proper examination of this culture is what forms a basis of the success or failure of German business organizations.

Marvin and Smith before venturing into this business environment have to bring these elements into perspective. They should adopt the favorable business cultures, consequently, doing away with unfavorable ones. Marvin and Smith coffee shop will do well if they adopt an organizational culture that will be loved by German clients. It is seen that business organization culture in Germany don’t adopt humor when doing business. Marvin and Smith should moderately embrace this technique to attract in more clients in their business. Serving clients with a hint of humor will improve the interpersonal skills between the staff and the clients.

Personnel and Managing Staff

Expansion of a business implies the hiring of new staff to take care of the new business organization. An all-inclusive staff management structure will determine how the business will run. Every personnel role will be spelled out well. Also, there will be smooth transition of power among the different levels of management. However, the type of structure will solely depend upon the objectives of individual business organizations.

The new business organization is starting from scratch and so the process of setting up that includes the hiring of new staff ensues. A vacant position is determined by the business management. In this case, all the positions are vacant as this is a new business that was formerly nonexistent. From each of the vacant position, there is the development of the job description. This is important as the very skilled individual will have the privilege of occupying this position. The roles and responsibility of the individual will be clearly stipulated. A recruitment plan is developed by the organizational unit. This is the strategy for hiring the best-qualified candidate. It cuts across all the factors that includes the age and gender of the employees. The advertisement timeline is also put in place as a means of being time conscious.

Marvin and Smith need to put into place measures that ensure a good team of employees is obtained to run the new business organization. All the available positions for the coffee shop need to be determined. The determination is critical to avoid work redundancy and the lack of personnel to carry out a particular duty. The coffee shop need to determine the various positions that include cleaners, accountants, waiters/ waitresses among other positions. The age limit of the employees need to be considered to have people who are able to carry out the required coffee tasks. Marvin and Smith coffee shop need to be gender conscious to ensure a balanced ratio of the male to female. This is important as there are clients who require to be served by either gender. Smith and Marvin coffee shop should come up with a proper managing staff to oversee the new employees. The managing staff should be up and running to maintain the new coffee shop brand and develop its name in the vast Germany economy.

Profitability and Liquidity

Gross profit- This is the gain by Marvin and Smith’s business organization after the deduction of the cost associated with the obtaining and selling the coffee products. In essence, this is the total revenue less the cost of goods sold. Marvin and Smith Gross profit is as follows:

Sales-Cost of goods

360,000-152,000= 208,000

Net profit- Is the gain made by a business organization after all the expenses are deducted. For example tax. This is deducted from the net revenue. Marvin and Smith Net profit is as follows:

Gross Profit-Expenses

208,000-181,200= 26,800

From the above calculations, Marvin and Smith coffee shops are doing good in terms of profitability.

Liquidity spells out the ability of a business organization to be able to honor its short-term debt obligations. The following is the calculation of Marvin and Smith current ratio:

Current Assets

Current Liabilities

113,000/113,000= 1

Current ratio being 1 indicates the coffee shop is neither becoming insolvent or increasing in value. The coffee shop is currently in a stagnating condition

The acid test ratio of Smith and Marvin coffee shop is as follows:

(Cash+Accounts Received+Short term investments)

Current Liabilities

200,000/113,000= 1.8

The acid test ratio is greater than 1 meaning Smith and Marvin coffee shops have liquid assets and are able to pay their current liabilities.

Conclusion

Competition is present in any business environment. This is what differentiates the success of one business from the other. The question here is why should clients choose your business and forego other businesses. Marvin and Smith coffee shop should consider this and develop ways of gaining competitive advantages over the other players in the market where they seek to expand into. For instance, the positioning of the coffee shop will be key. The shop should come out as the specialist in coffee deliverance. Instead of trying to reinvent new coffee services, the Marvin and Smith coffee shop should amplify and make better the existing ways of coffee deliverance. Gaining a better competitive advantage will make the coffee shop soar into event greater heights in the market.

References

Allen, R. (1999).Financial crises and recession in the global economy. Cheltenham, UK: Edward Elgar.

Chamberlain, T. (2008). Liquidity, Profitability and Business Investment.International Advances in Economic Research, 14(3), pp.350-351.

Dittmar, A., Mahrt-Smith, J. and Servaes, H. (2002).Corporate liquidity. London: Centre for Economic Policy Research.

Florczak, C. (2002).Maximizing profitability with safety culture development. Amsterdam: Butterworth-Heinemann.

Kotler, P. (1964). Marketing Mix Decisions for New Products.Journal of Marketing Research, 1(1), p.43.