Marvin and Smith’s Business in Holland

Introduction

Marvin and Smith’s business is a promising investment with high prospects for growth and expansion into international markets. The expansion must, however, be informed by research and evaluating the financial potential of the business. In this work, the focus is on conducting a case study research analysis to examine whether Marvin and Smith’s business expansion plan is viable including other factors they need to focus on the business expansion path

Country of choice Holland

When considering putting up the coffee shop there are important factors that one need to put into consideration.  Expansion of business into the international market is quite a challenging exercise one that requires a lot of planning. First countries in Europe have different sets of values, business laws, cultures, climate, and income levels among several other dynamics. All these factors are very important when considering setting up a business since they have a direct influence on the business. A look at country political, economic, cultural and legal aspects help one to understand whether it is friendly to the nature of business at hand or otherwise.  Compared to other countries in Europe Holland is a strategic country that is worth consideration for setting up a coffee shop (Eshuis and Harmsen 2013). Customers are key since for the Marvin and Smith’s coffee shop to thrive they must have a target customer.  Customer targeting is a great aspect that guarantees success if well analyzed and the business meets the expectations of targeted customers.

Coffee drinking culture is very common in Holland especially given the regions cold climate. Holland is one of the coldest parts of the globe, especially during winter seasons. People would like to keep themselves warm and active through a refined quality coffee products.  Netherlands is among the top highest consumers of coffee with an average consumption per individual averaging at 8.4 kilograms annually (Chapagain and Hoekstra 2007).  People at work in companies will have a morning breakfast and evening coffee times and this is a great culture with that supports coffee shop set up in the area.

Local people has a culture of inviting family and friends even after the work for a cup of coffee as they chat and catch up with each other or make business deals.  Coffee drinking is therefore regarded as a social event in Holland and most people enjoy fresh and relaxing moments in the popular coffee shop joints which they are popular for offering best quality products and services.

The Marvin and Smith’s targets those coffee drinkers to offer them east African inspired coffee products and other freshly prepared beverages. The target customers are therefore likely to respond positively to the variety of unique products and services that are offered by Marvin and Smith’s.

According to World Bank Holland has a very attractive destination for setting up business particular in strategic cities such as Amsterdam. The region is ranked position 27 according to the latest data with regard to the simple procedures required of operationalizing business in the area. It is a heavily populated region with cities such as Amsterdam having a very efficient infrastructure. It is a strategic position from which to connect with other regions such as Eastern Europe, Middle East, central Europe and other parts of the world including Africa.  The service and tourism industry is well established in Holland and hence an attractive place to set up a coffee shop.  The strong justice system also makes it possible to enforce contracts and protect the trading patents. With a good justice system, the country stands the best chance to enforce contracts as well as respecting the rights of foreign investors.  Compared to other countries in the Europe Holland has posted a significant improvement in improving business operating environment (Giovannucci and Koekoek 2013).The heavy investment in infrastructure and the availability of Amsterdam airport best recognized for its efficient services across Europe makes it the best destination of Marvin and Smith’s new coffee shop.  The country’s political and financial climate has remained relatively stable for several decades. Holland also was ranked in the eighth position among the countries with the most favorable business climate by the world economic forum in 2015 (Noe, Hollenbeck, Gerhart and Wright 2016).

The level of government taxation is also low with corporate tax at twenty-five percent.  This is especially very favorable for the foreign investors as double taxation is always avoided and for foreign investors, there is no tax withholding on royalties and interests. Expatriates especially those with specialized skills has the potential of enjoying a thirty percent non-taxed allowance.

Workforce

The availability of the human resource is also a very important factor when considering setting up a business. Holland has a highly educated and flexible human resource. The country has some of the best human resources in Europe. Setting up Marvin and Smith’s coffee shop in such a region will ensure that they have access to a human resource that is skilled and affordable (Noe, Hollenbeck, Gerhart and Wright 2016).

The socio-economic status of the people living in the region is also high and the percentage of people in the high and middle income are relatively high. The coffee shop targets the highly populated cities such as the Amsterdam which provides the ready market for the coffee products. The country is a commerce hub with several local and international businesses having their operating basis in the region. This provides an ideal strategic position to establish a coffee shop where people can meet and enjoy a cup of tea after work or during weekends.  Europe and particularly the Holland consumers have also developed a high consciousness for ethical trade practices. They are keen on promoting products that are sourced and produced by observing fair trade practices and ethical principles of doing business. Considering the high emphasis that Marvin and Smith’s has placed on ethical trade practices such as sourcing from fair trade registered suppliers  Holland stands as the best marketing destination for the new products (Kolk 2012). The target consumers are likely to accept the east African inspired products in Europe and this will translate into increased sales and revenue (Giovannucci and Koekoek 2013).

Marketing mix

Products

Product diversification is the main agenda of Marvin and Smith’s coffee shop.  The coffee shop plans to establish east African inspired unique products such as freshly prepared mango juice, cold drinks, pastries, and snacks among other innovations. Introducing new and unique products in the European market and especially for the coffee lovers is a sure way of attracting the target customers to the business (Palmer 2012). The products will be tailored to ensure that the customer gets maximum satisfaction through creating a relaxing natural environment with internet connections and sockets to enable the customer’s access internet as they relax and enjoy the products and services offered.

Promotion

Communication of the Marvin and Smith’s coffee shop products is a critical factor to the success of the business in Holland. A combination of several promotional strategies such as mainstream media and digital marketing will be employed. Television adverts will be placed online to ensure that the customers get to understand the products and services offered at Marvin and Smith’s coffee shop in Holland.  Digital marketing is also a very effective marketing strategy that the Marvin and Smith’s intends to employ in marketing the products. Social media marketing through popular networks such as the twitter and Facebook will help save the business costs (Goi 2015).  The use of direct mails such as setting a mail containing advisement to some of the companies in the region will help to popularize the products among the employees and top management in such environment. They will understand the best environment to enjoy a relaxed time after work or the best destination to organize informal meetings for their employees after work.

Place

The Marvin and Smith’s coffee shop will be established in Amsterdam one of the most populous cities in the region. It has a good road and airport infrastructure making it easily accessible to several consumers. The city has high-end residential segments which offer target customers for the coffee shop. The high population in the city is very appropriate as it offers a large consumer markets for the coffee shop. The coffee shop will, therefore, be placed in one of the popular Amsterdam streets strategically to make it easily accessible to the customers. It will also have ample parking space to accommodate several customers to give them peace as they enjoy the services offered in the shop (Rafiq and Ahmed 2015).

Price

Purchasing in bulk will help the Marvin and Smith’s business to have a higher bargaining power and enjoy from the economies of scale. The prices for the Marvin and Smith’s products in Holland will be affordable to customers and of high quality. The coffee shop targets middle and high-income consumers. The focus will be on positioning the products so that it can qualify as high-end value products and services. Customers must have value for their money and hence the east African inspired beverages will be specially prepared to create high value and taste for the customers to appreciate them. The prices will, therefore, be favorable especially considering that the target customers are those from high and middle-income consumer segment (Goi 2015).

People

Apparently, the Marvin and Smith’s intends to use people as the greatest resource in product promotion. The business understands that people are the greatest asset and source of competitive advantage.  The region has very educated and flexible workforce and hence hiring both locally as well as infusing leadership from the mother country is expected to work in promoting the coffee shop as one with the most efficient and effective services. The business intends to use people (employees) in developing innovations and designing products and services that are unique in the market.  It also intends to create a workforce in the new region that fully shares the business vision and intends to contribute with passion towards the growth of the business.  This will help the coffee shop to position itself as a leader in offering unique products and excellence service to the market (Rafiq and Ahmed 2015).

Process

The Marvin and Smith’s intends to fix the existing information communication system to allow it accommodate the expanded business activities. The intended purpose of expanding the business is to ensure that most of the activities are automated to reduce the costs of production. A pay system will be incorporated into the business system to ensure that the business is running effectively(Rafiq and Ahmed 2015).

 

Implications

Supply chain

The expansion of Marvin and Smith’s into international market implies that there would be expanded demand for the business raw products. The business will have a greater bargaining power since it can be able to buy in bulk. The customer’s preference for instance on ethical business practices will require Marvin and Smith’s to source their coffee beans and other raw products from a recognized supplier who conforms to fair and ethical trade standards. The suppliers will require being accredited by an international regulator body on fair trade practices.  The expanded coffee shop will require to source from variety of suppliers depending on the tastes and preferences of the local consumers. It is important to note that as the business expands to the international market in Holland it may also be required to develop other products and source more products from different suppliers based on the demand from the customers (Christopher 2016).

Personnel management staff issues

The expansion of the business into international markets means that the management of personnel will be more complex and cover a diverse category of employees. For instance expanding into international territories implies that the organization may need to employ some workforce from the local. Multicultural issues are also likely to arise when managing a culturally diverse workforce. Multicultural competent managers who can manage a culturally diverse workforce in England, as well as foreign territories, will be required (Schuler Farrand Smith, 2013). There are also issues that are likely to arise with the inclusion of more culturally diverse workforce such as motivation and individual behavior differences in the organization. This will influence the need for change on motivation strategies in the organization. For instance, according to Hofstede’s   cultural dimensions people in different cultures differ with regard to power difference. There are societies with higher power difference while others have low power difference (Chien and et al 2016). The management of personnel will require different management styles in such societies.

People behave differently in different regions and in accordance with their norms and socialization style. These are some of the issues that have direct impact on personnel management and are likely to cause conflicts or diversity strength based on how they are managed by the personnel managers. Marvin and Smith’s business may require a comprehensive human resource policy that more comprehensively outlines employee motivational strategy of the organization including the mode of performance appraisal systems. The business may also need a comprehensive reward system which is linked to the performance appraisal system.  The personnel management and supply chain are interlinked since they all lead to efficiency and improved profitability of the business. Good personnel management ensures that the business run efficiently while an effective supply chain management ensures that the workforce has the necessary materials to facilitate the smooth and cost effective method of running business Noe, R.A., (Hollenbeck, Gerhart and Wright, 2016).

Liquidity and profitability analysis

Liquidity =current liabilities /current assets

=35400/6200= 5.7

A very high liquidity ratio could imply that Marvin and Smith’s business is not using its assets appropriately to expand their profitability. Liquidity ratio is very useful information for business creditors. A high liquidity ratio implies that the business able to meet its short-term financial obligations effectively. Since Marvin and Smith’s business has a high liquidity ratio it implies that it is easier to obtain loans from other financial lenders. The profit ratios are also low meaning that sourcing capital for expansion plan may not be effectively covered by investing the profit from the business. Marvin and Smith’s business need to use its credit worthiness capacity to seek to finance for its expansion plans (Delen, Kuzey, and Uyar, 2013). Expansion capital can be sourced from the financial borrowing as well as investing part of their profits. The business has not exploited all the avenues for sourcing revenue since up to this point they have not borrowed from the financial institutions. What they have invested is from their contribution as well as borrowing from the friends. It is imperative that Marvin and Smith’s business consider other external sources of financing their expansion plans. Expansion into the international market may be more costly and Marvin and Smith’s business need to allocate adequate capital which currently may not be met from business profits alone. Sourcing capital from outside will do well to the business based on its liquidity ratios and profits but this must be done with caution to avoid putting Marvin and Smith’s business into liquidity crises (Saleem and Rehman 2011).

Conclusion

Overall there are high prospects for growth and expansion of Marvin and Smith’s business. The trends at which the profits are growing and response of the coffee shop products in the market is very promising. Europe is one of the highest consumers of the coffee products and feasibility study of a European country that has the very favorable business climate for coffee shop business indicates Holland is promising business destination. Holland has a great tradition coffee drinking culture and the consumers there have a high demand for quality and unique products. Its strategic position in Europe makes it easier to target other consumers from far and abroad. Amsterdam is a transport hub with major international airport indicating that coffee shop business can thrive well in the region. High population density in the area makes it more favorable region with regard to creating a market and meeting the demand of many potential target customers. The Marvin and Smith’s business need to employ a rigorous marketing campaign aiming at the target customers in the region. A combination of unique products and services, digital and mainstream promotional strategies, strategic positioning of business will ensure that Marvin and Smith’s business thrives in the new region. Availability of skilled people, flexible workforce and improved systems in the business is likely to give Marvin and Smith’s competitive advantage in the market. Marvin and Smith’s business expansion plan is viable and the implementation plan must be based on cautious investment and adequate research. Their liquidity and profitability ratios indicate that the business can obtain capital through a proper utilization of its assets to facilitate borrowing from financial institutions.

References

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Eshuis, F. and Harmsen, J., 2013. Making trade work for the producers: 15 years of fairtrade labelled coffee in the Netherlands. Max Havelaar Foundation, Netherlands.

Kolk, A., 2012. Towards a sustainable coffee market: Paradoxes faced by a multinational company. Corporate Social Responsibility and Environmental Management, 19(2), pp.79-89.

Giovannucci, D. and Koekoek, F.J., 2013. The state of sustainable coffee: A study of twelve major markets

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Palmer, A., 2012. Introduction to marketing: theory and practice. Oxford University Press.

Rafiq, M. and Ahmed, P.K., 2015. Using the 7Ps as a generic marketing mix: an exploratory survey of UK and European marketing academics. marketing intelligence & planning, 13(9), pp.4-15.

Goi, C.L., 2015. Marketing Mix: A review of’P’. The Journal of Internet Banking and Commerce

 

Christopher, M., 2016. Logistics & supply chain management. Pearson UK.

Schuler, H., Farr, J.L. and Smith, M. eds., 2013. Personnel selection and assessment: Individual and organizational perspectives. Psychology Press

Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M., 2016. Human resource management: Gaining a competitive advantage.

Saleem, Q. and Rehman, R.U., 2011. Impacts of liquidity ratios on profitability. Interdisciplinary Journal of Research in Business, 1(7), pp.95-98

Delen, D., Kuzey, C. and Uyar, A., 2013. Measuring firm performance using financial ratios: A decision tree approach. Expert Systems with Applications, 40(10), pp.3970-3983.

Chien, S.Y., Sycara, K., Liu, J.S. and Kumru, A., 2016, September. Relation between Trust Attitudes Toward Automation, Hofstede’s Cultural Dimensions, and Big Five Personality Traits. In Proceedings of the Human Factors and Ergonomics Society Annual Meeting (Vol. 60, No. 1, pp. 841-845). SAGE Publications.