To identify a profitable company that can produce profits that encourage the company to expand takes commitment and extra efforts to achieve business growth. Performance comes with self-motivation and a drive for the growth and competitiveness of your company in the the world of business. (Ryans, 1999) Businesses like Hank and Marvin use imagination, such as themed nights and opportunities for entertaining and satisfying customers. In order for them to perform better, they had to be very flexible from the start so that they could flexibly and freely take on a given task.This can be attributed to the growth of the business locally and their current aims of expanding overseas.
Country of choice
With their unwavering vision and ability to take risks in order to grow their business, the country of choice for Hank and Marvin to expand to would be Ireland. Ireland boasts a decades-long policy of welcoming foreign entrepreneurs who would wish to start businesses there. The World Bank through its ‘doing business rankings’ placed Ireland as the best country in the European Union to do business. This coupled with the fact that as an EU citizen you would not require going through a tedious rigorous process to obtain a permit to operate a business there makes it the ultimate destination.
The Irish government is pro-business, and it offers tax reliefs for new businesses up to 3 years of operating new ventures thus making the businesses have a grace period for expansion. Ireland has always had a job plus incentive where it rewards employers who create a successful venture with the possibility of hiring Irish citizens. (Drucker, 1985) This is a motivational factor for Hank and Marvin to expand their business to this country as they will enjoy the benefits that come with being an employer. Irish workers are graded as the best work force globally since they are highly education thus high productivity, Irish culture promotes the spirit of hard work and flexibility thus the business will definitely reap from this. The government also does offer loans for businesses which wish to expand their operations in the country this coupled with the fact the cost of living in Ireland is relatively cheaper than most EU countries make it the perfect destination.
Irish people love their coffee very fine thus it could be prudent for Hank and Marvin to conduct research on consumer tastes and preference ensure that their coffee is of high quality. The consumer needs always determine if your business will be successful thus keeping that in mind will help them refine their menu thus higher profits. (Ryans, 2000) It would be advisable for the business to develop a unique selling preposition this is attributed to applying their strength well thus gaining an edge cutting competitive advantage over their competitors. Their creativity will go a long way in attracting more customers since they will get to enjoy the East African feel too in their home country.
Whenever one wants to expand their business, there will definitely be challenges especially if the new venture is in a foreign country. One tends to be unaware of the new market and how to satisfy their needs, but this is possible if proper research is conducted. Irish people are pretty cultural thus the main indicator of success is the ability to marry their culture with your style of doing business. Otherwise expanding into this country seems like a profitable venture if main factors of business viability are put into consideration.
A Market Mix In Relation to the Coffee Shop Expansion Plan to Ireland
Marketing mix strategies are the marketing decisions which are used by companies and business to purse its marketing objectives and goals. (Nigel Poole 2000) This basically includes a set of actions and tactics a business will employ in order to promote its products and services. In relation to the expansion of the coffee shop to Ireland, Hank and Marvin will need to develop strategies to win sales, build a strong customer base and ensure their business is sustainable in the long run.
The main component in their market mix will be the product that is the quality of the coffee being produced. As such since Hank and Marvin use the finest high-quality organic coffee from Uganda the product will probably be received well in the Irish market. Developing a menu with Irish consumers in mind will ensure that the customers’ needs and demands are met.
How Hank and Marvin will price their coffee will be an important factor towards their profit-making goals, as this is a determining factor in how consumers will view the product value. Pricing is a challenging issue since it informs the consumers about how you view them as well. Thus pricing should be based on the positioning of the coffee shop. The coffee shop can choose between competitive prices, value pricing, and cost-plus pricing according to what works for them.
Promotional strategies will help the coffee shop to communicate with the customers; this could be through immediate advertising on social media. Research on the medium prospects the target consumers frequently seeks information from like television so that you reach many customers as possible. (Ryans, 2000) One other way of building a solid customer base is by social networking through the encouragement of customers to visit your site to learn more about you and the products offered this is attributed to gaining loyalty in a new market.
The choice of the coffee shop location matters in ensuring that the business picks up in the foreign land. The details of the location such as a drive-through, strip mall, or a standalone. The main thing to consider with the location is that the place should be served with high traffic of people. One more important factor with the place is the visual appearance, a relaxing East African feel infused with some Irish culture would be ideal for a coffee shop in Ireland.
Finally, the coffee shop should have an edge cutting competitive advantage over its rivals; this is achieved through the use of finest organic coffee beans together with high-quality tea and herbal infusions. The high quality of products will surely meet consumers demand and create loyalty to the brand.
Implications of the Need to Cover a Wide Geographical Area In Terms Of a Different Country
Impacts on Information Systems
Information systems are the core for the success of any business since this determines the level of communication which therefore translates to achievements of set goals. (Harri Lorentz 2012) Quality functions such as planning, monitoring, and evaluation as well as decision making are attributed to well-developed communication systems. Covering a wide geographical area in a new country would affect the success of communication. Ireland is a multicultural country with a large population being bilingual as they speak both English and Irish, this possesses the challenge of cultural difference and language barrier. Thus this would hinder effective communication and thus influence the daily running of activities in the coffee shops.
For the business to be a success over the wide geographical area in Ireland, it is important for the management to develop culturally sensitive ways of conducting business. This is by passing information which is sensitive to the receiver’s point of view by anticipating the meaning the receiver will get. This can be made possible by careful encoding of the message by careful choice of words, pictures and gestures thus avoiding miscommunication.
For successful communication over the large, diverse geographical area it will be prudent for the business to adopt a communication system that avoids the use of slang, idioms and regional slang as this hinders effective communication. (Poole, 2000) If it will be possible, it will be necessary to do selective transmission, with careful decoding of feedback which should be from multiple parties.
Success over the large foreign geographical area will eventually be achieved based on how the information system is packaged. Building relationships with the various groups through improved listening and observation skills coupled with follow-up actions will eventually result in a strong customer loyalty. This will result in more profits and prosperity to the business and thus improved economic standards.
Impacts on Supply Chain
The supply chain is a process that that ensures that a business is able to optimally get its products from the raw materials to the producers and finally to the consumer. (Harri Lorentz 2012) An effective supply chain optimizes the operations of the organization by utilizing speed thus creating efficiency with the aim of increasing cash flows. Operating in a large geographical area in a foreign land as a new business would adversely affect the intra-business supply chain.
A large geographical area would mean increased cost of warehousing, inventory and logistical administration as Hank and Marvin would need to set up stores in this different locations. This would proof to be a bit difficult to launch off their operations successfully as the cash to cash circle is also increased as the business has to cover a large geographical area.
Since the supply chain is dependent on the coordination of the flow of information, there will be a decline of perfect orders this is attributed to Irish multicultural nature as well as language barrier that would arise. Therefore to beat the challenge of communication the business will have to put the locals on strategic key points in the supply chain. This will be made easier if the business complies with laws and norms in the different geographical regions thus making the supply chain less complex.
The advantages that are likely to be enjoyed with operating in a large geographical area comes from profit optimization through sourcing materials from a geographical area with low procurement costs. This can be achieved through mitigation on risks that would face the business as well. Thus business will probably pick up if the right strategies are put towards an efficient supply chain which thus results in increased cash flow rate which translates to more profits.
How Profitability and Liquidity Will Affect Decisions Available To the Business
From prior economic literature, liquidity is the ability to get cash when you need it for an emergency which can be accessed in case of any financial setback that is getting money whenever you want it. (Nigel Poole 2000) Liquidity ratio shows the ability to pay off debts and business obligations and staying in a financial safety margin. This is used to calculate to calculate the company’s going concern which is the ability of the business to meet its short-term goals in the foreseeable future.
Nigel Poole articulated that ‘determining a company’s liquidity is done by comparing previous records with the current records.’ (Nigel Poole 2000, p. 163) Hank and Marvin’s business shows a positive working capital that is it has more assets than liabilities. It also shows a positive liquidity ratio which is the ability of the company to pay its short term and long term loans. Thus the company has positive prospects and is able to stay in business in the foreseeable future.
Vieira et al., (2010) notes that profitability is the ability of a business venture to generate positive revenues, without profits the business will not survive in the long run. From the provided financial analysis of Hank and Marvin’s coffee indicates that the profitability on the income statement is 26800 pounds while the value of the assets as indicated on the statement of the financial position is 113000 pounds. The business does not have any liabilities since it is debt free, this means that the net revenue is positive which an indicator of profitability. This provides a clear picture of the viability of the business as the income is sufficient to expand the business overseas.
Thus from the above financial information on the coffee shop, it can be deduced that the business is a going concern. Thus it will continue its operations without any threat of going bankrupt in the foreseeable future. The financial analysis shows positive net profits which are adequate to finance any future expansion plans; this is coupled with the fact that the company is debt-free thus it is financially stable. When making the decisions to expand the business, the partners need to consider profitability indicators with its cash flows which indicate liquidity.
Due to positive liquidity measures and the profitability indicators the venture will be successful since it has enough cash flows to cover any financial setbacks. The business is debt free meaning that they have an option of getting funding from debtors to expand the business without any fear of going bankrupt. Thus with funding from debtors together with the capital at hand, the future business prospects can overcome any financial challenges (Drucker, 1985).
The ambition and prospects of Hank and Marvin’s coffee shop is a promising venture. With the choice to expand their business to Ireland, the coffee shop will likely prosper into a global business. The Irish government being pro-business will be important for the success of the business, its employer incentives will favor the growth of the business.
With proper research, on the market and the ability to fulfill the consumer needs the business will soar in its operations. This includes factors as cultural differences as well as how the whole business is packaged to suit these needs and preferences. Putting into consideration the long-term tactics which will result in firm consumer base, the company will be able to meet their long-term goals. Thus the need for the company to have unique selling prepositions which will keep competitors at bay. Keeping a workable budget the business, therefore, will be in a position to expand their ventures easily. Success in business is attributed to working within your financial muscles thus avoiding buildup of debt which could render the business liquid.
Optimization of profits will be achieved through wise investments and strengthening of the supply chains. The smooth running of business will be made possible if the business complies with laws and regulations in the host country. Efforts to build friendship and ties with consumers will pay off eventually since this will create loyalty.
Finally, success will be attained if the company achieves profitability in its ventures since profits are the real measure of success. Without profits, the company cannot be in an in a position to run its daily activities effectively and efficiently. Daily activities should aim at generating positive cash flows which makes it possible to reinvest in the business, therefore, avoiding debts and loans. Accumulating of working assets which are factors of production will see the business grow the business. Thus the venture is viable since at the moment the business has more working capital and positive net income, this gives them room for more loans without fear of going bankrupt.
Drucker, P., 1985. Innovation and Enterprenuership. 2nd. ed. Boston: University Press..
Harri Loretz, J. T. L. O., 2012. Effects of geographical dispersion on intra-firm supply chain.. Journal of supply management, 17(6), pp. 611-626.
Poole, N., 2000. Building Coopertive Capacity. 2d ed. London: University press.
Ryans, B., 2000. Enterprenuership. In: M. Geber, ed. Successful Launching New Ventures. New York: Oxford Publishers, p. 752.
Schwambach, V. R., 2011. Relationship between liqidity and profitablity. 3rd ed. New York: Oxford Press.