According to the information provided about Marvin "Smith’s Coffee Shops The business success has been due to its open access to different classes and cultures of people. The use of the Ugandan coffee has made it attractable to different people especially tourists.
The first choice of London as the city to start the businesses was strategic since it has the market, capital, and operational efficiency to start any business. Practically the Marvin "Smith’s Coffee Shops have been performing better due to their multicultural outlook where they tend to accommodate all people.
From this perspective the best choice of the country within Europe for expansion is France. The country is the fourth largest economy in the world hence investing in Paris offers the same opportunities just like London. Its strategic position which is in the middle of western Europe makes it a central point for many people from different parts of Europe especially Spain, also it is close to Africa hence it can attract people from Egypt and other African countries. Marvin "Smith’s Coffee Shops depend on a huge market that is a diverse, multicultural society and a capital that has a lot of tourists. France offers to call these variables even far better than Britain. The multicultural society of France is made of people from different races that include blacks and the majority of whites (Allahoum, 2018). The community also accommodates almost every religion in the world.
Moreover, France through Paris offers the best business opportunities since it is home to millions of people. The high numbers mean that Marvin "Smith’s Coffee Shops will have a huge market base where it can even decide to adopt niche marketing according to the specific location in the city. The main logistical considerations will be getting the necessary government permits and meeting up with the required regulations. The business has to conform to the cultural set up of Paris and the way of living of most of the people. Also, the business has to develop clear funding or investment plan for its expansion. Paris is not an easy market to tap into unless it is done with enough capital to match the competition of other well-established coffee shops. Some of the coffee shops have a global outlook. Marvin "Smith’s Coffee Shops will also be faced with structural challenges which have to be carefully addressed and examined. The type of organizational culture in France has to be aligned according to the city traditions not London based. The information management systems have to be restructured to ensure they can accommodate a huge international expansion since the Marvin "Smith’s Coffee Shops will open extra outlets in the city. Lastly, the choice of Paris will ensure the shop taps into the huge tourism market. Paris is the highest tourist attraction in Europe hence the attraction that the Ugandan coffee offers will attract many tourists (Jean-Pierre and Perrain, 2017, 3-4). France tourism projection estimates that the number of tourists will continue increasing in the coming years. The significance of tourism in the country is displayed by its GDP contribution which accounts for almost 7% of the total GDP.
Marvin "Smith’s Coffee Shop tailored marketing mix
For Marvin "Smith’s Coffee Shop to effectively market itself in the new foreign market, it has to come up with a sound strategy that can satisfy its target consumers but fulfilling their needs. The most critical elements that have to be to addressed include coming up with the best strategies for product, price, place, and promotion. These three variables if effectively strategized will guarantee great success. Other factors include the people who are the consumers and the overall business process in the provision of services (CIM, 2009, 6).
Product
Currently, Marvin "Smith’s Coffee Shop has the best coffee that is highly attractable to the market. The only modernization it has to do is to improve the elements that accompany the product. First, the coffee has to be served or packaged with material that identifies with the beliefs and cultures of the consumers. The management has to ensure that it offers the best customer service when offering the coffee to customers (Ehmke, Fulton and Lusk, 2018, 4). The relaxing east African environment and the provision of internet services have to be maintained to ensure customer satisfaction. Also, staff interaction when serving coffee has to be positive where the current gaming practices with customers if needed should be maintained.
Pricing
The pricing strategy will be instrumental in determining the success of the expansion. Marvin "Smith’s Coffee Shop should not feel obligated to use lower prices since it will be viewed as having low-quality coffee. The city is made up people from different backgrounds and many tourists hence they prefer quality. Also, the city has already established coffee shops which are offering quality coffee. The best pricing strategy for the firm will be competitive pricing where it has to set out its prices according to the competitiveness of the market (Ehmke, Fulton and Lusk, 2018, 4). The firm can mitigate this by offering discounts since they are new.
Place
Place refers to the shop's distribution channel for the coffee. Upon meeting all legal entry requirements, the best place strategy is to go directly to the consumers and offer the coffee to them
Promotion
Marvin "Smith’s Coffee Shop first strategy is to make people know they are in France and they offer coffee. The promotion has to be tailored according to customer needs where they have to be assured that the new coffee will meet their needs and that it is better than competitors (Ehmke, Fulton and Lusk, 2018, 4). The internet, television, and the radio stations will be the best tools to promote the business.
Information’s systems impact
Information systems
Every business has its information requirements. Currently, information systems have been integrated into management information systems that are used by the management for effective decision making (Singh and Kaur, 2012, 4). The information generated has to satisfy the requirements of the management and the general business operations. The MIS of Marvin "Smith’s Coffee Shop has to be redesigned so that it can be integrated with the foreign coffee shops. Expanding to another country means that the system’s capacity has to be reconfigured to allow entries from France. Also, tracking down the daily sales and expenses for the business will have to be done through a single information system. For example, the transactions processing system has to be changed so that it can take total daily transactions from all the shops. It is through the information systems that management can make informed decisions.
The information system, therefore, will be reconfigured to study the market performance of Paris shops so that the management can make decisions. The systems, therefore, will detail the financial performance of Paris firms, the tax payments, and the regulations making the management to come up with better decisions like budgetary allocations and expansion plans further into France. Also, the current strategic information systems will be adjusted since it has to accommodate the strategies that can be used in France to maintain a competitive edge. The strategic information systems have to give information regarding the coffee and the entire business process in France. The information will then be used by the management to come up with the best tools for penetrating the new market. Lastly, the Executive support system will be impacted due to the expansion since the summarized reports needed by the management will also have to include operations from France (Singh and Kaur, 2012, 5). Generally, all aspects of Marvin "Smith’s Coffee Shop information will be affected since all decisions made will have to factor in the activities and revenues of the foreign coffee shops.
Management structure
Marvin "Smith’s Coffee Shop will have to undergo management restructuring. The effect of the expansion will result in reconstituting the management structure to determine who will head the foreign shops and who he or she will be reporting to. Although the current two owners will remain as heads of the firm, there is the need to determine who will fill the role of a foreign manager and how the person will fit in the management structure. The impact of the expansion has little effect on current employees and their positions since most of the employees will be from France. However, the firm will be affected by middle management changes. The owners have to decide how the new manager will rank in the organization structure. In France also, other management positions will have to be filled. Structural changes may lead to the promotion of some of the current employees to a senior position in France. Ideally, this is called internal structural changes to fit the requirements of the expansion plans.
The restructure also requires the determination of the salaries or compensation packages for new employees in France. They include the manager and those in charge of the daily firm operations. The management has to carefully consider the current packages for employees and the economic differences between France and Britain. Giving too many salaries may lead to employee demoralization back in London which can affect the overall performance of the coffee business. Alternatively, one of the management changes can involve one partner heading the oversees coffee shops while the other is in charge of the current London shops. The structural changes, in this case, will be very minimal where only junior positions will be needed in France although they will have to be integrated into the current management structure.
Profitability and Liquidity
Gross profit margin = net profit/ revenue
208,000/360,000 = 57.8%
The coffee shop has a higher gross profit margin. The high margin shows that its main operations are functioning with efficiency while at the same time they can provide positive net earnings to the business (CFI, 2018). The model of operation, therefore, can be used in the foreign expansion.
Net profit margin = Gross profit/ revenue
26,800/ 360,000 = 7.4%
The coffee shop is profitable in the long run. The viability of the firm cannot be questioned since it can generate high profits after all the expenses have been factored. The impact of this on foreign expansion is that it has to use the same mode of operational efficiency to get profits (CFI, 2018).
Return on Assets = Net Income/ end of period assets
26,800 / 113,000 = 0.2
When the earnings are compared to the total assets the firm has, then one can establish how asset intensive a firm is in the long run (CFI, 2018). The coffee shop is not asset-intensive which means that expanding in the foreign market will not need huge capital investments. The firm will only rely on the coffee importation and the purchase of equipment for making coffee which is not capital intensive. The owners, therefore, only have to worry about the kind and quality of service they will provide to the targeted market.
Liquidity
Current ratio = current assets/ current liabilities
35,400/ 6,200 = 5.7
The current ratio of Marvin "Smith’s Coffee Shop is very healthy. The standard ratio is always one but the shop's ratio is more than that meaning it can easily meet the short-term financial obligations. The ability will give suppliers confidence when they enter into France since they will be assured of payment as proved by their financial statements. The liquidity also means they can easily get short-term sheet loans due to the health and strong financial reflection of the shop.
Quick ratio = cash and receivables / current liabilities
27,400/ 6,200 = 4.4
The quick ratio of the firm is even much better since it guarantees that all short-term obligations can easily be met even without liquidating inventories. The firm holds a lot of cash which can easily be used to pay off suppliers when needed. The quick ratio is an indication that the firm will easily pay any immediate transactions upon entry into France.
Summary
France is the country of choice for many tourists across Europe. Every year, millions of tourists flock into the city of Paris. Also, the country is composed of people that come from many cultural setups. Being the fifth largest economy, it offers numerous opportunities to businesses with little trade restrictions. These characteristics are almost the same as London. The attraction that the Ugandan Coffee brings in London will sell in France because of its diversity and millions of tourists. Basing on this, investing in Paris is a viable option for business expansion.
Through coming up with the best marketing mix, Marvin "Smith’s Coffee Shop can easily enter the coffee market in France. Effective advertising and promotion have to be carried out upon entry into the city, but at the same time, the firm has to maintain a competitive pricing strategy to be in the same Ligue as other established coffee shops. Doing this will make people know the new coffee has quality immediately.
Although it is viable, the firm will undergo management restructuring and the modernization of the information systems to be integrated with the home financial systems. Looking at the financial performance of the firm, then the liquidity and profitability ratios prove that the firm has a positive vision. The profitability of the firm means that going overseas is a viable option because they have the capital. Also, the firm has managed to expand within London without huge financial loans. The financial statements provide the best avenue for the owners to get financial assistance. The good financial record will make them have easy access to the financial loans offered by banks. Suppliers tend to look at the liquidity of the firm. It has a more than usual liquidity position meaning that it will be straightforward for them to get supplies.
Work Cited
Allahoum, R. (2018). Is France's ethnically diverse team a symbol of multiculturalism?. [online] Aljazeera.com. Available at: https://www.aljazeera.com/indepth/features/france-ethnically-diverse-team-symbol-multiculturalism-180709224535038.html [Accessed 1 Dec. 2018].
CFI (2018). Profitability Ratios - Calculate Margin, Profits, Return on Equity (ROE). [online] Corporate Finance Institute. Available at: https://corporatefinanceinstitute.com/resources/knowledge/finance/profitability-ratios/ [Accessed 1 Dec. 2018].
CIM (2009). Marketing and the 7Ps. [ebook] Available at: http://www.thensmc.com/sites/default/files/CIM%207Ps%20Resource.PDF [Accessed 1 Dec. 2018].
Ehmke, C., Fulton, J. and Lusk, J. (2018). Marketing’s Four P’s: First Steps for New Entrepreneurs. [ebook] Available at: https://www.extension.purdue.edu/extmedia/ec/ec-730.pdf [Accessed 1 Dec. 2018].
Jean-Pierre, P. and Perrain, D. (2017). France, tourism. [ebook] Available at: http://hal.univ-reunion.fr/hal-01484933/file/Encyclopedia%20of%20tourism_France_tourism.pdf [Accessed 1 Dec. 2018].
Singh, K. and Kaur, B. (2012). Role of Management Information System in Business: Opportunities and Challenges. [ebook] Available at: https://www.gjimt.ac.in/web/wp-content/uploads/2017/10/N111.pdf [Accessed 1 Dec. 2018].
