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1. Country of choice with justifications

This section will explore all the aspects in relation to Hank Marvin and
Patty Smiths proposal to expand their coffee shop chain to a European
country. The country that they should consider expanding to is Finland.
According to the Business Insider (2017), Finland is the thirteenth best
country in Europe to start a business. Statistics provided by the World
Bank prove to be in favour of opening up a business in Finland as it is
quick and easy to set up (World Bank, 2017).Finland is an attractive
market, as the Finns consume the highest amount of coffee. According to
the Caffeine Informer (2017), Finland consumes up to 9.7kg per person
compared to the UK which only consumes up to 1.7kg per person.
Therefore opening a coffee shop in Finland will be very successful.
Language is not seen as barrier. The Finns speak finish as their mother
tongue, although it is mandatory for them to learn English in school (BBC
News, 2016). Moreover, the company can employ Finns as baristas,
waiters and waitresses who know both languages thus eradicating any
language barriers.

Proximity, and difference in time zones add significant costs in carrying

out a business in foreign markets (Christen E, 2012). There is a time
difference of 2 hours between the UK and Finland, and the journey takes
around 3 hours by plane from the London UK to Helsinki Finland. Careful
consideration needs to be taken to manage time effectively and ensure
products (coffee) are available at all times. The availability of innovative
and effective communication systems will aid in combating the time
difference. Careful coordination and planning must be implemented to
ensure products are delivered on time. An understanding of the Finnish
culture is vital to ensure success of the business. There are many
developed professional services in Finland which Hank and Patty could
seek help from such as Expat Finland (The Finland Guide Book) in order to
find out more about how to operate a business abroad. The Culture is very
similar to the UK as coffee is very common and is enjoyed with the
company of others, this is because coffee helps an individual become
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more social and enjoy interacting with others. It is quite similar to the UK
as most people in Finland drink it due to the very cold weather they have
during the winter. Another similarity between the two cultures is that they
are very up to date with technology and therefore are able to keep track
of the latest things.

Opening up a coffee shop is flexible enough in that it should be within by

laws of any country. Finland is part of the European Union hence it is
envisaged that there wont be any restrictions or laws against establishing
a coffee shop in the country. According to Pitney Bowes (2017), the import
duty of coffee beans to Finland is at 7.5% with an import VAT of 14%. This
is considerably higher than that of the UK which has zero percent import
VAT. Thus exporting coffee from Uganda to Finland will be considerably
expensive when compared to exporting to the UK.

Word count: 518

2. The Marketing Mix

The main target market of Marvin and Smiths coffee shop will be the
working class adults who are working or near the city centre, and
university students. This is because the main coffee drinkers around the
city centre area are individuals who prefer their coffee on the go, or
possibly individuals who enjoy holding professional meetings in a coffee
shop. In addition to the social meetings of young individuals (university
students) as Finns are known to be very sociable and hospitable
individuals.

Product
Marvin & Smiths coffee shop will specialise mainly in selling the highest
quality of coffee. This will be sourced from Gumutindo coffee, a Fairtrade
dealer in Uganda that puts emphasis on local farmers running and
managing their own farms. The company will attract customers by
continuing to provide excellent customer service, themed shop full of
cultural decorations and settings as it has been successful in their present
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shops in the UK. The way in which the products will differ from the
products sold in the cafes in the UK is that the coffee prepared will be
thick but with a light roast just the way the Finnish like it.

Price
The company will allocate a price that is similar to local shops and giant
coffee shops around the city. The price for the coffee will be set to 2 Euros
which is comparable and competitive with local Finnish shops in downtown
Helsinki. It is anticipated that the profit margin will be achieved through
the sale of snacks, light meals and fresh juice. The prices allocated will
also cover wages for employees, and general day to day running of the
coffee shop.

Place
It is proposed that the new coffee shop in Helsinki be located in central
Helsinki along Aleksanterinkatu Street which is in downtown Helsinki to
attract maximum number of young and old working class individuals and
university students where numerous Universities are located as well as
corporate buildings and retail shops.

Figure 1: Competitive
Coffee shops in
downtown Helsinki
(Source: myhelsinki,
2017. Sprudge, 2017)
Promotion
Reward programs
will be set up, where
customers can sign
up for the coffee shop (H&P) card and get loyal point after every purchase.
The points can then be used to get free drinks and food. Student discounts
on chosen brands. Develop websites, Facebook pages, twitter accounts,
for reviews and comments.
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Process

The process in which the caf follows is:

1. A member of staff greets each customer as they enter the caf.

2. There is an option if the customer would like to use a self-service
machine, order at the till, or order while seated in the shops
comfortable seats.
3. Customers are then then served according to their preference in
their order.
4. They input their order.
5. After the order
6. They are given a token that vibrates once the order is ready if it is a
take away order.
7. If the customer prefers to have their coffee or food in the shop, a
maximum of two minutes is all it takes to get there order ready on
the table.

Physical Evidence
Marvin & Smiths coffee shop has a website showing all the information
relating to the company including: shop locations, menu, staff information,
and employment with the company. The use of exclusive and customised
coffee beans from Uganda gives the company its unique brand and
recognition, together with its unique east African themed coffee shops and
entertainment. A modern contemporary look with themed and cosy
interior will ensure that customers are attracted to go in and try the
products. The efficient customer service, high quality of coffee, and
themed decorations and events will ensure that the customers will want to
come back into the shop.

People
The staff will include well-trained and experienced baristas that are both
conversant in the preparation of Finnish local coffee and international
brand coffee. Waiters and Waitresses will be well trained and fluent in both
Finnish and English Languages.
Word count: 658

3. Covering a wider geographical area

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Impacts on Information Systems

The proposed expansion plan for Hank and Pattys caf will be significantly
impacted by their need to develop new information systems to cope with
the expansion. By going global a sophisticated IT system needs to be used
to handle vast amounts of data and operations in relation to: the data that
needs to be shared, the number of users to access the system, the
languages that the system needs to support, the different time zones to
be considered, and the currency that needs to be considered.

The company will need to invest in an enterprise resource planning

software (ERP) that will handle all management issues relating to the day-
to-day running of the business. The software will integrate all aspects of
the business not limited to: planning, development, manufacturing, sales,
marketing, finance, and human resources (Investopedia 2017).

Since the business will be operating in different countries with different

currency a cloud based ERP would be Ideal. The cloud based ERP runs on
the web and works off cloud implying that it can be updated seamlessly. A
candidate cloud based ERP software for the company would be the
NetSuite ERP software developed by Oracle, which is a world-renowned
software developer. The software includes application that will handle,
financial activities (accounting, reporting, analytics), payroll, order, billing,
supply chain, and inventory management (Oracle + Netsuite 2017). The
software may be expensive at first to purchase but they will surely make
operations at Hank and Pattys caf more efficient and will eventually save
money for the company in the end.

Impacts on gaining competitive advantage

Finland is considered as one of the highest consumers of coffee in the

world. This said, the demand for coffee and coffee shops will be high
which also translates to the number of coffee shops around. The main
point to consider is; how will Hank and Patty gain competitive advantage
when surely there are many local and global coffee shops around?
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Hank and Patty will have to ensure that they provide the highest quality of
coffee to locals at a reasonable price comparable or even cheaper to
existing local coffee shops. The export of raw materials and products will
have to be at the same price as the UK so as not to increase overheads to
their new venture.

The company will also need to hire a great and experienced team
preferably local who can speak the language and know the culture.

The themed coffee shop and themed event days will surely capture
attention of the locals as it did in London. They will want to experience
something new unlike what they are used to in their local coffee shops.
Indeed, this will attract customers who will be attached with the
experience, the highest quality of coffee and excellent customer service.

The company will also need to adapt to the new environment with regards
to its branding and menu. During planning and implementation, numerous
cultural and customer needs will arise thus a tweak in the menu to
accommodate such needs will be required to accommodate local tastes
and requirements.

Word count: 513

4. Impacts of the companys profitability and liquidity on

decisions available

The total net profit that the company made at the close of 2016 was
26,800. Surely, this wont be enough capital to start up a venture abroad.
The company will have to obtain finances to fund their venture through
obtaining a loans from banks and/or lending organisation. This however
will be very difficult due to bank lending conditions and restriction. For
the company to obtaining funding, they will have to provide collateral or
personal guarantees, which implies giving up control of part of the
business to the funders in the form of equity shares (ACCA, 2013). Their
funding will be highly dependent on the quality of financial information
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provided and the funders willingness to take a risk on the proposal (ACCA,
2013). The company has decided to invest in an ERP system to facilitate
management and finance. The system is considered as a cash pooling tool
that will ensure a balanced business activity that reduces excess idle cash
and minimises internet risk (Hazenberg et al, 2014). This will surely act in
favour of Marvin & Smiths coffee shop in that they will demonstrate to the
funders that they have the ability to reduce financial risks and liquidity
risks. A carefully prepared financial statement will also give the company
a chance to obtain government grants to venture abroad. According to
(Card, J 2015) the UK government provides grants that are equity free to
numerous schemes provided that the seekers provide an innovative bid.
Marvin & Smith coffee shop proposal is innovative and has proved
successful in London, this might increase their chances to obtain the grant
provided that they provide a thorough financial proposal and statement.

For any business to be successful, they must demonstrate the ability to

generate profit that is evident in Marvin and Smiths coffee shop financial
statement. However, the company does not have any liquid assets in
which it can convert into cash to enable it to pay its bills and liabilities. All
the assets the company currently possess are assets that are in use in
their shops i.e. equipment, fixtures and fittings, and IT equipment. This
will have an adverse effect on their ability to obtain any sort of funding
from equity or loans. To address the issue the company will need to
formulate a working capital management that will increase profitability
and ensure that there is enough liquidity for the company to meet short-
term obligations without affecting their day to day running of the
business (Pass and Pike 1984).

Word count: 414

5. Conclusion

The current study investigated the possibility of Hank Marvin and Patty
Smith to expand and venture globally by opening a new coffee in a
European city after having successfully opened and operated three shops
in and around London. After carrying out vast research and getting advice
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from professionals, it was agreed that Helsinki Finland was the most viable
city and country to expand to. Finland is not only considered as a stable
economic country but is also the worlds highest exporter and consumer
of coffee, which are both prerequisites of a viable expansion candidate.

The logistical, ethical and structural consideration that were considered in

the study included:

Cultural impacts which highly determines the success of a business

Language impact since Finland speak Finnish and the company has
its capacity based in England where English is spoken

Time difference which will affect coordination and scheduling of

activities

Currency difference where the company normally trades in pounds

but Finland trades in euros.
A marketing mix ensures that a company considers the right product, at
the right place, in the right time, with the right price. A marketing mix was
prepared for Marvin and Smiths coffee shop that implemented the use of
7ps (product, price, place, promotion, people, process and physical
evidence) to control its marketing plan.

When venturing overseas it is essential that a company cover a wide

geographical area, which may affect numerous factors such as information
systems, and gaining competitive advantage. To expand globally the
company will need to implement a sophisticated IT system to ensure
effective coordination and management of the business. An ERP system
would be ideal to facilitate financial and overall management of the
company. To gain competitive advantage the company to provide the
highest quality of coffee at prices comparable to local and international
shops. The use of innovative strategies will also aid in gaining competitive
advantage. The company may fund its venture by obtaining outside
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funding preferably in the form of a short loan or obtaining a grant from
government schemes.

Word count: 336

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