Hank Marvin and Patty Smith Case Study
The city offers entertainment activities like casino and golf course. Most people live in the mountain areas. The town is most popular with retirees because of its scenery. Firstly, Benalmadena has attractive beaches and places like Colomares, which is the tallest Buddhist in the whole of Europe. The city, therefore, is a tourist destination for foreigners and also those living in Spain. This is a local tax, and the tax paid is determined by the value of the property. Corporate tax for foreign companies was reduced from 28% in 2015 to 25% in 2016. Local authorities in Spain decided to remove certain tax credits like the environmental investment credit and the reinvestment to encourage foreign companies to invest in local areas. Authorities also agreed to enact a capitalisation reserve that permits a 10% deduction of tax if a company’s equity increases in the following year.
The tax deduction would favour Marvin and Smith since it would able to generate more income and expand its growth to other parts in Spain. Firstly, it is difficult to start and register a company since a lengthy process is involved. The Spanish government has put in place minimum criteria for capital before starting any business. Marketing Mix It is defined as the different choices that businesses make in the whole process of creating a product or service available in the market. The marketing mix is an essential tool to know what the product or service can provide and how to provide the product to the market successfully. The marketing mix is, therefore, ensures that the right product is put at the right place (Moore, 2009).
Due to the continuing coffee culture, opening a coffee shop in Benalmadena will benefit Marvin and Smith. Opening a shop in European Country will create a competitive edge to the business. It should also concentrate on attracting more tourists and local people by providing free Wi-Fi throughout day and night. Additionally, it should provide volleyball and football where tourists can play and have fun. Doing this will attract more tourists in their business. The following indicates the price of different coffee to be sold by the firm. Tourists visiting this can easily afford the coffee offered by the firm. Coffee Euro/Cup Largo 6. 1 Cortado 5. 9 Capuchino 6. Promotions: It is defined as a way in which the consumers are given information on the product so that they can make decisions about a product.
The most commons promotion methods include advertisement and sales promotion. Marvin and Smith should advertise their business on billboards positioned on the road. The business should also create brochures and put on the business vehicles having the business name, location and logo. They should also indicate the opening date of the business and should offer a discount for the opening one week; this should also be placed on brochures (Moore & Pareek, 2009). People are grouped as Gallego, Catalan and Basque used dialectic speech which varies from age and remoteness from urban cities. Spanish language. The Spanish language is the local pride for most of the people. Tourists visiting Benalmadena likes speaking in the Spanish language. Eating and drinking while spending time together is a common thing with Spaniards.
Opening coffee shop business in Spain will force Marvin and Smith to change its management culture to meet customer’s expectations in Benalmadena. The business should also employ workers who keep customer’s privacy. The idea of offering playing games should be a major consideration for the business to meet Benalmadena's culture. Gaining competitive advantages Opening the coffee shop in Spain will reduce incomes in London. Marvin and Smith will be forced to relocate some of their staff in Spain. They each raised £50,000 b. The second shop opened after 6 months, the 3rd and 4th opened after 9 months. c. Coffee machines and associated equipment cost £5,000. Each shop has two machines d. Lower gross profit margin ratio may be caused by stiff competition; lower sales made and inappropriate advertising methods.
Gross margin ratio for Marvin and Smith is 57. 77% indicating that the business is generating enough earning to cover the cost involved in purchasing and selling the coffee. Net Profit Margin It is determined by dividing net income by sales revenues. It indicates how much a business earns from its sales. Marvin and Smith’s current ratio is 5. The ratio is high compared to the recommended ratio of 2. It shows that a company is holding too much of its resources which should be used in the business expansion. Acid Test Ratio It shows how a business can pay its liabilities using quick assets such as assets such as assets. Inventory is not included in the calculation of this ratio since it takes a lot of time to convert to cash.
Based on this analysis, the business can run a coffee shop in Benalmadena, Spain. It is because there is available cash that can be utilised in building a coffee shop. Conclusion It is essential for businesses to operate internationally since it can expand its costumer’s base and earn more profit. However, many aspects need to be looked in detail such as cultural differences and business regulations. The business also needs to understand geographical locations and ethical requirements needed for the business to operate efficiently. They should buy more land to create more space for their business. They should use the idle current assets to expand their coffee shop such as buy more land to increase the area of the shop and invest in vehicles to ensure faster delivery of their product.
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