Marvin and Smith Case Study

The plans by Marvin and Smith to expand their coffee shops to the overseas country will compel the two to restructure their management team to appropriately respond to new the challenges as well as harness the novice opportunities. The two business partners will have to recruit more staff and promote the older employees to other management positions. Prior to the expansion plan, Marvin and Smith assumed direct management responsibilities to oversee the day-to-day running of the shops. Now that they are expanding the business, there is a need for new plan to ensure the new business subsidiary withstands the inevitable management challenges in Italy. Marvin and Smith need to employ an additional staff including IT consultants, accountants, and human resource managers to successfully establish a new product in an existing market.

With the improved service delivery in the foreign country, more customers will be enticed who will further determine the price of the product and consequently an increase in revenues that will become the source of competitive advantage over the existing cafes. The managers both in UK and Italy will adopt strategies such as targeting iconic sports grounds which host games on weekly basis and tourist destination centers to penetrate a wider market. Controlling a significant portion of the market implies achieving high sales volume through reduced product prices which result in higher revenues (Reider 2015). With the unique Ugandan and East African taste of coffee, the wider coverage of Marvin and Smith’s coffee shops will make customer shift their allegiance from similar coffee shops and earn Marvin & Smith’s a competitive hedge.

Thus, the business’ ability to adopt an appropriate information system ran by IT experts will significantly boost online sales and increase profits. b) Net Profit The net profit of a business is the amount of revenue it generates after a deduction of all the expenses as well as the depreciation of the business equipment (Wilkinghoff 2009). As at 31st December 2016, Marvin & Smith’s café shop made a net profit of 26,000euros. With this amount of net profit, the business can expand without encountering any financial difficulty. c) Return on Capital Employed (ROCE) The return on capital is a ratio that represents a business’ efficiency and profitability based on the capital employed (Ibid 2009). Its mathematical relation is given as: ROCE = Earnings Before Interest and Taxes (EBIT)/Capital (Lowe 1816).