Organization Culture: Profitability And Liquidity

Implications and Impact. Implications of the need for Marvin and Smith’s company to cover a wider geographical area. Gaining Competitive Advantage. Marvin & Smith’s Coffee Shop – Financial Ratios. Income Statement for Marvin & Smith’s Coffee Shops for the period ended 31st December. Non Current Assets. Total capital and liabilities. Analysis of Profitability Ratios. Gross profit Sales x 100 ═ 208000 360000 x 100 =. Net profit / Sales x 100 = 26800 360000x. Net operating profit / Total assets - current liabilities x 100 800 / 113000 6200 xAnalysis of Liquidity Ratios.

By entering a new market in Germany, Marvin & Smith’s Coffee Shop could be facing some challenges and must adapt their domestic business to foreign market and take into consideration many factors. The company highlighted a range of factors: information systems, organisation culture, management structure, supply chain and HR issues.

Workers are part of the business. Recruitment process to hire right candidates, who are team players and bilingual.

Motivation system and bonuses – motivates workers in their job.

Unique furniture and uniform created to recognize company name and brand– African inspired art crafts, warm and private atmosphere.

The organization of Marvin & Smith’s cafe is exclusive because the organization is extremely targeted on these factors: Fair-trading, guest convenience and African theme management (Wilson, 2014). Every staff member within the organization understands, responds and follows this organizational culture. In Germany, the recruitment process should target people who speak German and/or some other (French, Italian, Turkish, Russian) language. Although there is a potential workers market in Germany, in order to obtain and exhibit company culture in the best possible way, when entering the new market, the company might send their best baristas and managers from the UK. Although, consequently, they might face staff shortage back in the UK. Undoubtedly, Marvin & Smith’s Coffee Shop will use company culture to attract and retain talent in Germany and great company culture will spread rapidly through employees’ network.

Although raising capital for the coffee shop is the most intimidating aspect it is fundamental to calculate the budget the company is working with. This part of the case study produces a financial analysis, based on the provided financial data about Marvin & Smith’s Coffee Shop. The profitability and liquidity ratios of the organization will be deduced and decision regarding business expansion in Germany will be made.

Gross Profit: The gross profit ratio could be calculated through dividing the gross profit earning of an organisation by total sales amount (Anderson et al., 2014). It is one of the most important ratios considered for determining the financial strength of an organisation. In 2016, the gross profit margin earned by Marvin & Smith’s Coffee Shop is around 57.78 % which represents its effective financial strength for expanding in new international markets.