Home or Abroad? I believe that Coffee Delight should expand by opening outlets in Romania then expanding further in UK

Authors Avatar by johnthegreat556 (student)

Parth Patel

Case study: Home or abroad?

It could be argued that it would be beneficial for Coffee Delight plc. to further their expansion in the UK. On the other hand, it could be argued that it would more profitable for them to expand aboard in Romania. I believe that Coffee Delight should expand by opening outlets in Romania then expanding further in UK.

One reason for my decision is that the market growth in the UK for a coffee shop has been predicted to drop significantly from 6.2% to 3.9% by 2010. This is highly influential for Coffee Delight as they would be put at a disadvantage as their growth may also decrease. As a result the remaining coffee shops will be in high competition and this will result in Coffee Delight needing to compete for customers, this may lead the business having to reduce prices. In order to reduce prices Coffee Delight then may need to reduce costs which could lead to a decrease in the quality of coffee produced; this could lead to unsatisfied customers. Consequently these customers then would look for substitute shops to purchase their coffee from. On the other hand, the market growth in retail sales in 2005 for Romania is 25%. This means there is a potential for Coffee Delight to increase sales as the market is stronger in Romania whereas the London market is saturated.

Join now!

Another reason for my decision is that the Romanian government is offering businesses which are expanding in Romania the chance to get some financial support as the EU is giving 17000million pounds over the next seven years. This would give Coffee Delight more of an incentive to expand in Romania as the financial support would be beneficial as London is not offering any. Although, it could be argued that the financial support alone would not be enough of a reason for the expansion, Romania currently has limited competition. This would be ideal for Coffee Delight as they will be able ...

This is a preview of the whole essay