Business Growth Project

This project examines the growth planning of 21 & Cup Coffee House, a UK-based coffee shop, focusing on innovation in coffee services to compete with rivals like Costa and Starbucks. It utilizes Ansoff Matrix to identify product and market development strategies, explores potential funding sources, and outlines a business plan and succession options for the organization.

BUSINESS
GROWTH

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Evaluation of growth opportunities to analyse the competitive advantage for innovation1
M1. Growth options................................................................................................................4
P2. Analysing opportunities for growth by implementing Ansoff Matrix.............................4
TASK 2............................................................................................................................................5
P3. Potential funding sources and their benefits and limitations............................................5
TASK 3............................................................................................................................................7
P4 Business plan for growth...................................................................................................7
TASK 4..........................................................................................................................................10
P5 Success options for an organisation................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business growth is the factor which determines the successful management of
organisational functions. It is essential for an enterprise to plan for growth by seeking the best
investing sources. It is the only strategy which is related to development of a small enterprise.
However, the report will evaluate competitive advantage for 21 & Cup Coffee House in UK. The
needs of innovation in coffee services will analysed by firm with the help of porter’s five forces
model. In addition, it will identify growth opportunities of company by implementing Ansoff
development vector matrix. Thus, the report will determine business plan of firm with the help of
which the organisation will seek for funds from different sources.
TASK 1
P1. Evaluation of growth opportunities to analyse the competitive advantage for innovation
Evaluating growth opportunities is the best strategy which assists firm in planning for
growth and establishing innovation in existing products and services (Barringer, 2012). In
accordance with the statistics, it has been identified that the small medium enterprises are
growing successfully which are denoted by the figures i.e. in 2015, there were 97000 SME's
which grew to 5.5 million private sector business till 2016. This reflects remarkable growth of
small and medium businesses in the UK. Further, innovating products as per increasing
competition and rivalries products is the best strategy which helps enterprise in managing
successful business operations. Analysis of competitor with the help of Porter’s five forces
model is the best technique which can help 21 & Cup coffee house in determining needs of
changes as per rivalries and new entrants and substitutes. The porter’s five forces analysis of
coffee business is as follows:
Industry Rivalry: Coffee house is a common business because it allows peaceful place
to people to hangout and chill. Therefore, the level of competition is high in sector because there
are various leading enterprises which are located at all prime locations and offering premium
quality coffee services (Schaper and et.al., 2014). In accordance with this, 21 & cup will offer its
services at competitive pricing and will also make use of quality coffee beans in order to seek
consumer’s attention.
New entrants: The increasing growth of small business enterprises in UK denotes the
potential level of entrant high. Entering is related to access and due to lower prices of goods and
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services, it has become easy for the entrants to enter food industry and generate profits by
offering variety of services. It is the situation which enables risk of increasing barriers but on the
other hand beverage industry have stability of services and therefore it is a growth opportunity
for 21 & CUP coffee house to come up with innovation in order to management successful
coffee services.
Power of buyers: Food and beverage industry offers various types of innovation in
services which enables high power to customers. It is the risk factor for 21 & and cup coffee
house because. In this industry, buyers hold control over success of business (Blank, 2013).
However, to overcome this factor and maximize growth opportunities, the firm will focus on
making innovation in coffee services in order to attract consumers. Moreover, it can be said that
high range of suppliers reflect the buying power of people.
Power of suppliers: This factor relates to power with suppliers which is determined by
supply of coffee products in the market. In accordance with increasing competition and
substitutes, it has been analysed that there are high range of suppliers in food and beverage
industry which is a risk for the growth of SME. However, to deal with increasing suppliers and
competition, 21 & Coffee will make innovation in coffee services and will aim at managing
competitive pricing strategy in order to gain consumer attention.
Substitute products: Level of substitute in food and beverage industry is very high due
to increasing competition and innovation. In accordance with this, it can be said that substitute of
coffee products holds a strong competition where the power is in hands of leading suppliers such
as Costa, Starbucks, etc. (Fernández-Guerrero, Revuelto-Taboada and Simón-Moya, 2012)
However, to attain competitive advantage and to establish innovation in services of 21 & cup,
firm will be implement the use of premium quality of coffee beans and entertainment activities.
BCG matrix:
When business raises it requires money in the future and new products to launch so BCG
matrix is designed to analyse a framework according to market share and its growth.
Stars: These stars are considered to generate best market share and cash in 21 & Cup Coffee
House. But it calculates same amount of money returning which has been invested for its
development purpose.
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Cash Cows: These are products or business units which have high market share but decreased
growth prospects. 21 & Cup Coffee is advised to invest in cash cows to maintain the present
level of productivity or profitability in passive level.
Dogs: Dogs are products or units that have low growth rate or low market share. These are prime
candidates for sale.
Question mark: This is considered for less return after lot of consumption of cash and have low
market share. Units in question marks cannot have potential to convert into stars in 21 & Cup
Coffee.
New product development:
New product development is a procedure of launching an innovative product to the
marketplace. It mainly goes with following stages:
Idea Generation: 21 & Cup Coffee must develop idea at the first stage and this comes in any
form and from everywhere. It includes internal sources, SWOT analysis, market research,
analysing customers and competitors.
Idea Screening: At this stage, screening of idea is done by 21 & Cup Coffee. It examines its
strength, customer needs, current trends and affordability.
Concept development and training: Then, blue version of the company is prepared with all the
ideas and is tested.
Business Strategy Analysis & Development: After testing, marketing of the product is involved
with all kinds of pricing. 21 & Cup Coffee also looks its breakeven point.
Product development: After all stages concept is converted into actual tangible product which is
further developed for marketing purpose.
Test marketing: For research 21 & Cup Coffee introduces a prototype in the test marketing
phase. Feedbacks from customers are taken and makes product ready to launch.
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Commercialization: Then at last stage 21 & Cup Coffee implement its marketing strategies like
marketing mix to gain profits, final decisions are taken and departments are allotted their duties.
M1. Growth options
In accordance with analysis, it has been determined that there are numerous growth
options of 21 & coffee such as innovation in coffee services, competitive pricing, entertainment
activities, discounts and schemes for limited period as well as increasing outlets to establish
strong presence, etc.
P2. Analysing opportunities for growth by implementing Ansoff Matrix
Analysis of growth opportunities is the approach which helps in analysing opportunities
for business success and product development against rivalries. However, to evaluate growth
opportunities, it is important for 21 & Cup coffee house to keep a check of existing market and
products with the help of Ansoff growth vector matrix. Further, identifying market and product
potential is the prior programme which assists in making business plan for seeking funds and
investors (Brinckmann and Kim, 2015). It helps the management in boosting knowledge over
factors which can be risk to growth of enterprise. Moreover, it can be said that it helps in
considering the aspect of organisation which needs to be improved and presented in front of
investors. Ansoff vector matrix of coffee business is as follows:
Market penetration: It reflects growing sales of company’s products and services in the
existing market. With the help of this analysis, it has been determined that it is important for the
coffee house to make innovation in services and quality of beverage beans in order to improvise
business functions in comparison to market leaders such a Costa. Thus, this will assist the
enterprise in increasing customer satisfaction and sales which is directly related to profit
generation and developing brand image.
Product Development: It is focused on developing market image by launching new
products and services in order to gain consumer attention. In this, the coffee house will focus on
launching coffee with premium and exclusive beverage beans. Further, to make idea more
attractive, the firm will focus on sharing stories behind coffee beans (Jones and et.al., 2013). For
example: with every order of beverage, the management will share one story of real life of
farmers who work hard for managing quality of beans.
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Market development: With the help of this analysis, 21 & cup will evaluate the growing
sales with launch of new coffee products. This will assist firm in evaluating success of launch
and development of brand image in market. It is the strategy which helps in deriving success and
needs of managing further improvement as per increasing competition in industry.
Diversification: It is the riskiest stage of managing growth opportunity as in this
development phase, organisation aims at launching new products in new market. The launch in
new market can be predicted and holds high range of risk which depends on consumer
acceptance. However, the focus of company will be on unrelated diversification of coffee
services, where cafe will be focusing on implementing competitive pricing strategy and adding
new product to business such as Mock-tails and Cocktails.
TASK 2
P3. Potential funding sources and their benefits and limitations
Funding is the biggest source to business growth and development as it enables capital
investment which assists in launch, innovation, marketing, promotion etc. To manage success of
small medium size entrepreneurial functions, it is essential for organisation to seek funds for
investment (Blackburn Hart and Wainwright, 2013). However, when seeking for funds, 21 &
Cup will first focus on analysing improvement measures and innovation plan in order to
convince investors. The potential funding sources and their benefits and limitations are described
in the below table:
FUNDING
SOURCES
FUNCTIONING BENEFITS DRAWBACKS
Bank loans Application approval rates
remain healthy and almost
80% of businesses are getting
finance at the time of
application. The loan request
considers all the factors of an
enterprise that is investment
plans, products, regional
Interest on business
loan is tax deductible
and the biggest
advantage of bank
loan is on fixed rates
loans where interest
rate does not change
with course of loan
Interest rates of bank
loans for small
business enterprise is
quite high which can
be risky for a firm like
21 & Coffee.
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differences and trading
environment.
(SME Statistics,
2017). However, this
will assist the 21 &
Cup in long term
investment for
unrelated
diversification and
market development.
Crowd
Funding
The concept emerged after
global financial crisis. It is the
strategy for raising small
amount of money from
different people. it is
successful via internet
connection and investment.
There are numerous SME's in
UK which are managing funds
with the help of internet
sources. The crowd funding is
based on interest of different
people in trading plans of
organisation.
It is the fastest method
which can assist 21 &
Cup in raising
investment for
managing growth and
innovation.
It is the best to seek
reaction of public on
the changes and
product idea of
company.
It requires pre
planning for building
business plans and
predicting interest rate.
It requires patient and
copy right on business
idea.
Peer to Peer
lending
It offers virtual market place
where borrower and lender
interact directly for investment
on certain plans (Brinckmann
and Kim, 2015).
It is the situation where party
applying for loan focuses on
better rates whereas lender
It offers flexibility
over funding which
can assist coffee
house in
diversification and
market development
plan.
It lacks fees and
charges which are
taken by bank n
personal loans.
It is uncertain and in
this, interest rate can
fluctuate which can be
risky for 21 & Cup.
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focuses on better returns
Bootstrapping It is an effective source of
funds for start-ups. It is the
step in which the business
makes own investment for
start-up business or setting
plan.
It helps in saving time
of hunting for
investment.
It can be controlled
because the business
is not answerable to
investors for profits
and losses.
It is not applicable in
cases where the
organisation requires
huge amount of
investment.
It can end up with lots
of debt to business
which can be risky for
the brand image and
its existence.
Venture
finance
It is the investment provided
by investors to start-up
companies or small businesses
with the, believe of long term
growth.
It is related to future success
and professional relationship
with firm.
It requires business
connection for
tremendous benefits.
If in case 21 & Cup is
planning for venture
capital, then it is
important for the firm
to have business
expertise on
development and
innovation plan.
The strategy of
funding lacks control
over finance as it is
based on long term
growth and benefits.
In this strategy, it is
possible that firm may
lose control over
finance ability and
profits.
TASK 3
P4 Business plan for growth
Business plan plays an important role in managing successful organisation functions in
accordance to competitors. The plan of 21 & Cup is as follows:
COMPANY OVERVIEW
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21 & Cup is a small size UK based coffee house. The firm has been running restaurant
business successfully. Coffee is the speciality of restaurant but it offers food and entertainment
facilities to customers in order to expand market share.
VISION
Vision of firm of coffee high quality of beverage services at affordable prices.
MISSION
The coffee house mission is to improvise and innovate its coffee services in order attain growth a
competitive advantage.
GOAL
To become market leader and offer exclusive and premium quality coffee experience to
people across the globe (Pattanayak and Roy, 2015).
OBJECTIVE
 To implement the use of strategic tools for analysing competition and business growth.
 To enhance market, share and customer base.
 To offer high quality of food and beverage services.
FINANCIAL PROJECTIONS
Particulars January February March April May June
Cash inflows
Opening cash inflow 4000 4100 5395 6733.74
8114.848
4
9536.836
312
Net revenue 9000 9180 9363.6 9551 9742 9937
Other income 3500 3500 3500 3500 3500 3500
Total cash inflows 16500 16780 18258.6
19784.61
2
21356.73
784
22973.56
35408
Cash outflows
Raw Material 2500 1377 1404.54
1432.630
8
1461.283
416
1490.509
08432
Employees 3000 3000 3000 3000 3000 3000
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Other cost 2700 2808 2920 3037 3159 3285
Administration cost 4200 4200 4200 4200 4200 4200
Total cash outflows 12400 11385 11524.86
11669.76
36
11819.90
1528
11975.47
19208
Cash deficit / surplus or
closing cash balance 4100 5395 6734 8115 9537 10998
STRATEGIC TOOLS
21 & Cup coffee house will implement the use of Swot analysis for evaluating own
strengths and weakness. This will assist the firm in analysing improvement measure in micro
environment for managing successful business operations. Further, the firm will implement the
use of Pestle analysis will assist the firm in regulating a check over macro factors such as
political and economic changes, needs of society, technological advancement which can aid in
easy and safe management system at cafe.
Apart from this the restaurant will implement the use of porter five forces which will
helps in evaluating needs of innovation with regard to competitor analysis and substitute of food
and beverage services (Morecroft, 2015). In addition, the coffee house will implement the use of
BCG matrix which will assist the firm in deriving value of innovated products and needs of
further improvement in order to stability in business functions against competitors.
LEGISLATION
Food Safety Act 1990: This act will enable guidelines of managing safe practices in
restaurant which aims at protecting interest of customers.
Food hygiene regulations 2006: This act will assist the restaurant in maintaining
hygienic practices in restaurant.
MONITORING TECHNIQUES
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 The major responsibility of organisation will be to ensure regular innovation in food and
beverage services in order to attain growth (Cardinal, Miller and TenBrink, 2015).
 Monitoring business environment with the help of strategic analysis will assist the firm in
managing successful innovation and stability in order to stand out in competition.
TASK 4
P5 Success options for an organisation
Deriving succession options is the plans which helps the firm in taking risk against
market leaders. It offers different strategy which can help the firm in taking risk to attain growth
and competitive advantage. Some succession option for 21 & Cup coffee house are described
below:
Development of plan: In this, the focus of firm is on analysing scope of business plans.
Like it helps in deriving whether business plan is realistic and achievable. It helps in determining
time frame, key personnel changes, product innovation, market development, risk management,
and strategical analysis. However, the major limitation of business plan of 21 & Cup will be one-
time plan, because it is important for the firm to analyse all the changes from start for managing
changes.
Alignment of interest: In this it is important for the company to derive factors on the
basis of innovation will be done. This is done to protect interest of stakeholders and to ensure
safe economic contribution. Aligning interest of organisation help the management in deriving
needs of change in company’s services (Pugalis, Townsend and Ankowska, 2015). Further, it is
effective because it helps in outlining the profits, sales and benefits to company with business
operations. However, the major limitation of aligning interest is grouping of activities for which
management of change become difficult as it offers rigidity in success and growth plans.
Development of opportunities: In this, it is important for the organisation to focus on
opportunities in order to manage growth and innovation. The focus on opportunities and
innovations for small business enterprise leads to big changes and huge capital invest which can
risk for future debts. On the other hand, it is an effective approach because it helps in planning
changes in services as per competitors' analysis in order to establishing market and products
development.
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Evaluation of Job profiles: In order to make innovation and improvise small business
functions. It’s important for the coffee house to recruit and train staff as per market trends of
food and beverage preferences (Sahay, 2015). This is an effective step of succession plan as it
enables diversity and creates employment opportunity which assist the firm in contributing to
economic development. However, on the other hand, recruiting and training diverse staff is a
complex and time consuming process which can impact management of business plan.
This is to discuss upon both succession and exit planning for the chosen SME, where
both of these measures, despite of their similar connotation differs to a great extent. This is on
considering the instance of succession planning, which is meant to identify the replacements in a
business. It further offers the opportunity for developing those skills and experiences that are
required to replace the existing business leaders. It is primarily focused on the approaches of
business continuity and is usually adopted for transferring the tact of leadership from one
generation to another. Exit planning on another hand depicts a wide-ranging analysis of all those
elements that tends to impact on the business owner.
It thereby addresses several number of issues, considering both present and future planning
of the business. Both of these approaches called succession and exit strategy are incompatible
where the succession plan itself fits into the exit plan of the business owner. For this, 21 & Cup
coffee house can refer developing a realistic succession plan and can either refer it to involve any
of their family for continue the business or get into a buy sell agreement by involving a lawyer
into it. There together exist certain other plans such as selling the business, closing the business
or hiring an outside management for continue running the business.
CONCLUSION
The report summarized about the growth planning of small size UK based enterprise that
is 21 & Cup. It is a coffee house which is focusing on making innovation in its coffee services as
per industry rivalries that is Costa and Starbucks. Further, it outlined Ansoff growth vector
matrix of coffee house which helped to derive product and market development for which the
firm will focus on using exclusive premium quality bean for making innovation and to gain
consumer attention. In addition, it has been analysed that enterprise will implement the use of
competitive pricing to attain competitive advantage. Thus, the report concluded by outlining
business plan and succession options which will be considered by Coffee house at the time of
managing business operations.
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REFERENCES
Books and Journals
Barringer, B., 2012. Entrepreneurship: Successfully Launching New Ventures. (2012).
Schaper, M.T. and et.al., 2014.Entrepreneurship and small business.
Blank, S., 2013. Why the lean start-up changes everything. Harvard business review. 91(5).
pp.63-72.
Fernández-Guerrero, R., Revuelto-Taboada, L. and Simón-Moya, V., 2012. The business plan as
a project: an evaluation of its predictive capability for business success. The Service
Industries Journal. 32(15). pp.2399-2420.
Brinckmann, J. and Kim, S. M., 2015. Why we plan: the impact of nascent entrepreneurs'
cognitive characteristics and human capital on business planning. Strategic
Entrepreneurship Journal. 9(2). pp.153-166.
Jones, C. and et.al., 2013. The student business plan: useful or not?. Industry and Higher
Education. 27(6). pp.491-498.
Blackburn, R. A., Hart, M. and Wainwright, T., 2013. Small business performance: business,
strategy and owner-manager characteristics. Journal of small business and enterprise
development. 20(1). pp.8-27.
Pugalis, L., Townsend, A. and Ankowska, A., 2015. Planning for Growth: The Role of Local
Enterprise Partnerships in England Final report. RTPI Research Reportno, 9.
Sahay, M., 2015. Corporate Growth Planning: Concepts and Issues. Advances in Management.
8(11). p.1.
Cardinal, L.B., Miller, C.C. and TenBrink, C., 2015. STRATEGIC PLANNING AND FIRM
PERFORMANCE. The Psychology of Planning in Organizations: Research and
Applications. p.260.
Morecroft, J.D., 2015. Strategic modelling and business dynamics: a feedback systems
approach. John Wiley & Sons.
Pattanayak, S. and Roy, S., 2015. Synergizing business process reengineering with enterprise
resource planning system in capital goods industry. Procedia-Social and Behavioral
Sciences. 189. pp.471-487.
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Online
SME Statistics. 2017. [Online]. Available through: <https://www.bba.org.uk/news/statistics/sme-
statistics/>.
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