Factors to Consider Before Expanding Business: A Comprehensive Guide

This report discusses the factors that a business must consider before expanding their products and services in the market. It covers the analysis of internal and external factors, risk reduction, and achieving higher outcomes. The case study focuses on Coca Cola's expansion and marketing strategies.

COURSE ENTERPRISE
AND BUSINESS

Executive Summary
The report is going to consist of factors which a business must plan before expanding
their products and services in the market. The company has to analyse the internal and external
factors of the company to that there is going to be higher outcomes and risk factors in the
company can reduce.

TABLE OF CONTENT
Business detail.............................................................................................................................4
Customer needs............................................................................................................................4
Macro environment......................................................................................................................4
Market & industry analysis..........................................................................................................5
Competitor analysis.....................................................................................................................6
Marketing & pricing strategies....................................................................................................7
Operation plan.............................................................................................................................8
SWOT analysis............................................................................................................................8
Financial requirements.................................................................................................................9
REFERENCES..............................................................................................................................11

Business detail
Coca cola has expanded themselves in a lot of products and services in the market in
order to be able to make the satisfaction level of the customers be improved. The company was
established in 1886 which is 134 years ago and there are more than 86,200 employees working in
the organization as of 2019. Customers want new products and services from the company which
is going to make them satisfied further and that is very important for the organization to have.
There is an appreciation from the customers whenever there are new products which are being
served. The market of Coca Cola gums are having 25 employees on this project and is going to
just increase in the market because this is a very unique flavour and other businesses will not be
able to produce this product which is going to make the company have higher functioning and
loyal market share as well in the market which is a very important factor.
Customer needs
The customers need variety in the products and services which are important for the
organization to get in so that they can be satisfied higher. Satisfaction and demands of the
customers are very important in Coca cola gums which are going to help the company be able to
have higher reputation and standards for themselves in the market as well.
Macro environment
Coca cola is having a strong understanding of the external factors which can influence the
working of the organization which is going to be discussed in the further report as well.
 Political factors
There is a stability in the policies and power in the country therefore there are going to be
constant strategies and techniques which are present in the company in order to be able to
operate and function effectively in the market.
 Economic factors

The company is having an advantage since the GDP is improving and so is the
unemployment rate in the country therefore the organization will be able to operate and function
effectively. There are a lot of measures which the company has taken already in the market (Barr
and et.al., 2018).
 Social factors
The lifestyle, demands and expectations of the customers is changing and that is being taken
care of by the company by getting in new products and services from time to time.
 Technological factors
There is a lot of investment in research and development department and the demands is also
increasing which needs to be fulfilled on time which is making the company have a stable brand
value and image.
 Legal factors
There are a lot of patents and copyrights which Coca cola is having on their ingredients and
recipes so that the competitors cannot copy and also the company is following all the policies
and laws for the customers and employees.
 Environmental factors
There are a lot of environmental factors as well which the company takes care of and zero
carbon footprints is just one of the measures which the company is working upon currently.
Market & industry analysis
To understand the competition in the market it is important for the company to analyse
the market and industry in order to have higher performance and value in market.
 Bargaining power of customers (Low)

Customers can not have a control on Coca cola because of the changes and new products
which the company is getting and there is a well maintain quality as well which organization
takes care of (Молчанова, 2020).
 Bargaining power of Suppliers (Low)
The company is having a lot of suppliers and is dependent on retailers for the sales of the
company to increase which is going to be profitable for the organizations long run.
 Competitive rivalry (High)
There are a lot of competitors in the market which the organization needs to maintain only
then there are going to be good for the overall functioning of the organization.
 Threat of new entrants (Medium)
There is a requirement of a lot of investment which a business will have to make so that they
can operate effectively in the market.
 Threat of substitute products (Low)
The company is having a strong patent for the flavour and products of the company therefore
the company is not going to have substitute for Coca Cola gum in the market which is a great
factor for the business.
Competitor analysis
The company is targeting for urban areas because the product is famous in these locations
and so is it in rural areas but that is going to take time for the product to be able to capture the
customers. The business is having a strong internal and external factor which is a great factor for
the company to have in the market which is going to make the organization be able to operate
effectively (Ullman, 2020). The competitors will not be able to copy the product and service
because the organization has made a patent over the flavour which is why the product is going to
be unique in the market which is a great factor for the company to have in the market. The
weakness of this product in the location is that urban population is getting health conscious

which is going to make the organization have limited sales and that is not a good factor for the
company to have in the market.
Marketing & pricing strategies
Marketing strategies
There are four segments which are present for this factor which are going to be discussed
in the further report.
 Demographic- Coca cola gum is going to be placed according to the age and location
because there are a lot of people which are getting heath conscious and this product
would not do well in that sector. Targeting the youth for this product is going to be very
good for the functioning and operations of this factor which is good for a long run.
 Psychographic- The lifestyle of the youth and interest as well is going to be fulfilled by
Coca Cola gums in the market. The product is going to aim for the right psychographic
factor as well so that the product will be able to gain the market easily and effectively
which is a great factor for the company to have.
 Behavioural- The product is not going to be aimed high in the market which is that the
spending habit of this segment is going to be fulfilled by the company and that is a great
factor for the company (Verel, 2020). Brand is also going to attract more customers in the
company as well for this product.
 Geographic- Location of the product is going to be urban cities which are going to make
the company have the right sales as expected and that is a great factor for the company to
have in the market.
Pricing strategies
Coca Cola gums is going to use skimming pricing for this product because this is having
a high competition and since the flavour is also going to be new in the market the customers will
take time adapting to it as well. The company will have to think of the competition as well as the
expectations of the customers so that the product will be able to capture a larger market and have
a stable and expected economic factor.

Operation plan
The company is having a lot of links for transportation already globally which is why it is
not going to be difficult for the company to develop more links. Equipments are going to be
around the same which are going to be used by the company so that they can get in the right
customers in the company and make the satisfaction level of the customers improve in the
market which is going to be very good for the overall development. There are legal patents and
copyrights which the company is already having on the flavour which they are going to be using
in the gum as well which is why it is not going to be difficult for the company in any way
possible to be able to capture the market with this new product (Demidenko and Malevskaia-
malevich, 2017). They have the right building and premises which is required for the
organization to be able to produce the products in the market which is going to be very good for
the overall brand value and image in the market. New products always add value to the portfolio
as well and Coca cola is already having a very strong base for market and customers in the
market because of the portfolio which the company has developed over years.
SWOT analysis
Coca cola is aware of the importance of internal factors and work accordingly so that the
company is not being affected negativity which is going to make the organization have higher
competitive advantage in the market.
 Strengths
The company is having a strong market base for themselves which the company has gained
over years which is a great factor for the company to have in the market. There are a lot of
innovations and improvement which the company has got in their products which can make the
company gain a lot of knowledge and experience and is being used in the future expansion as
well (Pereverzieva, 2019).
 Weaknesses

The company is not having a good retention of employees which is that the company is
losing on their loyal customer base which is not a good factor for the company to have. The
company will have to work upon their functioning in order to be able to operate effectively and
there has to be good motivation level as well for the employees which need to be present making
the company be able to operate and function effectively.
 Opportunities
Strong base and working on the portfolio is a great factor and working technique which Coca
cola is having for them in the market making the company gain competitive advantage for a long
run (Kucharčíková, Mičiak and Hitka, 2018). The company is having patents and rights for the
products and services which is why the company is being able to operate effectively in the
market. The company will have to invest a lot of economic factor to be able to develop their
product into healthy product in order to get a higher functioning and sales in the market.
 Threats
The competition in soft drink is increasing which can make the company lose their market
share and that is not a good factor for the company to have. There is another factor which is a
threat for the company which is that the organization is not having healthy products for the
customers and the demands for the customers are shifting towards healthy products and that can
affect the sales of the company. It is important for the company to take care of their sales in order
to get their economic factor stable in the market which is going to make the company be able to
operate effectively.
Financial requirements
Start-up expenses Amount (£)
Legal 1500
Promotional material 1,100
Contractors 600

Insurance 100
Computers 400
Others 1,200
Total 4,900
Start-up assets Amount (£)
Cash required 25,000
Start-up inventory 15,000
Other current assets 7,000
Long term assets 50,500
Total assets 97,500
Total requirements 100,000
Start-up findings Amount (£)
Liabilities 16,000
Accounts payable 1,500
Other current 8,000
Long term liabilities 60,000
Total liabilities 85,500
Investors 0
Total start-up findings 85,500

Template 2: Cash flow and budget for the proposed ventures
Initial budget or the cash budget for the pre launch of the venture can be developed as:
Particular Amount (in £)
Technological requirements 350
Human resources 400
Marketing 300
Research expenses 250
Other expenses 500
Total £ 1,800
Further, the prelaunch asset cash budget can be prepared in following manner:
Particular Amount (in £)
Raw Material 650
Cash 1500
Machinery and equipments 1100
Physical Outlet (On rent) 1000
Other Assets 350
Total £ 4,600
Cash flow forecasting for 18 months
(Amount in £)

Particular Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter
5
Quarter
6
Opening balance 35000 56600 83650 116850 153850 176000
Cash sales 17000 20000 25000 28000 15000 60000
Receivables 16000 18500 19000 20000 20500 21000
Sales of assets 20000 0 0 0 7000 0
Total cash received 88000 95100 127650 164850 196350 257000
Cash Expenses
Direct labor 1900 2000 1800 1600 1800 1600
Direct material 2000 2100 2200 2300 2000 3000
Selling & distribution
o/h
4500 4200 4000 4100 3600 3900
Manufacturing o/h 3000 3150 2800 3000 2950 2500
Assets purchased 20000 0 0 0 10000 90000
Total Cash expenses 31400 11450 10800 11000 20350 101000
Net cash flow 56600 83650 116850 153850 176000 156000
The company is going to be using bank loans as the source of investment for the further
functioning and that is going to be a very safe and secure method which the organization would
be using in order to be able to operate effectively in the market. Coca cola is having the right
investment for the future expansion and investment for new products and services in the market
as well which is going to make the organization have higher profitability but having the right
experience the organization will have to use the right methods in order to be able to operate
effectively (Grudina, Avdonina and Podgornaya, 2016). There are already a lot of products
which the company has developed themselves in the market which is going to make the company
have higher revenue and brand value in the market has raised over years. From the above
business plan it can be concluded that there is a very strong planning which a large organization
must have for them in order to be able to operate effectively in the market. Company is having a

lot of changes from time to time which have to be maintained and practices so that they would be
able to maintain the market and functioning in the market effectively.
Breakeven analysis
Breakeven analysis is one of the best technique to analyse whether the business should continue
the production or not and if yes then at what level of production does the company operates to be
in a profitable stage. The breakeven point determines the number of unit the company should
produce where it has earned no profit and incurred no loss. The company produces only that
number of units where it has been just able to cover its all costs. In this plan if the company had a
sale of £300000 where per unit price would be £100 and the company has sales of 3000 units. If
the company has to incur £70 per unit towards the variable cost to produce the products. And the
fixed costs incurred by the company is £70000. For the given information regarding the
company’s production, the breakeven point can be calculated as follows:
Sales 300000
Less: variable costs (70*3000) (210000)
Contribution 90000
Less : fixed costs (72000)
Profit 18000
Breakeven point (in units): Fixed costs ÷ contribution per unit
Fixed costs = £72000
Contribution per unit = 90000 ÷ 3000 = £30
BEP in units = 72000÷ 30 = 2400 units
BEP in sales = Total Fixed Costs ÷ contribution * Sales
Total fixed costs = £72000
Contribution = £90000
Sales = £300000
BEP in sales = 72000 ÷ 90000*300000 = £24000
Verification
Sales (2400 units@£100) 240000
Less: variable costs (70*2400) (168000)

contribution 72000
Less: Fixed costs 72000
Profit 0
From the above illustration it has been clear that by producing 2400 units the company will
attend its BEP, where its profit earning is zero because the sales made at BEP is just enough for
covering costs.

REFERENCES
Books and Journals
Barr, T.L and et.al., 2018. Development of indigenous enterprise in a contemporary business
environment–the Ngāi Tahu Ahikā approach. Journal of Enterprising Communities:
People and Places in the Global Economy.
Demidenko, D.S. and Malevskaia-malevich, E.D., 2017. Institutional Approach to Enterprise
Production Cost Analysis and Optimization. In Financial Environment and Business
Development (pp. 601-610). Springer, Cham.
Grudina, S.I., Avdonina, S.G. and Podgornaya, A.I., 2016. MODERN GLOBAL TRENDS IN
ENTERPRISE REENGINEERING MANAGEMENT. GLOBALIZATION AND ITS
SOCIO-ECONOMIC CONSEQUENCES. 5. p.556.
Kucharčíková, A., Mičiak, M. and Hitka, M., 2018. Evaluating the effectiveness of investment in
human capital in e-business enterprise in the context of
sustainability. Sustainability. 10(9). p.3211.
Pereverzieva, A.V., 2019. Assessment of the enterprise internalization level. Bulletin of
Zaporizhzhia National University. Economic Sciences, (3 (43)), pp.92-98.
Ullman, D.F., 2020. IS 685-852: Enterprise Architecture and Integration.
Verel, E.T.G., 2020. Principles of the organization of marketing activities of an enterprise.
Молчанова, С.М., 2020. DEVELOPMENT OF THE RELATIONSHIP STRUCTURE AND
PLANNING OF THE TECHNOLOGICAL CHAIN AT THE ENTERPRISE.
In Фундаментальные научные исследования. (pp. 34-38).