Planning for Growth: Analyzing Considerations, Evaluating Opportunities, and Assessing Funding Sources

This report analyzes the growth opportunities and funding sources available to Redroaster Coffee Co. and discusses the benefits and drawbacks of each source. It covers key considerations for evaluating growth opportunities, applying Ansoff's growth vector matrix, and assessing potential sources of funding for businesses. The report includes a PESTLE analysis, Porter's generic strategy, VRIO model, and SWOT analysis to demonstrate the understanding of competitive advantage within an organizational context.

Planning for growth

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................4
P1 Analyze key considerations for evaluating growth opportunities and justify these
considerations within an organizational context.........................................................................4
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix...................7
M1 Discuss the options for growth using a range of analytical frameworks to demonstrate the
understanding of competitive advantage within an organizational context................................8
P3 Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source. ......................................................................................................9
M2 Evaluate potential sources of funding and justification for the adoption of an appropriate
source of funding for a given organizational context................................................................10
P4 Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business..........................................................................................10
M3 Develop an appropriate and detailed business plan for growth and securing investment ,
setting out objectives, strategies and appropriate frameworks for achieving objectives..........13
P5 Assess exit or succession options for a small business explaining the benefits and
drawbacks of each option..........................................................................................................13
M4 Evaluate exit or succession options for a small business comparing and contrasting the
options and making valid recommendation..............................................................................15
CONCLUSION .............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Planning is an ongoing process which provides direction and guidance to the organisation
related to what to do, how to do and when to do. Planning includes establishment of short term
and long term goal of the organisation. It is used to deal with the dynamic and uncertain business
environment which helps them to achieve the organisational goal. An organisation is involved in
various business activities which is done for earning higher profit and desired goal of the
organisation (Ferreira Teixeira,and Rammal 2021). The strong business plan is the key to success
of an organisation as it identifies all the external and internal factor which may influence the
performance of the organisation. The organisation chosen for this report is Redroaster Coffee
Co. which is UK based small scale coffee company. It was founded in the year 2000 and provide
roaster Coffee beans which is continuously gaining reputation specially in the coffee market
(Bowen,and Morris2019).
This report will cover the internal and external factor which may contribute in the growth of
the chosen organisation and how opportunities can be evaluated with the help of Ans off matrix
model. Further, it will analyse the source of finance that can be managed and utilised by the
organisation for the expansion of an organisation. Also, this report will identify the entry and exit
option that can use by the organisation and associated benefits and drawbacks of such available
options.
TASK
P1 Analyze key considerations for evaluating growth opportunities and justify these
considerations within an organizational context.
The use of PESTLE analysis is an appropriate mechanism that identifies the growth
opportunities available to the Red roaster Coffee Company. Such opportunity can contribute in
the growth of the organization, ensure the success and development of coffee company.
PESTEL analysis- it is an external factor analyses the dynamic and uncertain business
environment which may directly affect the performance of the organization. It includes:
Political factors- This factor includes political stability and government policies in the UK
economy that directly affects the growth of the organization. In context to Redroaster coffee

company, current political stability promotes the success of the coffee company and they are
encouraging the new industry to expand the business in the competitive market.
Economic factors- It includes inflation rate, employment rate, GDP growth etc. which may
create depression and recession period in the economy. In context to Redroaster coffee company,
bank rates and inflation rate are stable which increase the purchasing power of the consumers
and it leads to rise in profit earning capacity of the organization.
Social factors- It refers to change in taste and preference of the consumer which tends to change
by the time. However, it is important for the organization to analyze the market demand to meet
their need and expectation in order to survive in the competitive market for a long run. In context
to Redroaster coffee company, they are deeply analyzing the consumer's need in order to
establish brand value in the market and leads to growth in their business.
Technological factors- technology and innovation is the current demand of he market which is
only boost the productivity of the organization but also enhance their efficiency. In context to
Redroaster coffee company, they are using creative style and ideas for surviving tasty coffee to
their consumers in order to gain reputation and growth of the company.
Legal factors- It includes rules, principles and standards which are legal compliance and
binding upon the organization. This statutory requirement are majorly affected the growth of the
organization. In context to Redroaster company, they are legally complied with all the provision
of the statute and are meeting all the standards for the safety and health of the consumers.
Environmental factors- It includes important elements which are essential for the protection of
the environment. This factor is crucial for the organization to consider as it is directly connected
with the health of the consumers and affects the society at large. However, the Redroaster Coffee
company uses the cost effective and sustainable method for reducing the wastage of resources
and minimizing the expenditure which helps in expansion and growth of the company.
Therefore, the macro environmental factors is evaluated to identify the growth opportunities and
enhance the operational efficiency of the Redroaster coffee company.
PORTER generic strategy - this is the strategic tool which is used by the Redroaster coffee
company to evaluate the growth opportunists. This approaches foster the productivity and
promote diversification of the industry. It includes Cost leadership strategy, differentiation and
focus.

Cost Leadership Strategy- it is the effective strategy which focus primarily on the cost system
in order to deal with the competitors in the market. In context to Redroaster coffee company,
they are using the cost leadership strategy to utilize the resources and minimize the expenditure
that are incurred by the company. It is important for the organization to utilize the available
resources as they are limited in number. The cost friendly price of the product are also helps in
gaining the reputation in the market and will contribute in growth of the company.
Differentiation Strategy- It refers to use of unique and different style of production that helps
them to establish brand value and goodwill in the market. The product should be unique , novel
and attractive to ensure the quality of product. In context to Redroaster company, they are using
unique strategy by roasting coffee beans and meet the need of coffee lover's who are buying their
coffee. This strategy can be made by conducting market research and development program
which helps them in analyzing the taste and preference of the potential consumers.
Focus Strategy- This strategy mainly focus on the specific segment and geographic area where
the demand of such goods are high. It identified the age, demographic areas, particular market
which helps them to create a large base of consumers. In context to Redroaster coffee company,
they are targeting the youth in order to provide them quality coffee taste at reasonable price
(Ahmad and Bakar2018).
However, it is recommended to Redroaster Coffee company to use the differentiation
strategy and attract the consumers to produce the goods in the selected market. This is deep
analysis of market and anticipation of consumer' need that helps to target the large base of
consumers.
VRIO MODEL- This model identifies the internal activities of the organization that helps them
to gain competitive advantages in the market. The expanded form of VRIO includes value, rarity,
imitability and organization. In relation to Redroaster coffee company :
 Value- it is related to the need and want of the consumers that is provided by the
Redroaster Coffee company to gain market reputation. The brand value and goodwill is
the asset of the organization that ensure them huge benefit in the competitive market for a
long run.

 Rarity- It refers to effective use of resource to meet the consumers demand in the market
as it help them to deal with the competitive market. In context to Redroaster coffee
company . They are simply acquired the resources to deal with the competitors which is
difficult to copy and use as substitute.
 Imitability- this factor is dealing with the product which is easily affordable to copy and
create a clone of the resources. In context to Redroaster coffee company, they are
creating unique and creative product which is difficult to copy for the competitors.
 Organization- this approach deals with the effective and efficient operation and
functioning of an organization. In context to Redroaster coffee company, they are using
cost effective and sustainable method is the key to the success of this organization. It
brings transparency and competency in the working system.
 SWOT Analysis- It refers to the internal analysis of the organization that identifies the
core area of management that helps to deal with the competitors. In context to Redroaster
coffee company, SWOT analysis is done which includes:
STRENGTH
 It provides online delivery of product
which saves time and money of the
consumer's.
 The price of the coffee is reasonable
and popular for its exotic taste.
 Employees are highly skilled and
creative who contributes their part in
the success of the organisations.
WEAKNESS
 Lack of financial resources and
investment, company is unable to
attract investors.
 Lack of effective management and
policies creates difficulty in their
expansion of business.
 Lack of an effective distribution
channel network outside UK
OPPORTUNITIES
 Expansion of small coffee shops by
introducing flavoured coffees
 New polices and government
regulations are encouraging the small
scale industry to raise their funds at low
rate of interest to make expansion of
THREATS
 Stiff competition among the coffee
industry increases the difficulty for the
Redroaster coffee company to manage
their business.
 Paucity of resources may cause serious
threat in the operational efficiency of

business.
 Th promotional strategies and
marketing techniques helps to establish
large base of consumers in the market.
the Redroaster coffee company.
 The unpredictable event of Covid 19
pandemic has stressed out the small
scale industry and cause serious threat
to this organisation.
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.
The Ansoff growth vector matrix is one of effective tool used by the top level
management to strategies their future plans and policies for the organization. It is also termed as
product market expansion grid. In context to Redroaster coffee company, the Ansoff growth
matrix model are used as:
Market development- This market development approach is used to gain share in the market by
introducing new product in the existing market in order to attract the consumer from their
services. In context to Redroaster coffee company, they can target the market by way of
creativity and innovation to increase economic sale of the company.
Market Penetration- this approach is used to make sell of product in the existing market by
offering the new product to its customers. In context to Redroaster coffee company, they are
using the modern technique and distribution channel to enhance the sale of the product in
different geographic areas and satisfying their need and demand of its customers.
Product Development- This approach is used to increase the production capacity and
operational activity of the organization. In context to Redroaster coffee company, they develops
the product by way of research and development technique that analysis the market and its
demand. The consumer's satisfaction is the paramount objective of every organization and can be
possible by using this approach.
Diversification- It refers to areas of product and its diversification. It happens when company
starts investing in range if products to satisfy all their needs to achieve growth and expansion of
their business. In context to Redroaster coffee company, they are not using this strategy as it is a
small scale industry so they are unable to bear the risk of diversification of products
(Dawes2018).

M1 Discuss the options for growth using a range of analytical frameworks to demonstrate
the understanding of competitive advantage within an organizational context.
With the help of growing strategy, it is analyzed that company can only gain advantage
when they have better plans and strategies to strengthen their financial performance in the
competitive market. The Ans-off growth matrix mode and VRIO model are the effective
mechanism that allows the organization to make expansion and growth of their business. In
context to Redroaster coffee company, they are able to generate funds by minimizing wastage of
resources and optimum utilization of resources also reduces their expenditure (PM and
et.al.2021). These strategy attracts the investors and allows them to invest in such industry where
chance of expansion is comparatively high. It enhance brand value, image and goodwill in the
market.
P3 Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source.
There are multiple sources through which organization can raise funds and meet their
routine expenditure. Finance is one of the important source that allows the company to enhance
their business and helps to deal with dynamic business culture. It is important for the finance
management to make effective decision for avoiding the wastage of funds and should establish
effective policies which will meet their financial requirements. The are several sources of funds
but commonly mode of raising finance are retained earnings, equity capital, debt capital etc.
Each sources of funds involves some benefits and drawbacks which will be discussed in context
to Redroaster Coffee company.
Retained Earnings: This is the primary source of finance which is created out of the profit
earned by the company from the production and sale of their product. In context to Redroaster
coffee company, they are meeting their financial requirements with the help of retained earnings
which proves to be beneficial for them.
Advantages: During emergency, the company is required to take help of lenders and make
borrowing, They can easily utilizes their retained earning to meet their financial requirements.
 It reduces the burden over the company related to payment of interest on monthly basis.
 It is one of the most effective method preferable for the small scale industry like
Redroaster Coffee company.

Disadvantages: In case of loss suffered by the company in any financial year, it would be
difficult for them to meet financial requirement from retained earnings.
 This is left over amount remains after distributing to the shareholders.
Debt Capital: It is one of the source of funds which involves legal formalities and raise with the
help of corporate bonds and promissory notes. Debts is to repaid on monthly and yearly
installment and it is compulsory obligation over the debtors.
Advantages: This is suitable option for medium and large scale industry and can raise funds
through completing some essential formalities.
 There are various Banks and financial institutions which are providing low rate of
interest to the organizations.
 The interest amount is deductible from tax that directs the net obligations.
Disadvantages: This is suitable option for a company who have good financial position and
credit score.
 Repayment is required to be paid on time and must follow the required procedure.
 Failure to repay, may declare company as insolvent.
Equity capital: it is a source of funds that involves shareholders who invest their funds in the
capital of the company. Shareholders are the actual owners of the company (Park Park and Park
2019).
Advantages: It does not require any repayment of loan and brings flexibility in the
organization.
 It contributes in the growth and expansion of a company.
Disadvantages: The ownership gets resolves and take part in the process of decision making.
 It involves complex procedure and requires compulsory repayment of dividend to the
shareholders.
M2 Evaluate potential sources of funding and justification for the adoption of an
appropriate source of funding for a given organizational context.
The most potential source of funding is debt capital because it levied less cost in
comparison to equity source of finance. The payment of interest rate is much lower than the
amount vested in the hands of shareholder or investor. The risk associated with this source is
relatively less.

P4 Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business.
A business act as per its constitution which is the charter of the company which defines
principle objective of the company. It outlines the process and procedures in which direction the
company needs to run. The business strategies of Red Roster coffee company determines its key
objectives which needs to be followed in order to increase its sells (Watson 2019). This strategies
will attract potential investors invest in their company. At most Red Roster company limited use
traditional business method which is followed by the set standards which provides details about
each section. The further plans of Red Roster Coffee Company Limited includes:
 Executive summary: this summary explains principle objectives of the Red Roster
Company limited and ground on which it will attain its principle objectives which
includes, leadership, mission statement, product segments, and many more.
 Company description: it gives overview of Red Roster coffee company limited to its
customer along with aim, objectives and achievement of the company.
 Market analysis: this tool provides the analysis about the market structure which Red
Roster is targeting to expand its business. This enable them to identify their competitors
in market (Hart 2021).
 Organization and management : In this the structure of an organization and its
management is understood and faculties who are responsible for running the business.
Red Roster coffee limited is the small enterprise also use organizational chart with the
view to outlined the determined responsibilities to execute the assigned task. This will
provide relevant information about the contribution made by the employees for attaining
the success for the business.
 Service or Product line: In this all the products and services offered by the company are
explained in details in this section. Red Roster Coffee company limited use this section in
order to identify the benefits which they provide to their customer. The product and
services they offered is also evaluate by conducting research and taking feedback about
the quality of their product.
 Marketing and sales: In this strategies are being used by corporations especially in
context of product or service marketing. This enables company to attract and retain its
capacity in respect of customer (Dong2019).

 Funding request: in context to the Red Roster company Limited, this enables company
to ascertain knowledge about the required funding for the functioning of the company. It
provides a layout about the funds which are needed and their usability in business
operation.
Financial Budget

M3 Develop an appropriate and detailed business plan for growth and securing investment
, setting out objectives, strategies and appropriate frameworks for achieving
objectives.
Business plan is the initial stage which includes important decision making at the
beginning of the business as it gives a plan of action which may help in inception of business at
its very essential stage. However, for planning a a business it requires lot of time and energy, it is
essential for securing business success. To attract investors in order to secure funds for the
business is the top most priority for the business (Thevenard-Puthod2022). Similarly, for Red
Roster coffee company, it is very important to prepare business plan to test its feasibility and for
determining capital requirement.
P5 Assess exit or succession options for a small business explaining the benefits and
drawbacks of each option.
There are several options given to business organizations for their entry or exit. In case of
entry option the business needs to adopt the strategy in context to its expansion at global stage.
For attaining this option company needs to look into several essential factors like allocation of
resources, networking, marketing and product penetration (Campopiano Calabrò and
Basco2020).
Entry option
 Local Manufacturing: this option is classified into three categories.
1. Contract manufacturing- it is pertains to contract based manufacturing.
2. Assembly operation- it pertains to assembling of different parts to give a product final
touch.
3. In this stage the product is integrated completely.
Advantages
 The only advantage is that it is relatively less expensive than other option.
Disadvantage
 it is more difficult to make communication effectively with the customer, because of
divers culture and competition.
Joint Venture: it pertains to creating a distinct entity by partnering with other entity of other
country.

Advantages
 all the risk and cost of the company is shared with venture.
Disadvantage
 at initial stage the support is not wide from the venture.
From above entry option, Red Roster Coffee Company Limited can make it presence in
international market by applying all the relevant and effective options.
Exit options
Liquidation- it the stage where business is terminated or shut down completely, no operation
associated with it left operative. The assets and properties in this stage is sold off or auctioned
for clearing of debts of creditors. It is the quickest way of exit.
Advantages
 the company at this stage is free from all the legal challenges or disputes.
Disadvantages
 once the company is dissolved, then again it cannot be established on same name.
Acquisition- In this one entity take full control over the other company.
Advantages :
 companies generally acquire their compositors in order to end their competition and
expand their share in market (Oxford Analytica 2022).
Disadvantages
 in some case, especially in hostile takeover, the company acquiring often pay much
higher cost than the actual cost.
From the above explanation, it is recommended to the Red Roster Coffee company limited to go
ahead with the option of Acquisition as an exit option where company wish to end its presence.
M4 Evaluate exit or succession options for a small business comparing and contrasting the
options and making valid recommendation
It is noted that the options of entry and exit plays crucial role for companies in certain
situations where changes are inevitable and from both the option company may choose either of
the option to respond the situation.

CONCLUSION
From the above report, it can be concluded that for every business formation planning is
required in proper and clear formate with the view to shape business and to make it reliable and
active for long period of time. In this report recommendation is made to industries for growth
opportunities which are available to them if they implement proper planning and strategies. The
report also mentioned the PESTLE analysis which helps company for evaluating the external
factors and its impact. The chosen company Red Roasted Coffee limited company, is
recommended sources of finance along with the appropriate entry or exit options.

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