Planning for growth

This report by Desklib covers key factors for evaluating growth opportunities, Ansoff's growth vector matrix, potential sources of funding, and more. It includes a SWOT analysis and PESTEL analysis of Old Spike Roastery, a UK-based non-profitable company in the food and beverage services industry. The report recommends product development as the best strategy for growth and suggests bank loan as the potential source of funding for the company.

Planning for growth
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Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Analysation of key factors for evaluating growth opportunity and justifying it ..................1
TASK 2............................................................................................................................................5
P2. Application of Ansoff's growth vector matrix to determine organisations opportunities for
success..........................................................................................................................................5
TASK 3............................................................................................................................................6
P3. Determining the potential source of funding which are available to businesses along with
their benefits and drawbacks........................................................................................................6
TASK 4............................................................................................................................................7
P4. Make a business plan for growth of the organisation which includes strategic objective and
financial information for scale up a business...............................................................................7
TASK 5............................................................................................................................................9
P5. Evaluate succession and exit options with benefits and drawbacks of small business.........9
Recommendation ..........................................................................................................................11
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
Growth planning is strategic organisational activity that entitle the owners of business to
plan and record organic growth in their profits. The plans and strategies made for a business
involves growth plan focus on mainly revenue generation that is driven by customers (Adu-
Gyamfi, 2020). It enables the company to assign resources towards the organisational goal, to
adjust with the changes in industry operated by differentiate from rivals. For having better
understanding about growth planning strategies, Old Spike Roastery is taken into consideration.
Old Spike Roastery is a non-profitable UK based company founded in 2014, headquarters
located in London and its specialities includes social enterprise, coffee roasting, speciality
coffee. It is a food and beverage services industry which promotes sustainability and charity.
This project reports highlights an understanding of the consideration of important factors
of SMEs while analysing growth opportunities. It also comprises of the different methods
through which firm enable funding and when to use it (Bridge, Dodds, 2018). Also includes the
development of business plan and talk about how to grow it. The following report also covers
different types of options for business succession and their implications.
TASK 1
P1. Analysation of key factors for evaluating growth opportunity and justifying it
Meaning of SMEs
Small medium enterprises are those businesses that have specified assets, revenues and
employees which is stated by government for starting a business (Buxton, Butt, 2018). It plays a
very crucial role in account of economy, helps in employing large amount of people and in
growing their business. To let people, continue their businesses, government offer incentives
which includes preferred tax treatment and good access to loans.
Competitive advantage
It is the suitable position that an organization looks into in accordance to be more
productive and profitable than its competitors. It guides businesses to stand in front of its rivals
in the market (Horn, 2020). Companies may have this advantage because of its brand image,
customer service, technological expertise or for its distribution network. Competitive advantage
of Old Spike Roastery is very helpful for growth of the company as it has a good customer
service segment
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SWOT Analysis of Old Spike Roastery
SWOT Analysis is the tool to identify and analyse the internal factors of an organisation.
This analysis helps managers of a company to determine all the factors which guide them in
decisions making (Hu, Huang and Li, 2019). It assists managers of Old Spike Roastery in
planning for future to overcome their challenges and take advantage of its strengths to by using
opportunities along with working on its weaknesses. SWOT Analysis of Old Spikes Roastery is
given below:
Strengths
 Effective niche marketing: Old Spike
Roastery targets a small area or a group
of particular area to sell their products
according to the needs and preferences
of customers to attract them. Team based culture: Each and every
member of Old Spike Roastery works
together as a team to achieve its
success, goal and profitability.
Weaknesses
 Strong existing competitors: Old
Spike Roastery is a small enterprise
which have a giant competitor in the
market, hence it is difficult for them to
compete with that companies.
 Low brand awareness: Old Spike
Roastery marketing and branding
strategies are weak because it is a small
scale business.
Opportunity
 Building brand awareness: Old Spike
Roastery managers can spread their
business by attracting people by
advertising their brand on social media,
participating in events and other ways
of giving awareness of their products. Develop relationship with online
influencers: To attract more number of
people, developing good relations with
online influencers helps Old Spike
Roastery to spread their business in
more locations.
Threat
 Limited profit levels: Because of small
scale entity and targeting niche market,
Old Spike Roastery generate limited
amount of revenue.
 Changing buying habits of
costumers: Rapidly changing buying
habit of customers according to their
taste and preferences is a big threat for
Old Spike Roastery.
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Porter's Generic Strategy
It is the strategy to analyse the direction of its company and make a strategic plan to
pursues competitive advantage to stay on top in the market (Lee and Jung, 2020). This tool aid
business in understanding its current position and profitability. Porter's Generic Strategy in
context to Old Spike Roastery is defined below:
 Cost Leadership: In this strategy, company become low cost producers in their own
industry by manufacture their product and services at reduced price. Managers analyse
and utilise all the factors which gives them cost advantage. If Old Spike Roastery
implement this strategy, then they can present competition in the same industry market by
lowering their operational cost.
 Differentiation: According to this strategy, organisation seeks to become unique from
competitors. They provide differentiated goods and services to consumers. If the
managers of Old Spike Roastery applies this strategy, then they can attract huge number
of consumers.
 Focus: In this strategy, organisation focuses on the niche competitive market, particular
sector or group of sectors in same industry. If Old Spike Roastery managers uses this
strategy, then it will give them advantage of remaining on the top in the competition. By
providing products at low cost along with fulfilment of consumer’s needs.
Managers of Old Spike Roastery should apply differentiation strategy in its business. This is
going to help them in producing different or unique products for their customers by keeping in
mind their taste and preferences. This strategy assists them in analysing the needs of different
people in the same industry market. This gradually increase their sale and profitability and give
sustainable competitive advantage over others.
PESTEL Analysis
This technique is used by the managers to determine macro or external factors of a
company (Li, Liu and Su, 2019). It increases the productivity of the organisation, as this tool
provides the information about its brand position, risks, competitions and gives direction.
PESTEL Analysis of Old Spike Roastery is explained below:
 Political Factors: Because of Brexit, from few years in UK uncertainty of
atmosphere arise. Due to which there is a decrease in number of costumers and
increase in production cost in the market. Because of Brexit agreement, there is a
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fall in number of buyers. This is a threat for Old Spike Roastery as their sales and
revenue decreases.
 Economic Factor: The inflation rate is presently high in UK due to labour
scarcity, increased supply and higher prices. So, it is a threat for Old Spike
Roastery, as they are already selling their product at low cost and this situation
also decrease their revenue because of high prices.
 Social Factors: UK have a multicultural population, so in food industry every
individual have their own different taste and preferences which changes rapidly
according to their needs. It is an opportunity for Old Spike Roastery to attract
more people by determining the needs of the consumers and providing them good
quality and taste at low prices.
 Technological Factors: In UK, because of fast and new technology, businesses
are using updated version of technology to increase their productivity and sales by
minimising the production cost. It is the opportunity for Old Spike Roastery
because new technologies like social media helps them in giving their brand
awareness and attract more customers.
 Environmental Factors: In UK, the government is strict about environmental law
which every organisation have to follow. Old Spike Roastery encourages people
for planting trees for every bag of coffee. Customers can enjoy coffee by knowing
that they are also helping planet by planting trees. They have planted over 40000
trees in last 12 months.
 Legal Factors: There are so many rules and regulations in every country which
everyone has to follow (Morison, 2020). In UK there is a parliamentary system of
government. In this system highest law making body is Westminster parliament.
This is the opportunity for Old Spike Roastery because they follow each and every
rules and regulation for example Customer Protection Act, Minimum Wage Act
and many more to maintain their business image in the market to achieve its goal.
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TASK 2
P2. Application of Ansoff's growth vector matrix to determine organisations opportunities for
success
Ansoff Matrix
It is a strategic planning tool which helps the managers of a business and marketers for
future growth of company (Renne and Tolford, 2018). The purpose of this model is to identify its
strategies of growth revenue of a firm by introducing new products or by tapping new markets.
Ansoff matrix helps Old Spike Roastery in determining the products and market the growth
strategy. With the guidance of this model, the organisation can follow the business strategies
made that will help in enabling product development and risk involved. The four strategies that
Old Spike Roastery can adopt based on Ansoff matrix are:
 Market Penetration: This strategy is applied when a company focuses on increasing of
market share by selling more products in the existing customer market (Olesen, 2022).
The managers of Old Spike Roastery can use this strategy to easily tap different
customers which will help the company in growing its market share and to increase the
sales of products in the existing market. It will also help the managers to measure the
product value in the market.
 Market development: It is a business tool that enters into new market with its existing
products. Managers of Old Spike Roastery can apply this strategy to easily connect with
new customers in the market with same product also there is no investment and can
upgrade its brand image.
 Product development: It is a technique of the firm to market its new products in the
existing marketplace (Sparkman, 2018). Managers of Old Spike Roastery can adopt this
strategy of product development, it will benefit the company in increasing the market
share by getting new products in the existing market.
 Diversification: This is the strategy of a firm to market its new product into the new
market, where both product development and market development are considered. If Old
Spike Roastery managers are aware of the risk involved in developing a new product and
with the current technologies only in that case they can use this technique.
From the above, it can be concluded that the best strategy Old Spike Roastery can use is product
development where new products are marketed into the existing market. This will help Old Spike
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Roastery to capture the brand loyalty and brand awareness by introducing new products in the
market.
TASK 3
P3. Determining the potential source of funding which are available to businesses along with
their benefits and drawbacks
Sources of funding
Sources of funding comprises of savings, grants, credit, venture capital, donations,
subsidies and taxes (Sudarshan, 2020). Funding is when a company make use of its internal
reserves to fulfil its need for cash, it is usually in the form of money or can be effort or time
given by a company. Sources of funding is very essential for Old Spike Roastery to grow their
business as it helps them to initiate funding either for short-term or long-term purpose. Old Spike
Roastery can use banks, venture capital and family & friends for the source of funding:
 Bank loan– Banks provide some loan to the company by fulfilling the bank's minimum
criteria, it generally offers low interest rates to Old Spike Roastery to grow in the market.
It is also flexible as there is no set of rules specifying money spend and maintains control
as equity is not required to get a loan from the bank.
 Family& friends– People who are ready to invest in their friend’s startup are one of the
source of funding for many small businesses. Friends and family of Old Spike Roastery
owners can also help them by investing some amount of money or by taking some stake
in the company to grow at its initial stage.
 Venture capital- They are the private equity firms that invest only in early stages of
businesses. It will help Old Spike Roastery to raise large amount of capital in the market,
no monthly payments need to be given, opportunities for networking are provided, advise
from a renounced person and experienced leadership is provided.
There are some drawbacks as well for Old Spike Roastery by using these source of funding, the
bank loan process is very time consuming and complicated, it also requires collateral to protect
themselves in case payment are not able to made, any miscommunications can destroy relations
of Old Spike Roastery owners with family or friend who have invested. And also the ownership
stake of the owner will be reduced as venture capital take some stake in the organisation which
led to less profit in owners hand.
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According to the above analysis Old Spike Roastery should adopt bank loan as its source of
funding. It will be helpful for them as bank loans generally offers low interest rates which will
benefit the business to grow on a large scale in the market. It maintains control over business, no
need to give any equity to get a bank loan and is flexible for the business.
TASK 4
P4. Make a business plan for growth of the organisation which includes strategic objective and
financial information for scale up a business
Business plan for Old Spike Roastery
It is a document which helps in determining the objectives of enterprise in detail and aid
to make a strategic plan for future to achieve its success (Wang, Et.Al., 2019). Its purpose is to
analyses, identify and describe organizations goal. Business plan in context to Old Spike
Roastery is given below:
 Vision: To give best quality of roasted coffee with excellent service and at reasonable
price.
 Mission: With the help of its coffee- roasting business, their mission is to provides living
wage, training and housing to homeless people.
 Objective: Their main object is to help needy people. They work for charity and
sustainability instead of running towards money.
Stakeholders: Stakeholders of Old Spike Roastery are as follows:
 Customers: Customers is main stakeholders of Old Spike Roastery, as they are the one
who decide whether company is going to be successful or not.
 Governments: As government collect taxes from Old Spike Roastery which includes,
corporate income tax, payroll tax, sales tax. So, they are also its major stakeholders.
 Investors: For Old Spike Roastery, investors are internal stakeholders. They invest in the
business with the expectation of earning certain amount of return which helps them in
financial investment.
Capital funding
Old Spike Roastery uses bank loan as a capital funding. Because it provides low interest
rates, flexibility and maintain control over business. It takes loan of expected amount of €10000,
which helps them to make their future plans to run its business smoothly to achieve its goal.
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Operation plan: Operation plan of Old Spike Roastery is discussed below:
 Preparation: Old Spike Roastery wants some equipment's to make coffee from raw
materials like coffee beans, as they are coffee Roastery producer.
 Logistic: Old Spike Roastery focuses on every details and to continuously use it in the
business plan to increase the chance of achieving success from starting to the end for
long run.
Resource plan: Old Spike Roastery resource plan is discussed below:
 Financial: The budget for growth and expansion of Old Spike Roastery is as follows:
Particulars Amount
Salary €600
Purchasing of equipment €1000
Advertising €200
Rent €300
 Human: The employees of Old Spike Roastery are its main human resource. Because
they helps them in profit making by working effectively and efficiently to achieve
success.
 Intangible: Ingredients and material copyright of Old Spike Roastery is its intangible
resource. Because the ingredients which they use in its recipe is unique and no one is
allowed to copy the process of using that ingredients and materials in the way they are
already making.
Technological plan
For growth of the business of Old Spike Roastery, they can use higher technologies like
digital marketing. They can advertise about their products on social media like Instagram,
Facebook, linked in, etc. By collaborating with any influencers they can give its brand awareness
to the end number of customers.
Risk Factor: Factors that are considered as a risk for Old Spike Roastery is mentioned below:
 Competitive: There are end number of Old Spike Roastery competitors are
present in the market. Which provides quality products with low prices according
to the taste and preferences of the buyers.
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 Business strategy: If Old Spike Roastery business strategy is not proper then it is
a great risk for them. Because strategy plan helps organizations in its growth and
expansion.
 Change in customer taste and preferences: Each and every person have its own
taste and choice which rapidly changes according to them. So, customers can shift
to other businesses if they are fulfilling and satisfying their demand.
Marketing Plan
Old Spike Roastery can use social media, TV advertisement, distribution of their
business templates, collaboration with influencers and many more digital platform. Which helps
them in giving awareness of their brand to large number of customers. Through this marketing
strategies they can achieve higher profitability and success.
Time Frame
It is the period where organizations can plan for their future growth and expansion. 1 year
is the exacted time for Old Spike Roastery to expand their business in different locations.
TASK 5
P5. Evaluate succession and exit options with benefits and drawbacks of small business
Succession or Exit Planning
It is a planning of training, identifying and transferring the management or leadership of a
business to other person or a group of people to continue it (Wann-Ming, 2019). While, the exit
planning is when the transfer strategy is executed in a firm and its ownership to any entity, team
or any other person. The aim of succession planning is to ensure that organisation make effective
changes with right leaders in place. Strategies for succession or exit planning are mentioned
below:
 Liquidation- It happens when a business is close by selling all the assets of company. It
enables owner to make right choices avoiding difficult ones and the business can be
slowly unwinding. If managers of Old Spike Roastery use this method then there will be
no liabilities to pay personally.
Benefits Drawbacks
It is benefited for Old Spike Roastery as their
debts will be written off.
After applying this method Old Spike Roastery
cannot recover its business assets.
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 Friendly Buyout- A friendly takeover creates a scenario where a target firm is willingly
acquired by any other company. If Old Spike Roastery apply this method of friendly
buyout, then it ensures a good design of deal and value delivery to the involved party.
Benefits Drawbacks
Old Spike Roastery is benefited as the parties
offers reasonable cost takeover the ownership.
It can affect negatively to Old Spike Roastery
as problem of change management arises
which includes the resistance from personnel.
 Management Buyout- It is a process of handling over the firm to the management or any
family member (Wey, 2019). If Old Spike Roastery adopts this strategy then it will cost
very cheap and easy to do the contract and it is the quickest out of all.
Benefits Drawbacks
Old Spike Roastery will get a high chance of
success as it has ongoing profits and success to
avail.
It will be difficult for Old Spike Roastery in
raising the funds as it affects the whole
surroundings of the company.
 Acquisition- An acquisition is when a firm purchase any other business, with this method
owner can give up their ownership of business to the other that buys it. If Old Spike
Roastery use this method of acquisition, then it will be beneficial to them in marketing
their products and for the brand awareness.
Benefits Drawbacks
Old Spike Roastery can enter into new markets
for showcasing the products as there is no
entry barriers.
Employees of Old Spike Roastery may
decrease their morale of working.
According to the above analysis of succession or exit planning, Old Spike Roastery should adopt
the strategy of acquisition as it reduces the entry barriers so it can showcase its products in new
market. It can also have the market power to improve its brand image and brand loyalty.
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Recommendation
It is recommended to the manages of Old Spike Roastery to conduct a proper market
analysis of the place where it is located. They should also make authentic budget system to
overcome with their losses and points where they are lacking. Also seek into the customer base
segment to improve the brand awareness and brand loyalty in the market. Managers can also get
a clear vision of the company by preparing a detailed report on the factors of micro and macro
environment (Zafar and Akhtar, 2020). A survey for employees should be considered as the basic
thing in the company as it is very necessary to fulfill the needs and demand of them and to know
whether they are facing any issues with surroundings or not.
CONCLUSION
From the above report it can be concluded that Growth planning guides the firm to set their
targets and business goals to make strategies understandable for them. SMEs benefits a lot of
people with their start-ups to grow on a large scale in the market. Organisation should use
differentiation strategy as it makes unique product which is valuable for customers. Ansoff
matrix also allows the company to find the strategy which needs to be apply in future for
achieving its goals. Business plan of company includes stakeholders, capital funding, operation
plan and many more.
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