Planning for Growth

This assignment analyzes key considerations for evaluation of growth opportunities, application of Ansoff growth vector matrix, advantages and disadvantages of potential sources for funding, and development of a business plan.

Planning for Growth

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Analysing and justifying key considerations for evaluation of growth opportunities............3
P2. Application of Ansoff growth vector matrix for evaluating the growth opportunities..........5
TASK 2............................................................................................................................................6
P3. Advantages and disadvantages of potential sources for funding available to business.........6
TASK 3............................................................................................................................................7
P4: Development of business plan...............................................................................................7
TASK 4..........................................................................................................................................10
P5: Assessment of exit or succession options for a business.....................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Planning for growth is a strategic activity which allows business owners to make plans
for the growth and sustainability of their organisation (Hu, 2016). It enhances businesses to use
their resources in an effective and efficient manner so that profits of the organisation can be
maximised. The company which has been selected for this report is Prufrock Coffee which is a
small coffee shop located in London, United Kingdom. The company is looking to expand its
operations in Australia. In this assignment, detailed analysis will be made on analysis of
considerations considered by SMEs in evaluation of growth opportunities. Also, assessment of
methods through which funding can be accessed by organisations, development of a business
plan will be analysed. Additionally, different ways through which a small business owner can
exit business will be discussed.
TASK 1
P1 Analysing and justifying key considerations for evaluation of growth opportunities
Growth opportunities are the ability to achieve organisation goal efficiently through its
increasing power, high economic sale, greater profits, etc. This is essential for organisation to
survive in global market with its competitive advantage and to sustain with good market revenue
and increasing shares (Murray, 1988). This is further explained on the basis of Porter's generic
strategies and Bowman Strategic clock which are as follows:-
Porter's generic strategies:- This describes the various patterns through which an
organisation sell its product to large number of consumers for increase its consumption with
increase in satisfaction level (Ozdemir and Mecikoglu, 2016). It focus on the need, desire and
want to be satisfied through qualitative products to compete from its rivals. These strategies are
described as under:-
 Cost Leadership strategy:- This strategy focus on the least cost- effectiveness and
qualitative products with consumer satisfaction. The managers of Prufrock Coffee can
use this to capture large number of global market which results in maximisation of
revenue and profits.
 Differentiation strategy:- This is referred as the process to develop specialised product
by analysing the needs and wants of consumers at high premium prices. The managers of
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Prufrock Coffee can use it as the products are unique in market and their positioning
make consumers aware with high consumption and high profit margins.
 Cost focus:- This strategy focus on least cost advantage to its segmented market with the
capability to meet their requirements for its success. The managers of Prufrock Coffee
can use this to increase consumer loyalty with high satisfaction level leads to achieve
organisation goal.
 Differentiation focus:- This strategy concentrates on innovative specialised product for
their differentiated target market with high premium to meet their requirements with good
quality. The managers of Prufrock Coffee can use this strategy in order to maximise its
sale, profit and market share.
Bowman's strategic clock:- This is referred as the strategic decision planing to position
the product for its utmost competitive advantage of organisation to achieve success. Managers of
Prufrock Coffee implement this strategy to make consumers aware about the product through its
positioning which increase its sale. This model is further explained as under:-
 Low price and low value added:- This is not highly competitive stage as the product is
not differentiated and consumers realise little value on its adoption. Managers of Prufrock
Coffee can use this strategy to compete with its cheap prices and to remain stable in
competitory market.
 Low price:- It is the strategy to minimise cost of product from its competitors with the
ability to earn profits. Managers of Prufrock Coffee can use this strategy to maximise its
sale with least cost for good quality products which results in consumer loyalty.
 Hybrid:- In this strategy producers focus on least cost with good quality and specialised
product to meet the needs of consumers. Managers of Prufrock Coffee can use this as it
provides good value on the less price with unique product through its product positioning
in mind of consumers.
 Differentiation:- This means to produce differentiated product with high value added
through superior quality products. Managers of Prufrock Coffee can use it to increase
brand awareness to its differentiated market which increase their satisfaction level by
enlarging consumers.
 Focused differentiation:- It refers in product positioning with high pricing at high value
(Akan and et.al., 2006). Managers of Prufrock Coffee can use this to achieve high
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premium prices from segmented, targeted and positioned market which are ready to pay
high amount.
 Risky high margins:- This strategy enables to meet the high prices of product with the
motive of high profits through its high positioning product. Managers of Prufrock Coffee
can use this strategy to sell premium products with the assumption of high risk leads to
high return to compete from its rivalries.
 Monopoly pricing:- This refers to single business entity with its high pricing strategies
of the particular product. Managers of Prufrock Coffee can use this to sell products at
high price with low value to its consumers.
 Loss of market share:- This strategy explains that producer manages standard prices for
their low value. Managers of Prufrock Coffee can use this to sell its product on that price
for its low value products.
Followed strategies should be adopted by the Prufrock Coffee which are:-
The cost leadership:-This creates growth opportunity for organisation by minimising
cost which attracts consumers to purchase more this leads in maximise of revenue with increase
in market share. Prufrock Coffee should adopt cost leadership strategy to minimise its cost which
attracts consumers to purchase more of products (Yin, 2016). This increase the stability of
organisation to compete with rivalries in global market. This increase opportunity for growth of
organisation by enlarging consumers through positioning their product in target market.
Managers of Prufrock Coffee focus on maximisation of production by developing it with
specified quality which attracts consumers for its features promises and to make aware the
symptoms for unhealthy issues of market such as diabetes patients are requested to consume
coffee with less sugar or avoid if possible. It increase awareness among target market which
maximise consumer support and loyalty.
Hybrid:- Managers of Prufrock Coffee should adopt the hybrid strategy to meet the
needs and wants of consumers through least cost with qualitative products which results in
maximisation of revenue and profits. This also leads to achieve success in competitive market.
This increase opportunity for growth of Prufrock Coffee by implementing various strategies to
attract consumers which increase demand of product for their qualitative product. The managers
of organisation monitor their actions of production through determining the errors and mistakes
and to solve it by corrective measures which increase its possibility to remain stable in
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competitive market. The motive of business is to minimise the cost for quality products that
attracts consumers to purchase more as they have to pay less amount for their high level of
satisfaction. It increase growth opportunities as it expand business by enlarging consumers which
maximise its market share.
Focused differentiation: This process is to create growth opportunities for Prufrock
Coffee which leads to achieve desired results through minimising the cost, providing qualitative
products to their specialised target market that leads to achieve high satisfaction. The
organisation focus on differentiation for its opportunities of growth as it develops specialised
product for their consumers to increase its effectiveness which they are ready to pay high
amounts. This increase possibility to charge high premium on their products as these are most
wanted from consumers which are beneficial for maximisation of revenue and profits. Focus
differentiation leads to focus on small segmented target market which are to be satisfied with
qualitative products to meet the requirements of consumers. It increase growth opportunities for
organisation as to attain success and to compete with its rivalries through their competitive
advantages.
P2. Application of Ansoff growth vector matrix for evaluating the growth opportunities
Growth opportunities are the component of external environment which organisation
implement to compete from its rivals to sustain in competitive market (Schawel and Billing,
2011). These opportunities are very essential for organisation to build its more strength over
weakness and threats. These are further described on the basis of Ansoff growth vector matrix
which leads to achieve goal.
Ansoff growth vector matrix:- This strategy is adopted by organisations to determine
their external strength and opportunities for the growth and development (The Ansoff Model,
2019). This is very essential for the managers of Prufrock Coffee in their strategic decision
planing to use its growth opportunities as competitive advantage for its rivalries. It's four
strategies are further described as under:-
Market Penetration:- This is explained as the existing product to be targeted in existing
market with the motive to increase its market share (Shaw, 2016). Managers of Prufrock Coffee
can use this strategy by adopting high risk with same resources and capabilities as its will
generate high return in future.
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 Pro: It creates the ability to minimise the price which attracts consumers to purchase
more of their product. This leads to increase consumer satisfaction for maximisation of
profits and revenue.
 Con: In this the producers are not able to achieve high margin as they focus on least-cost
effectiveness which makes the manufacturers lacks in their maximisation of profitability
ratios.
Market Development:- This is termed as the existing product in new market with the
aim to enlarge consumers. Managers of Prufrock Coffee can use this to expand their product in
global market for new consumers to increase in sale with profit margin.
 Pro: This increase ability to compete in global market for sustaining in competitive
market. This create competitive advantage of organisation through their internal strength
and external opportunities which maximise volume of output.
 Con: It is very tough to compete with rivalries as there is large number of suppliers in the
global market which is difficult to remain stable in perfect competition market.
Product Development:- It is referred as the new product in existing market with the aim
to extend the product with different varieties to fulfil their needs and wants. Managers of
Prufrock Coffee can use this to expand their product through improving quality, least cost,
packaging, diversified product, etc. which increase market share.
 Pro: It leads to develop new product with innovative idea which creates competitive
advantage by developing their product through the new idea of expanding it for enlarging
consumers.
 Con: It takes time to develop innovative idea with adoption of new technology as it
creates delay in goal achievement which lacks in efficiency.
Diversification:- This is meant to produce new product in new market with specialised
features for its specialised segmented market. Managers of Prufrock Coffee can use this to attract
more consumer through differentiated product at high price with their satisfaction level to
increase revenue and profitability ratios.
 Pro: This leads to target small market which increase specialisation of product with
discriminate features at which consumers satisfy their requirements and are ready to pay
high premium which increase profit-margin.
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 Con: It's level of risk is high as this creates danger for producers as their new
differentiated product is able to meet the needs, desire and wants of consumers or not.
From the above discussed growth strategies, managers of Prufrock Coffee can adopt
market development in Australia to enlarge its consumers with good quality products at least
prices . It increase ability for growth of organisation through expanding its business by enlarging
its consumers to meet their demands. This encourage employees to perform their task effectively
which result in accomplishment of goal efficiently. The market develop creates growth
opportunity for business by positioning its product to consumers which attracts them to purchase
more of their product. This encourage managers to develop product with innovative ideas for the
development of strategic decision-making which is difficult for competitors to adopt the strategy
easily.
TASK 2
P3. Advantages and disadvantages of potential sources for funding available to business
The potential sources of an organisation are explained as venture capital, subsidies, taxes,
donations, business incubators, personal investment, etc., don't have direct return of investments.
Managers of Prufrock Coffee implement this sources to achieve high return for its competitive
stability from rivalries . These are further described as under:- Funding from personal
saving:- This is the willingness for the ability to invest saving with the assumption to earn profits
or high return (Abdulrezzak, 2016). Managers of Prufrock Coffee use this funding to invest
money for capital generation and optimisation of profits.
 Advantages:- This is beneficial as the high investment or high risk with proper
management results in high return or capital generation. It is the ability to control the risk
of financial resources by funding from personal saving that leads to deal with monetary
deficiency by generating capital.
 Disadvantages:- Its can't be guaranteed that surely their will be increase in return, some
circumstances may create negative possibilities. This is unfortunate as when will the
producers be able to attain high return.
Friends and family:- This is most common source as they can provide funding as debt,
equity, hybrid, etc., which used to have trust and faith in convincing easily (Shakhshir, 2014) .
Managers of Prufrock Coffee can use this at the very high time and promise it to return in future.
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 Advantages:- It is advantageous by no need to pay interest over principal and may be
paid anytime in future. The friends and family who are investing in the organisation does
not focus on interest amount as for them relationship is most important asset than money.
 Disadvantages:- This may have the lose of money and the relation may suffer may create
negative impact with worse relations. The friends and family also plays negative role in
funding sources as when the amount is not provided on the time than it creates negative
impact on long relations.
Venture Capitalists:- In this source of funding, two business collaborates with each
other to form one organisation and to provide funds through expansion and increase in market
share. Managers of Prufrock Coffee can use this to involve management through setting
milestones, targets and achieving success to compete from its rivalries.
 Advantage:- The target is to accomplish goals effectively with focus on increasing
market share and revenues to earn profits. This is the ability for one business to share
their liabilities which reduce the risk of dissolving the business.
 Disadvantages:- This effects as the chances of conflicts, misunderstanding between
partnership, etc. This creates negative impact on the business as it is dissolved in the eyes
of legal legislations.
TASK 3
P4: Development of business plan
A business plan is a document which sets out the objectives of a business and makes a
summary of them (McKeever, 2016). It makes strategies using different techniques such as a
budget to sort out the finances required to realise the objectives (Chodkowska-Miszczuk and
et.al., 2016). It is basically a road map which guides a company towards the future. Elements of
business plan of Prufrock Coffee are as follows-
Executive summary: Prufrock Coffee is a small coffee shop in London, United
Kingdom providing coffee and other food products to its customers. Details regarding company's
business, budget etc. are given in this business plan.
Business details:
New market: Prufrock Coffee is an established business in U.K. and wants to expand its
base to Australia.
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Mission: The cafe aims to provide good coffee and ambience to its customers where they
can relax over a cup of coffee.
Vision: The cafe's vision is to become the leading coffee outlet in London, U.K.
Strategic objective: Prufrock Coffee wants to take its market share to 25% in U.K. and
enhancing its margin of profit to 30% by 2023.
Appropriate frameworks:
Industry size: The estimated value of coffee business in U.K. Is 10.1 billion pounds.
SWOT analysis: It is a strategic framework tool which is used by businesses to assess
their strengths, weaknesses, opportunities and threats . The SWOT analysis in the context of
Prufrock Coffee is as follows-
Strengths Weaknesses
 Specialised market and a strong base of
customers who come regularly to the
cafe for coffee is the strength of
Prufrock Coffee.
 Prices kept by company for its products
are comparatively lower than that of its
competitors which allows it to have a
foothold in the market which is price-
sensitive.
 Marketing and promotion strategies of
Prufrock Coffee are insufficient to
counter the level of competition present
in the market. Thus it should use
aggressive marketing and promotion
strategies to capture more market share
in the long-run.
 Presence of Prufrock Coffee is only in
United Kingdom which is restricting its
growth to other countries.
Opportunities Threats
 Expansion to Australia offers Prufrock
Coffee a perfect opportunity of
expanding its customer base and
enhancing its level of profits.
 Pull strategies are required by Prufrock
 The level of competition in the market
is pretty high. This leads to lower prices
and in turn lower level of profits for
Prufrock Coffee.
 The brand value and goodwill that
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Coffee such as innovative and creative
cafe design, use of new concepts to pull
young generation towards it.
Prufrock Coffee once enjoyed among
its customers is now dwindling because
of lack of aggressive marketing and
promotion strategies.
STP framework- It is a framework which summaries and simplifies the process of
segmentation of market (Agarwal, Ruenzi and Weigert, 2017). Elements of STP framework
which can be used by Prufrock Coffee are as follows-
 Segmentation- Prufrock Coffee segments the market according to demographic and
behavioural basis. In demographic basis, the cafe segments its customers according to
various areas they live in. In behavioural basis, the cafe focuses on the way customers
behave.
 Targeting- The target market of cafe in Australia would be middle and high-income
customers.
 Promotion- For promotion, the cafe uses social media and online advertising along with
use of traditional methods like posters, distribution of pamphlets.
Marketing strategy: Marketing strategy refers to use of different approaches to plan for
long-term marketing activities of the company (Yumantini, Rarasati and Sumabrata, 2017).
Prufrock Cafe is looking to use competitive pricing for setting up its operations in Australia as it
is a completely new market for it and therefore it needs to set its price according to the prices
charged by the competitors there.
Financial projection:
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Cash flow projection:
Monitoring and controlling: - This is adopted by Prufrock Coffee to ensure that the set
standards are being followed by monitoring it properly. It focus on rectifying of errors and
variance which delay in goal achievement. The monitoring and controlling create opportunity for
growth of business as it enhance proper direction and control of actions implemented in the
business. Prufrock Coffee is benefited by monitoring and controlling its activities which increase
its efficiency to perform task which leads to achieve satisfaction of consumers. This creates
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growth opportunity by accomplishment of organisation goal and objective efficiently that leads
to remain stable in competitive market.
TASK 4
P5: Assessment of exit or succession options for a business
Succession planning is a process of identification of new leaders which can replace the
old ones once they retire (Romano and et.al., 2018). There are also different exit options for a
business through which it can quit the market. These options have been discussed in the context
of Prufrock Coffee as follows-
Succession options for a business-
Direct succession- This involves putting in place employee and leadership development
plans which are needed to identify the potential leaders which can replace the current leadership
when the time comes (Prajogo, 2016). Prufrock Coffee's leaders also need to identify such
people in the company which can replace the current leadership as and when required. They have
to be nurtured in their roles before they can do so.
Merits-
 The business is prepared to replace the current leaders whenever they retire which can
ensure that the organisation is prepared for their replacement.
 Well-trained employees having the required leadership skills are selected for the role.
This prepares them for assuming bigger roles in the future. This also helps in identifying
talents within the organisation.
Demerits-
 A wrong person may be appointed as the leader in the firm which may reduce
performance and turnover. This is so because if a mistake is made in identification of
skills then it can prove costly for the organisation.
 Wrong implementation of succession strategy can lead to poor decisions in the firm
which may hamper it in the long-run. It may reduce its profits substantially and impact its
revenue growth.
Target date replacement- In it, companies appoint the successor to the current leader
who will take charge on a particular day (Savini and Aalbers, 2016). Prufrock Coffee can also
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adopt this strategy by identifying potential replacements to the current leadership through a
structured process.
Merits-
 The company gets to know well in advance who will replace its current set of leaders.
This enhances replacement procedure. Training sessions can be held well in advance.
 Training programmes can be facilitated to nurture future leaders in the role. This will
enhance their skill development and raise their efficiency and effectiveness.
Demerits-
 It can reduce clarity in decision-making process until the time new leadership takes over
from the old one. Thus a delay in decisions is possible which will affect the firm.
 It can affect policy-making process in the firm which can affect its business model. This
can lead to implementation of wrong policies hurting prospects of the company.
Exit strategies-
Liquidation- Liquidation refers to closure of business by sale of all the assets. It can be
used by Prufrock Coffee if it is felt that it cannot continue its operations anymore.
Merits-
 Liquidation is a simple process and does not involves too many complexities or
formalities. It just involves transfer of assets and liabilities to another firm which helps in
the process.
 It allows for quick winding-up of the business by the sale of its assets which makes the
process very fast. Thus the process is made fast and quick which leads to fast flow of
funds.
Demerits-
 Liquidation provides a very low return on investment to businesses on the realisation of
value of their assets. Their real value is not realised but a very low value is received.
 The value which can be realised from second-hand assets such as machinery and
equipments is very low. Therefore this affects the prospects of the firm in raising funds
required.
Sell to another business- It means selling off the business to another company which can
do so by takeover process (Tambovtsev and Rozhdestvenskaya, 2016). The potential acquirer
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must purchase all the assets of the company. Prufrock Coffee can consider this route which will
involve its takeover by another firm dealing in same product line.
Merits-
 It ensures quick sale of business as there is interest among other competitors to takeover
the business (Ibidunni, Peter and Ogbari, 2017). The time taken for it is very low as
businesses can be transferred easily if the nature is same.
 It also allows for maximum profit in selling the business as the value of business is
calculated by taking into account different factors including goodwill, brand image etc.
This ensures high profitability for the organisation.
Demerits-
 Existing employees of the firm can lose their jobs because of the takeover process. Thus
layoffs may happen hampering image of company.
 It can give critical information regarding the business if a company is only pretending to
be interested in purchasing the business. Thus crucial information may be accessed by
other businesses.
CONCLUSION
From the above report, it can be concluded that planning for growth is an essential
activity which all organisations have to involve themselves in. Different considerations need to
be analysed for identifying growth opportunities, Ansoff's matrix can be applied for evaluation
of growth opportunities. Also, assessment of various options which a firm has for finance,
designing of a business plan for formulating strategy for business have been covered. Succession
or exit options for a business have been discussed.
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