Planning for Growth Solution Assignment

Planning for Growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Analysis and justification of key considerations for evaluating growth opportunities ........1
P2: Evaluation of growth opportunities using Ansoff's growth matrix.......................................3
TASK 2............................................................................................................................................3
P3: Assessment of sources of funding along with advantages and disadvantages.....................3
TASK 3............................................................................................................................................5
P4: Business plan for growth including financial information and strategic objectives for
scaling up a business...................................................................................................................5
TASK 4............................................................................................................................................7
P5: Succession and exit plan for small business with its advantages and disadvantages...........7
CONCLUSION................................................................................................................................8

INTRODUCTION
Formulating of planning is an essential part of an organisation which drives them to
achieve growth and move ahead than their competitors in the market world. For this, the
management play an important role in framing strategies and plans which is possible through
conducting market analysis and addressing customers' requirements (Alsos, Carter, and
Ljunggren, eds., 2011). SME's are small and medium sized organisation which are operating
their business to meet the market needs and requirements by maintaining financial condition
through raising funds from various sources including banks, venture capital, angel financing etc.
The present assignment report is based on “Impresso Espresso” which is newly coffee shop
situated in London, United Kingdom. The company looking forward to increase sales and
revenue due to which decision has been made for the purpose of growth and success. The report
discusses the growth opportunities with proper evaluation using Ansoff's growth matrix. Along
with this, sources of funds has been also discuss along with their merits and demerits so as to
give suitable option to “Impresso Espresso” to strong their financial condition. Business plan is
also prepare under this report with an objective of achieving growth along with exit and
succession plan.
TASK 1
P1: Analysis and justification of key considerations for evaluating growth opportunities
Porter's Generic Model: This is a framework that is used by the organisations for
gaining competitive advantage in the business environment. This model was given by Michael
Porter for implementing successful business in market. The different kinds of strategies given by
this model are listed below -
Cost leadership: According to this strategy, the Impresso Expresso coffee house is able
to provide products and services to people at an affordable rate. This is an important function for
this coffee house as this will help in providing products an a price which is agreed by all.
Differentiation: This is another strategy by which Impresso Expresso will attain
competitive advantage in market. This strategy will help the entrepreneur of the company to
provide new and innovative products to customers.
Focus: This is key tactic which has been used by organisation and the main objective of
these is to enhance the profitability and productivity of business.
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 Cost focus: This assists organisation in identifying benefits which are associated with
pricing and cost of the product and service offered by the company. In context of this
coffee house the main motive is to attract more number of customers.
 Differentiation focus: It is other strategy which will help Impresso Expresso in
identifying a market segment that will be helpful in providing new services.
PESTLE Analysis
The PESTEL analysis is a framework that is helpful in analysing the various external
factors that affect the business environment of new companies is described below -
Political factors – This states that there are some political factors which affects the
functioning of company or small businesses. There are different rules followed by various
countries and hence it is important to evaluate these rules before doing business in different
countries.
Environmental factors – The environmental factors include climate change, weather
change and pollution that impacts the operations of business. It is advisable for Impresso
expresso coffee house to analyse these factors before starting any business.
Social factors – These factors include age, gender, trends and fashion which limits the
companies for increasing the market share (Beatley, 2014). Like and trends are keep changing
and hence the entrepreneurs of small businesses have to ensure that they are providing product
according to the new change.
Technological factors- These factors include the new techniques and tools that are used
by the company in doing business processes. These must be evaluated by Impresso Expresso so
that more customers can be attracted.
Ecological factors -These includes various concepts like economic growth of the
country, inflation rate, trading rate, export import rates that are essential to know about the
country before starting a business.
Legal factors -The different legal factors includes legal rules and regulations followed by
the company so that goals and objectives can be achieved effectively without any governmental
disputes.
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P2: Evaluation of growth opportunities using Ansoff's growth matrix
The Ansoff matrix is a structural matrix which was given by Igor Ansoff. The main
motive of this matrix is to provide analysis of present potential products customers of firm. There
are basically four quadrants which are available for analysing product and market combinations
of the company. In context of the Impresso Expresso coffee shop, the four quadrants of this
matrix are described below -
Market Penetration – In this strategy, the enterprise and businesses seeks to achieve
growth by innovating the existing products and selling their products in market (Berkowitz,
2016). The main aim for this strategy is to increase the market share by using the existing
product and launching this product in the market share. In context of Impresso Expresso coffee
shop market penetration strategy is helpful for increasing the market share.
Market Development – This is another strategy used by the firm for achieving growth
and development in business by launching an existing product in the new marketplace. This is a
good opportunity for the business as expansion is required for increasing profits and money
earned by the coffee shop. In context of Impresso Expresso coffee shop it is advisable that this
strategy is effective and best option for this company to increase the market share.
Product Development – According to this strategy, the firm or enterprise is developing a
new product in the existing market segment. This is a stage of market development in which a
new product is launched in the existing market.
Diversification – According to this strategy, the firm experiences growth by diversifying
the business into several new businesses. This is done by developing new products into new
market segment. This is a very risky job for businesses. In context of Impresso Expresso coffee
house, this is the most risky market expansion as this involves entering into a new market
without knowing the customer experience about this product.
TASK 2
P3: Assessment of sources of funding along with advantages and disadvantages
There are various sources from where company can borrow the fund. “Impresso
Espresso” can borrow funds from internal and external sources. The brief explanation of these
sources-
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Internal sources- This is the source of capital which is generated internally and not
causes any burden on the company. Each sources has its advantage and disadvantage and the
types of internal sources are- Retained earning- This is the type of internal source in which profit which was reserved
for the contingency is used to finance the operation of company. Advantage- This type of finance allows company to grow by itself and do not depend on
outside parties.
 Disadvantage- This type of finance will result in no fixed obligation for borrowed capital
and it might result in bankruptcy.
Additional owned capital- This type of internal source also known as equity and the
company can raise more capital by issuing equity shares (Chavunduka, Chimunhu, and Sifile,
2015). The equity shares are less risky to raise as it own capital of business and provide
ownership to the the person whom shares are issued but it doesn't include regular payment of
dividend. Advantage- This is a long term capital as it will stay permanently with business and there
is no burden of paying interest.
 Disadvantage- This type of shares increases the interference of outsider in company as
equity share provide rights of ownership.
External sources- The external source of capital refers to the capital generated from the
outside. The source is a wider context as it involves all the sources which are available from
outside business. The brief explanation of types of external sources are-
Bank loan- This refers to the capital raised through bank which offer lower interest rate
in comparison of credit cards. The loan can be short-term or long term which determines the rate
of interest. Advantage- This provide immediate access of fund without burden of repayment in short
term.
 Disadvantage- A company has to pay interest in specific period of time and try to pay
principal amount as early as possible otherwise it will put company in a big problem.
Angel Investors- They are an individual who provide financial support to company by
providing required fund for growth of company. The sources of angel investor are family and
friends.
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Advantage- The financing through investor does not require much formalities in comparison of
taking loan from financial institution.
Disadvantage- The control over company can be lost by allowing for investment someone who
belongs to the company.
 Overdraft- An overdraft occurs when money is withdrawn from bank and the current
balance become zero. There is an specified limit in case of bank overdraft and the interest
is charge at the rate which was agreed by both parties.
Advantages- It allows management of cash flow in business by providing fund when there is
higher cash outflow and it will result in balanced cash flow.
Disadvantage- This type of fund is generated in against of some collateral security which
contain risk of seizing it.
TASK 3
P4: Business plan for growth including financial information and strategic objectives for scaling
up a business
A business plan is defined as the statement which includes several details about the
purpose and scope of the project. This is a blueprint that consists of information about the new
venture, products and purpose of business. This document consists of the goals and objectives of
the company and this document will contain the necessary details which are used for managing
action plan for increasing the sales and profit of the company (Denton, Forsyth, and MacLennan,
2017.). The various concepts present in the business plan include vision, mission, goals,
objectives, purpose and scope of the business. The business plan made for Impresso Espresso is
given below-
Executive Summary – The impresso espresso is a coffee shop situated in United
kingdom. The main objective of this coffee shop is to make profits for this business. This shop
was started as a small business firm that is the main objective of this business. The Impresso
Expresso coffee shop has to attract more number of customers and increase the profit of the
company. This coffeshop has to increase the customer loyalty and value.
Vision - The vision statement of this company is to attract more number of customers by
delivering delicious coffee and milk products to the customers and setting an example for other
small coffee shops.
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Mission – The mission statement of this company is to improve the quality of coffee
every time it is served to the customers. This company wants to increase the sales and profit of
this business and expand this in several areas of the country.
Objectives – The objective of this coffee shop is to grab attention of different customers
and increase the number of customers. The other objectives include the improvement in
infrastructure and designing of the coffee shop. Some of these objectives are growth and
opportunities of the business.
STP – The STP approach is defined as the approach which is used for analysing an
estimating the market and target customers of the company. This method is used by Impresso
Espresso coffee shop to organise and manage the operations and functions of this small business.
The segmenting, targeting and positioning approach of this coffee shop is described below -
Segmentation – This is defined as the method for dividing the business segment and
selecting the best and feasible market area that is used for increasing the market share and
customers of the company. In the following context of Impresso Espresso this coffee shop
business has used the market of UK as a segment market.
Targeting – This is defined as the approach for focusing on a particular group of
customers and targeting them towards the new and attractive products of coffee. In context of
Impresso Expresso coffee shop, the target customers chosen are youngsters and adults. Coffee
can be made rich by adding more creamy milk and chocolate in the coffee offered by Espresso
Impresso coffee shop.
Positioning – This approach means establishing the product or service of the company in
a particular market (Dixit, and Kumar Pandey, 2011). This includes analysing the needs and
demands of customers and implementing certain strategies for increasing the efficiency of the
business. In context of Impresso Espresso coffee shop, the customers are attracted by providing
good creamy milky coffees to customers.
Financial information – The Impresso Espresso Coffee shop must be able to plan the
business activities and tasks for managing and handling them in an effective manner. The
Impresso Espresso Coffee shop is a small business that is run by a new entrepreneur. He is
planning to expand the business and for this funds and huge amount of money is required for
performing functions and operations of the business in specified time.
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TASK 4
P5: Succession and exit plan for small business with its advantages and disadvantages
It is one of the complex process which consists number of factors that can impact on the
business organisation either positively or negatively. While talking about “Impresso Espresso” it
has been affecting the profitability due to which the are unable to perform better in the market. In
addition, they are even planning to shut down the business organisation. Some of the ways to
close the organisation (Mahmoudi, and et. al., 2013). Different ways to take exit from business
are explained below.
Liquidation: Here, organisation is declared as insolvent due to which they wants to sell
their assets to clear its debt amount. Various advantages and disadvantages of liquidation are:
Advantage:
 Outstanding debts are always written off and even company is also no liable to pay. Once process of liquidation is started non of the person is allowed to take legal action
against organisation.
Disadvantages:
 All of the assets will be sold.
 Once process of liquidation is started it cannot be stopped.
Sell the business in open market: It is the situation which arises in front of the business
organisation where owner do get the option to sell its business to third party and even can be
stakeholders of a company.
Advantages:
 As stakeholders are connected with the company, it will be easy for them to continue the
business activity. Plans and strategies can be made for increasing the loyalty and motivation level of work
force in the organisation.
Disadvantages:
 Customer might show less faith towards business organisation.
 Actual amount of business organisation might not be easy to get.
In this, “Impresso Espresso” can take the helps of liquidation process as chances of
getting actual price of assets is high in it where as it is not possible in case of sell of open market.
Ways of succession:
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Merger: It is situation where two or more then two organisation comes together to
conduct same form of business activities. It helps to reconstruct the life of an organisation. Some
of the advantages and disadvantage are:
Advantages:
 Chances of earning profit is high.
 The firm which is struggling can be benefited with the help of new management.
Disadvantage
 Increase in market share can lead to monopoly which can create problem for customers.
 Merger can lead to job losses.
Acquisition: It is defined as the corporate transaction where certain shares of the
company is purchased by other organisation. Here, mainly control is being takeover by another
firm. Some of the pros and cons are listed below:
Pros:
 It reduces the barrier of new entry in the market.
 Company do get the chances to utilise new resources in efficient manner.
Cons:
 It damages the brand image or organisation.
 Acquiring company increases the debt load on organisation.
Here, “Impresso Espresso” needs should try to adopt the option of merger because that
will help them to increase there overall profit and even can come back to the track.
CONCLUSION
From the above analysis it can be concluded that planning of growth of business is an
important factors for achieving success in business projects in less time. It includes various
analysis that helps in analysing the external factors which impact profits of business. The
different analysis used by organisations for examining business factors are PESTEL analysis,
Porters Generic Model, etc. Moreover, a business plan is important for analysing goals,
objectives, vision, mission and strategies of business. This helps in estimating success of
business in specified time.
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REFERENCES
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Online
Business Exit and Succession Planning. 2018. [Online]. Available through:
<https://www.ldb.com.au/our-services/business-exit-succession-planning>.
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