Growth and Expansion Strategies for Bar Italia Cafe: A Business Report

This report analyzes growth strategies for Bar Italia Cafe. It begins with an introduction to growth planning and its importance, followed by an examination of key considerations for evaluating growth opportunities using PESTLE and Porter's Five Forces analyses. The report then explores growth opportunities using the Ansoff matrix, including market penetration, development, and diversification. It also details funding sources available to businesses, and creates a business plan with financial information. Finally, the report outlines potential exit strategies for Bar Italia Cafe. The report is well-structured, covering key areas such as market analysis, strategic planning, and financial considerations, providing a comprehensive overview of growth strategies for the cafe.

PLANNING FOR
GROWTH

Table of Contents
INTRODUCTION.......................................................................................................................3
LO 1.............................................................................................................................................3
P 1 key considerations for evaluating growth opportunities ..................................................3
P 2 Opportunities for growth ..................................................................................................6
LO 2.............................................................................................................................................7
P3 Funding sources available to business...............................................................................7
LO 3 .........................................................................................................................................10
P 4 Business plan for growth that includes financial information........................................10
LO 4 ....................................................................................................................................12
P5 Exit strategies for Bar Italia Café ....................................................................................12
CONCLUSION..........................................................................................................................14
REFERENCES..........................................................................................................................15

INTRODUCTION
Growth planning is a strategic business activity that enables business owners to plan and track
organic growth in their revenue. It allows businesses to allocate their limited resources toward
a centered effort to adapt to changes in the industry driven by digital disruption and
differentiate from competitors. This report covers issues such as analysis of pestle and porter
five forces, Ansoff matrix for growth and development of cafe, business plan, exit strategies
for the business and sources of funding for the business.
LO 1
P 1 key considerations for evaluating growth opportunities
Pestle Analysis-
This analysis helps the company to evaluate all the macro factors which leaves an
impact on the performance of the company in negative manner.
Political Factors-
These factors can influence the business of bar in lot of ways irrespective of time and
place. These factors include reforms of taxes or guidelines which are linked to health and
safety. Bar Italia Cafe needs to consider this factor so that they can figure out way to resolve
the issues created by this factor. If the decisions taken by the bar are appropriate then they will
be able to minimize the risk involved and the impact these factors will make to the business
(O'Sullivan, 2018).
Economic Factors-
These factors are concerned with the rate of inflation, growth in economy and if the
place where bar deals in suffers from this factor then they will have to pay more for the

ingredients and charge more for the services they offer to their consumers which will affect
their sales and profitability.
Social Factors-
There are many factors that can affect the business. People nowadays prefer healthy
food more than unhealthy food which raises a concern for the bar as they will have to start
offering healthy food so that they can achieve growth in market. This will arise a need to
change the menu and add more creative stuff in it but it will help the bar to make more sales.
Technological Factors-
This factor has simplified the work of owners of the Bar. For instance CCTV cameras
has helped the owners to look after the employees and their pattern of working even when they
are not present at the place. This helps the owners to look after other work and responsibilities
which has been possible because of this factor. This factor has helped the company to achieve
growth in market.
Environmental Factors-
Bar Italia Cafe needs to consider the factors which are internal as well as external. The
ambience of the Bar must be made according to the considerations which satisfy as well as
attract people to visit the place again. If people notice that they have maintained cleanliness
inside as well as outside the place then they will be satisfied and come to visit again which
will help them to grow in the market.
Legal Factors-
There are some people who have the authority to check the place that if or not they are
using the factors which are not expired and of high quality and it must be matched with the
level of hygiene otherwise they will put a stop on the operations of the company (Loures,
2019).
Porter's five force Analysis-
This model is a business analysis model that helps the company to maintain the level
of profitability and measure the intensity of competition in the market.
Threat of new entrants-
Impact of this factor is less as it takes a lot of requirement to open up a Bar. Another
factor which limits them is the economies of scale which can be only achieved if they have

achieved efficiency in their operations. People who are considering to enter in this segment
will have to think of the cost of operating as well as the fixed cost.
Bargaining Power of Buyers-
Buyers are the ones who have control over this factor and the business of bar gets
affected because of the factors such as change in tastes and behaviour of switching places. If
the bar charges high prices for their services then they will not be able to achieve growth as
they will loose a lot of customers. Prices needs to be set on the basis of area they are serving
and the audience they are targeting (Olesen and Carter, 2018).
Bargaining Power of Suppliers-
Suppliers are the ones who provide raw materials and ingredients to the bar. Number
of supplier affects the price of ingredients. If they are present in high numbers then the prices
will be kept low and if there are less no of suppliers then prices will be kept high. This factor
is also concerned with the size of the bar. If the size is small then order will be limited and if it
is big then order will be large and suppliers don't engage in negotiation with them as compared
to small sized bar (Pallagst, 2017).
Threat of Substitute Products-
The cocktail, mock tail or any kind of dish or beverage which is served by the Bar
Italia Cafe can be served by other bar and cafes too which gives a benefit to customers to
switch easily. The cost of switching is low in this industry. Even the brand which is offered by
them can be found at other place which can affect the growth of the business.
Competitive Rivalry-
This industry has high number of operators which is the reason why Bar Italia Cafe
faces a lot of competition. All of them are looking to obtain more share in market so that they
can take the business to the path of growth. There is one factor which is loyalty of customers
which helps the business to survive in the market.
Porter's generic strategy
This model helps the company to determine the position of the company that if or not they are
earning below the level or above it. There are three strategies in this model-
Cost Leadership-
This aspect includes those companies who are the low cost producer in the market. The
benefit from this aspect depends on the structure of the company. For instance economies of

scale, preferential access and other factors. If the company is able to achieve this strategy then
they will be able to achieve growth.
Differentiation-
This aspect focuses on being unique and provide value to their consumers. It helps the
company to focus on those which the consumers see as important.
Focus-
This aspect focuses on one particular segment of consumers in the market. It has two
variants-
A) Cost focus heps the company to focus on getting advantage for the consumers in the
particular segment.
B) Differentiation Focus allows the company to look out for differentiation in the targeted
segment.
P 2 Opportunities for growth
Ansoff model is considered as a strategy for product marketing. This model includes four
alternatives for growth and it is suitable for the company in the existing as well as the new
markets for the products they are already dealing in and for the line of products they want to
enter in. Each alternative in the model has different level of risk for the company.
Market Penetration-
In the strategy of market penetration Bar Italia Cafe can try to grow in the market by
using their existing services. It will help the bar to increase the share in the current market.
This will help them to increase their share in market. In the segment of market in which they
are dealing in their share will be increased. Bar Italia Cafe can increased its share by
increasing the no of customer they serve and apart from established customers they must also
focus on finding out the customers which can be new and establish them as their base of
customers in the existing markets. The bar wants to increase its sales for their current offerings
in the current market with the help of enabling promotion in an aggressive manner (Zhou,
2016.). There are some ways to achieve this such as decrease in prices, increase in the level of
promotion and support from the channel of distribution, they can acquire their rival, offer their
customers the products which are modest and refined. This method is considered as least
riskiest method.
Market Development-

This strategy will help the business to expand and serve their operations into new
markets. It may be countries or different area in the same city with the existing services which
has minimum chances of development. It can be accomplished by different segments of
customers, buyers which deals in industrial goods which previously only sold goods to the
households, areas which are new or untapped regions of the country and to enter into the
market of foreign countries. It is suggested that business will grow more successfully if they
have a service which is unique so that they can have the leverage when they enter into new
markets. If they increase the output then they will be able to get benefit on economies of scale.
The new market is similar as the one in which they are dealing in or the buyers in the market
are able to give the business more profits intrinsically. This strategy is considered as a bit
riskier (Leick and Lang, 2018).
Product Development-
In this strategy Bar Italia Cafe will have to offer new products and services by which
they can target the markets which they are already serving in so that they can achieve growth.
To achieve growth they will need to introduce new range of offer and services into the existing
segment of market. These products can be acquired by investment in the department of R & D
so that they can introduce new services to offer, buy the rights of someone else's products and
add them into their portfolio. The bar can brand or package the product with their name or
develop the operations jointly with some other company who requires the need of distribution
channels and access to it. The risk involved in this aspect is similar to the risk involved in the
aspect of market development but it is considered as more riskier than market penetration
(Kouba, 2017.).
Diversification-
In this strategy in order to achieve growth in the market they need to introduce new
services so that they can enter into new markets. This aspect is considered as most dangerous
and riskiest and the reason behind it is that it requires both the aspects the development of
market as well as product. There are two aspects of diversification-
Related Diversification-
There is a relation between the firms who are already serving in the market which
makes the scope for the to come into synergy.
Unrelated Diversification-

This aspect is considered as growth of conglomerate as the corporation is a
conglomerate. It is a group of business without having a link or relation with each other. This
is a strategy for the growth of the business by acquiring or beginning to deal in those areas
which are outside to the market and current products.
LO 2
P3 Funding sources available to business
Whenever company plans to develop its business, it requires lots of money and investment. If
the firm has enough capital, then company can make necessary changes in operations or
can implement innovation so that it can grow well. Bar Italia Café is planning to expand
its business in the new location which is the big decision and require huge capital
investments. Funding sources are explained as below:
Bank loan
This is considered as easiest option that can be opt by Bar Italia Café to enter into new
market or to grow its operations. It is source in which company can take credit from
financial institutions and can manage expenses (Hoch, 2017).
Advantage
Bar Italia Café can pay the loan amount as per its convenience as bank schedule instalment on
monthly bases and company has to repay that amount in easy instalments. This is better
for the firm because this flexibility in repayment manage the financial pressure of entity.
If organisation opt any other option, then it will have to repay the amount with heavy interest
but bank charges nominal interest from the consumers and if person is paying the regular
instalment then give overdraft facility as well. Hence it is cost effective method of getting
funds.
Another benefit of taking credit from bank is that Bar Italia Café can retain its profit that
means if firm takes capital from any investors then investor takes shares from profit but in
bank loan no need to share profit hence Bar Italia Café can retain its profit easily.
One of the advantage of taking bank loan is to get tax benefit, as government gives facility in
tax if person has taken any kind of loan from financial institute. Loan is considered as tax
deductible source of finance.
Disadvantage

Taking loan enhances long term liability of Bar Italia Café. As it is essential to repay the
instalment with interest which is fixed expenses of business hence profit of company gets
minimised.
If Bar Italia Café fails to pay instalment on time, then it would affect creditability of company
and firm will not be able to get capital from any financial institution in near future hence
it would affect the brand image of business to great extent.
Retained earning
This is the funding source which is also known as equity earning portion. The amount
which is found after paying dividend to all stakeholder and paying tax to government is
scarified by most of the stakeholders is called retained earnings. This amount is further
reinvest by company with the intention to earn more profit (Denton, Forsyth and
MacLennan, 2017).
Advantage
This is easy source of finance because firm can use own capital and can reinvest which help in
fulfilling the capital requirement. Bar Italia Café will not require to ask for help for the
funding.
Controlling will be in the hand of owner because owner of Bar Italia Café will not have to
share ownership hence all the decision will be taken by respective members only.
This is beneficial in controlling over the cost of issuing external equity.
Disadvantage
The drawback of retained earnings is that opportunity cost is too high because shareholders
sacrifice their dividend.
Management can misuse that amount and can manipulate it which will decrease trust of
investors.
Over capitalization is another drawback of retained earnings because Bar Italia Café may face
issue of insufficient availability of funds.
Angel funding
This is the funding source in which company approaches to some investors, these are
private capitalist those who like to invest their money in small business to get profit on
their investments (16 Pros and Cons of Angel Investors, 2016).
Advantage

Funding range is the advantage of this source, being a small size firm Bar Italia Café needs
limited funds hence it is suitable option for the organisation.
Angel investors have proper knowledge about market and have experience of investment
hence when they get connected to business then they can give advice to business which
can give benefit in near future (Daniels and Lapping, 2016).
As it is not the debt financing method hence it is quite cheaper source of finance which can be
afford by Bar Italia Café. Here Bar Italia Café needs not to pay payment on monthly
bases.
Disadvantage
It is less transparent method because firm has to share its important information with angel
investors hence there is high risk of data leakage.
Controlling risk is also high because angle investor will sit in board meetings and will give
own portion. Individual will have right to control over business decision. This too much
involvement of investors can create problem for Bar Italia Café (Wynn, 2017).
LO 3
P 4 Business plan for growth that includes financial information
Objectives- To increase sales of new product by 10% till the end of year 2020
To increase the market share by 30% till the end of year 2022
To enhance consumer experience by 10% in upcoming 6 months
To increase the profitability by 20% till the end of year 2020 (Colantoni and et.al., 2016).
SWOT Analysis
Strength-
Bar Italia Cafe offers the food in many varieties which is a quality food and people love
their menu. This place targets those who are young in age so that they can acquire more
people in the place. The style that the place has is totally new to the area. Prices of the
things in menu is less as compared to the competitors and rivals so that they can attract
more people. Some of the products that the Bar Italia Cafe offers is exclusively offered by

them. They also organize a night of entertainment which is based on a particular theme.
The staff that is employed is well behaved and well mannered.
Weakness-
The funds that the bar has is limited for a specific period of time as it cannot help to
expand their operations. The bar is new which requires to establish the name in the
market. Place does not have the adequate or significant amount of facility for the people
who are disabled. Almost all the products which is offered by the business is already
served by their competitors which reduce the possibilities of growth for the bar. To make
it popular and attract people a lot of marketing and advertisement is needed which
requires a lot of money.
Opportunities-
The area where the place is established has developed a lot and places such as offices
and houses have started which means the Bar has the scope to target all those people as
their target audience. Apart from that some of the competitors has moved out of the
industry which will help the company to increase the level of profitability and also create
a scope to expand their business by adding another branch (Pugalis and et.al., 2016).
Threats-
Places which are very old or a big franchise is a threat to the Bar Italia Cafe. If the area
becomes more popular then rent of the place will also increase. Many of the competitors
has lowered their prices so that they can serve more people which is a threat to the
business as they are implementing the same strategy as them which will take away their
lot of customers (Cheung, 2017).
4 P's of Marketing Mix-
Product-
This aspect is concerned with what the business offers to their target customers. They are
working on introducing new range of products so that they can bring innovation and
obtain more share in market. The reason behind growth is to acquire more share and
brat their competitors in the market. They serve products such as tea, coffee,
smoothies, frappuccino etc.
Place-

This aspect is concerned with determining that how many venues the business have and how
many options are there to access them. There are many ways which helps the cafe to
reach their customers such as cafes and applications on mobile. All of the business
have physical presence but similarly like big companies Bar Italia Cafe also has a
online presence. Cafe made their presence online so that they can make their
customers feel more convenient by giving the order on the phone and get it deliver at
their place (Park and LaFrombois, 2019.).
Promotion-
This aspect is concerned with promotion of the business so that they can encourage and
motivate more people to have a visit at their place. There are many strategies which
are used by the business such as advertising, word of mouth, public relations and
sales promotion etc. Cafe give offers such as buy this much at this price or 10 to 20
per cent off, apart from this they give rewards to their prospective buyers which is
redeemable on the next purchase.
Price-
Bar Italia Cafe charges a nominal price for their products and services. This strategy allows
them to gather more no of people at their place by which they are able to generate
more revenue. This will help the company to develop and achieve more growth in
market (Bridge and Dodds, 2018).
LO 4
P5 Exit strategies for Bar Italia Café
Succession is the process which is implemented by every owner when firm fails to run
operations successfully and generate profit. There are several ways to close the business:
Merger with other business
If Bar Italia Café is unable to generate profit, then enterprise can get merged with other
company. This is the time taking process because other firm ha to investigate capability of
business before taking merger decision.
Advantages-
 It helps to achieve the economies of scale. More the business is bigger more it is
efficient in handling their operations.