Planning for Growth: Analysis of Key Considerations and Funding Sources for E Pellicci Cafe

This assignment discusses the key considerations for evaluating growth opportunities for E Pellicci Cafe, including the analysis of key factors and the application of Ansoff's growth vector matrix. It also explores the key sources of funding accessible to companies and the advantages and disadvantages of each one.

Planning for growth
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1 Analysis of key consideration that are used to evaluates growth opportunities.....................3
P2- Application of Ansoff’s growth vector matrix......................................................................5
LO2..................................................................................................................................................7
P3- Key sources of funding accessible to companies and advantages & disadvantages of each
one................................................................................................................................................7
LO3..................................................................................................................................................8
P4 Business plan that include financial information and strategic objectives.............................8
LO4................................................................................................................................................10
P5 Assess exist or succession options for small business..........................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14
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INTRODUCTION
Planning for growth of ventures is one of the most important strategic activities of organizations,
which make firms able to plan & track progress in their revenues. In recent time, within every sector,
companies while operating their functions and operations in market focus on making plans for its better
growth. The current assignment will be based on E Pellicci, which falls under list of small cafes in
London, UK. E Pellicci is a small cafe that offers tasty and delicious food products to customers
in order to grow and sustain in market for longer run. This organization has more than 20
workers and earns profit approximately 3 billion. This study will define important considerations for
examining growth changes in context of chosen company. It will explain opportunities for progress after
applying Ansoff’ growth vector matrix and also describe sources of funding along with their drawbacks &
benefits. Furthermore, this report will justify business plan developed for growth that includes financial
information & strategic objectives for scaling up chosen firm. It will clarify succession or exit options for
cafe explaining disadvantages and advantages of each option.
LO1
P1 Analysis of key consideration that are used to evaluates growth opportunities
So, company have opportunities to expand its business operation in UK and different
parts of world by conducting effective market survey in order to gain competitive advantages.
There are numerous factors that need to be considered by E Pellicci while evaluating key
opportunities for growth and success of business. Pestle model is used to identify the way
company can gain competitive advantages which is illustrated as follows:
Resource based view:
VRIO framework can be used to understand the way company strength have contributed in
gaining competitive advantages.
Basis Valuable Rare Imitate Organised
Management Yes No Yes Yes
Products Yes No Yes Yes
Brand image Yes Yes No Yes
Innovative Yes Yes Yes No
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technology
Valuable: It can be stated that management, products, brand image and innovative technology of
company are valuable that helps it to effectively expand its business operation across worldwide.
Rare: From the above table it can be illustrated that management styles and product are not rare
as same can be easily manufactured by other organization to attract maximum individuals. So
company needs to work on its products and services in order to gain competitive advantages.
Brand image and technology used by company is rare that helps it to influence maximum
number of individuals.
Imitate: Due to no use of patent and trademark, other competitors can easily make use of
technologies or products to enjoy high profit margin.
Organised: Company have effectively organised its products, brand image and management that
have contribute in optimum utilisation of resources and achievements of company goals.
BCG matrix
Dogs: It includes products that have low market share and market growth like E Pellicci like
home made steak pie is not tasty dish of company so it have less demand and growth thereby
firm needs not have to make any investment.
Cash Cow: It can be stated as low market growth while higher market share like drink menu
have low growth but have maximum market share.
Question market: Low market share but high growth such as burger is demand by limited people
but have maximum growth potential so marketer of E Pellicci needs to think before making
investment.
Stars: This have high market share and growth such as demand of pasta, organic food is
increasing so E Pellicci needs to invest in them to enjoy higher profit margin.
Political Factor: Globalisation and strong connection between nations lead government of UK
to promote free trade regulation so it motivates E Pellicci to export and import products to other
countries in order to earn profit.
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Economical Factor: Brexit and Covid-19 have resulted in economic recession in UK, large
number of people has become unemployed and pricing of products are increasing at rapid stage.
For example: Thus, less number of people are ready to spend their money in purchase of non
essential products or goods that are available at high price like of E Pellicci (Almeida, Santos
and Monteiro, 2020).
Social Factor: Now- a days, people have become more and more demanding and their
expectation have increased with new development and trends in external environment. They
want to have food products from place that maintain hygiene, offer organic and more health
products so E Pellicci can opportunities to expand its market by making changes in menu.
Technology Factor: With advancement in technology, customers are preferring to have online
payment and home delivery of services or more use of innovative technology to meet their needs.
Digital technology is a best platform to expand and grow business operation in limited cost and
time as large number of individuals invests most of their time in social sites or using mobile
devices. E Pellicci by making use of social sites like Instragram , You Tube and Facebook can
easily promote business and offer more qualitative services to customers (Ng. and Kee, 2017).
Therefore, company by making use of digital platform can easily create awareness among large
number of customers and gain competitive advantages.
Environment Factor: People are enforcing company to take CSR activities or promote
sustainable management therefore E Pellicci by taking steps towards the same can grow its
business operation.
Legal Factor: There are several legal laws that force business to take certain steps such as
ensures health and safety of employees, non discrimination, equal wages etc. So, company by
abiding to all legal laws can build strong brand image in minds and hearts of customers.
New products and services: E Pellicci while expanding its operation has to consider what new
products or services it can deliver to end customers. Such as it can offer quick and home delivery
services or add new varieties and ingredients in products so that customers have better options to
select best out of several alternatives. Online payment, free Wifi facilities are some more method
that can be used by company to attract maximum individuals within organisation (Krotov, 2017).
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Risk and mitigation: There are several risk associated with opportunities like financial risk,
dilution of brand image and market share of firm. Company can avoid all such type of risk by
undertaking market survey to understand taste and preferences of people or recent trends in order
to find effective strategies that could helps in meeting their expectancy level.
Collaboration: There are several other options that could also be considered by company while
planning for its growth or making best utilisation of available opportunities. Such as it can easily
form joint venture, acquire or alliance with another local firm in order to have know of new
market in which it is planning to enter to enjoy higher profit margin in future circumstances.
Company by merging with another firm can increase its resources and easily enter into global
market to attain its objectives (Shengelia and Mushkudiani, 2019).
Advantages: Sharing of financial and others resources thus company can easily grow and
expand its business operation across worldwide. Associated business risk is shared between both
the companies thus single firm is not responsible for all losses.
Disadvantages: Difference in culture and practices results in conflict or ineffective management
of enterprise thus adversely impact on growth of firm.
P2- Application of Ansoff’s growth vector matrix
It is one of the most effective strategic frameworks that can be used in context of several
companies, to identify growth opportunities. Here, it can be applied for E-Pellicci as chosen small
venture, operated in the United Kingdom. It model comprise four different growth strategies that provide
a lot of benefits to selected organization.
Market penetration-
This give new growth chance to chosen cafe in term of gaining competitive edge and increasing
profitability by focusing on selling existing food and beverage goods to current group of consumers
(Loredana, 2017). With this strategy small venture can increase their market share and retain potential
buyers for longer period of time. Firm can concentrate on pricing strategy for its products, which make
them able to gain attention of new consumers. Furthermore, they have to give more focus on marketing
activities in context of existing items and business within chosen marketplace where coffee lovers are
seeking to buy a taste coffee. When organization can use this strategy they can get all above benefits, but
would not reach at global level as it only help satisfy current market place not suggest to satisfy people
across UK. It just aid to increase profits margin by serving under home boundaries not outside of London.
Product development-
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This strategy provide several benefits to E- Pellicci cafe in term of increasing their customer base,
generate revenue and profits margin even better than other small cafes operated in similar sector since for
so long (Sopińsk and et..al., 2019). In order to gain all these advantages for growth of venture, firm have
to introduce new drink along with exiting one as innovative product for target consumers who are able to
purchase and look forward to try something new instead of coffee as morning or evening drink take to
fresh mind. It require that firm can develop new competency or venture of create change item which will
appeal to potential buyers in exist market. It can help firm to be competitive in industry as opposite to
their rivals who are offering similar services or products to people. It can be said that, development of
new product or venture is quite risky as it if full of threat in term of failure.
Figure 1: Ansoff Matrix
(Source: Ansoff Vector Matrix, 2018)
Market development-
It is also beneficial and helpful just like above growth strategies of Ansoff’s matrix model for
chosen small cafe. With this tactic firm can gain competitive edge and attract new customers who are
interested in drinking coffee early in the morning, especially from small stalls. There are ranges of
potential manners or modes by which company can use this strategy (Alkasim, Mohammed and Bala,
2018). For example, E- Pellicci cafe can open its business into a new location or nation with existing
items in form of market development where lots of people available who can earn even better and spend
money to drink coffee outside at home. Furthermore, firm can consider another way as well for instance,
they can sell products by setting different pricing rule which in return help attracting different buyer and
also support create new market segments that is quite beneficial for company growth within competitive
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business environment. While it can be analysed that market development is risky tactic more than
penetration of market because of segmenting and targeting new group of consumers.
Diversification-
This tactic as compare to other strategies is quite different and consider as risky one because the
change of growth and success of chosen small business with this strategy is less. It drive firm towards
moving to new market with new products in which company has no experience, which in return
decreasing profitability and sales more than now. With this strategy company need to conduct depth
analysis of chosen market in which they wants to enter. Organization should conduct market research in
systematic manner to know more about preferences and needs of local people relate to food & drink. Two
different forms of strategy are accessible in the world of business that company can employ such as
related to diversification and unrelated to it.
Conclusion-
From above discussion it has been concluded that by using market development strategy,
organization obtained competitive edge and gained further benefits.
LO2
P3- Key sources of funding accessible to companies and advantages & disadvantages of each one
Funding is the key source of business success and progress, it help firms to invest in
profitable tasks or projects. There are different sources of funding accessible in the business
world that E- Pellicci organization can use (Pakhnenko, 2019).
Venture capital-
These are known as investors who invest in considerable sum of money in exchange for
partnership in small cafe and desire return when firm goes public and generate profit even better. Venture
capital is all about funds or money and only put in ventures that have power to provide good refunds on
their each investment. This source of funding caters funds and also provides mentorship as well as
expertise to aid establish and maintain small chosen cafe. The disadvantage of this mode is that person
can be forces to give huge chunk of its venture due to important amount of funding offered.
Bank loans-
As most popular funding source, E- Pellicci can use this one in order to make investment within
existing business and enlarge is even better. It helps many start-ups and established companies in the
world of business. Company can apply for total amount in specific bank, which is trustable and have
return policy.
Angel investors-
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This source of funding can be recognized as wealthy individuals and companies who can cater
money in exchange for a profit or share of equity in company’s project (Harrison and Mason, 2017).
Some of them work in teams and screen deals together before offering amounts, while most act on their
own level. These investors usually want from 21 to 26% return on success of project in form of money
they invest in small cafe. The best benefits of obtaining funding from this source are that there is low risk
more than when Chose Company can take out a small venture loan. The drawback of this funding source
is that angel investors can demand substantial return on his or her investment, sometimes they expect
equal to 10 times their actual amount within first 5 to 7 years.
Family & friends-
It is one of the most common ways of funding that used by so many organizations either small or
large. Chosen firm can request their family member, close friends and associates to aid fund their venture.
This form of funding or money collection has more to do with relation themselves. It helps company to
point where it can get other forms of similar things. With this source firm can obtain money within short
term period without paying extra amount in return it can be taken as loan free from interest. When
business owner can take fund from friends and family member, they can return according to comfortable
zone or when they have specific amount after selling products in new or existing market. Drawback of
this way is that people can cater money without assessing viability of further and current business plans.
Crowd funding-
It is a manner for companies and people to raise money. This source works through firms or
individual who are able to invest in profitable projects in return for great profits. This method includes
funding small or big ventures by taking some amounts of capital from wide number of individual, mostly
through internet. This sort of funding makes utilize of huge networks a business owner have of their
family and close friends via varied social platforms to obtain word out about organizations with aim of
gaining attention of new investors. The best thing about this source is that it is quickest mode to raise
money with no upfront fees. Dependency on internet in ventures, hence much action to develop this
element, needs before asking for this mode of money.
Recommendation-
E-Pellicci as small cafe should consider bank loan as effective and excellent source of funding
where firm would not face any threat and easily pay taken loan on decided time duration. Furthermore,
chosen organization must use venture capital for purpose of receiving money which firm will invest
according to needs and requirements.
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LO3
P4 Business plan that include financial information and strategic objectives
Business plan is documents that describe key information such as objectives of firm,
strategies that could be used to achieve specific objectives. So it is type of roadmap that state that
way company can achieve particular goals or expand its business operation. So business plan of
E Pellicci is made to know the way company will grow and succeed in near future
circumstances. Such as:
Business plan of E Pellicci
Executive summary
Company mission and vision is to become one of leading cafe in United Kingdom by delivering
services that are beyond expectancy of customers. E Pellicci is cafe initially started by Priamo
Pellicci in 1900 to provide tasty, delicious and healthy food products to customers so that they
are motivated to be with organisation for longer time frame. Purpose of company is to grow and
expand its business operation by meeting expectancy of customers in best possible manner. It
offers varieties of delicious, healthy and tasty dishes at minimum prices so that large number of
people are attracted to taste products of E Pellicci for satisfaction of their needs.
Target market
Each company has its target market or customers that are influenced to be part of company for
fulfilment of their respective requirements. E Pellicci marketing manager have segmented or
classified individuals into several group so that strategies can be formulated to motivate and
influence to make purchase from particular firm. Income group, demographical, psychological
and social are some of the factor that has been considered by manager to group diverse
individual. Each company has its target market or customers that are influenced to be part of
company for fulfilment of their respective requirements (McKeever, 2016). E Pellicci marketing
manager have segmented or classified individuals into several group so that strategies can be
formulated to motivate and influence to make purchase from particular firm. Income group,
demographical, psychological and social are some of the factor that has been considered by
manager to group diverse individual.
Company have target youngsters, families and teenagers or couples that want to enjoy having
meals or tasty food at outside their home in café. It have motivated all income group individuals
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to come at café to have taste of different food items for fulfilment of their respective
requirements (Linderman, 2020).
SWOT analysis: It is model that is used to identify key strength and weakness of firm that have
helped in making best utilization of available opportunities and removing associated threats of
business. Therefore, SWOT analysis of E Pellicci is as follows:
Strength: Company strength lies in qualitative products and services that it delivered to end
customers so that it can gain competitive advantages.
Weakness: E Pellicci have limited financial resources that resulted in huge obstacle in growth
and expansion of business in international market.
Opportunities: Digital media, expansion of firm in UK and other countries, launch of new items
are some of opportunities that can be used by firm to attain its objectives.
Threat: Company is facing threat of increasing competition level, rapid changes in technologies
and taste and preferences of customers while operating its business.
Organization and management: E Pellicci is small and medium enterprise that operates in UK
that have definite organizational structure which contribute in effective functioning of
organization and achievements of goals. Management have emphasis on provide safe and secure
work environment where both male and female can work or put their efforts for growth of
enterprise. Management have planned to use democratic styles which state it will considered
viewpoints of all individuals while taking any particular decision.
Marketing and sales: Company have planned to make use of digital platform to promote
company and its products and services to number of customers so that it can enjoy higher profit
margin and sales volume. Its plan to create official websites so that people can easily review
products and services of company, get knowledge about it within limited time and order food or
beverages as per their requirements (Alonso-Vazquez and et.al., 2018). E Pellicci have planned
to increase sales by focusing more on enhancing customers satisfaction level by delivering
maximum value to them.
Sources of fund: Finance is required by organization to meet several expenses that are incurred
to effectively implement plan and achieve particular objectives. There are numerous sources of
fund that could be used by enterprise to implement its plans such as personal saving, angel
investors, venture capitalist and loan from financial institution (Sládková, 2018). E Pellicci have
planned to make use of bank loan and venture capitalist to raised fund for meeting expenses and
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achieve desired goals.
Budget: It contain detailed related to several expenses or cost that are incurred by company to
make optimum utilization of opportunities and attain competitive advantages in industry such as:
Expenses Amount
Marketing and sales £1000
Purchase £2300
Stationary £200
Wages and rent £2000
Market research £500
Total £6000
LO4
P5 Assess exist or succession options for small business
Exit strategy is plan that is implemented by owner, investors and venture capitalist to liquidate
assets of business or dispose them. Therefore, there are numerous exist strategy that could be
used by business such as liquidation, merger, acquisition and sell to open market. So, different
exist strategy with their advantages and disadvantages are discussed below:
Liquidation: It is most common, simplest and quickest method through which owner can easily
exist its control and ownership over business operation. It is most suitable for enterprises that are
owned and managed by single individuals as owner by selling assets and paying liabilities of
firm cease down operation (How to Pick an Exit Strategy for Your Small Business, 2019).
Advantages
The biggest advantage of liquidation is that company can easily wound up its assets and pay all
liabilities.
Disadvantages
On the other hand disadvantages of Liquidation is that owner of company get less return on
investment made from sales of assets and by paying all liabilities.
Keep your business in family: It is another strategies that are used by enterprise as it helps in
maintaining legacy of business by transferring right of ownership and management to new
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generation. Thus, the business does not came to end as it is transferred from one generation to
another.
Advantages
The owner can still have control over decision making of firm as it have passed to another
generation only.
Disadvantages
Firstly management, investors or employees may not be ready to work with new owner or might
successor individuals does not have skills and knowledge to maintained business in best possible
manner.
Sell business in open market: It is most popular exist strategy that is used by maximum number
of small business at certain point of time by selling business at specific rate in open market.
Advantages
Business that has more sales volume and profitability can easily attract large number of
investors to make purchase for their respective requirements.
Thus, owner gets maximum return or value of business by selling it in open market.
Disadvantages
Disadvantages of selling business in open market is that it is difficult for manager to decided
value and selling price of business thus it may sometimes result in lower value.
Merger: Firm can also plan to exist business by merging with another company that have similar
strong brand image , resources or forming joint venture or acquiring another enterprise. Thus, it
lead to distribution of profit and losses, collaboration in decision making process etc (8 Business
Exit Strategies for You to Consider 2020).
Advantages
Company by forming merger with another firm can quickly or rapidly expand its business
operation in existing and new market share.
Quantity of resources and finance increases as both company contribute resources to attract
maximum number of customers within limited time frame.
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Disadvantages
Now company have to share its resources, brand image and profitability with another enterprise.
From the above several exist strategies, E Pellicci have selected merger to exit business
so that it can quickly expand its operation in international market. Merger contribute in sharing
of resources and making best utilisation of opportunities as both firm can make better use of their
capabilities for growth and expansion of firm. There are many more benefits of selecting
merging as option for exist businesses strategy such as associated businesses risk can be easily
minimised. Brand image, strong market share of both firm can be used by companies to gain
competitive advantages and attract more and more customers within firm. So, merger is the best
alternative option or exist strategies that could contribute in growth, diversification and survival
of firm in competitive market condition.
CONCLUSION
It can be concluded from above analysis that company can easily expand its business
operation by considering several factors that directly or indirectly impact on growth and strategy
of organization. Ansoff growth matrix states that there are four alternative strategies that could
be used by enterprise to make best utilization of available opportunities and gain competitive
advantages. Firm by deciding particular exit strategies that it could adapt in future is able to
cope up with threats and sustain business for longer time frame. At last it can be concluded from
above report, that digital media and globalization have offered varieties of opportunities to E
Pellicci to growth and develop in external environment.
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REFERENCES
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Sládková, J., 2018. [NEOBHÁJENO] A Business Plan for a Café.
Sopińsk, A and et..al., 2019. Strategic Choices of Managers of Furniture Companies on the
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Online
8 Business Exit Strategies for You to Consider 2020. [ONLINE]. Available through :<
https://www.fundera.com/blog/exit-strategy-for-small-business>.
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https://www.tutor2u.net/business/reference/ansoffs-matrix>.
How to Pick an Exit Strategy for Your Small Business, 2019 . [ONLINE]. Available through :<
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