Planning for Growth

This document discusses the key considerations for evaluating growth opportunities, potential sources of funding, and creating a business plan for the growth of an organization. It explores Ansoff's matrix and strategies for market penetration, product development, market development, and diversification.

Planning for Growth
1

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
P1) Key consideration for evaluation of growth opportunities..............................................4
P2) Evaluation of growth opportunity with Ansoff's matrix..................................................6
TASK 2............................................................................................................................................8
P3) Potential sources of funding.............................................................................................8
TASK 3............................................................................................................................................9
P4) Business plan for the growth of the organisation.............................................................9
TASK 4..........................................................................................................................................13
P5) Exit or succession options for the small business..........................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
2

INTRODUCTION
Planning for the growth is strategic activity of the business in which the management of
the organisations plans for the organic growth. For this they need to consider the effective use of
the resources which helps the organisation in taking competitive advantage (Price, 2018). While
planning for the growth the management need to identify the opportunities prevailing in the
market and strategies which they can adopt to grab such opportunities. The organisation which is
taken for report is Ella's kitchen, which is a small enterprise that manufactures organic baby and
toddlers food. They have been operating in many countries other than UK such as China,
Finland, Norway, Netherlands, US etc. In this report, various sources of funds are identified with
the help of which they can gather the funds. Along with this external and internal market will be
analysed and on the basis of which various strategies will be determined. Further a succession
plan will be formulated for the organisation.
TASK 1
P1) Key consideration for evaluation of growth opportunities
The businesses need to identify various opportunities that helps them to plan for their
actions and to formulate various strategies. For this the organisation need to analyse the internal
situation in which the resources, capabilities and core competencies are taken into consideration.
While considering the external environment the organisations have to focus upon various macro
economic factors which cannot be controlled by them. For evaluating the opportunities for Ella's
Kitchen the strategies need to be analysed that can be done with the help of Porter's Generic
model (Leick, 2018).
Porter's generic strategies facilitates the organisation in determining the suitable
strategy which can helps them in taking sustainable competitive advantage. An organisation can
take such advantage either by way of lower cost or by offering differentiated products. Some of
the strategy are given below:
 Cost Leadership: This is a strategy in which the organisation aims to enhance their
market share by providing low cost products to the customers. It can be done by
improving the economies of scale, improving the technology and many more as with
this the per unit can be reduced. Ella's Kitchen can adopt this strategy as the product
3

that they offer are essential and by providing them at lower cost will enable them to
expand their market share.
 Differentiation Leadership: This strategy aims to provide unique products to the
customers by introducing differentiated attributes to the products. With this Ella's
Kitchen can create unique position in the market that will facilitate them in meeting the
specific needs of the customers. In this higher prices can be charged from the customers
on the grounds of uniqueness.
 Focus: With the focus strategy, a narrow segment is targeted by the organisation. Such
strategy can be adopted either by considering cost or differentiation. Cost focus strategy
seeks to take lower cost advantage in smaller market which will be acceptable to most
of the targeted customers. While with differentiation focus strategy specific need of the
customers can be satisfied but for this higher prices can be charged from the customers.
Ella's Kitchen can adopt both such strategy in case they target niche market (Kim,
2019).
On the basis of above analysis it is identified that Ella's Kitchen must focus upon
differentiation focus strategy as it will help them in satisfying the customers effectively by
providing the superior quality products.
In addition to this organisation need to analyse the external market as that will enable
them to identify various opportunities and threats that can have impact on the organisation. This
can be done with the help PESTLE analysis:
 Political: This factors reflects the extend to which the government can intervene in the
operations of the organisation. In UK the situation is of political stability which has
positive impact on the organisation as their will not be any frequent changes in the
policies. For Ella's Kitchen it is an opportunity as with this they can easily expand their
business.
 Economic: Economic factors includes the purchasing power, unemployment rate, GDP
rate etc. that has direct impact on the profitability of the organisation. The income of the
people in UK is high which is why they can afford goods easily which are of higher
prices but of better quality. So for Ella's Kitchen this is an opportunity to plan for the
growth.
4

 Social: Social factors includes the demographic factors of the target market, their taste
and preference, perception etc. and all such factors has impact on the buying behaviour of
the customers. The people in UK have higher standard of living which is an opportunities
for Ella's Kitchen to expand as the customer can easily be attracted towards their products
because they are conscious about their children health.
 Technological: The technology plays a crucial role in making the organisation
successful. With the frequent advancement in the technology the requirement for the
organisation is increasing and this can increase the cost of Ella's Kitchen. But due to new
technology innovative and quality products can be provided by them that can facilitate
them in enhancing their market share (Kemp, 2018).
 Legal: Such factors are associated with implication of various laws that an organisation
has to comply with. The conditions of labour law need to be complied by Ella's Kitchen
as this will help them in making the labour motivated and satisfied. Also it will enable
them to improve their brand image and reduce the chances of any legal proceedings.
 Environmental: This factors includes various rules and regulations imposed with the aim
to protect the environment. For this Environment protection act is being enacted with
which the companies has to complied with. Ella's Kitchen has adopted various waste
management strategies which will help them to reduce the impact of such act.
With the help of analysis of the external factors it is analysed that Ella's Kitchen has
opportunity to expand their business as all the factors have favourable impact.
P2) Evaluation of growth opportunity with Ansoff's matrix
Ansoff's matrix is a tool which is being used by the organisation for analysing and planning
various strategies that can help in achieving growth. This matrix suggest four strategies in which
the organisation aims to expand the business in new market or existing market with new product
or existing product (Helmold, 2020). It facilitates analysis of the risk which is associated with
strategies. The strategies that can be adopted by the Ella's Kitchen are:
 Market Penetration: This is the strategy in which the organisation aims to increase their
sales and market share with the existing products within the existing market. It can be
done by way of improved promotional strategies, decreasing the prices of the products so
that they can attract more of customers. Also it can be by acquiring any competitors in
5

the same market. Ella's Kitchen can adopt this strategy as with this they can increase
their market share with lesser investment and minimum risk (Schepker, 2018).
 Product Development: In this strategy, a new product can be developed by the
organisation for the existing market. For this extensive research need to be undertaken by
the organisation as they have to determine the needs and wants of the customers. Ella's
Kitchen can adopt this strategy by providing new product through effective research and
development, by strategic partnership with other firms providing similar goods etc. But
the requirement of funds in this strategy is quite large. Along with this risk associated
with this strategy is also high as the product may not get acceptance by the customers
(Candelo, 2019).
 Market development: In this strategy the organisation aims to enter new market with
their existing products. This means that the organisation can expand their market into
new geographies , regions etc. With this Ella's Kitchen can leverage into new market by
adopting new technology where they can cater new customers. The requirement of
investment in this is high as for this they need to undertake the research for analysing the
new target market, also the risk is quite high.
 Diversification: In this strategy the organisation aims to expand their market share and
profitability by way of new market with new products. This is the most risky strategy as
the amount of funds invested in this strategy are huge. Such diversification can be related
diversification in which similar type of products are offered by the organisation. While it
can be unrelated diversification in which there is no similarity among the exiting and the
new products. Ella's Kitchen can adopt related diversification as with this they can
effectively manage the change because they have knowledge of related products
(Tsatsoula, 2018).
On the basis of all the strategy identified, the most appropriate strategy for Ella's Kitchen
is product development as with this they can make their customers satisfied with new products as
per their needs and wants. Also the requirement of the funds can be managed effectively. With
this they can increase their sales by attracting more customers with new and innovative products.
6

TASK 2
P3) Potential sources of funding
Investment decision making: It is defined as a type of decisions that is to be taken by
investors or the top level managements of company in order to know about the amount of money
that is to be deployed in investment opportunities (Brown, 2019). As owner of Ella's Kitchen
takes long term decision-making in order to grow which is related to the purchase of assets,
shares, bonds, debts etc.
Methods of financial appraisal:
These are used for the purpose of value of money over the time and some of the
techniques which can be used by Ella's Kitchen in order to make investment are considered as
follows:
 Payback period: This method is used in capital budgeting that defines to the requirement
of time in order to recover money which expanded in an investment. Within the context
of Ella's Kitchen, payback period can be used by the company for specific project in
order to repay their initial investment. As it could be based on the life or time of a project
that measured in years, months etc.
 Net present value: It is the value of future cash flow either positive or negative over the
whole life of an investment which are discounted to the present (Straub, 2018). As Ella's
Kitchen analyse NPV as an intrinsic valuation that is used extended over finance in order
to determine investment security, business value, cost, new entrepreneurial idea, capital
project etc. related to the cash flows.
Sources of finance for growth:
Every business requires funds in order to perform day to day operations and earning
profits. For the purpose of fulfilling financial requirements several sources are used by the Ella's
Kitchen so that they can able to manage their finance and operates business activities efficiently.
The sources of funds can be discussed as follows:
 Bank loan: Ella's Kitchen borrowed funds from bank on a security basis that makes a
legal agreement in which principle amount will be repaid with the interest money
(Branch, 2018).
Advantages Disadvantages
7

It is useful for the company's growth and it
helps when a person or business needs money
urgently so it is most appropriate among all
sources.
As in which bank charges some specific
amount of interest on a pre decided time period
and has strict policies of repayment that leads
some burden on borrower.
 Crowd funding: In this, funds are raised in a small amount of money from the big
group of persons to finance their businesses (Roussanov, 2018).
Advantages Disadvantages
It is based on social media marketing so it may
help in marketing of Ella's Kitchen and it can
assist company to get customers feedbacks on
time for brings improvement.
In this, failure risk is major which directly
impacts on spoiling Ella's Kitchen reputation.
Also, the fear of copied business idea is more.
Evaluate potential sources of funding:
From the above sources of finance bank loan can be consider as a most appropriate
option for fund generation as it helps in systematic financing and gives a clear picture of
repayment along with the interest rates.
TASK 3
P4) Business plan for the growth of the organisation
Business plan is a written document that includes the goals of the business, the methods
which will be used by the organisation for achieving such goals. Along with this the time frame
is being provided within which the goals need to be achieved. Financial projections are made and
on the basis of which funds are arranged by the management. Apart from this various strategies
are identified that can help the organisation in achieving the goals (Barrow, 2018).
Executive summary: The Ella's Kitchen is a small business that offers a wide variety of
food product for the baby's and toddlers. They sell their products through various supermarkets
in various countries. They are planning to expand their business by adding new products to their
product line. For this they identified the taste and preference of the customers and needs of the
children. On the basis of this they decided to provide candies which are shaped in various letters
of alphabets and in numbers. This will make learning for the children attractive.
8

Vision and mission: The vision of the organisation is to offer yummy organic food for
the children with better products which will be best and healthy for their tiny tummies. While the
mission of the company is to make sure that all of their products are healthy, handy and fun for
the children. Also they aim to make the products attractive and innovative.
Goals: With this innovation the goals of Ella's Kitchen is to enhance their sales by
creating awareness among the customers for their existing and new products. Further they aims
to improve the image of the company.
Objectives: The objectives of the company are to increase the sale by 30% with the
launch of the new products within next 6 months. This will help them to enhance their market
share by 20% as they will take necessary steps to improve the promotion.
Stakeholder Expectations: For the organisation, it is important to consider the interest
of the stakeholders so that sustainable growth can be achieved by Ella's Kitchen. For this the
expectations of various stakeholders need to be taken into consideration which is given below:
◦ Customers: The customers are the one whose need is considered while providing the
goods and for them Ella’s Kitchen is responsible. For them a wide variety of products
are provided which are healthy for the children. With the help of product
development strategy their satisfaction level can be improved.
◦ Employees: The employees of the organisation need to be kept motivated which
makes an organisation effective. For this various opportunities are identified by the
Ella's Kitchen that can lead to development of their employees. Accordingly various
trainings are provided by them that can enhance their productivity and efficiency.
◦ Shareholder: The interest of the shareholders must be taken into consideration as they
have invested in the company. For them the returns must be increased and with the
help of this strategy of product development the profitability can be improved. This
will enable them in satisfying them.
STP framework: With the help of STP strategy of marketing the organisation can
effectively identify the target market that they have to cater. On the basis of such identified
market the products are positioned so that they can be made aware of products and pursued them
to purchase the product (Schawel, 2018). Ella's Kitchen can effectively use this strategy for
identifying the target market.
9

 Segmentation: In this the entire market is classified into groups on the basis of common
characteristics of the customers. The factors that will be taken into consideration by
Ella’s Kitchen include the demographic factors and behavioural factors. They will
consider the age of the children and the perception of the parents.
 Targeting: The Ella’s Kitchen will target the children between the age of 2 to 4 and their
parents for the new product as this is the age where they learn letters and alphabets.
 Positioning: These new products will be available ion all the supermarkets with which
they are in agreement also they will make this product available online through various e-
commerce sites.
Marketing Mix: Marketing mix is the framework that helps to decide upon various
strategies of the organisation which are related to the product, price, place and promotion. For
Ella's Kitchen the product will be the candies which are shaped in letters and numbers. The
pricing strategy that can be used by them will be pricing penetration as with this they can
increase their revenue and market share. Their products will be made available in all the
supermarkets and at all e-commerce platforms. For promoting the products the social media
platform will be taken into consideration. Along with this the posters and pamphlets can be
distributed which will enable to attract the parents (Atwood, 2020).
Financial projections: For the businesses it is important to consider the requirement of
the funds which they have to procure. The strategy of product development requires a large
amount of funds that can help Ella’s Kitchen in undertaking all the financial transactions. The
projected cash flow for the company is given below:
10

On the basis of the projected cash flow it can be analysed that the £10,000 will be the
required capital for the development of the product. This is because they need to procure a
variety of material for manufacturing of the new products. Also it can be analysed that the sales
will be of about 2500 units which will be credit based for the first month. It will gradually
increase to around 10000 units in the coming months.
Monitoring and controlling: It is important for the organisation to control and monitor
the activities which are to be undertaken. This is because it helps them in tracking the
performance of the activities. Monitoring can be done by way of Key performance indicator and
through internal audits. This will help them to determine the important aspects and such can be
managed by effective control and monitors. Such evaluation enables them in achieving the
objectives within the time limit and resources.
11

TASK 4
P5) Exit or succession options for the small business
The businesses required sufficient amount of funds in order to operate them effectively.
But many times when organisation fails to arrange the resources and in analysing the market they
have to shut down the business and for this succession and exit plan need to be prepared by the
organisation. The strategies that can be adopted by Ella's Kitchen are given below:
Liquidation- It is a strategy in which all the assets of the business are sold and the
operations are closed. This strategy is suitable for small businesses as they are generally
dependent on an individual. When they realise the business is no more profitable they can wind
up the operations (Allen, 2018).
 Benefits- This strategy is better and flexible as the goods and assets can easily be sold by
the owners and money can be recovered. Due to this they can easily move out of the
market.
 Drawbacks- The assets are sold suddenly due to which the return is very low and it has
impact on the relationship of the owner with other business partner as their business also
get affected due to this.
Merger- This strategy suggests that the similar type of businesses is purchase by the other
and this create a win-win situation for both as they can effectively conduct the operations as
businesses are similar. Such exit strategy is suitable for businesses as the buyer get an
opportunity to invest in well established business while the seller can get value for their business
(Adler, 2018).
 Benefits - The benefit of this strategy is that they facilitate the buyer to expand their
market share and position with immediate effect by collaborating with their operations.
Also it helps the businesses to improve their efficiency as they will have more resources.
 Drawbacks – The outlook of the customers changes for the company once it is being
merged with other and this has direct impact on its operations and brand image.
Ella's Kitchen can adopt both the strategy but merger is better exit option as they have been
at comparatively large scale due to which they have their brand image. Their business can
effectively be acquired by any organisation if they fail to operate effectively as they have strong
customers base.
12

CONCLUSION
It is concluded from the report that for planning of the business it is important for the
organisation to analyse the internal and external environment as they have direct impact on their
operations and thus on profitability. For analysing the growth opportunities and strategies
PESTLE and Porter’s Generic can effectively be used. Also with the help of Ansoff’s matrix
various strategies can be determined that can facilitate the growth of business. Further it is
concluded that with business plan objectives can be achieved effectively as all the strategies can
be planned and developed before.
13

REFERENCES
Books and Journals
Adler, R.W., 2018. Strategic performance management: Accounting for organizational control.
Routledge.
Allen, P., 2018. Artist management for the music business. Routledge.
Atwood, C., 2020. Succession planning basics. American Society for Training and Development.
Barrow, C. and et. al., 2018. The Business Plan Workbook: A Step-By-Step Guide to Creating
and Developing a Successful Business. Kogan Page Publishers.
Branch, M., 2018. Comprehensive city planning: Introduction & explanation. Routledge.
Brown, G.W. And et. al., 2019. Do private equity funds manipulate reported returns?. Journal of
Financial Economics. 132(2). pp.267-297.
Candelo, E., 2019. Marketing Progress: A Never-Ending Story. In Marketing Innovations in the
Automotive Industry (pp. 67-78). Springer, Cham.
Helmold, M. and et. al., 2020. Tools for Negotiations. In Successful International Negotiations
(pp. 173-182). Springer, Cham.
Kemp, R.L., 2018. Strategic planning in local government. Routledge.
Kim, Y.S. And et. al., 2019. Business environmental analysis for textual data using data mining
and sentence-level classification. Industrial Management & Data Systems.
Leick, B. and Lang, T., 2018. Re-thinking non-core regions: planning strategies and practices
beyond growth.
Price, K.M. and Nelson, K.L., 2018. Planning effective instruction: Diversity responsive
methods and management. Cengage Learning.
Roussanov, N. and et. al., 2018. Marketing mutual funds (No. w25056). National Bureau of
Economic Research.
Schawel, C. and Billing, F., 2018. Ansoff-Matrix. In Top 100 Management Tools (pp. 31-33).
Springer Gabler, Wiesbaden.
Schepker, D.J. And et. al., 2018. Planning for future leadership: Procedural rationality,
formalized succession processes, and CEO influence in CEO succession planning.
Academy of Management Journal. 61(2). pp.523-552.
Straub, S. and Sperling, M., 2018. Controlling und Businessplan.
Tsatsoula, E., 2018. Application of Ansoff's Matrix-Methodology: Marketing Growth Strategies
For Products.
14

15