Planning for Growth: Evaluating Opportunities, Funding Sources, and Growth Strategies

This document discusses the key considerations for evaluating growth opportunities, such as the PESTEL analysis and Porter's Generic Model. It also explores the potential sources of funding available to businesses, including personal savings, friends and family, business angels, and venture capital. Additionally, it assesses the benefits and drawbacks of each funding source. Lastly, it applies Ansoff's growth vector matrix to evaluate growth opportunities for Ella's Kitchen.

Planning for Growth

INTRODUCTION
Growth planning is a strategic business actions which enables a business entity, owners
and marketers to plan, track and organise resources for growth in their revenue units and
ultimately in profit numbers. Planning and allocating available and limited resources in towards a
centred efforts brings changes in company according to the changing external business
environment. Ella's Kitchen is a small business organisation in Unities Kingdoms, which was
founded in 2006 by Paul Lindley. The entity is dealing in manufacturing industry producing
organic food products for babies and toddlers. Ella's Kitchen is chosen for the report,
acknowledging several aspects of business developing plans for growth and success (Hu, 2016) .
The report contains a thorough analysis of growth opportunity available and key
considerations for evaluating such chances available. Funds is an important resource for
expansion and growth therefore, different funding sources available for business are explained
along with their benefits and drawbacks. Moving forward a business plan is developed for Ella's
Kitchen which is innovative and measures against all the opportunities available in the
marketplace. At the end, of the report exit and successions options are suggested to entity with
highlighting their benefits and weaknesses.
TASK 1
P1. Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organisational context.
Macro environment is basically a combination of all the external elements which are
present in business surroundings. There are numerous factors and key considerations that affects
the operations of an entity in either positive or negative manner. The PESTEL framework is a
tool which is useful in understanding and evaluating the macro factors that are affects the whole
manufacturing industry and ultimately Ella's Kitchen. Along with it Porter's Generic model is
used for adopting one efficient strategy for flourishing the growth plans of Ella's Kitchen in the
most efficient and effective manner that is aligned and integrated with the impacts of the external
surroundings (Cobetto, Aubin and Parent, 2018).
PESTEL Analysis:
 Political factor is refers and highlights about those impacts which are implemented on
the entity due to changes taking place in governmental policies and actions. The political

environment of UK is evaluated in order to seek knowledge about its impact on Ella's
Kitchen. Currently the political parties and governmental influence is negative on
businesses that are flourishing in UK because of the instability and uncertainties of the
government.
 Economic environment is focused towards factors such as inflation rate, exchange rates,
GDF of the particular region etc. these Current economic environment of United
Kingdom is very dynamic and unfavourable for business as recently the BREXIT deal is
closed. The economy of UK is very uncertain for Ella's Kitchen to make long term plans
of growth and implement them (Kumar, 2016).
 Social surroundings talks about the population and ultimate customers of the entity. The
people to whom business entity is serving their offerings have great impact on success
and growth of an organisation. The people is UK are identified as loyal customers and
supports to their preferred brands. Although, the social environment is also very dynamic
and unpredictable as regular changes are taking place in social trends still it is favourable
for Ella's Kitchen as its goodwill is high in the market.
 Technological factor is concerned about the changes taking place in technologies and
regular advancement is happening in all digital devices. UK has proper and potential
access to these updated technologies and tools (Pugalis and et. al., 2016). Ella's Kitchen
as well make use of all updated technologies in manufacturing and marketing their
offerings. The company is recently being engaged in making recyclable packages of their
food products.

(Source: Pestel Analysis Showing Economic Growth And Legal Forces, 2020)
 Environmental focus is recently came into existence in past years due to increasing
negative impacts of businesses of nature, overutilisation of natural resources and
increasing global warming. Ella's Kitchen as identified recently engaged in making
recyclable packing of their products contributing a huge portion to the society and
fulfilling their CSR.
 Legal factor is interrelated and linked with political element, it talks about more specific
laws and regulations developed by the political parties while running the country for safe
and smooth functioning of businesses in the UK. Legal environment is also not in favour
of Ella's Kitchen as many fluctuations took place due to BREXIT in the laws which are
uncertain as their results are unknown (Colantoni and et. al., 2016).
Porter's Generic Model:
Illustration 1: Pestel Analysis Showing Economic Growth And Legal Forces, 2020

The Porter's Generic Model defines that once two basic competitive advantages of an
entity are combined and mixed with its scope then it results in three generic strategies out of
which one is most potential and efficient for the business. These strategies are Cost leadership,
Differentiation and Focus, elaborated below in context of Ella's Kitchen.

(Source:Porter's Generic (Competitive) Strategies, 2019)
Illustration 2: Porter's Generic (Competitive) Strategies, 2019

 Cost Leadership strategy states that a firm can gain competitive edge and be on a higher
position by serving their products and services to consumers in lowest cost. Basically,
cost leadership strategy suggest that the entity Ella's Kitchen should become the cheapest
producer of baby food and toddler eatables and maintaining the best quality of their
offerings.
 Differentiation generic measure suggest that the company should innovate and invent.
That means firm should differentiate itself by its offerings and render a new innovative
product or service which fulfils the needs and desires of people and keep them satisfied.
Ella's Kitchen can use this strategy for growth and succession planning. Risk involved in
differentiation for Ella's Kitchen is moderate and can be easily rationalized (Sell and et.
al., 2018).
 Focus generic strategy is combination of Cost focus and Differentiation focus. This
generic measure states that a firm should either focus on its cost and serve their offerings
in the lowest cost possible and lead the market or either concentrate on differentiating
itself from rivals and new entrants by regularly innovating and bringing new products for
targeted audience and keeping their needs satisfied and their expectations high.
P2. Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.
Growth opportunities and development is a need of every business and individual.
Businesses always requires to grow and expand in order to keep up with the changing
environment and market along with handling individual, teams and organisational growth as
well. Therefore, most specifically small business enterprises always keep themselves and their
workforce focused towards success by grabbing all growth and development opportunities
available in market and potential for them. In case of Ella's Kitchen and this section of the report
Ansoff Growth Matrix is applied for identifying an appropriate growth strategy (Göçmen and
LaGro Jr, 2016).
Ansoff Growth Matrix was develop by H. Igor Ansoff in 1957 providing marketers and
business owners a quick and easy source for thinking about growth and their development along
with highlighting all risks involved. The matrix is developed on two horizons that are Markets
and Products and Services offered. There are four growth strategies stands on these horizons
with their respective risk factors involvement. These strategies are as follows:

 Market Penetration strategy is adopted and suggested to firm stating that they should
try to make more sales of their products and services in their existing market only. That
means the entity should expand their customer base by sticking to their existing customer
base and their old offerings. Ella's Kitchen owners can develop new marketing and
promotional techniques while growing in their domestic market of UK. Moreover, risk
involvement is also very low as the entity is well aware and know to the marketplace,
have knowledge about social trends and holds goodwill in the market amongst targeted
audience (Litman, 2016).
 Product Development strategy states that while adopting the growth is taking place in
the product portfolio of the firm. Basically, the entity stays in the same marketplace serve
to exiting customers but an entirely new product or service which is potential enough to
satisfy their needs and preferences. Ella's Kitchen can adopt this strategy and differentiate
their offerings from competitors. The involvement of risk is moderated as business
owners have a sufficient idea about the success of new product as they have appropriate
market knowledge. Also to mitigate the risks a in-depth research according to new
business ideas will be conducted.
 Market Development strategy of growth referring that the brand should move
international and in new marketplaces or regions with their same offerings. The market
development strategy suggest that Ella's Kitchen can grow by moving their operations in
international waters and establishing their presence in a new potential market where their
offerings will be efficient and fulfilling the needs of people or targeted audiences. The
risks involved is huge new place of work no idea of the market but to mitigate company
can merge and make use of resources of existing firm for their business.
 Diversification measure of growth is the most complex and crucial also risk involved is
high with sever negative impacts on business if fails. Diversification states that the
organisation should move into new market and develop a very innovative an
differentiated product offering which do not exist in the marketplace and people never
seen such products or services. Ella's Kitchen can adopt this strategy but being a small
business enterprise the risk level is too high and can result in closure of the whole
operations and business if failed. For mitigating risk effective market research and
availability of all required resources is most important.

Recommendation
According to the discussion conducted and evaluation of all the practices suggested in
Ansoff Growth matrix the most potential growth and development measure for Ella's Kitchen is
of Product Development. Through this strategy, portfolio of entity will improve and social trends
and factors are in favour of business holding another advantage. Moreover, risk involved is also
moderate which can be easily managed by the firm is any consequences occurs.
TASK 2
P3. Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source.
Money, Funds or Finance all terms refers towards one of the most essential and primal
resource that is required by every firm in conducting their day to day activities. In relation with
growth and development it becomes more important and significant as money is required to
move and develop as it is a major element for growing (Zhou and et. al., 2017). Therefore, it is
mandatory for Ella's Kitchen to evaluate and identify available potential funding sources through
which business owners can gather required amount of money for funding their growth plans and
actions. Few funding resources are elaborated underneath in relation with Ella's Kitchen and
highlighting their benefits and drawbacks for the firm as well.
 Personal Savings- For a SME personal savings is the very easy and potential source of
earning. Every entrepreneur and business owners first save before making any
arrangements and planning for starting their business or growing the existing one. They
save some amount every month for their motive of funding their operations and future
plans for business.
BENEFITS
The funds acquired through personal saving while planning for growth and expansion is
very easy and fastest source. Ella's Kitchen owner do not need to raise funds externally they can
start their growth activities as per their wish. Moreover, owners do not have go under any debts
or external financial liabilities.
DRAWBACKS

The drawback which of using personal savings into business is it will affect the owners
financial positions. Moreover, the purpose for which these funds were being collected by the
owner will be hindered.
 Friends and Family- Growth purpose of a business is a long term or a short term process
depending upon its size. In case of an SME or a Medium sized business a potential source
of finance is asking for help through family or friends.
BENEFITS
Raising funds through family and friends is the easiest and also secured. Owners of Ella's
Kitchen can ask their closest family members and friends for money on the basis of their trust
and relationship. Furthermore, this money can be repaid in flexible manner without any extra
cost of interest and without any threats of losing any fixed asset.
DRAWBACKS
The drawback of asking for monetary help form family members and friends can
sometimes cause issues amongst them which can break their relationships and their personal
bondings.
 Business Angles- These are also known as angel investors who are wealthy individuals
investing their money or rendering capital to businesses for running operations and
succeeding in their entrepreneurial business ideas. They also takes part in business and
activities as they are interested in becoming a part of project as a investor and mentor.
BENEFITS
The benefits of such funding for Ella's kitchen is the company will be receiving expert
guidelines and instruction form an individual who have appropriate market knowledge and skills.
DRAWBACKS
The drawback is Ella's kitchen owners can lose rights and they can be diluted which gives
external party decision making rights in organisation and to have a say in potential actions of the
firm.
 Venture capital- This is a source of financing and a form of private equity that are
provided by different investors to small business entities and new start-ups that are
potential enough to grow and succeed in future changing into large organisations. The
well off investors in the society are generally engaged in such financing activities known
as venture capitalist. Owner and managers of Ella's Kitchen can acquire funds from a

venture capital as it is the most easy source. But the equity of company will be diluted as
venture capitalist get a share in equity in return of funds and also hold decision making
power.
BENEFITS
Raising money from a venture capitalist is beneficial for Ella's Kitchen as the firm will be
engaging with experts who have appropriate knowledge of market and also potential say in
decision making. These experts and diplomats can lead the business and growth plans in positive
and higher profitable directions.
DRAWBACKS
As the venture capitalist gets the equity and decision making power in Ella's Kitchen if
funds are raised through them. So, it is possible that dilution of equity can hinder the objectives
of growth of the firm.
 Bank Loans- Banks are the authorised bodies and institutions who invests and lends
money along with other services to customers. Bank loans is one of the leading service
which is provided to the clients. A particular amount of money is loaned by the bank to
the borrower at a pre-decided interest rate and usually on a collateral security for a
specific time period. Ella's Kitchen can raise money from banks as it is the safest source
of funding with very negligent percentage of risk.
BENEFITS
For the firm Ella's Kitchen in order to implement their growth plans bank loans are
beneficial as they are flexible enough rendering long-term benefits. The business owners have
the choice of selecting the duration of the loan amount and also their EMI's. Moreover, loan
amount and interest rates are negotiable as well (Birkin, Clarke and Clarke, 2017).
DRAWBACKS
Firm has to face sever difficulties in procuring the bank loan as its primal requirement is
the entity should have sound credibility and valuable collateral. This is the basic requirement of
getting a loan from a bank which can become a drawback for the business owners while looking
for source of funds.
Recommendation
From the discussion and evaluation performed for identifying different sources of funds
in order to support the growth and development plans of Ells's Kitchen, there are two potential

source through which business owners can raise funds venture capital and bank loans. Out of
these two after knowing all the benefits and drawbacks it is recommended that the bank loans is
a appropriate source. The firms equity will be secured and safe, external people do not get any
rights or say in decision making. Also, through banks Ella's Kitchen can easily raise money with
faster and safer methods and measures.
TASK 3
P4. Design a business plan for growth that includes financial information and strategic objectives
for scaling up a business.
Company Overview and Growth Plan
Ella's Kitchen is a small business organisation which was established in 2006, entered
the market with a unique offering of organic food products for toddlers and babies. Ella's
Kitchen is operating in manufacturing industry serving their offerings through starring or leading
supermarkets and superstores present in UK. This growth plan of Ella's Kitchen is developed for
expansion of its product portfolio as the owners and managers are very innovative and inventive
along with concerned with the environment as well.
Ella's Kitchen recently joined hands with TerraCycle for running their EllaCycle
recycling programme in UK. The firm now changed their packing into recyclable packaging by
joining TerraCycle. Now with the similar motive of being sustainable and attaining competitive
edge through it a new product offering is of vegan food for babies and toddlers. This is a growth
opportunity which is identified and potential as social and technological external factor of
PESTEL is in favour of the firm (Grooms and Frimpong Boamah, 2018).
Vision
The vision statement of Ella's Kitchen highlights and reflects upon its practices and plans
to always work ethically, sustainably and in right ways. The vision statement is concentrated on
five dreams of the firm, Ingredients, Environment, Packaging, People and being the change.
Mission
The mission statement Ella's Kitchen focuses towards providing healthy foods which is
nutritious and best for babies and toddlers. With the same now entity is moving towards bringing
one more ingredient which is as healthy as organic is 'VEGAN' offering.
Objectives

 To improvise sales and revenue by 8% in next one year.
 To increase profits and company's presence in existing market by 6% in next 8 months.
 To enhance customer base by 7-8% in next 10 months or in an year.
Industry Overview & Competition Analysis
The company Ella's Kitchen deals in manufacturing industry producing food products for
new born babies and toddlers. The industry is highly competitive and regularly increasing as
well. Ella's Kitchen is planning for growth and expansion of their business by adding a new
product in their portfolio and manufacturing new baby food item by vegan ingredients. The
industry is aggressive and competition is increasing moreover, the products can easily be copied
by the rivals by determining the ingredients and recipe. Therefore, company has to be aware and
work efficiently in order to mitigate the risk and keep their operations unique.
Strategy
Ansoff Growth Matrix is applied to Ella's Kitchen in order to identify a strategy which is
beneficial for the business and ensures competitive advantage for the business as well. From the
four strategies Product Development is suggested and adopted by Ella's Kitchen for growing
and developing further. The entity is developing a new product adding a fresh offering in their
portfolio of “VEGAN Food for Babies and Toddlers”. Ella's Kitchen is establishing their new
product in existing market as the social trends of UK prominently shows the divergence of
people towards more healthy and nutritious food for their children. Moreover, through this
company can attain its objectives of increasing sales, profits and customer base in predetermined
duration.
STP
 Segmentation is a marketing measure used by businesses to divide and bifurcate their
market into smaller groups for reducing complexities and chaos which can create
confusion. The segments are separated by their common features and characteristics.
Ella's Kitchen make use of demographic segmentation by diving the segment by age of
the consumers (Liang and et. al., 2018).

(Source: 4 Types of Market Segmentation , 2020)
 Targeting is the next phase of STP Model which is performed once the market is
segmented. Once potential groups are determined now marketers and management of
Ella's Kitchen target their potential consumer segment. The main targets for the firm are
those lower, middle, higher middle class families of the society who has babies and
toddler of age 5 and under (Kühn, 2018).
 Positioning is next measure which is overviewed by marketers of Ella's Kitchen through
which it spread awareness in public and targeted clients. Positioning stage enables the
firm to change the mind-sets of people and make their purchasing behaviour in favour of
Illustration 3: 4 Types of Market Segmentation , 2020

their offerings. Ella's Kitchen will be making use of their value and likely attributes for
attracting consumers and targeted audiences. The value of new product offering is they
are new, innovative, healthy, nutritious, differentiated and most importantly sustainable
developed by sustainable means and packed in recyclable packages.
Marketing Mix
 Product- the new product which is being offered by Ella's Kitchen is VEGAN food
products for babies and toddlers.
 Price- The pricing strategy is penetrating as in the beginning it cost low but with market
develop the prices will also rise.
 Place- Currently the new product offering will be just distributed in London, domestic
market of Ells's Kitchen but in future company will make its international as well if they
succeed.
 Promotion- Social media and online platforms will be used with the help of internet and
other advanced devices for promotions. Also, print media will be used as well by sticking
posters in supermarkets and other public places like maternity hospitals and others.
Critical Risks and Success Factors
Risk is an element which is always present in business irrespective of their size, scope
and potentials. For Ella's Kitchen the biggest risk is failure of the new product offering and
company making losses. The success factor for which is its innovative idea and ingredients of the
food products which is vegan attracting people who are aware and health conscious and want
their babies to develop taste for food in the new future.
Financial Information

TASK 4
P5. Assess exit or succession options for a small business explaining the benefits and drawbacks
of each option.
A small business enterprises, start-up's develop their business operations with new
innovative ideas of growth and expansion. These ideas are thoroughly evaluated by appropriate
market research but are dependent on past data. Therefore, it is possibility that the entity fails in
their plans and do not attain their strategic objectives (Kazmi and Shin, 2017). As well as a
possibility of success is also prominent. Thus, in this section of the report succession and
exiting option is suggested or recommended to Ella's Kitchen for future in relation to their
growth and development planning.
SUCCESSION OPTION

 Merger and Acquisition- Ella's Kitchen already is aware about this succession option as
the firm earlier joint hands with TerraCycle for producing recyclable packing for their
food products. By merger and acquisition company can expand their business and move
into new and even international markets as well with its goods and services.
BENEFIT
The primary benefit of merger and acquisition to Ella's Kitchen is the management have
knowledge about the perks and complexities of it which provides them a upper hand. As well as
the firm increases their chances to move internationally and expand.
DRAWBACK
Ella's Kitchen have been in jointly working with one company and engaging in another
acquisition and merger agreement being a small business entity is bit difficult and complex. The
workforce of the organisations will take time to mingle up and integrate their efforts causing
delays (Lin and et. al., 2016).
EXITING OPTION
 Winding Up the operation- In case of failure of operations that are established by Ella's
Kitchen to grow the best exiting option available is of winding up the particular loss
making business operation. Ella's Kitchen owners can wind up the operation where they
were developing vegan food products for babies and toddlers. Through this entity can pay
off creditors and remove burden of liabilities (Ward, 2016).
BENEFIT
Once failed operations are winded up and its debts are paid off Ella's Kitchen owners
now can look over new beginnings. That means winding up one operation will not end the
business and now firm can road their map towards fresh, better and more potential directions.
Along with it by winding up company pay off all debts and won't be liable for any burdens or
liabilities.
DRAWBACK
The drawback which comes with winding up option of exiting the market for Ella's
Kitchen on its reputation and goodwill. Failure and closure of business operation will be
definitely seen on current operations and goodwill of the firm making it suffer for few months or
more (Liang and et. al., 2018).

 Selling the business in open market- This is the simplest exit strategy involving two
types of buyers other individuals who wants to own a small business and group of large
company who wants to buy the business for integrating it in their existing operations and
reduce competition.
BENEFIT
It is a very potential source or exit strategy is the market trends and economic condition
allows the owners of Ella's kitchen to attract buyers who are potential enough to give higher
prices.
DEAWBACK
The process involved in sale of business is very complex and difficult to follow up and
the legal charges involved also are very high.
 Giving up to family OR Management or employee buy-out- This means a SME owner
can sell their entire operation to any employee who is interested and also to the family
members who wish to run the business, face all the problems and liabilities.
BENEFIT
The owners do no have to search for any buyers from the external sources they can make
arrangements to make sale to their known family member or management employee by just
transferring the assets on their name with exchange of money reducing all the chaos and
legalities.
DEAWBACK
In such transactions and transferring of business to close members money or other issues
can be raised which are harmful for the personal relationships of the parties. Also, transactions of
doing so will involve many paper work and agreement signings.
CONCLUSION
The report discusses about one very sever and important aspect of business, Growth and
Planning for it, concluding that it is an activity or a effort made by company towards a
betterment and expansion with the available resources by allocating them in potentially for
effective utilisation. The key considerations for growth and success are evaluated by analysing
external environmental factors with the help of PESTEL and Porter's Generic Model. Ansoff
Matrix is applied for identifying appropriated strategy for business to grow. At the end, a plan is

developed by conducting efficient analysis and exit or succession options are suggested which is
best suitable for the business owner and entity.

REFERENCES
Books and Journals