Planning for Growth In Kaffiene

Planning for growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
P1 Key consideration for evaluating growth opportunities.........................................................1
P2: Evaluation of growth opportunities using Ansoff's growth matrix ......................................3
TASK 2............................................................................................................................................5
P3 Sources of funding with their benefits and drawbacks..........................................................5
TASK 3............................................................................................................................................6
P4 Business plan for growth of the business...............................................................................6
TASK 4............................................................................................................................................9
P5: Succession and exit plan for small business with its advantages and disadvantages...........9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Planning is an essential part of the responsibilities performed by the management of an
organisation which can be formulated if they have sufficient amount of skills and knowledge. To
achieve future growth and success, the management tried to forecast the market situation and
accordingly formulate an action plan which contains roles and responsibilities of each
departments. Kaffiene, a coffee shop which is operated in London, UK is taken for the purpose
of preparing this assignment report. The report includes growth opportunities that will help
organisation to move ahead than their rivals. For this, Ans-off matrix is used which assist
management in making suitable strategies to achieve competitive advantage. The report also
explains sources of finance along with its merits and demerits, business plan and exit or
succession plan.
TASK 1
P1 Key consideration for evaluating growth opportunities.
Planning is a continuous process in which plans and strategies are made for the future
course of action. Plans and strategies are generally made to achieve the goals and objectives in
the effective and efficient manner. It focuses on reducing the gap between actual performance
and planned performance. Kaffeine is a small coffee house business which is planning to expand
its business in various parts of UK.
Porters generic strategy
This is related with making plans and strategies for the achievement of competitive
advantage in the best possible manner. This type of model has five stages which can help
Kaffeine in achieving its goals and objectives in the best possible manner. Various stages of this
strategy is discussed below-
Cost leadership- As per this strategy plans and strategies are made for providing
products at low prices so that large market share can be captured. This strategy can be adopted
by Kaffeine for capturing large market share by keeping the price of its products and services
low (Alsos, GCarter and Ljunggren, 2011).
Differentiation- As per this strategy management of the organisation can focus on
deciding a unique plan for enhancing satisfaction level of customers. By deciding a unique
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strategy needs and demands of the customers can be fulfilled and better competition to
competitors can be given.
Cost focus- Under this type of strategy focus is emphasised on attracting large number of
customers by keeping the price of products low. This type of strategy is generally used after
analysing and evaluating the need and preferences of potential customers. With the help of this
Kaffeine can easily capture large market.
Differentiation focus- The major focus of this strategy is to create brand loyalty and
awareness in the mind of customers. By doing this competitive advantage can be easily attained
by the management of Kaffeine. Plans and strategies can be made for introducing a brand new
product in new market so that large number of customers can be attracted (Blackburn, Hart and
Wainwright, 2013)..
Cost focus strategy will be more suitable for Kaffeine as with the help of this products
and services will be offered to customers at low price as compared to its competitors. Since
Kaffeine is a small scale business which is planning to expand its business so by adopting this
strategy organisation will be able to attract large number of customers within limited period of
time.
PESTEL analysis
Before making plans it is very much essential for Kaffeine to analyse the external macro
environment in systematic order. This can be done using PESTEL analysis, with the help of this
management of organisation will be able to decrease the chances of risk and uncertainty. Various
factors of PESTEL analysis are discussed below-
Political- This type of factor is related with rules and regulations imposed by the
government of a particular country. Since the political conditions of UK is stable so Kaffiene
has wide range of opportunities to expand its business properly. This is because government of
UK will not make changes in its plans and policies on regular basis.
Economical- This type of factor is related with inflation, deflation and various other
economic polices imposed by the government. Since the economic growth rate of UK is high so
Kaffeine can easily generate high revenue from the market of UK. As the customers will be
easily able to afford its products (Colantoni and et. al., 2016).
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Social- This type factor is related with need, attitude, values and belief of customers. Due
to high degree of stress level in personal and professional life of customers, it is good
opportunity for Kaffiene to attract large number of customers.
Technological- The customers of UK generally demand for latest and innovative
techniques to satisfy their need and wants. Major focus can be emphasised on using new
techniques in the making of coffee so that better competition can be given to other organisations
in UK.
Legal- This factor is related with laws and regulations imposed by the government of
UK. Kaffiene coffee house can make plans and strategies for reducing chances of discrimination
and disputes in the internal and external environment of the organisation (Fahlvik, Elfving and
Wikström, 2014).
Environmental- This factor is related with considering the environmental issues and
making plans for reducing negative impact of these issues. Strict and appropriate laws can be
formed for conserving the environment in the best possible manner.
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P2: Evaluation of growth opportunities using Ansoff's growth matrix
Illustration 1: Ansoff matrix
§
(Source: Ansoff matrix, 2018)
Ansoff growth matrix
Ansoff's growth matrix is considered as an effective tool which is essential to adopt by an
organisation in order to bring them ahead than their rivals in competitive market. This tool
comprises of various strategies which assist management to determine the complexities of
market and rivalry's competitive strategies. Here are these strategies which can be adopted by the
management of Kaffiene:
Market penetration: It is the strategy which mainly focuses on increasing market share
with existing products and services. Implementing this strategy drives Kaffiene to achieve huge
stability in existing market for longer period of time. This can be possible through investing
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more in marketing tools and techniques to attract new customers in existing market (Haaland and
van den Bosch, 2015).
Benefit :
 By entering into existing product in the current market it will be easy for the firm to
capture huge market ratio.
 Huge profits can be gained by less promotion as company is already aware about the
market scenario and it's demand and preferences of customers.
Risk factor:
 New market ratio can be captured as there is no innovation in it's product.
 Gradually decreases the goodwill of the firm.
Market development: This is the strategy which is adopted to attain strong market
image by expanding business to other market. By using this strategy, Kaffiene can expand its
business in non-operated nations such as Australia, China etc.
Benefit :
 Firm can raise more customer base for the product as the market is new in nature.
 Huge set goals can be achieved in the set time frame.
Risk factor:
 Need to advertise product at a large scale and try to understand the demand of the
customers in the new market.
Product development: This strategy enables company to increase existing customer base by
introducing new product into existing market. By using this strategy, Kaffiene should increase its
investment in conducting market research which help them in identify market opportunities and
needs. For example, introducing different flavours in Coffee can easily attracts new customers.
Along with this, providing home delivery services can also influences interest and buying
behaviour of large number of customers in favourable way.
Benefit :
 By innovation in the existing goods huge profits can be gained and tough competition can
created for other competitors in the market.
Risk factor:
 Firm need create demand for the innovative product in the competitive market place.
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Diversification: This strategy implies that an organisation can achieve strong global
image only if they expand its business with new products and services. By using this strategy,
Kaffiene can introduce new product in new market after analysing demands and preferences of
customers (Love and Roper, 2015).
Benefit :
 Company attain huge profits in the new market which directly leads to growth and
development in the cut throat competitive world. As well as potential customers can be
pulled towards the new product in the existing market.
Risk factor:
 Emerging needs of the customers changes frequently due to which set standards can not
be achieved and decreases market value of the firm slowly.
From the above strategies, market development will be the most profitable strategy to
adopt by Kaffiene as it allows an organisation to capture huge market share as well as customer
base. Introducing new product into existing market increases competition among rivals which
indirectly brings beneficial outcome to customers as well as an organisation.
TASK 2
P3 Sources of funding with their benefits and drawbacks.
Funding is related with formulating plans for the arrangement and maintenance of
financial resource. If the management of Kaffiene is successful in maintaining financial resource
than growth and profitability can be easily attained. The management of organisation has very
limited amount of fund for expanding its business in various parts of world. So Kaffiene can
focus on generating funds from various sources. These majorly includes-
Internal source- It is related with availability of options within internal environment of
the organisation. Funds can be collected by selling asset of Kaffiene, reducing working capital,
etc.
External source- This factor is related with gathering funds from the external
environment of the organisation. These basically includes debenture, purchasing, crowdfunding,
etc.
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Bank loan- In this amount is borrowed from various banks for a limited period of time.
This amount can be repayable in future and bank charges interest rate. Bank loans can be taken
for long and short period of time. Its advantage and disadvantage is mentioned below-
 Advantage- Organisation can get appropriate interest rate so that repayment of the
amount can be done within limited period of time. Examples: Kaffiene by taking loan
from bank can be befitted as they there is pressure from outside to pay the loan. On fix
interval they can repay the amount. Due to which business can grow and flourish in the
cut throat competitive world.
 Disadvantage- One of the biggest disadvantage of this source is assets of the
organisation can be seized if Kaffiene fails to pay loan (Mbogo, 2011). Example:
Kaffiene if unable to pay amount taken as loan they they can sell out their property
which was taken as security. Due to which set golas are not meet on time.
Overdraft- In this agreement will be signed between Kaffiene and bank regarding the
extension of credit limit. Its advantage and disadvantage are-
 Advantage- With the help of this source financial needs can be fulfilled in a best possible
manner. As funds in this can be withdrawn easily. Example: Kaffiene can collect cash
amount on immediate basis due to which business function can be carried out effectively.
Du eto which set bgoals can be achieved in the set time duration.
 Disadvantage- If the management of organisation wants to extent overdraft than
additional fee is charged which is one of the biggest disadvantage. Example: Kaffiene
is charged with high charges on exceeding the overdraft limit due to which debt ratio
increases and business functions are affected greatly.
Crowdfunding- This method is related with arranging small amount of fund from
various individuals. This method is generally used by social media as in this funds are gathered
from various individuals. Its advantages and disadvantages are-
 Advantage- Since it is a online platform so fund can be gathered within limited period of
time and will also lead to increase in brand awareness. Example: By collecting funds
from this sources Kaffiene can collect huge amount of funds due to which business
operations can be carried out smoothly. Also, set objectives are attained in the set time
frame.
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 Disadvantage- It becomes difficult for organisations to build interest of local public for
the collection of fund. Example: As there is weak relations with the public Kaffiene is
unable to gather sufficient amount which leads to decrease in profits and productivity.
TASK 3
P4 Business plan for growth of the business.
A business plan is a document which is in a written form and includes objective of the
company and the methods are also specified and time limit is also specified in the business plan.
The information about nature and background of the company and its financial projections and
strategies which is essential to achieve the objective is stated in business plan (Unit, 2015). This
is considered as a roadmap for the company which provides direction to the employees of
company. The Kaffiene is planning to expand their business in new areas for this a business plan
has to prepare for this expansion so that it result in growth for the Kaffiene. This plan will
include the mission, vision, strategical objective of the company. This plan supports company in
performing all the operations effectively. The business plan work as a guidance in formulation of
policies and procedures which will be a support for future course of action. The main objective
to form a business plan is to attract investor by assuring them that they will receive higher return
and make them invest in the new venture by showing business plan as an attractive plan.
Kaffiene is planning a new expansion that is opening a new coffee house has made specifically
this plan for better operations which are as follows-
 Vision- The vision of Kaffiene is to expand and open more coffee house and want to
attain highest market share as coffee house.
 Mission- The mission is to provide better services to their customers and want to keep
their customer satisfied by fulfilling their need and bringing value in their services.
 Objective- The objective of Kaffiene to earn more revenue and increase the share of
profit by 10% to 30% in the consecutive five years by keeping their employee satisfied
from the services and the SMART approach can be used by the firm to get surety
regarding the objective as it should be specific, achievable, measurable, realistic and time
bound.
 Financial plan- The efficiency of firm is depend upon the smooth functioning of
business which can be only be achieved if proper fund is available. Finance is the basic
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requirement for the firm to grow or expand. A financial plan is a document containing all
the sources are specified from where fund can be generated and where it will be utilised.
Kaffiene has prepared a financial plan so that it will provide direction in relation with
arrangement of fund and utilising it an efficient manner (Vargo and Seville, 2011).
This statement shows the areas where the fund is required so that firm can operate its
business effectively which is-
Total estimated Budget
Particular 31/12/16 ($) 31/12/17 ($) 31/12/18 ($)
Implementing
technology cost
15000 - 2000
Promotional expense 10000 9000 7000
Advertisement
expense
8000 7600 4800
Catalogues 1000 3000 2000
Training charges 7800 6700 5600
Total Cost 56700 35400 25500
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From the above statement it is clear that funds are allocated as per the requirement which
is essential for the functioning and expanding the new venture in a new area.
Cash flow statement
Cash flow statement of pleasure foods is as given below:
From above cash flow statement, it is clear that the firm has sufficient cash for paying the
pending debts. Pleasure foods needs to pay tax which is changing with year. Pleasure foods has
the cash in hand for year 2015, 2016 and 2017 as $102203, $200354, $238503 and average
income is estimated as $72001 for the 3 years.
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TASK 4
P5: Succession and exit plan for small business with its advantages and disadvantages
Various factors are there which have influences the working of business environment
such as political , economical fluctuation, technological up-gradation etc. which has bought so
many challenges and has drastically affected the business of Kaffiene due to which its
profitability and business situations is in danger (Business Exit and Succession Planning, 2018).
It has lead the manager of Kaffiene to think whether to exit the market or to survive with the
hope of getting successful in near future. Some ways to exit and succession of business are
mentioned below :
Ways to Exit -
Liquidation : It refers to the process of winding up of business when a company become
insolvent and it decides to distributes its assets to claimants such as shareholders and creditors
according to the priority of their claim (Whelpton, Campbell and Patterson, 2015).
Advantages :
 Once the company has been liquidated than the employee of the business have the right
to claim against unpaid salary, holiday pay, notice pay and redundancy from the
government funds. Example: Kaffiene can ask for unpaid salary, holiday pay etc. after
liquidation in the market place. By doing so healthy relations are build with the
employees for longer time duration which is a positive sign for the firm.
 All the legal actions against the business venture is halted which takes away owner from
any risk and penalties.
Disadvantages :
 Once the liquidation process starts it cannot be stopped which means the business must
stop trading and assets realised. Example: Kaffiene business can not grow and flourish
in the market as trading of goods and services can not be done. Due to which productivity
and profitability decreases.
 This will create problem while starting a new venture as it will be difficult to take credit
from suppliers and banks.
Sell the business in open market : It is the process of selling a business to a third party
which can be a manager or employee of the firm rather than ending up the business.
Advantages:
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 Managers or employees are much familiar with the business operations which makes easy
to continue for future period of time. Example: Business can expand easily in the market
place due to which objectives can be achieved easily. Which directly leads to increase in
sales volume in the open market.
 Managing a long-term buyout by managers or employees increases the loyalty and
motivate workers to work hard to make business succeed.
Disadvantages:
 Managers or employees are not suitably qualified to acquire the business which may
affect their succession for future in successful manner.
 Lack of trust by clients towards new management may affect the business operations.
 Chances of getting payments is much lower than the actual value of business. Example:
When business is sold in open area it directly decreases the goodwill in the eyes of the
customer. Due to which productivity and profitability ratio decreases which is a negative
aspect for the firm.
Ways to succession :
Merger : When two different companies come together to form one new entity with a
mutual contract is a merger. It is basically a form of agreement between two old entities (Xheneti
and Bartlett, 2012).
Advantages:
 The size of merged companies gets larger as compared to individual companies so
because of economies of scale the total cost of operation get reduced.
 Merger of companies would leads to more revenue and profit growths. Example:
Kaffiene when merged with other companies it will able to expand the business as
revenue in the market place. Due to which goodwill be raised at a tremendous scale.
Disadvantages:
 A bigger monopoly can leads to increase in the prices of goods and supplier which is not
beneficial to the consumer.
 It may be difficult and tough to communicate and coordinate with large number of
employee of different culture. Example: The productivity of Kaffiene decreases as it is
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difficult it handle large diversified people under one roof. Due to which set objectives are
not meet on time as well as chaos occurs at a lrge scle.
Acquisition : It refers to the process of purchasing shares of another company to gain
control of the company.
Advantages:
 It allows entry into new market and new product as the risk of new product development
decreases.
 It helps in overcoming market barriers by acquiring an existing organisation.
Disadvantages :
 The activities of new and old business may be difficult to integrate.
 This may create problems of managing resources and competencies.
CONCLUSION
From the above discussed report, it has been observed that Planning is an essential to
formulate by the management of an organisation if wants to achieve growth and success in
competitive market. For this, growth opportunities should be analysed by using an effective
theory such as Ansoff growth matrix. Along with this, business plan is also essential to prepare
which provides guidance and direction to the employees about their roles and responsibilities. An
organisation must also required to consider exit or succession ways after analysing the scope of
company in near future.
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REFERENCES
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Fahlvik, N., Elfving, B. and Wikström, P., 2014. Evaluation of growth models used in the
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Haaland, C. and van den Bosch, C. K., 2015. Challenges and strategies for urban green-space
planning in cities undergoing densification: A review.Urban Forestry & Urban
Greening. 14(4). pp.760-771.
Love, J.H. and Roper, S., 2015. SME innovation, exporting and growth: A review of existing
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Mbogo, M., 2011. Influence of Managerial Accounting Skills on SME’s on the Success and
Growth of Small and Medium Enterprises in Kenya. Journal of Language, Technology
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Unit, E. P., 2015. Eleventh Malaysia plan, 2016-2020: Anchoring growth on people. Putrajaya,
Pencetakan Nasional Malaysia Berhad.
Vargo, J. and Seville, E., 2011. Crisis strategic planning for SMEs: finding the silver lining.
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Whelpton, P. K., Campbell, A. A. and Patterson, J. E., 2015. Fertility and family planning in the
United States. Princeton University Press.
Xheneti, M. and Bartlett, W., 2012. Institutional constraints and SME growth in post-communist
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Online
Business Exit and Succession Planning. 2018. [Online] Available through
<https://www.ldb.com.au/our-services/business-exit-succession-planning/>.
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