Planning for Growth: Evaluating Opportunities, Ansoff Matrix, Funding Sources

This document discusses the planning for growth of Little Bay, a small restaurant in the UK. It evaluates growth opportunities using PESTEL analysis and Ansoff Matrix. It explores different sources of funding such as venture capitalists, bank loans, and business angels. The document also discusses the advantages and disadvantages of each funding option. The focus is on market penetration, market development, and product development strategies for growth.

P1 Evaluate Growth Opportunities
PESTEL: PESTEL is a framework or tool which analyse macro environment of a business
which will have an impact on performance. This tool would be very useful for Little Bay
which is a small scale restaurant in United Kingdom.
Political Factors: Stability of political parties in UK creates opportunity for company as
firms need not change their process or working pattern again and again with changes in
leaders of government because regulations will be fixed that would give benefit to
restaurant in conducting operations in smooth manner (Kumar, 2016).
Economic Factors: Employment rates have got better which is giving customers an
advantage on inflation. GDP of country has increased over time which is making country
get a lot of benefit and Little Bay has got a lot of local customers who are loyal to them.
Prices can be set as restaurant wants so that they can have profit.
Social Factors: Population of UK has a high standard of living which is having a positive
impact on restaurant because they are providing customers with more beautiful
environment in restaurant. Maintaining standards of customers and restaurant will result in
more customers coming in restaurant (Perloff and Wingo, 2019).
Technological Factors: Recording of data collection will be easier for restaurant through
technological help. Through this factor restaurant can find out revenue they are generating
and proper data will be available without errors (Park and LaFrombois, 2019).
Environmental Factors: Both internal and external environment factors of restaurant are
well maintained and reachability to restaurant is also very good for customers. Waste
disposal policies are also being followed by restaurant so that they can get a competitive
advantage.
Legal Factors: Employees and customers are being provided with health and safety
regulations as per government policies. Satisfaction of two are very important in Little Bay
for growth. Right healthy products are reaching customers which will result in more
customers (Grant, 2017).
Porter's Generic- Porter's generic helps organization to get a competitive advantage in
market which is a very important factor and analysis of this factor can lead to have a better
stand for firm in market.
Cost leadership- Cost of products can be lowered by Little Bay and quality of products
can be higher so that can attract a lot of customers in restaurant. Once restaurant makes a
place for themselves in market they will be able to reduce competition for themselves
which will create loyal customers for Little Bay (Krumholz and Hexter, 2019).
Differentiation Focus- Innovation can help restaurant attract a lot of customers because
that will give a unique feature to restaurant and this will make Little Bay reach new target
market. There should be a strong relationship with all target markets.
Cost focus- Producing the products with good quality is aims of Little Bay restaurant so
that they can satisfy customers with low cost investment (Sarin, 2019). Analysis of market
is a very important factor before they can develop and manufacturing goods this will be
more beneficial for restaurant.
Differentiation Focus: There are a lot of addition and innovation so that there is a
uniqueness in market which will attract more customers in market. Targeted customers or
market can be achieved so that they can have competitive advantage.
PLANNING FOR GROWTH P2 Ansoff Matrix for Growth Vector
This tools help managers, executives and marketers for future growth of business.
Little Bay is not experienced therefore these strategies is going to be very helpful for
restaurant.
Market Penetration: To deal in the same market with the same products with the use of
different techniques and methods to get more customers is known as market penetration.
Little bay can use promote to end result so that they can make customers come in the
organization faster and better. Little bay can sale its products in local market to local
consumers only. This strategy can give benefit to business in satisfying consumers because
being a local brand it is well aware with needs of buyers hence can offer them satisfactory
services in restaurants (Biddle and Taylor, 2018). But this strategy can strict firm in
attracting global buyers which will restrict revenue of company. Little Bay is a small scale
business which will find it difficult to invest for expansion in other countries as well.
Market Development: Entering new market for example Indonesia, United States, etc with
existing products would attract a lot more customers in Little Bay which can be beneficial
for restaurant. Revenues which business will get will be higher, and they will be able to
expand themselves in the future. This can make Little Bay get a lot of competitive advantage
in market which will make small scale business turn to a medium scale business ( Rudolf,
Kienast and Hersperger, 2018). Whereas understanding other markets will take time for
Little Bay to understand and settling down in other markets will take a lot of time.
Customers choices differ and understanding that is a very important factor. Investment
which Little Bay will have to make to expand in new market will be higher and getting
breakeven point will take time since experience with restaurant is not enough.
Product Development: Introducing a new product like healthy salad in the same market
would make the customers get more variety. Which will help the company have a lot of
competitive advantage since this is trending in the demand of the customers and little bay
will be able to satisfy that demand. Revenues and competitive advantage of restaurant will
improve on a large scale which will be very beneficial for a small scale restaurant like Little
Bay. This can give restaurant a large experience for future growth and improvements can be
made in products restaurant is dealing with. Quality of products can be improved and
satisfaction of customers can be met so that restaurant can grow in the future. Testing
products before Little Bay gets them to market will be better so that they know if product
will be able to capture market.Though investment in research and development department
will be higher and since Little Bay is a small scale restaurant therefore they will have to hire
a better R&D department for themselves. Understand needs and demands of customers is a
very important factor before restaurant invests in product's development (Sell and et.al.,
2018).
Diversification
New market with new product in hand will make the customers get attracted and
make the customers satisfied in a better way which will be very beneficial for the restaurant.
Loyal customers will get added in restaurant because of unique features and new product
(Baschat, 2018). This is a long term investment therefore restaurant will have to make
appropriate decisions so that they will be able to capture market better. Performance on
portfolio will be positive to a large extend. Risk of investing in new market is high but
introducing a new product will be even higher which can be risky. Portfolio of company can
be affected because of this factor which will create a great impact on restaurant.
Complication can rise because investing in a foreign market has a lack of experience for
Little Bay. Quality can reduce because of getting into new market which can be very
dangerous for restaurant.
P3 Sources of Funding
Little bay is a small restaurant which is why they will need some investor so that
they can fund themselves to expand themselves or improve themselves which will help the
organization to attract more customers and satisfy them.
Venture Capitalists
A financial help is given to small firms which have high growing potential in
market. High Growth as in the terms of revenue, employees or both. In exchange for funds
they expect equity or ownership stake in those companies. There is a high uncertainty in
market, Venture capitalist helps business to grow with risk factor.
 Advantages: Venture capitalist provides an opportunity for expanding any firm.
Obligation for returning amount is low which will benefit Little Bay to expand
themselves. Funding from other resources is very easy for restaurant in the future.
This will help to bring wealth and expertise in company so that functioning of
organization can improve (Loures, 2019).
 Disadvantages: Decision-making of restaurant will get shared and power will not
be in owners hand of Little Bay. Restaurant will find it difficult for funding in
future which will create further expansion in different target markets. There will be
an addition of forces investors as management who will have a great role in
decision-making.
Bank Loan
This is very much advisable for Little Bay since it is simple and arranged funds can
be taken for small and medium enterprises. Bank loans can be given to restaurant for a
certain time and there are fixed rates of interest. Bank loans are most secured way of
borrowing amount which is required by organization so that they can invest and expand
themselves more which will be very beneficial for firm.
 Advantage: This is a legal form and fixed fund through which businesses can fund
themselves. Interest rates are lower which will make restaurant have higher profits
(Bates, 2018).
 Disadvantage: Bank has right over taking assets if company falls to pay loan back
on time. Firms will have to pay rates or amount from time to time even if
organization is in a profit or loss.
Business Angel
This involves private investors who are wealthy and want to invest in new
enterprises or ideas coming in market. This is done so that a small enterprise will be able to
cover itself in a large area or globally. Will be beneficial for company since they will not
have to invest themselves but can take investors who have amounted with them.
 Advantage: There are no interest rates which company will have to pay and amount
which Little Bay will take can be given by at a flexible time (Bridge and Dodds,
2018). There will be discipline in organization because they will be under
someone's debt which is why they will have to make most, and they will have to
make changes when and where required as shareholder or investor would say.
 Disadvantage: Ownership will be completely lost which means owner of company
will have no control over business, and they will not be able to make changes
which are required in firm. Losing a share of business will make objective of
company compromise which is a very important factor.
Little bay should go for bank loan because that is a legal way through which they
will be able to fund themselves in the future growth and the company will be able to make a
lot of profit. Little Bay will have to take risk for expansion, and they will have to make the
most from it and bank will help the organization so get international.