Planning for Growth

PLANNING FOR GROWTH

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
P1: Key considerations for growth evaluation of Warrens Bakery.............................................3
P2: Ansoff's Growth Vector Matrix.............................................................................................8
LO 2...............................................................................................................................................10
P3: Potential sources of funding for Warrens Bakery...............................................................10
LO 3...............................................................................................................................................11
P4: Business plan for Warrens Bakery......................................................................................11
LO4................................................................................................................................................18
P5: Business exit strategies........................................................................................................18
CONCLUSION..............................................................................................................................20
REFERENCES..............................................................................................................................21

INTRODUCTION
Planning is essential for the growth of any business whether small of large. Every
business regularly evaluates its business plan to review its performance. Warrens bakery is one
of the oldest Cornish Pastry baker of Britain established in 1860 and currently based in Cornwall,
UK. The company produces a range of baked items and sells it through a chain of stores and
wholesale channels. The company is looking forward to expanding its operations in other parts
of the country. This report will identify key considerations for evaluating the growth of the
business by using frameworks like Porters five forces and Ansoff's growth vector matrix.
Potential sources of funding the bakery will be determined along with a business plan for growth
by setting out strategic objectives and financial statements. Also, various succession or Exit
strategies for the bakery will be highlighted.
LO 1
P1: Key considerations for growth evaluation of Warrens Bakery
To increase the value of any business, growth is a must. But before expanding the
Warrens bakery, there are things that should be evaluated for devising any business strategies
(Ferguson, 2016). These include market research, assessment of key performance indicators,
competitors, competitive advantage, resources, capabilities, legalities, political environment,
technology, economic conditions, cash flow, product development, logistics, business needs etc.
For evaluating these frameworks like VRIO, Porters’ generic strategies, Porter's Five forces, and
Pestle analysis have been evaluated in context of the bakery.
Internal Analysis
Competitive Advantages: Warrens bakery has an advantage of operations over its
competitors as it is efficiently dealing with the post Brexit atmosphere and implementing
changes in its supply-chain practices. The rising income level of consumers is also an advantage
for the bakery as it can further diversify the product range to premium snack items and cakes.
After addressing the trend of health consciousness, the product line has been expanded to include
dietary baked items like diabetic friendly cookies and biscuits, sugar free cakes and even non-
dairy items for vegan customers. The company uses eco friendly packaging materials and
adhered to all Food, Health & Safety standards.

Resources: The tangible or physical resources of the bakery are its location, stores, equipment
and machines namely ovens and OTGs, Electric mixers and Bake wares etc. The human capital
includes the employees of the bakery especially the chefs and bakers who are highly skilled and
proficient in baking specialized items like the Cornish pastries etc. The intellectual property
rights of the company account for its intangible resources. Apart from that, the bakery is famous
and well-known, and is considered the oldest Cornish pastry baker in England, which accounts
for its goodwill and brand equity.
Capabilities: The distinctive capabilities of the bakery are that it utilises its competitive
advantages to increase it organisational capacities. Warren bakery is diversified its product line
as a change in consumer behaviour was noted and shifted to other baked items like snacks,
breads, rusks apart from its usual specialities. The Bakery has also used its traditional reputation
and heritage to expand its goodwill and create specialised items along with marketing strategies.
The dynamic capability of the bakery is that it has adapted with the technological changes and
brought innovation in its baking procedure by following total quality management and using six
sigma techniques.
Core competencies: It has its special technical knowledge of age-old recipes and flavours of the
original Cornish pastries. The organisational perspective bakery follows is the maintenance of a
culture of heritage along with changing times and adapting to fulfil consumer demands. The
experience and pre-existing knowledge of consumer behaviour and tastes is a core competency
for the firm and gains them a competitive advantage.
VRIO Framework
The framework is based upon the core competencies, capabilities, tangible and intangible
resources of the bakery which derive its competitive advantage.

Valuable Rare Inimitable Organised
No - - - Competitive Disadvantage
Yes - - - Competitive parity
Yes No Yes - Temporary competitive advantage
No Yes No - Unused competitive advantage
Yes Yes No Yes Sustainable competitive advantage
Porters Generic Strategies
Figure 1: Competitive Advantage
Source: mindtools
Cost Leadership Strategy: The Warrens Bakery can increase the profits and by reducing its cost
of operations, raw materials, cost in transportation and logistics infrastructure. As the bakery is

planning to expand, charging lower prices will lead to increased market share and reasonable
profit per sale due to reduced costs.
Differentiation Strategy: The bakery can research about the latest trends and hypes in the food
and beverage industry and take insights to develop a new product like. Although the risk is high,
the bakery can definitely profit from introduction of vegan friendly and organic baked items.
The focus strategy: To concentrate on specific niche markets, bakery has to understand the
dynamics of the market and unique innovations. It can include a focus upon customised baked
items likes designer cakes for kids.
As the bakery is expanding, it can take up differentiation strategy. This would help the bakery in
gaining new customer base as the new market segment may not be aware of its speciality items.
Porter's Five Force Model
Porter identified five factors influencing the nature of competition. This can be evaluated
to understand the rivalry Warrens Bakery is likely to face while expanding its saturated business.
1. Threat of new entrants: Bakery businesses in UK keep growing with a number of start-
ups and pre-existing businesses which will intensify the competition to gain market share.
There are various barriers in expanding the business like: High investment cost which
may deter entry and high capital requirements. The economies of scale of established
businesses will impact pricing strategies.
2. Bargaining power of Suppliers: The bakery's supplier may have a higher bargaining
power when they exercise that power and sell products a higher value by squeezing
industry profits. If the intermediaries are essential for the production of goods of the
bakery, then they might have a higher power and changing suppliers is not ideal. Also,
the uniqueness of the supplied input and cost of switching to alternative sources also
determines their power. Suppliers do not have much negotiating power in the bakery