Planning for Growth: Evaluating Opportunities and Funding Sources for American Food Store

Planning for growth

INTRODUCTION
In the recent time, businesses are focused upon their growth and expansion methods that
helps them to improve the overall performance of the company. For that, effective planning
should be done that helps to meet the defined aim and objectives. The chosen firm for this study
is American Food Store which is one of the small grocery store deal online and offer range of
products to their customer at minimum rates. The study will evaluate the key consideration for
evaluating growth opportunities and by using Ansoff growth vector matrix, study will evaluate
the opportunities. Further, it determine different sources of funding that business can use to
expand its business and then design a business plan in order to meet the strategic objectives.
Lastly, it identify the ways through which business may take exit and succession.
TASK 1

Planning for growth
Presenting the key consideration for evaluating growth, opportunities
In order to evaluate the growth, different key consideration should be used by applying Pestle
framework. Like
Political factor: Growth of the company is depend upon the political situation of the company and
that is why, it is essential for the business to determine the same. Due to Covid-19, entire business
especially retail firm is affected adversely, so companies should consider the competitive advantage
and come up with new and innovative products (Emmaru, 2021).
Economic factor: The economic stability support business to evaluate numerous growth options.
Therefore, it is necessary for the American food store to consider the economic fluctuation like,
inflation may affect the price of products and decrease the spending power of customers as well.
Social factor: Perception and views of people changes as per the market need updated. That is why,
it become difficult for the businesses to consider the changing need and meet the defined aim as well
(Chen, Hung and Ma, 2020). For that, American food store may also revive back by offering
innovative products like organic food, expand business with new product in new market.
Technological factor: With the emerging digital era, it is necessary for the company to comply with
new technologies. As American Food Store is already offering online products that assist to increase
the customer base and enhance the overall performance in positive manner. This in turn also assists
to increase the competitive advantage and grab attention of customers.
Presenting the option for growth using framework
By using Ansoff growth vector matrix, it has been analyzed that American Food Store should consider
Product development as a growth opportunity. Under this, company may offer organic food products because
it is the basic need of all the people within UK due to Pandemic. Also, in London there are limited organic
stores available and that is why, considering this as a growth opportunity will be beneficial for the business
and improve the brand image as well (Mazzarol and Reboud, 2020). Moreover, it has been also analyzed by
key considerations that the political and economic situation of UK is not appropriate and that is why, there is a
need to proceed with the chosen growth option among all which is not more risky and assist business to
improve the competitive advantage as well.
Describing the risk for each option
Applying the Ansoff growth vector matrix, it has been analyzed that there are different risk associated with
each option which need to be consider before making any valid decision. Such that under market penetration,
company might face a risk of stable sales performance because if innovative products are not offered then
customers do not invest upon such item. Further, under market development, company face a risk of not
evaluating external factor that causes adverse impact upon the business performance (Robinson and et.al.,
2020).
Legal factor: It is necessary to adhere with defined laws and
legislation while expanding a business at new phase. In this,
employment law, consumer protection act and data privacy act
must be strictly followed that helps to meet the defined aim.
Environment factor: Business should comply with sustainability
act and that is why, it is necessary for the business to make steps
that helps to protect the environment from any harmful gases like
use of plastic etc
Evaluating the opportunities for growth by using Ansoff growth vector matrix
By using Ansoff growth vector matrix, American Food Store will evaluate the growth opportunities and this in
turn also causes positive impact upon the brand performance. Such that:
Market penetration: It is all about offering existing product within current market in order to enhance the
sales of a business (Salvador and et.al., 2020). With the help of this strategy, company makes competition
intense and as a result it grows its business along with increase market share.
Market development: In this, firm target new market with its current products or service. Through this,
company is able to sustain the brand image at international market. Also, for small business, this strategy
helps in expansion from the current market to another where products may easily compete.
Product development: With the help of present growth opportunity, company is able to introduce new
product for the expansion in its existing market. Through this, entity is able to increase the customer base and
also may easily enhance the market share through its new offerings (Klein, Schneider and Spieth, 2021).
Diversification: It is one of the most risky strategy in which company has to offer new products within new
market. It is generally used by large organization because they have strong competencies in order to maintain
a strong market share and take a risk in market. Sometimes, it helps a business to grow at further level of
success, whereas sometime decline its overall performance as well.
Further, risk associated with product development is
changing need of customer might decrease the sales of
new offering at particular time and causes opposite
impact. Also, diversification requires enough capital and
human resource which is not possible for small business
enterprise

Presenting the appropriate source of funding for company
There are different sources off funding available for the American Food store which helps
a business for its growth. Some of them are as mentioned below:
Personal saving: It is one of the simplest ways of funding that helps in the long term
commitment for the invested project. Along with this, if an owner of American Food Store has
enough personal saving then they are ready to take risk (Loredana, 2017).
Advantages: It is easy to access and allow individual to retain full ownership that provide 100%
future profit. It also offer much more control as compared to other finance options.
Disadvantages: If the business will be failed then individual might lose personal possessions. It may
decrease the amount saved by people during a time of an emergency.
Angel investor: They are those people who invested their amount directly to small
business and also shared their experience in order to help business for their growth. In return they
require ownership of a business in which they have invested.
Pros: the chances of risk is decreases by using such type of source of funding, also individual do not
have to pay in return as of bank loans (10 pros and cons of Angel Investors, 2019). There is minimal
amount of paperwork that helps to save time. Along with this, individual may use the experience and
Pros: the chances of risk is decreases by using such type of source
of funding, also individual do not have to pay in return as of bank
loans (10 pros and cons of Angel Investors, 2019). There is
minimal amount of paperwork that helps to save time. Along with
this, individual may use the experience and contact people to
increase the sales.
Cons: The company’s growth might not increases as expected.
Also, funding can be slow and all the terms and condition are
negotiated that affect the ownership of individuals.
Bank loans: One of the commonly used sources for small business and a good idea that
assists to get the required loan easily (Bessière, Stéphany and Wirtz, 2020). Moreover, it
is also helps the individual to repay the amount and also track the record with an excellent
credit.
Benefits: it helps to keep control of a firm and also business may repay the amount in
installments. Along with this, it is also analyzed that interest is tax deductible and that is
why, company may increase its ownership.
Drawback: Due to high interest rates, company did not uses such form of sources of
funding. Moreover, it will be difficult for the individual to repay the amount if the sales of
a company is decreases.
Government grants and subsidies: Now a days, government also provide funds to the
small business and also develop different subsidies that helps business to improve their
overall performance. For that different criteria should be matched that helps to provide
the grants and run a business effectively.
Pros: Government grants is related to free money and that is why, business may uses the
money for their own purpose. It is accessible by all kind of people and there is no
Pros: Government grants is related to free money and that is why,
business may uses the money for their own purpose. It is accessible
by all kind of people and there is no pressure to repay the amount
because it is free of cost.
Cons: Government did not provide grants to all kind of people
because they have to provide specific proposal that must be approved
from grant (Mallinguh and Zoltan, 2020). Also, government agencies
who provide loan have as specific and strict criteria which needs to
be fulfilled before applying for a loan
Presenting the appropriate source of funding for American food store
Among all, it is suggested to use bank loan and personal saving by American Food Store
because it helps a business to improve the overall performance and minimize the chances of decline
in its sales. Through such source of funding, quoted firm is easily retail its full ownership and this in
turn causes positive impact upon the sales and overall performance. Such that through personal
saving, owner invest maximum amount whereas from bank it took small amount of loan which can
be repay within minimum installation period (Gasparin and et.al., 2021). This in turn causes positive
impact upon the business performance.
Critically evaluate the sources of funding with justified argument
It has been examined that American Food Store uses personal saving as a first source of
funding which helps a business to enhance its sales. However, it has been critically argued that if the
sales of organic products will nit increases then it becomes difficult for the company to use the
amount in any future emergency. On the other side, bank loan is the second source of funding which
is also used by the company that helps a business to invest within new products. Whereas, it is also
argued that due to change in the bank interest, company’s financial performance got affected. That is
why, American Food Store must select the funding option by considering its positive as well as
negative aspects.
Bankloan