Planning for Growth

This document provides a comprehensive guide on growth planning for businesses. It covers topics such as evaluation of growth opportunities, Ansoff's Growth Vector, sources of funding, and business planning. The document also includes a case study on Prufrock Coffee, a coffee shop in London, UK.

Planning for Growth

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1: Evaluation of the Growth Opportunities...............................................................................1
P2: Ansoff's Growth Vector.........................................................................................................2
LO2..................................................................................................................................................3
P3: Source of Funding.................................................................................................................3
LO3..................................................................................................................................................4
P4: Business Plan.........................................................................................................................4
LO4..................................................................................................................................................5
P5: Exit and Succession Options.................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Growth planning refers the strategic organization action which helps organization owner
for organizing and tracking sustainable growth in their revenue. Planning growth supports
organization to allocate their limited resources and utilizes them for adapting change in the
business. The main goal of growth planning is to differentiate own business from the
competitors. It sets goal of the company which gives instruction to execute company. To
understand the planning growth in business there is an example of Prufrock Coffee. It is
established in London, UK. This report includes key consideration for evaluating growth
opportunities and verify these considerations within organization. This report will cover
possibilities for growth applying Ansoff's growth vector model. Potential sources of funding also
will cover in the report.
LO1
P1: Evaluation of the Growth Opportunities
There are various opportunities which helps business for growing of Prufrock coffee
shop. Opportunities are-
Consumer segmentation
Consumer plays significant role for the business growth, therefore consumer
segmentation is the good opportunity for the Prufrock coffee shop. Organization can analyse
consumer segmentation which is based on their age, gender and their preferences. There is an
example to understand consumer segmentation such as college student who wants such like
products which is affordable for them along with good taste. On other hand young age customers
wants variety of coffee along with good taste (Gounaridis, Chorianopoulos and Koukoulas,
2018). While old aged customers prefer healthy products or their services which improve their
health, taste on affordable price. It is good option for the Prufrock coffee shop because it is
available in small scale and offers beverage products. If organization applies customer
segmentation strategy, in that state organization can offer products according to their demand.
For example old aged customers prefer tea and coffee. On other hand young age customers looks
for variety of coffee like cappuccino, espresso, green tea and black tea. While teenager looks for
varieties of beverage on affordable price. Thus, organization can differentiate customers and give
value to offer their desire products along with good services. Based on customer segmentation
organization can improve purchasing behaviour of the customers. Therefore, it is profitable
option for the organization.
Competition analysis
Competition analysis is also good opportunity for the new businesses because
competition analysis introduces organization in the market. Through the competition analysis can
analyse demand and purchasing condition of the products in local market. Competition analysis
determine two categorize of the competitor in which direct competition and indirect competition
analysis. Direct competition analysis helps to evaluate demand and buying situation of the brand
and products. It supports organization to focus on local market. On other hand indirect
competition helps organization to differentiate product brand in existing market as result
organization enables to generate high income from the market (Grooms and Frimpong Boamah,
2018). it also good option for the Prufrock shop because it helps organization to understand
market competition and product demand which can lead sustainable growth in the business and
can take competitive advantage.
Business goal and plan
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Business goal directs organization to create plan so that organization gets the mission
over the time. Goal gives direction, time deadline and helps to identify profitable opportunity
which leads company prosperity in business market. On other hand business plan refers business
actions which is utilized to gain predetermined goal of the company. Business plan helps
organization to implement strategies for promoting brand so that enables to take competitive
advantage over the time. Even it plays significant role for sustainability, In simple term it creates
sustainable plan and take in action for leading sustainable growth in the organization. It is also a
good opportunity for the Prufrock. For example Prufrock is coffee shop which offers beverage
i.e. coffee, tea along with varieties. If organization applies this opportunity and sets goal for the
growth, in that situation organization enables to make strategies which can helps organization to
promote business in large scale. Goal setting plays vital role for any type of organization because
it leads creativity in the organization and gives dedication to meet fixed goal.
Purchases situation analysis
It is an expansion opportunity which gives understanding about product quality, variety
and their services to customers. Even it also assists to analyse that what customer needs in the
product and how can influence product quality so that purchasing power of customers increases
in the organization. Even it also introduces various resources for improving purchasing of
products such as payment methods, distribution channel etc. These sources influence
organization activity for selling products (Kumar, 2016). It is also an opportunity for the
organization to improve buying behaviour of the customers. It introduces selling resources like
online product delivery, online payment facilities etc. thus, Prufrock can promote business on
large scale and can reach new customers by offering online shopping facilities.
Environmental analysis
Market research is the best option for identifying opportunities by examining change in
the business environment along with technologies. Environmental analysis helps organization to
update for new emerging technologies which can give opportunity or can become threat for
organization. For example internet is new technology which lead opportunity for the
organization to selling product on wide scale. On other hand climate change, finance market and
political factor can become threat for the organization. Thus, environmental analysis helps
organization to identify opportunity and threat. It is best for option for the Prufrock coffee
business because it can update organization about market opportunity and threat. Based on the
analysis organization can set goal for promoting business on large scale.
P2: Ansoff's Growth Vector
Ansoff's matrix is specially organized for market or product expansion. This framework
is utilized for analysing and creates strategies for growth and also alerts risk for the organization.
It is classified into four parts such as-
Market penetration
Market penetration is less risky strategy which is utilized for the product in existing
market. The main goal of the strategy to enhance market share along with market penetration
strategy (Hanlon, 2019). There are various strategies to improve growth of the business. For
example if organization applies affordable price strategy of product can attract existing and new
customers. This strategy is fruitful for influencing purchasing behaviour of the customers. It is
golden opportunity for the Prufrock coffee business because it can improve purchasing behaviour
of the customers by offering product on affordable price. This strategy retain existing customer
and supports to attract new customers. It has some drawback such as organization unable to
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generate high income and gives low profit margin. Pricing war can become threat for the
organization in existing market.
Product development
Customer wants different taste along with standard quality in products. Product development
strategy is best for the organization because it helps organization to differentiate own brand from
other competitive brand by improving product quality in existing product or variety of existing
products local market. This strategy update organization about product inflexibility and customer
needs. Prufrock is coffee shop which has main goal to meet customers objectives and promote
business in high level (Arzaghi and et.al., 2017). It is good strategy for the organization because
it can differentiate product from other products and can improve their selling behaviour. It also
posses some drawbacks such as continuous changes in products can reduce product quality and
enhance price of product, as result customer doesn't prefer to buy expensive products. It is good
option to introduce new product in existing market.
Market development
Market development strategy refers enters into emerging market with existing product
strategy. This strategy helps organization to promote business in wide scale along with existing
products. On the basis of strategy organization can expand business by analysing customer
segments, regions etc. Through the existing product strategy organization can attract new
customers in new market and improves their loyalty on product quality (Deng, Fu. and Sun,
2018). This strategy is costly which a big drawback of the company. Constantly changing market
can give threat on organization image.
Diversification
diversification refers enter into new market along with new product. It is specially
organized new pr5oduct in emerging market. Diversification is classified into two forms related
diversification and unrelated diversification. Related diversification refers introduces new
product along with existing business. It also good option for the organization to develop business
in new market with new product services (Yim, and et.al., 2019). This strategy posses some
drawbacks such as to introduce new product in emerging market can be riskiest for the
organization. It can create complexity in product definition.
Recommendation
Four strategy of Ansoff's growth vector is best for the Prufrock coffee business. It can promote
business on large scale by applying these strategies. One strategy is more effective rather then
remaining strategy. Market penetration is the best opportunity for the Prufrock because it helps
to elevate business growth in well-formed and differentiate brand from other competitive brand.
Even strategy helps business to create sustainable plan which leads competitive advantage in
business market. Thus, organization should apply this market penetration strategy to growth
business on wide scale in existing market.
LO2
P3: Source of Funding
There are many funding sources are available for the Prufrock Coffee which mentioned
below;
1. Banks: This is one of the most popular funding sources for the any business or company.
In which Prufrock Coffee also able rise fund for their business growth. Generally banks
are providing funds on the basis of loans. These loans are divided into two parts; long
term loan and short term loan. In case if this coffee shop want to rise fund for the short
term period, then it needs to take fund short term loans (Mebmer, 2016). In other side the
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shop want to fulfil its long term fund need, then it needs to take long term loan from the
banks. Banks provide funds on their decided interest rate. In which the coffee shop's
owner need to return that fund amount with specific interest amount. This is the common
procedure which almost all banks are following during provide fund to any business or
company. Banks are most favourable source of funding, because rise fund from banks is
too easier process in the comparison of other sources. It is big benefit of this source. In
other side banks are strictly checking all statements and cash flow of the business while
considering a fund. So, it'll break the business privacy of the Prufrock Coffee. It is really
drawback of this source.
2. Investors: Investors are also good option for the Prufrock Coffee to rise specific fund for
growth of the business. These investors are basically known as angel investors. The
management of the coffee shop need to approach these investors for rise fund. In case if
these investors are satisfied with the management's offer, then they will ready to invest in
the coffee shop by provide fund (Pulido and Mandri-Perrott, 2018). With the help of this
fund the owner of Coffee shop will enables to grow their business by expend this fund on
the performance improvement strategies. The main benefit of this source is, investors
mostly provide fund on lower interest rate. The coffee shop owner loss their
independence by rising fund from the investors. It is also one drawback of this source.
3. Customers: For rising fund from the customers, the management of coffee shop need to
take some additional and advance money from the customer when they buy any good and
service of the Prufrock Coffee. In which the coffee shop need to promise their customers
that it'll return your money in the future with good offers. In case if customers agree with
this deal, then they will provide their additional money to the coffee shop. It is most very
favourable deal to the coffee shop as well (Dogan, Yamamoto-Ibusuki and Andre, 2018).
This is the fastest way for the shop owner to rise fund, and it is the big benefit of this
source. The drawback of this fund is, it is tough challenge for the shop owner to
convince customer for pay additional money for a product or service.
LO3
P4: Business Plan
An effective business plan for the growth of the Prufrock Coffee business has been
mentioned below;
Business Plan
Step 1: Executive Summary
This business plan is prepared for the purpose of grow the Prufrock Coffee in the UK's
coffee cafe market by expand their business operations. There are all major points was
mentioned below which impact to the business growth of the Prufrock Coffee.
Goal: The major goal of the cafe is to grow their business in the UK's market by business
expansion.
SMART Objectives
Specific: The main specific objective is to develop some expansion strategies to grow Prufrock
Coffee business in the market.
Measurable: The coffee shop need to measure their current performance for improve it in the
future. It is too necessary for over all growth of the coffee cafe.
Achievable: There are some marketing strategies are the management need to use in their
marketing campaigns for achieve effective results.
Realistic: The management need to follow some logical and meaningful business terminologies
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for gain decided goal in the market.
Timely: Proper scheduling for all business activities is also very necessary for the proper time-
management. The management of Prufrock Coffee need to set specific time period for achieve
this goal.
Step 2: Business Description
Prufrock Coffee is situated in the Leather Lane, London, UK. It is totally vegetarian
friendly cafe which has good image in the local market. The cafe runs many discount offers to
gain much customer attention in the market.
Step 3: Market Analysis
There are many chances for the coffee shop to gain huge competitive advantage in the
market. Currently in the coffee market of the United Kingdom there are very high competition
(Piette and Zachary, 2016). In which the management of Prufrock Coffee need provide quality
coffee on the customer friendly prices for gain high competition. Currently the marketing and
sales strategies of the Prufrock Coffee are not much effective. The cafe still using those all
traditional marketing strategies in their marketing campaigns. It is completely needed to
improve these strategies.
Step 4: Company Organization
Organisation and management system of the Prufrock Coffee are something small. The
cafe owner is completely managing all operations within business environment. Number of
employees are currently working in this cafe, but the owner want to expand their business
activities in different market segments. In the daily operations the Prufrock Coffee dealing with
their customers which visit in their cafe. The owner always focuses on provide best of the best
satisfaction to the customers. It is also strict towards their products and services good quality in
the daily operations.
Step 5: Products and Services Provided
Prufrock Coffee cafe generally offers effective range of coffee cups. It is also providing
Breakfast, Lunch, and Brunch to the customers. This coffee shop also has little loyal customer
base in the market.
Step 6: Financial Outlook
The cafe is completely depends on their savings and daily earning for fulfil their
financial needs. In some case when the owner need large amount of money, then it takes from
their family members and friends. It is currently not working at the large scale. So, here is no
need for high funding for the Prufrock Coffee.
Financial Projection:
Start-up Expenses Amount (£)
Promotional Material 300
Contractors 700
Insurance 150
Computers 400
Legal 1400
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Total 2950
Step 7: Summary
There are various sources and strategies are currently available for the coffee shop
which help it in rise huge fund for business growth, like; banks, investors etc. The management
of the Prufrock Coffee need to choose most favourable strategies and sources according to the
business conditions to rise fund. The company also have option for gain finance from their own
saving. With these all fund the shop owner is able to secure invest in such areas which will
boost the business growth in the market.
LO4
P5: Exit and Succession Options
There are included major options of exit and succession for the Prufrock Coffee business
below;
TRANSITION TO FAMILY: According to this option the owner of coffee shop able to give a
part of their coffee shop business to its family members, like; son, daughter, brother, etc. In this
option the owner not need to cover lots of paper formalities, because it is basically its family
matter but in some cases the owner need to cover paper formalities (O’Donnell and Dahl-
Popolizio, 2018). With the help of this option the owner can easily enable to grow their business
in the market.
Benefit: By choosing this option the owner no need use complicated legal terms. This option
will not consume too much time of owner.
Drawback: Many times the family members not work like owner expectation. This option
promotes nepotism as well.
THIRD PARTY MANAGEMENT: This is also good option of exit and succession for the
Prufrock Coffee's owner. In which the owner need to give some top-level management rights and
control to the exiting management team or employee which has good performance in the
business. In some case the owner need to give full authority to other person within business for
take high advantages from the process of exit and succession. This will positively impact to the
business growth of the Prufrock Coffee.
Benefit: Here is when the owner gives business authority to other internal person, then that
person already have full knowledge of the business, and with the help of this knowledge that
person is able to easily make continuity of the business (Khoury, 2018). This is the main of this
option. In this option, an owner no need to use outside sources of business.
Drawback: The tax amount sharing is some complicated in third party management option. It
promotes conflict in business, because when owner give succession to one person in
management, then other people within management will not feel well.
SELLING TO THE THIRD PARTY: Selling business to the third party is also good option for
the owner of Prufrock Coffee. In which the owner need to identify such businesses in their local
area which want to buy any settled coffee shop. Then it needs to approach any of them for buy
this coffee shop. In this case if any business satisfied with current conditions of coffee shop, then
it'll buy that Prufrock Coffee business with effective amount. The coffee shop owner need to
clear all terms and conditions with buyer for zero objection in the future (Javed and Jaffar, 2019).
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Benefit: With this option the owner is able to take cash from buyer in quick form in the
comparison of other option. Owner able sell their business to that company which can give huge
amount in return.
Drawback: Cover all contract formalities systematically is a difficult task to the coffee shop
owner. It is too time-consuming option also, because owner need to give too much time for
searching a appropriate buyer.
LIQUIDATION: This is an option where business owner need to close their business operations
by selling all existing assets to anyone. Many business owners have chosen this option to exit
from their own business, because with this option they can easily get great return by selling their
assets.
Benefit: This option is too simple way for exiting from own business. Liquidation is very quick
process, because an owner can easily find people who buy their assets.
Drawback: In this option an owner can't able to get effective return on their investment, because
in this option buyers mostly offer very low price during purchasing assets. Bargaining of power
of buyer is always high in this option, which is not favourable for business owner.
MERGER: In merger option, business owner is able to merge its business in another business
which working in same industry. Suppose Prufrock is a coffee business, in which owner of this
business is need to search that business in their market which is also working in coffee cafe
business. Then it needs to merge their own business in that another business. Currently many
companies or businesses chooses this option also to exit and succession.
Benefit: When business owner choose this option, then it can easily increase it markets share.
Provide additional growth opportunity to existing business.
Drawback: Find appropriate business to merge is the toughest challenge to an existing business
owner. This option promotes unemployment in the market as well.
Recommendations
The Prufrock Coffee shop owner need to choose the option called; Transition to family. It
is the easier and finest option for the owner to exit and succession their business. In which the
owner no need cover many legal formalities, other side the family members will high attach with
the business in the comparison other parties. The owner also able to high trust on this option for
future the growth of the coffee shop. So, it is completely good idea for exit and succession
business by provide a part or full authority to the family member.
CONCLUSION
It can be concluded that there are various opportunities are available for the Prufrock
Coffee shop to grow their business in the United Kingdom. The owner need to develop their
business strategies to gain high competitive advantage in the market. There are many funding
sources are also mentioned above which are very helpful in rise large fund. Top-level
management of business need to identify most appropriate source of funding to fulfil own
financial needs in the market. An effective business plan also has been mentioned above which is
very important in improve performance of coffee shop. Reason is, this business includes various
effective business strategies which will help to this business in gaining huge competitive
advantage in the market. Day by day market competition in coffee business is increasing, so this
coffee business is able to achieve large market share with the help of mentioned business plan.
There is transition to family is the best option for coffee shop owner within exit and succession
options. Prufrock Coffee specially need to focus on provide best of the best quality coffee on the
fair prices to the customers for achieve high growth in the market.
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