(Solution) Planning for Growth Opportunities- Assignment

Planning for Growth

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Analysing key considerations for growth opportunities and justifying within firm's context
................................................................................................................................................1
M1 Growth methods for SME................................................................................................2
P2 Assessing growth opportunities by using Ansoff’s growth vector matrix........................2
TASK 2............................................................................................................................................4
P3 Discussing sources of finance and explaining benefits and limitations of sources...........4
M2 Justification of sources of finance....................................................................................7
TASK 3............................................................................................................................................7
P4 Producing business plan for firm for future growth including financials.........................7
M3 Producing business plan.................................................................................................10
TASK 4..........................................................................................................................................10
P5 Evaluating exit options for organisation and benefits and limitations of each options...10
M4 Succession methods for firm..........................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Planning for growth is required by which business can attain desired objectives with
much ease. Present report deals with Exotic Coffee Shop which will start its new business by
providing coffee to customers in Marylebone location in London. Business plan is outlined with
main considerations and growth opportunities are assessed. Furthermore, sources of finance wit
advantages and disadvantages are discussed. Succession points are highlighted by explaining
benefits, drawbacks etc. Hence, it can be said that through various sources, Exotic Coffee Shop
will be able to generate profits and new business venture will be successful.
TASK 1
P1 Analysing key considerations for growth opportunities and justifying within firm's context
Every firm starts its business operations with the view to provide effective services and
goods to customers and garner profits. This is the main objective of organisation so as to earn
profits and increase market share by satisfying consumers in realistic manner. It also applies to
an SME which operates business at smaller level and employees are nearer to 250 only. In this
scenario, it is required that SME should perform well so that it may be able to satisfy consumers
and build its market standing in effective way. Exotic Coffee Shop which is a new start-up will
operate coffee shop in UK to increase satisfaction level of customers and garner profits in the
best possible manner. In relation to this, key considerations for growth opportunities of firm and
justification is listed below-
New products and services-
Organisation is required to provide better products and services so that customers may be
satisfied in effectual manner. It is particular important for Exotic Coffee Shop as it will have to
impart quality coffee and related items in order to build its market standing and eventually
enhancing customer satisfaction up to a high extent (Cocks, 2017). The services and items needs
to be expanded and certain innovative products are required so that portfolio can be
strengthened. This will lead to expansion of services and satisfaction of customers may be
enlarged quite effectually.
Competitive advantage-
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The competencies are part of business and organisation need to start its operations by
effectively enhancing customer satisfaction to great heights. It is required that strategies of rivals
present in the market should be perfectly analysed so that company may be able to frame well-
mannered strategies in order to outreach competitors and build market by maximizing customers.
Hence, competitors are required to analysed by Exotic Coffee Shop so that new ingredients and
flavours may be made and coffee can be provided to customers by enhancing satisfaction level.
Innovation-
The innovation is required so that organisation can be able to enhance products and
services up to a high extent. Furthermore, since business will start its operations in the
Marylebone city in UK. It is essentially needed that organisation may effectively able to satisfy
customers. For accomplishing this, Exotic Coffee Shop will open game zone in the shop so that
people who come with their families and friends can enjoy the same along with coffee.
Moreover, allied services will be given such as fusion of food items by which organisation can
effectively attain customers who love fusion of different continents (Gallagher and et.al., 2016).
This will automatically enhance customer loyalty towards coffee shop as they will be provided
with products and services which would be entirely different from other rivals.
It can be said that Exotic Coffee Shop would effectively enhance its product portfolio as
innovation is needed so that new customers may be attracted of all ages and location of
Marylebone will also help to enlarge and lure more of the coffee drinkers.
M1 Growth methods for SME
There are various growth methods which can be used by business in order to attain
growth in the best possible manner. Ansoff's matrix is required to be used by the business so that
well-mannered strategies can be implemented and better growth may be attained.
P2 Assessing growth opportunities by using Ansoff’s growth vector matrix
Growth of organisation is required to be attained so that business may be able to enhance
its development in effective manner. The Ansoff’s growth vector matrix is useful as it helps to
formulate strategies so that business may be able to stand in the market with well-structured
strategies so as to beat rivals in the best possible manner. It is essentially required in order to
attain benefits by enhancement in overall growth. By implementation of such matrix, business
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can formulate strategies and enlarge its market share. The Ansoff’s growth vector matrix is
described below-
Market Penetration-
The penetration is required in order to enhance overall sales of firm. Market penetration
means that organisation sells its products in existing market only so as to expand share in the
best possible way. It caters needs of potential customers so that satisfaction level may be
enhanced in a better manner. By catering to demands of consumers, firm can easily satisfy them
and attain desired objectives. This means that Exotic Coffee Shop will have to provide with
better services and products which can satisfy customers and as such, profits can be
accomplished in effective manner. Without penetrating existing market, desired goals cannot be
achieved (Grant, 2017).
Market Development-
Growth is essence of organisation's operations as it starts business with main view to earn
profits and attain growth in realistic manner. It means that firm is required to attain growth for
expanding future operational tasks. Market development is n strategy whereby company sells its
core products to completely new marketplaces which were not yet explored by it. This implies
that in order to maintain and achieve more growth, Exotic Coffee Shop will require exploring
new markets so that larger customer base may be attained and more profits can be achieved with
much ease.
Product Development-
This is another type of strategy which is made by organisation to expand its product
portfolio in existing marketplace. This means that company is needed to provide better products
and services and eventually to develop new items so that potential customers may be provided
with larger range of products (Nason and Wiklund, 2018). It will have positive impact on
consumers as they may be able to taste new coffee and increased allied services which will
provide Exotic Coffee Shop with more quantum of profits in effective manner. Hence, this
strategy will help to enlarge profits quite effectually.
Diversification-
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It is the last strategy as given under Ansoff’s growth vector matrix which means that
organisation when have enough profits in hand and larger customer base may easily diversify its
business. In simple words, through implementing such strategy, completely new business will be
started and operated in order to earn more profits. However, such strategy needs to be properly
studied and analysed in a better manner so that competitors may be assessed and market research
is the main tool for accomplishing rivals' strategies. Hence, if Exotic Coffee Shop wants to
diversify its business, it will require doing comprehensive research for minimising risks up to a
high extent.
TASK 2
P3 Discussing sources of finance and explaining benefits and limitations of sources
Finance is required so that business can effectively run smoother operations and attain
desired objectives in effectual manner (Delen, Kuzey and Uyar, 2013). This means that firm is
required to have enough of capital by which operational tasks can be attained in a better way.
Sources of finance and related benefits and drawbacks are explained below-
Bank loans
The bank loans is one of the most used source of finance by firm. Interest payments are to
paid along with principal amount by the business. Furthermore, it can be used by Exotic Coffee
Shop to meet its operational requirements quite effectively.
Benefits
 One of the main benefit of bank borrowings is that fixed interest charges are applied and
thus, transparency is attained. Another merit of loan is that firm can easily pay loan and that too has better terms and
conditions.
Drawbacks
 It is unsuitable as if monthly instalments is left even for one month, then interest is
doubled because of default is made by organisation (Cox, 2017).
 It is not suitable for new firm as credit paying capacity is not good because it has low
credit standing in new market.
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Crowd funding
This is a useful source of finance which can be raised by inviting people in large quantum
and as such, smaller amounts of funds may be achieved from them on online basis.
Advertisement is made by company and investors assess whether to provide funds to firm or not.
It is much better than taking borrowings from bank.
Benefits
 It is suitable for Exotic Coffee Shop as pitching business with crowd funding help to
attain marketing without making additional investment on initiating marketing. Faster funds are processed and requirement can be met quite effectually of business in
effective manner (What are the advantages and disadvantages of crowdfunding?. 2014).
Drawbacks
 Target amount is fixed and investors are not entertained in that manner, it has adverse
effect on firm as they will have to pay invested amount back.
 If project is failed, then entire image of organisation in front of public is damaged.
Peer-to-peer lending
Peer-to-peer lending means that borrowers and lenders can meet for exchange of finance
on an online platform which is done by computer algorithms. It is quite useful for organisation as
it can easily use such source for meeting operational requirement for effective start-up.
Benefits
 The application process for obtaining peer-to-peer lending is fast, secure and reliable for
firm to meet operational requirements. It is suitable as interest payments to be made are generally fixed and no hidden fees
prevails. Thereby, transparency is obtained.
Drawbacks
 The interest charged on such borrowings are fairly high and as such, it restricts business
to obtain finance.
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 The credit score of firm will be badly affected if monthly instalments are not paid on
time. Hence, market reputation is damaged.
Angel investors
Angel investors invest in firm by taking certain part of ownership generally in relation to
funds provided by them to business (Arena and Ferris, 2017). Hence, Exotic Coffee Shop can
attain funds with much ease.
Benefits
 It is useful as it is cheaper source as compared to obtaining bank loans More funds can be provided by them which is suitable to newer firms in effective
manner.
Drawbacks
 This source of finance is not suitable as organisation need to provide ownership rights in
proportion of funds given by them.
 Angel investors are not good for Exotic Coffee Shop as it has to give part of equity and
control over operations is also made by them.
Venture finance
Venture capitalists provide loan to company which is usually provided in innovative
projects so that firm may easily attain operational activities. In this case, Exotic Coffee Shop can
attain finance from this source as it is an start-up business and is suitable for it.
Benefits
 Funds are provided in innovative project which has good profitability in long run
prospectus. They give away valuable suggestions and advices that are needed to effectively run
business operations.
Drawbacks
 It is not suitable as funds are provided only in innovative firms which restricts use of
venture finance.
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 The benefits are only received in long run and not in short run which is the basic
drawback of such source.
M2 Justification of sources of finance
Venture finance should be used by Exotic Coffee Shop so that it may be able to finance
its activities in effective manner. The main reason for utilising such finance is that firm is able to
garner valuable suggestions from venture capitalists and it is justified to use such source (Rudolf,
Kienast and Hersperger, 2018).
TASK 3
P4 Producing business plan for firm for future growth including financials
Mission and Vision
Vision of Exotic Coffee Shop is to provide quality coffee to customers so that satisfaction
can be attained. Moreover, attractive atmosphere to consumers will be provided by which they
can socialise in shop by taking quality brewed coffee and related products.
Aim and Objectives
Aim: To enhance customer satisfaction and achieve desired goals
Objectives:
 To become first choice of preference for coffee lovers
 To attain profits from first month and satisfy customers
 To maintain healthy gross profit margin
Overview
The coffee shop will be starting its operations in Marylebone town in UK. It will provide
quality experience to coffee drinkers so that they may be able to earn profits. Start-up
expenditures would be required as listed below-
Requirements for start-up
Particulars Amount
Legal expenses 1400
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Stationery expenses 600
Pamphlets 3200
Rent 4500
Insurance charges 2000
Total expenses 11700
Start-up assets
Cash 40000
Inventory 11500
Other current assets 0
Total requirements 63200
Marketing strategy
The strategies are required to be made so that customers may be able to promote its
business by which customers may get attracted. In relation to this, Exotic Coffee Shop will
segment its market to office people and college students. The main reason behind this is that in
accordance to the company. The marketing mix will be implemented so that customers may be
lured in effective manner. Furthermore, advertising and sales promotion would be implemented
to attain better customer attention.
Investment securing
Finance is an operational requirement for business. Venture finance will be used to attain
funds and expenditures will be met out. Furthermore, bank borrowings would also be utilised for
other activities in business.
Analysis of competitors
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Competencies are required to be ascertained in a better way. Various rivals are present in
location of Marylebone such as Borough Barista, Gino's Coffee Bar are main competitors which
may affect earnings of firm. It is needed that firm may effectively carry out complete analysis of
competitors so that better strategies may be implemented by organisation. This will help firm to
implement well-structured plan of action and as such, better services can be provided to
customers, thereby, overcoming competition.
Future products and services
The Exotic coffee shop will provide coffee with advancement of technology such as
coffee makers will be purchased which can cut off production cost up to a large extent.
Furthermore, fast and effective services will be given such as allied products like burgers,
chocolate cakes and pastries. It would enhance consumer satisfaction and more customers will
become loyal in the future.
Operational Plan
The operational activities are required to be attained so that business may be able to
achieve goals in effective manner. Furthermore, company will incur capital expenses to
effectively carry out activities. Moreover, proper task allocation to employees will be provided
so as to reduce duplication of work
Projecting financials
Forecasted Cash Flow Statement of Exotic Coffee Shop for future periods
Particulars Year 1 Year 2 Year 3 Year 4
Sales 90000 95000 96000 98000
Opening balance 12000 22323 34595 49308
Cash available to
business 102000 117323 130595 147308
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Expenses in future
years
Spending on
operations 5600 6000 6500 6600
Advertisement 6007 6500 6600 6650
Salaries and
Wages 5650 6008 6507 6605
Supplies 3000 3200 3300 3400
Legal charges 4000 4500 4600 4780
Bank charge 1000 1000 1000 1000
Miscellaneous
expenditures 3000 3020 3210 3300
Withdrawal by
owner 6420 6500 6562 6675
Machinery bought 45000 46000 43008 44050
Total cash
disbursements 79677 82728 81287 83060
Ending balance 22323 34595 49308 64248
It can be interpreted that business may be able to carry out positive cash inflows in future
course of action. This is evident from the fact that Exotic Coffee Shop will be able to have good
quantum of cash balance as in first year, balance would be 22323 while, it will increase to 34595
from previous year. In Year 3, it would be again incremented to 49308 and in next period, cash
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amount will reach to 64248 in effective manner. Hence, it can be said that firm will have positive
cash inflows as sales would elevate and expenses will be controlled in a better way.
M3 Producing business plan
Business plan should be formulated in accordance to the aim and objectives so that
organisation can attain those effectively. Moreover, it is required that rivals' analysis and
marketing strategies should be made for achieving goals.
TASK 4
P5 Evaluating exit options for organisation and benefits and limitations of each options
Selling to family member
This exit option is decided in advance which means that firm may sell its business to a
family member by effectively consulting with attorneys, accountants for better transition. Thus,
organisation can be valued by asking parties and correct valuation may be paid (Sawyer and
et.al., 2015).
Benefits
 This is one of the best option for exiting business by correctly valuing company as family
member are trustworthy and thus, transparency is observed. Family member can take firm to new heights and as such, it could be more profitable than
earlier.
Limitations
 Top dollar sale cannot be achieved due to emotional issues and amount is less received
than market value.
 Business transfer and valuation may be complicated issues often restricting use of such
exit option.
Sell to employee
It is another exit strategy which can be used by firm is to sell business to an employee.
This is the best suitable when a worker has enough of financial resources who can easily take
over organisation. Hence, business can be sold to employee having good financial standing to
acquire it (van Leeuwen, 2014).
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Benefits
 Easier business transition can be accomplished as organisation may be sold to employee
and flexibility is attained as well. Business can reach more heights as employee is familiar with business operations and
more profits may be garnered.
Limitations
 It is not suitable as clients may not ready to look for business with all new management
considerably involves changes in company direction.
 Worker may not be qualified for effectively handling business operational activities
which may have bad impact on firm.
Sell to competitor
Acquisition will be beneficial as business can be sold to organisation who is an major
competitor. This would help firm to have good amount of valuation and furthermore, it is an
attractive form of business. Moreover, competition can be reduced in the market with much ease.
Benefits
 It useful as better purchase consideration price could be paid by rivals which can be
further negotiated as well (Ying, Chaolin and Xiaojiang, 2014). Quick sale could be made and thus, correct valuation price can be paid prevailing in the
market.
Limitations
 The rival which is purchasing business may only have one objective to extract lists of
potential customers and basic financial statements' information.
 Consulting with professionals such as lawyers, accountants are to be made so that proper
valuation amount may be obtained by the organisation.
Liquidation
Liquidation is common exit strategy used when business is unable to cover its dues and
debts out of assets or earnings are very low. Thus, company can be liquidated by involving
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professional parties in order to do liquidation. When assets are realised, creditors are paid first
and then if amount remains, other parties are paid having stake in the business (Warmerdam and
et.al, 2017).
Benefits
 It is a simple process by which firm's operations comes to an end. Owner can attain funds
and business can be liquidated. Proper process is followed regarding selling of assets, collecting receivables, paying
obligations and other legal formalities.
Limitations
 ROI (Return on Investment) generated is fairly low in comparison to the market value.
Hence, owner suffers loss.
 It is obliged to creditors as they will have to be paid funds at the earliest which reduces
amount being available to business.
Sell to third party
It is another exit option by selling business to third party. In this, financial and strategic
buyers finds place. Main aim of strategic buyers is to enhance business portfolio. On the other
hand, financial buyers effectively go through financial statements and then decision is taken
either to buy firm or not (Unkelbach and et.al, 2014).
Benefits
 Business can attain good valuation price and as such, better amount can be attained by
negotiating as well. It is quite advantageous as restructuring of business is not required by which operations
may be started soon.
Limitations
 It is not good for selling firm as cash flows are adversely affected because of excessive
leverage and position of firm can become worse.
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 Expertise lacks in strategic buyers and thus, diligence is required to be made in effective
way (Mosher and et.al, 2017).
M4 Succession methods for firm
The succession methods are various and should be used according to the nature of firm
and its activities. Furthermore, liquidation and selling to competitors are to best methods which
can be used as an exit strategy.
CONCLUSION
Hereby it can be concluded that business may achieve growth by properly planning for
the same and then making strategies accordingly to attain goals. Furthermore, key considerations
should be analysed so that business may be successful and in this context Ansoff's matrix is
useful for framing strategies in effective manner. Moreover, firm is required to attain finance for
meeting requirements which is available from variety of sources. Succession methods are
evaluated and business plan is made for firm.
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Online
What are the advantages and disadvantages of crowdfunding?. 2014 [Online] Available
Through: <https://www.premierline.co.uk/knowledge-centre/what-are-the-advantages-and-
disadvantages-of-crowdfunding.html>
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