Planning for Growth in Small-Scale Enterprises: Opportunities and Strategies

This report discusses the key considerations for evaluating growth opportunities in small-scale enterprises and justifying these considerations within an organizational context. It also covers the potential sources of funding available to organizations and their advantages and disadvantages. The report analyzes growth opportunities from VRIO framework, Porter's generic framework, and the Pestle framework. Lastly, it includes a discussion about the exit options a small business has and their benefits as well as drawbacks.

Unit-42
Planning for Growth

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Key considerations for evaluating growth opportunities and justify these considerations
within an organizational context..................................................................................................3
P2. The opportunities for growth to business by Ansoff’s growth matrix.................................7
TASK 2............................................................................................................................................8
P3. The potential sources of funding available to organisations and their advantages as well as
disadvantages...............................................................................................................................8
TASK 3............................................................................................................................................9
P4. Business plan for growth with financial information and strategic objectives for scaling up
an organisation.............................................................................................................................9
TASK 4..........................................................................................................................................12
P5. Reasons of failure of small business and its exit options with their advantages as well as
disadvantages. ..........................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Planning for growth is a strategic activity of businesses to plan and maintain growth as
well as success in their profitability. It provides a formed route to business to allocate resources
in a way that it increases productivity and can be unharmed by digital interruption or competition
in market (Achtenhagen, Brunninge and Melin, 2017). For this project, the chosen organisation
is Figment Coffee which was founded in 2018 and working as a small scale business with around
30 employees.
This report covers the growth opportunities and its competitive advantage for small-scale
enterprise. It studies the sources of funding available and its advantages as well as disadvantages.
It discusses the growth opportunities from VRIO framework, Porter's generic framework and the
Pestle framework. Lastly, it includes discussion about the exit options a small business have and
their benefits as well as drawbacks.
TASK 1
P1. Key considerations for evaluating growth opportunities and justify these considerations
within an organizational context
Small and medium size enterprises are independent firm with fewer number of employees
and differentiated according to their investment. SMEs plays vital role in economy growth by
providing career opportunities to large number of people. Figment Coffee is a small-scale
business commenced recently with the aim to serve the best coffee in town (Bae and Richardson,
2017). The company acquires its materials from local farmers and also treat them fairly.
Growth refers to in-depth and organized patterns of business in order to succeed in the
future. It fixes business targets and objectives and clearly defines strategies as well as plan of
actions to reach them. It views all the aspects of business such as strengths, imperfections and
opportunities in future Likewise, planning is defined as deciding before-hand what is to be done,
how, when and by whom. It describes the core activities of business, their objectives and its
ways to attain its goals. Small-scale enterprises uses business planning to establish its name in
market and to pull in investors. Growth and planning in Figment Coffee consist of stages from its
existence to its success (Demazière, 2018). It is an essential and strategic means for owners of
small-scale enterprises. It allows the owners of Figment Coffee to focus on certain ways which is

required in the success of the business. It also helps to attain the goals in short term as well as in
long-term.
Competitive advantage are the elements that a company enjoys among its competitors
and which allows a firm to produce commodities better than their rivals. The competitive
advantage of Figment Coffee as a small-scale enterprise is the quick decision-making process
due to less number of owners and employees (Thorpe, 2017). It accepts changes in market,
technology and innovations faster than its competitors as it does not permission from
government or stakeholders.
To analyze the strengths and opportunities for growth, managers of Figment Coffee use
various frameworks explained below:
VRIO Framework
The VRIO framework is an internal four step analysis tool exercises by enterprises to
evaluate business's resources and sustainable measures for growth. This analysis is important for
Figment Coffee to determine their resources which can turn into competitive advantage for them.
VRIO Analysis of Figment Coffee is as follows:
Resources
and
Capabilities
Valuable Rare Imitable Organised Competitive
implications
Service
Quality
Yes No No Yes Competitive
advantage
partially
Supplier chain Yes Yes Yes No Sustainable
competitive
advantage
Human
Resources
Yes Yes No No Sustainable
competitive
advantage
Valuable- In Figment Coffee, service quality is valuable as it provides personalized
services to consumers according to their preferences. Supplier network is valuable because it

supplies materials from local farms and human resources are important as their efforts
contributes in enterprises performance.
Rare- In case of Figment Coffee, suppliers network is rare as it uses the beans produced
by local farmers. Human resources are rare due to their commitment towards company's growth
and success(Walker, 2017).
Imitable- Supplier network of Figment Coffee is unique and differentiated from its rivals
as it provides finely produce coffee beans by local farms which attracts more customers to the
brand.
Organized- The quality of services provided by Figment Coffee is very organized as it
focuses more on providing best customer experience than profits.
Porter's generic Framework
Porter's generic framework is an instrument used by companies to understand competitive
advantage in the market they operate(Deng, Ma and Zhang, 2017). In reference to Figment
Coffee, porter's generic is beneficial as it helps management of enterprise to develop better
competitive advantage. Strategies of Porter’s generic framework in aspect to Figment Coffee are
as analysed:
Cost Leadership- Figment Coffee can use the strategy of low cost for competitive
advantage against its rivals. This tool can also be used to retain existing customers and attract
more customers.
Differentiation- In order to be unique and provide differentiation in products rendered,
Figment Coffee can use this strategy. It allows the firm to choose the best attributes which is
important from point of view of target audiences.
Cost Focus- By this strategy, Figment Coffee can try for cost advantage in a niche
market by studying the current conditions of market and by building value for offered goods.
This can help Figment Coffee in increasing its market segment by providing low- cost uniquely
created products.
Differentiation Focus- Figment Coffee can also strive to create loyal and specific market
base which will help in maintaining brand image as well as its sales (Zhao and Liu, 2020). It can
provide goods which can be easily differed from its rivals.
As per above explanation, it has been analysed that differentiation strategy of Porter's
generic framework is beneficial for Figment Coffee as it strengths company image by fully

satisfying customer needs. It provides opportunities to differentiate its products in markets which
will help in company's growth in future.
Pestel Framework
Pestel analysis is a tool to study macro environment factors that impacts the working of
an organization. It evaluates the risks and opportunities created by external conditions for a
business. In Figment Coffee, Pestel framework is used to assess growth opportunities available
with the company. The factors on context to Figment Coffee are below:
Political- The political factors like taxation, laws, policies and regulations can impact the
working of a small-scale enterprise by great extent. In UK, the political landscape is stable and
the government also provide remittance for commencement of small scale enterprises by
providing easy loans. Managers of Figment Coffee can use this opportunity by utilize the
subsidies and loans provided by government and transform them to create growth opportunities
in future
Economical- Economical factors such as interest rates, inflation, growth rates etc which
can impact company's operations directly or indirectly (Higgins and Savoie, 2017). In UK, the
interest rates for small-scale enterprise is low as compared to big businesses and the country also
provides opportunities for growth to small enterprises. Figment Coffee owners can strengthens
its brand value by operating in an environment where the interest rates are low and growth rates
are high.
Social- The factors like health consciousness, culture perceptions, customer's needs etc
are social factors. UK have favorable social variables which creates opportunities for all kind of
businesses. Figment Coffee enterprise can avail the benefit of social factors by providing value
goods for money and diversifying its product base to attract more number of consumers.
Technological- The impact of technological advancement, research and development
activity, automation on businesses are technological factors. In UK the manufacturing techniques
and marketing technologies are highly advancement which provides opportunities to Figment
Coffee to expand its network. By adopting current techniques, such as updated coffee making
machines, equipment which takes less time etc., the enterprise can enlarge its customer base and
create various growth possibilities.
Environmental- The environmental elements include weather conditions, climate change,
pollution level etc of a country. The environmental conditions of UK are very favorable for

business to operate as it provide great work conditions and there is no scarcity of resources.
Continuous availability of resources provides opportunity of uninterrupted operations of Figment
Coffee which strengths its position in market (Innes, 2017). It also provides clean and safe
working conditions to employees which maximize their efforts.
Legal- The legal factors are elements which a company must follow for successful
operations such as licenses, labor laws, industry regulations etc. UK have several laws such as
Employment Law, Health and Safety at Work Act 1974, Equal Pay Act 1970 etc which an
enterprise must follow to be rightful in eyes of law. Figment Coffee owners can provide equal
pay and safe working environment to its employees, this will increase productivity of employees
as well as of organization.
P2. The opportunities for growth to business by Ansoff’s growth matrix.
The Ansoff matrix is a tool used for planning which helps the managers of businesses to
create and develop market strategies for growth in future. The matrix describes four strategies
that helps a firm to expand its market and evaluate the risks present in the market. The Ansoff
matrix in context of Figment Coffee is explained below: Market Penetration- This strategy aims at enlarging sales of existing goods in existing
consumer base. Figment Coffee managers can utilize this strategy by providing
diversified and customized products to its customers. The main advantage of this strategy
is that it has minimum risk as the company has to make effort to promote its offering in
its existing market while the demerit of this strategy is that it lowers down the chances of
business to expand its customer base. Product Development- It focuses on offering new commodities in existing segment of
market. The managers of Figment Coffee can invest in its R&D team and can combine its
existing products to create a new one which satisfy customer needs better. The benefit of
this strategy is that there is more chances for the business to satisfy the customer need by
introducing new offering while its demerit is that there is risk of failure of launch of new
offering. Market Development- By using this strategy, organization can enter new market
segments by offering existing goods(Kearney, 2019). Figment Coffee managers can use
this strategy for growth by render its services to different market segment and by

increasing the scope of enterprise. The main benefit of this strategy is that the company
gets the advantage of new market to enhance its sales while its demerit is that it is risky.
 Diversification- With this strategy, a company can get into new markets with new goods
or services. Figment Coffee managers can strive to enter new markets by introducing
different types of products. It can also turn into new sources of revenues for the
enterprise. The main disadvantage of this strategy is that it is the riskiest one while its
benefit is that it helps in exploring new market with new offering.
As per the above discussion, the best strategy which can strengthens growth and provide
several opportunities to Figment Coffee is Product Development, as the company have to
develop its existing products by understanding the preferences of customers. It will help Figment
Coffee to retain its existing customers and the loyal customers will help in marketing of firm if
they will be fully satisfied. Also, the changes will meet customers needs better and not cost much
for company.