Planning for Growth Project - Assignment

Planning for Growth

INTRODUCTION
Planning is the long term strategy which is prepared by managers of business
organisation in order to sustain growth and development. It is the process of getting ideas about
business activities that is required to accomplish desired goals. Planning is the first stage of any
business entity that helps to make present as well as future plans. It is important for enterprises to
make future plans for achieving desired objectives (Batty and Marshall, 2012). The main objects
of planning is to ascertain the growth of business industry by maximizing profits. The main
purpose of this project report is to understand the why planning is important for companies and
how it helps in growth of business organisation. To know about planning for growth Qila Joe has
been taken that will offers different types of coffee to their customers and would help to sustain
the business growth. This project will discusses about Ansoff's matrix for growth opportunities,
funding sources and plan of business that involves financial information and objectives for
scaling up a business.
TASK 1
P1
Planning is the long term strategy which is used to set the goals and objectives of
business industry and increase the productivity. The manager of any business entity prepare
plans and creates number of options to face the problems. The Qila Joe is a coffee company
which is going to different flavour of coffee in London. To build this business successfully the
managers of Qila Joe needed to make plans for completing the objectives. It considers two
identified key consideration that may help entity to attain growth objectives (Boserup, 2017).
The description of key points are given as:
Porter's generic strategy: This is strategy which was described by Michael Porter in
1980. This strategy states that how an entity pursues competitive advantages beyond the selected
market. It can be used by any organisation to get the competitive advantages. It contains four
strategy which are defined as:
Cost leadership: In this type of strategy, a business organisation set out to be the lower
cost manufacturer in same field. Its sources involves cost advantages which is depend on the
structure of entity. The main purpose of this strategy to achieve and sustain overall cost
leadership by focusing on cost.
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Cost focus: This strategy mainly focused on launching products in small market segment
with low prices of products and services. It can be adopted by manufacturing company to launch
new products at low cost in small market in order to attract the customers. It is essential to
reduce the cost of production and increase the profitability.
Differentiation: In this strategy, a business organisation is looking to be unique in its
industry by bringing new products which are valued for buyers (de Roo, 2017). It supposed that
company will produce different types of products as compare to others. It helps to attract the
those customers who want to purchase new and attractive products.
Differentiation focus: This strategy is relates with unique products that are introduced in
small market segment. The manager of business entity consider all needs of customers during
manufacturing the products. It can help to targeted people and creates opportunities by fulfilling
their needs. Moreover, it helps to create the good image of business in London.
From the above strategy Qila Joe has decided to use differentiation focus strategy which
is most relevant and feasible for organisation. As Qila Joe has decided to launch new cafe with
unique product it will attracts the customers by providing number of flavour and better quality of
products in London. These differences will help to make Qila Joe stand out. The company will
emphasis on speciality of coffee that will help to make different from competitors and would
help to increase the competitive advantages (Dimitriou, 2013). Moreover, this strategy will be
more sustainable and responsible because it will manufacture different and unique products that
influences customers to purchase new products.
From the above discussion it is analysed that a business organization focuses on different
changes which needs to be accept by management. The main aim is to create opportunities for
business growth and reach globally. For example, Qila Joe is wants to increase business activities
for the purpose of expanding business. In this situation, manager need to introduce from new
products that will attract customer for availing services. For this manager will make strategy and
apply in their organization that helps to maintain business growth.
PESTLE Analysis
This is a techniques which is used by organisation to know which factor can impacts on
business industry. This tool helps managers to make effective business decision by providing
external environment's information. The PESTLE analysis of Qila Joe is defined as:
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Political: This factors involves government related policy such as fiscal, tax policy,
monetary, trade, import and export duty which is decided by government. In UK, there is
constitutional autocracy and government is also stable. So it may be a great opportunity for Qila
Joe to launch its new business in London.
Economical: This factor involves interest rate, inflation rate and employment rate which
affects economy of a nations. As the economy of London is strong and very good that will help
Qila Joe to provide an chance or opportunity to launch its business in London and earn
maximum profits.
Social: This is also consider as external environmental factor which includes
demographic changes, changes in fashion, social values and customer's lifestyle. In London,
people are so much aware and interested to use new products and services (Gleeson, Dodson and
Spiller, 2012). Hence, it will be a opportunity for Qila Joe entity to introduce new goods at there
and get profits.
Technological: These factor mainly considers technological aspects and new innovation
with the help to new technology that help to influence customers. The manager of Qila Joe are
planning to launch unique coffee by using new technology that will help to reduce time and
increase the productivity. As result it can sustain in competitive market and will maintain the
profits within business organisation.
Legal: This type of factor basically related with number of laws which may affect the
business and its organisation. The Qila Joe is following equal pay act that will help to influence
customers and make feel them happy, as result high productivity and profitability in entity. Thus,
it will be an great chance for Qila Joe to earn high level of profit with the help of employees in
order to eliminate problems and increase profits.
Environmental: This is main factor for all companies which is needed to follow by
management. It considers environmental protection act and rules that can affects businesses. The
management of Qila Joe are concerned with environmental protection act that helps to create
positive image of organisation. So it will help to generate an opportunity for Qila Joe to launch
the products in London.
P2
Ansoff's growth matrix was developed by H. Igor Ansoff which is used to define the
growth of business organisation. This matrix is enforced by assorted entities to analysis the
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different market segment in order to introduce products and services (Haughton, Allmendinger
and Oosterlynck, 2013). It helps Qila Joe to state the suitable market for business entity to
introduce new products. It involves different types of strategies which can applied by Qila Joe to
launch new cafe by providing better quality of products in London. These strategies are defined
as:
Illustration 1: Ansoff's growth vector Matrix
Source: Ansoff's growth vector Matrix
Market penetration: This strategy means to sale the existing goods and services in
already exist market. There is not need to set the new products and new market for introducing
new products and services. It helps to create the opportunities by getting more clients in existing
market and also helps to maximize the market share (Holman and Rydin, 2013). It may be a
good option for organisation to save promotion cost because manufactures are already aware
about customer demand.
Market development: It considers introduction of existing products in new market that
help to target new and more customers. It will be feasible for organisation because it helps to
save the modification cost but need to spent money for selecting the best market place to sale the
products.
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Product development: This is more effective business strategy for new launching
business as it is used to introduce new products in existing market. It can help organisation as
marketers have already information about customer's taste and perception. So it may be a good
opportunity for Qila Joe to grow fast and increase the market image by providing better quality
of products.
Diversification: This planning or strategy is related to launching new products in new
market segment that will helps to target new as well as existing customers. The organisation can
adopt this strategy to introduce new or unique products in new market in order to grow the
business.
From the above discussed strategy Qila Joe is applying diversification strategy that will
help in growth of business in new market place. As Qila Joe is launching new product that is
different flavour of coffee according to taste of customers (Kerzner and Kerzner, 2017). This
strategy will be beneficial, suitable and feasible for Qila Joe because management has enough
resources and skills to produce better quality of coffee to attract customer that will help to save
the cost and time. Moreover, it will helps to meet with higher level of growth by offering
different types of products in new market place.
From the above mentioned strategy it is evaluated that Qila Joe is applying diversification
strategy that helps to create growth opportunity within organisation. If Qila Joe is adopting
market development strategy then it need to introduce products in new market which is difficult
and less productive, by applying market penetration strategy it has to deal with existing products
which does not like customers as result lack of customer and low profit. Moreover, by applying
product development strategy it has to bring new product and more money that is difficult for
organisation. Therefore, Qial joe is using diversification strategy that help top modify the
products and also helps to create growth opportunity.
P3
Qila joe is a new age start up which specialises in the coffee making business. It aims to
provide an experiential paradigm for its valuable customers through providing a wide range of
coffee flavours enriched with premium roasted coffee beans from Brazil. Being a new age
venture Qila joe is dwelling onto various funding options to fund its operations for the targeted
growth rate of 6+% in the financial year 2019-20 with the net profit margin targeted at 10% for
Quarter 4 taking SnP global 500 as a benchmark. To achieve the targeted quantitative, the
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organisation requires £200000 for its targeted locations in Europe (Mitchelmore and
Rowley,2013). To adhere to the aforementioned targets Qila joe needs funding from internal as
well as external sources however it being new lacks proper internal sources to fund so it is
planning to acquire funding from external sources primarily. The various sources it can prefer
are :
Internal source
Internal sources are the sources which are internal to an organisation which can be the
internal capital available with the promoters to fund business. Qila joe can go for the internal
sources but since they are lacking it should prefer external sources.
External sources
These are the resources which are external to an organisation and most organisation rely
on them. External sources offer wide variety of choice to the promoters and some options are as
follows :
Crowdfunding:It is the most popular and easy way to acquire funds in which technology
comes handy. Under this process funds are acquired from people, investors, concerned parties
and society at large using social media platforms. It is quite cheaper compared to other sources
of funding. Qila joe should prefer this mode at first because it cheaper costing and easy
implementation.
Advantages
 It is a cheaper medium which almost requires nothing costly from the organisation
 It builds social rapport of the organisation and value base.
Disadvantages
 Very hard to pursue people to donate and would attract low funds.
 It is not a full proof method; less technical.
Bank loan:Bank loans are the most preferred medium of acquiring funds for the business
since banks are always ready to provide loans to businesses and entrepreneurs (Ozanne, Biggs
and Kurowski, 2014). Qila joe can prefer this mode as it is a safer medium to consult a bank to
provide loans and advances. Banks also offers handsome deals to the promising business ideas.
Advantages
 Easily available and most popular method around the globe
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 Provides technical knowledge and security of money.
Disadvantages
 Banks charge hefty interest rates which could be an issue for new start ups
 It can turn to be a burden in case business doesn't make enough profits to pay.
Venture capital: Venture capital is most popular mode among start ups in which
investors with huge stack of money invests money in the start ups based on the profitability of
the idea and the capacity to establish business for a stake in the equity. It is synonymous with the
'Angel investor' concept. Qila joe can go for this method of funding acquisition as venture
capitalists are always interested in investing in new start ups and early age businesses seeking
funds.
Advantages
 Most easier method in modern day business scenario
 No collateral or interest or any other hassle to the business.
Disadvantages
 venture capitalists grants funds for an equity position in the firm which can hurt owners
 they have decision making right which may lead to banter at times.
Qila joe is a new age business and since it is actively seeking funds to further fund its
operations and will establish a business in London. It should consider an amalgamation of
various funding methods dividing funds in equity and debts in equal proportions. From the more
options it has been assessed that Qila Joe will arrange funds from venture capital funding which
is medium as the prime mode for its operations because of the easy and timely availability along
with the technical expertise venture capitalists provide as mentor to the new business which Qila
Joe can certainly exploit for its benefit.
TASK 3
P4
Business plan can be defined as a written document that includes goals and objectives of
a specific firm which has to be achieved or actions that has to be taken for achieving these goals.
It is also very important for Qila Joe to form a specific business plan that consists of vision
mission or relevant data about the plan because through it, company will be able in performing
its functions and operations in more effective manner which leads the firm towards growth and
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success in marketplace (Phelps, 2013). Main aim behind formation of business plan is to attract a
large number of investors for investing in their business organisation so that desired growth can
be achieved in marketplace. Qila Joe is a small coffee outlet that wants to expands their business
operations in London by adding new effective coffee products. Therefore, it is very necessary for
them to form an effective business plan so that desired goals can be achieved in given time-
frame. Business plan of company is given as follows:
 Vision :- Vision of Qila Joe is to become recognised coffee shop in London and take #1
position as a coffee shop in desired location.
 Mission :- Mission of organisation is to enhance services and products in New market so
that desired success can be attained in a small time period.
 Strategical objectives :- Main objective of Qila Joe is to maximise their profit share
from 15% to 30% in next 2 years through satisfying the needs of desired customers.
 Financial information:- Growth of an organisation is depends on their functions and
contribution of employees due to which an adequate amount of funds is required so as to
performing these functions. Finance plays a very essential role so that it is very essential
for entrepreneurs of firm to allocate these funds and resources effectively so that desired
objectives can be attained in limited time-frame.
Before expansion towards London, it is very important for Qila Joe to prepare a
forecasted budget so that operations can be carried out in effective manner. With the help of this
statement company will be able in managing their expenses that will be done by them during the
expansion on recruitment of new employees, technological installation etc.
Total forecasted budget
Particular 31/12/15 ($) 31/12/16 ($) 31/12/17 ($)
Implementing
technology cost
14000 - -
Promotional expense 8000 6000 7000
Advertisement
expense
7000 4600 4800
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Catalogues 3000 5000 9000
Training charges 6500 10000 2500
Total Cost 38500 25600 23300
It has been identified from the above budget, managers of Qila Joe will be able in
identifying expenses that has to be done during the expansion process of business in London.
TASK 4
P5
Qila Joe is a coffee company which is going to be introduce in London by launching
their new product as well for respective organisation it is important to make their succession and
exit plan. So that future risk as well as uncertainties will handle in better manner without any
negative impact on execution of business activities. Respective planning is decision of manager
within company explanation of succession and exit plan are as follows :-
Exit plan – This is strategy use for closing business entirely or handing over authority of
company to another person. Exit plan will assist owner of organisation by providing them several
exit options for their firm (Thapa and Murayama, 2012). In the situation when business firm is in
loss from long duration then it exit plan will be suggested to them. There are several exit plan
explanation follows :-
 Winding up – This is an exit plan in which owner of organisation sale their assets for
paying creditors as well as distribute their rest off the assets as well as funds to
shareholders and investors. Qila Joe is a coffee company not succeed in London then
Winding up is an exit plan adopted by them.
 Advantages – Winding up is the best option because owner will get free from all the
debts and its another advantages is that owner will not have to face any other losses.
 Disadvantages – company will loose their effective staff member's because their assets
will be sold.
 Selling in open market – In this business firm will sale in open market and it will be
purchase by third party (Pothukuchi, 2015). Within this operation will remain same but
owner get change.
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 Advantages – Such activity will not harm business activity and image because third
party will purchase business and its operation remain same.
 Disadvantages - The drawback of this option is that the owner will lose his authority and
skilled employees of his business.
CONCLUSION
From the above discussion it has been concluded that planning is important for an
organisation because it help in determining goals, objectives, future events as well as risk for
company to identify their future opportunities. If there is a business firm who is willing to launch
their business within different market area then it is important for them to conduct PESTEL
because it help in analysing factors that may affect business. For making the expansion plan
successful the owners have to prepare business plan which involve insider information of vision,
mission, objectives and financial information. It will help to attract investors. An organisation
should also make exit or succession plans to deal any future event that may result negatively.
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REFRENCES
Books and Journal
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