Planning for Growth

PLANNING FOR
GROWTH

TABLE OF CONTENTS

INTRODUCTION
Planning for growth is a strategic business activity which helps the business owner in
order to make plans and track their original growth as it allows the business to allocate their
limited resources and it also helps in adapting the changes in the industry. Planning bring
changes in the business environment and it is also very important for making a business plan. It
put emphasis on the business goals and detailed information about the company (Biddle and
Taylor, 2018). Planning refers to the development of strategies and plans which helps in
addressing the uncertainties. It is a process which helps in defining the objectives and developing
the course of action. In this context, small and medium business enterprises are those companies
who have limited number of employees and share less market. Small business are the concept of
sole trading, start-ups or just for the survival and many more. There aim is to survive in the
market with the proper strategies and initiatives. Usually, these companies are considered as a
small business who have 500 or less than 500 employees according to the Small Business
Administration (SBA). In this report, Ella's Kitchen is considered who makes organic baby and
toddler food and sold in the supermarkets at the international level including UK, China,
Norway, Sweden and many more. This report is going to focus on the various topics such as
Porter's generic model, PESTLE analysis, Ansoff matrix and sources of funding. A business plan
is made for the growth which includes detailed information and strategic objectives and also
provide opinions for the exit plan for business.
TASK 1
P1.
Organisations use strategic plans in order to achieve growth and success which is in the
written document and used in order to communicate goals with the employees (Wynn, 2017). To
gain the competitive advantage, Ella's Kitchen need to consider various strategic models which
helps in determining the profitability of company in the sustainable environment. In order to
analyse the competitive advantages, Porter's generic model and PESTLE analysis are applied
which is discussed as under:
Porter's Generic Model: It is concerned with the business activities and also describe that they
are narrow or broad. Competitive advantages are owned by business over competitors by

offering various benefits and services at low prices to customers (Kouba, 2017). When company
applies these strategies in product development then this results in three generic strategies: Cost Leadership: This strategy depicts that being a leader in the business environment by
fluctuating the cost and because of this firm will become the lowest producer. In this
context, company target broad market and also offer lowest price which helps them in
becoming the leader of market (Denton, Forsyth and MacLennan, 2017). For this,
company keeps its cost low as much as possible and make sure that they will acquire
large market within the average prices. Ella's Kitchen can use this strategy by cutting
down its production cost as it helps them in acquiring the market. There are many ways
by which company can adopt this strategy such as optimum outsourcing of goods,
produce innovative products at low cost and many more. Differentiation Strategy: This strategy allows firm to be different and unique by making
attractive and different products in comparison to its competitors. In order to achieve
success by using this strategy requires good creativity, by doing research of market
segment and ability to deliver high quality products. Uniqueness allows firm to change its
premium pricing for their innovative ideas and company can develop its customer base as
customers does not shift to substitute products easily. The risk is associated with this
strategy is that business environment is dynamic so the taste and preferences of the
customers changes frequently. Therefore, company need to control its actions in
production process.
 Focus strategy: This strategy falls in the narrow segment and has two main variants cost
focus and differentiation focus. Company who uses this strategy enjoy large base of
customer loyalty and this can discourage their competitors (Sarin, 2019). This strategy
focus on dividing the market into different sections. Ella's Kitchen need to decide that
which focus strategy they will allow in order to gain the competitive advantage for
growth. If company adopts focus strategy then they have high customer base and loyalty.
By this, company will get success as they build broad range of product development
strength in narrow segment. There is a risk in focus strategy that the company is
competing with the better companies who is providing good quality products and services
in targeted segment.

PESTLE Analysis: This framework is used to identify the external forces which are present in
the business environment. This analysis is used in order to analyse or research about the market
conditions and it is beneficial for any organisation who want to enter in the new market or start a
new business which helps in achieving the success (Zhou and et. al., 2017). Ella's Kitchen use
this framework in order to analyse the external forces before entering into the new market or
launching a new product. Various factors are mentioned as under: Political: This factor determines the government policy which impact the economy of
country. Different policies such as taxation policy, monetary policy, trade policies,
political stability etc. impact company and its policies (Albert, 2017). If new policy
introduces in the business and government is not stable then the revenues of the Ella's
Kitchen may get affect. Economical: This factor affects the economical state and performance of the company
which impacts organisation and its profitability. Analysis of this factor before expansion
of business gives company advantage over competitors. Economic condition of UK is
very strong so Ella's Kitchen does not have threat in expansion and will not affect buying
power of customers. Social: Company need to analyse the social factors before expanding its business into
new market, identify rising trends, culture, trend, values etc. This can be done by
conducting research and development activity. Ella's Kitchen need to determine demand
of products and buying trends of the segment. Before expanding business into new
market company need to develop various strategies to get success. Technological: This factor concerned with the technological aspects such as innovation
and development, R&D activities, awareness of technology etc. which impact business
and its operations (Perloff and Wingo, 2019). Ella's Kitchen need to determine the
technological aspects before entering into new market and launch its products according
to according to the innovative technology. Legal: In this factor, company need to understand what is legally allowed in their
operating territory. It is concerned with the laws which company should know and follow
before entering into a market. Government of UK has formed various laws which should
be followed by Ella's Kitchen and company need to make sure that they formulates under
these laws.

 Environmental: This factor is concerned with the surrounding environment, ecological
aspects, and various environment protection acts that can impact business (Baschat,
2018). Ella's Kitchen is concerned with the environmental protection act and will create
positive image in the eyes of government and customers which creates opportunity for
company to grow.
P2.
This model helps the company to identify the suitable market for companies to launch its
products. It is implemented by various companies to evaluate different market segments to
launch their products. This matrix includes four strategies which is adopted by Ella's Kitchen to
introduce its products in the market. Various strategies are discussed below: Market Penetration: This Strategy describes sale of existing products and services into
existing market. It creates opportunities to create profit by getting more consumers in the
existent market segment. This strategy has its saturation point and after that new
strategies must be adopted in order to get success or grow in the market. So, Ella's
Kitchen need to gain growth strategies to improve its market share by focusing on quality
of its products (Ansoff Matrix, 2019). Market Development: In this strategy, existing product launches into the new market. It
includes the happiness of acquiring new market or geographical areas. When a company
is willing to target various customers in different market segments this strategy will help
to attract them (Ansoff Matrix, 2019). This strategy conducts SWOT and PESTLE
analysis to determine opportunities and threats of different market. Ella's Kitchen need to
target that area in which it is not currently operating for growth. Product Development: By this strategy, sale of new products are done in existing
market. This strategy helps company to grow faster because organisation already have
knowledge of customers taste and requirements. This can save the cost of research and
promotion if company has good image in the market. Ella's Kitchen have good reputation
in the market and has loyal customer base which help company to launch new product in
the market. Diversification: This strategy is very risky from the four strategies as in this product as
well as market both are new which means launching of new product into new market
segment. It is costly as it involves market research and examining the current buying

power of customers before launching a product into market. If the product can attract the
customers it will help in growth of company (Ansoff Matrix, 2019). Ella's Kitchen can
adopt this strategy because after doing research and PESTLE analysis company need to
introduce new product to attain new market segment and expand its business.
Brief Analysis: From the above discussed strategies, market development strategy is adopted by
Ella's Kitchen because by this company can introduce its existing products into new markets and
can occupy new segment. Ansoff model helps in determining the best strategy company could
adopt. The complete analysis involves PESTLE analysis, Porter's generic strategies model and
Ansoff's matrix helps the company to determine and understand the customers needs and use of
promotional tools to gain competitive advantage over market. But there is risk is associated with
every market strategy as it requires huge capital investment to launch its product into new market
segment. To minimise risk, company need to do market research which includes customers taste
and preferences. Business environment is dynamic in nature and customers preferences will
change according to trends so company need to do continuous research to get success in the
market and these researches will provide organisation to launch its product into new market
segment.
TASK 2
P3.
Money is a resource which is essential for all type of businesses to flourish and perform
their activities efficiently. Funds belongs to very basic need of every organisation and which is
required by entities in order to conduct their transactions (Sources of Finance, 2019). Various
businesses acquire funds from several different sources, which are potential enough. These
sources are classified into two broad categories internal and external.
Internal Sources refers to those funds which the owner of the business raised from the
company itself or from other related internal party. On the initial stages of business capital and
funds invested in it are mostly internal, brought in by the owner or managers themselves.
Different methods raising funds are personal capital, retained earnings, sale of capital asset etc.,
these sources are used by company on initial level of their business (Park and LaFrombois,
2019). If organisations operations are large scale then internal capital is not enough for them,
external capitals are required by the company.

External Sources of funds are those methods which organisations use to raise money
from the outside. Third party gets involved in business operations as they are providing their
hard earn money to someone they expect returns from it (Wu, 2018). For raising capital
externally entity has to perform some actions like investigating the third party, searching for all
potential risk involved, analysing all benefits associated along with drawbacks and after all this
selecting the best available sources to raise capital.
For Ella's Kitchen preferred sources for raising capital and funding for the business are
external sources. Some of the potential sources are suggested below for Ella's Kitchen along with
their specific benefits and drawbacks.
Equity shares are basically giving away ownership rights to other, it is a very common
source of finance used by companies. It is governed by lots of legislations as many shareholders
are involved in it. Benefit- As laws, rules and regulation involved, issuing shares is very safe process for
both the company and the shareholders.
 Drawback- This type of fund raising practice is very costly and time consuming,
organisations have to invest lot of money and time in it. Also, its not an easy method of
raising capital as many legal formalities are involved.
Bank loans are long and short term source of finance, which involves rigorous analysis
and evaluation of the entity, which is performed by the banks (Kinossian, 2018). This is also a
very secured form of funding as some assets are kept under mortgage by the banks for their
safety. Benefit- Bank loans are safe and easy to avail, organisations just have to provide proper
documents and complete all the formalities on time.
 Drawback- Sometimes banks takes lot of time in company analysis, which results in
delay of funds. Therefore, to avoid this company may choose other sources of funds.
Trade credit means taking credit from creditors, sometimes suppliers or other creditors of
business give some amount or makes some sales to entity on credit. They allow the company to
make payments in future but that credit period is decided by the creditors. Benefits- Good relationships are induced and maintained by both the debtor and creditor,
which bring additional support and advantages to both the parties.

 Drawbacks- The only drawback associated with this type of source is its not safe. The
credit receiver can back off from payments at any time as there is not legal obligations on
them (Mazza, 2017).
These are some of the external sources which are suggested to Ella's Kitchen managers
for raising funds for the business and its operations. These finances will enhance the
performance of business and help in smooth functioning of company.
TASK 3
P4.
A business plan is a document which describes information about company and its
shareholders and investors. It help businesses to form strategies for future and policies which
reduces risk in various operational activities (Tian, Ge and Li, 2017). Ella's Kitchen is a food
company who produce organic baby and toddler food in UK so their management should make
proper business plan to achieve its organisational objectives and before expanding its business.
Company Overview: It is a private limited company incorporated in 2006 by Paul
Lindley who provide products for the babies by considering their health and make organic baby
food and also provide its facilities in various places including UK, China, Norway, Denmark,
Sweden, Ireland and many more.
Purpose of Business: Ella's Kitchen is dealing in Baby food products and provide
organic food and want to expand its business in new market segment. As a small business or
start-ups its purpose is different from other enterprises.
Vision: Its vision is to provide various products and offer them to the different segment
of the customers and become the leader of baby food producer.
Mission: Its mission is to determine the requirement of customers and provide them
products accordant to their requirements so it will aid to create affirmative market representation
and attract different customers from different industry place. Ella's Kitchen always innovate new
products which helps them to acquire new market.
Objectives: Its objective is to with success establish its business concern in various other
countries by creating a brand worth over there. Ella's Kitchen want to acquire market share of
UK and satisfy the customers by supply products accordant to their needs and requirements. This
can be achieved by proper fixture of business act and control over executing process of business.

Promotional Strategies: Company will make plan according to the market, customers,
their preferences and the above discussed model of market development. In this strategy
company will enter into new market with existing products (Medeiros, 2017). Company can use
it brand image while promoting its products into the market as its reputation is strength for it.
According to the various situational analysis as described above company can expand its
business in the various regions of UK.
The government of UK is politically stable which helps in expansion of business and
foster its operations. There are some laws relating to the working conditions and employment
which protect their rights and prevent them from exploitation. Company need to follow these
regulations in order to operate and run successfully as they are abided by law.
Financial Information: Success of business act are totally depends on the planning and
control over business activity of company. Funding is important for the business as it helps in the
operations (Deng, Fu and Sun, 2018). Ella's Kitchen need funds to execute all the act and funds
that can be create from inner as well as outside sources of funds. While planning to expand the
business, management of Ella's Kitchen have to prepare budget plan which will supply of those
Fields where funds are necessitate and how the finances are going are to be used. This budget
will show the expenses which may occur while expansion of business such as promotion, new
technology etc.
Particulars 31/12/17 (£) 31/12/18 (£) 31/12/19 (£)
Implementing technology cost 16000 - 9000
Promotional expense 12000 7000 7000
Advertisement expense 6000 8000 4500
Catalogues 12000 4000 6000
Training charges 1500 7000 4000
Total Cost 47500 26000 30500

Cash Flow Statement: This statement carries the financial information of the company
from beginning to ending year or previous years. It is a numerically detailed tool by which cash
inflow and outflow will be measured (Wilson, 2019).
TASK 4
P5.
Exit Options: This option is used by companies when they want to discontinue their business,
close or hand over the powers and authorities to other person. These options helps the owner to
exit their business. If a company is in loss from a longer period of time then it would be
suggested to company to end or wind up its organisation. Following are the options of exiting the
firm: Winding up: It is the process of dissolving a company in which owner sale out all the
possession, pay off all the individual and administer leftover funds and possession to the
stockholder and investors of the organisation. If Ella's Kitchen does not get success in its
expansion then this option can be adoptive by the organisation.
Advantages: Hire purchase and lease agreements will gets terminated at the date of
winding up of the company. If company is suffering from any legal action then it will stop at the

time of winding up. The proprietor will be free from the liability and the institution will not have
to aspect more losing.
Disadvantages: Owner will lose the control over assets and management as liquidator
will undertake the entire winding up process. All the assets of the company will sold and the
organisation will lose effectual manpower of the organisation. Selling in open market: It is process of selling its business globally or in the open market
and the enterprise will be buy by third party external of the enterprise. In this option, the
business trading operations and the other act will stay same but the proprietor of the
enterprise will get transformed
Advantages: This option will not hurt the enterprise image and act because the purchase
will purchase a running enterprise, that will not impact the operations.
Disadvantages: In this option the owner will lose its authorization and accomplished
employees of the business. This will affect the company's staff morale and values and can also
demotivate them.
CONCLUSION
By the above information it is concluded that planning is the procedure of deciding goals,
goals, future events and uncertainties for the organisation to identify chances that may help to
reach the goals. If organisation wants to establish its business concern in various market places
then it can organise PESTLE to examine the factors that may impact its enterprise. Ansoff's
model can help to choose best strategy for the marketplace. In order to expand the business the
proprietor should set up business plan that consider internal information such as vision, mission,
objectives, financial information and cash flow statement. Therefore, this will help in attracting
the investors. An administration should also have exit options to deal with any future uncertainty
that can affect business.

REFERENCES
Books and Journals

Online
Ansoff Matrix. 2019. [Online] Available through
<https://corporatefinanceinstitute.com/resources/knowledge/strategy/ansoff-matrix/>./
Sources of Finance. 2019. [Online] Available through
<https://efinancemanagement.com/sources-of-finance>./