Planning for Growth

This document discusses the importance of growth planning in business, key business growth drivers, analyzing growth opportunities with Ansoff Matrix, potential sources of funding, and designing a business plan for growth. It also provides recommendations for Prufrock Cafe to adopt product development strategy and launch a new green coffee product to increase customer base and compete in the market.

PLANNING FOR GROWTH

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P 1. Key Business Growth Drivers..............................................................................................1
P 2. Analysing Growth Opportunities With Ansoff Matrix.........................................................3
LO 2.................................................................................................................................................5
P3 Potential Sources of Funding..................................................................................................5
LO 3.................................................................................................................................................7
P4 Design Business Plan for Growth...........................................................................................7
LO 4.................................................................................................................................................9
P5 Assess Exit or Success Options..............................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Growth planning is a business strategical action which helps business owners to evaluate
the economic growth and increase productivity. Planning also helps to optimally utilize all the
available resources in the operation of business activities which helps to grow. Growth planning
also ensures the market trends which will help to implement business transition to increase the
efficiency of the products and services. This includes market analysis of external factors of
business environment helps to understand the competitor’s strategical policies. This report has a
brief description of business opportunities which will help Prufrock Cafe. The study will also
help to evaluate all the sources of funding for the cafe to launch its new coffee products in
market. In Addition, a business plan will also be designed in this report to understand all the
market strategies which can grow business with the opportunities available.
LO 1
P 1. Key Business Growth Drivers
Business organization needs to analyse the external factors in the market to formulate
effective strategies as it also helps to determine opportunities available. Prufrock Cafe analysed
business growth drivers which helps to increase the efficiency in market and support growth in
market effectively. This also help to ensure competitor's marketing strategies.
Vertical Integration
Vertical integration is the process of developing production stages and different supply
change in business which helps to successfully integrate with market factors and increase the
efficiency of the company in market. It is effective business structure which is formulated by
business to increase the value of products and services and reduce cost to gain better profit
margins and attain better opportunities for growth effectively. Prufrock cafe has the opportunity
to vertically integrate with all the value chain factors, like suppliers, distribution channels,
marketing, retailing to have better control over business financial and improve quality of
products and services according to customer's needs and wants and to increase customer base and
to achieve core competency in market effectively.
Forward Integration
Forward integration is the process when high value Chain business move forward in
order to expand its business and integrate with lower value chain businesses. Like manufacturing
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business has the opportunity to expand its business by integrating its business to wholesale or
distributors to reduce middleman in the business and increase profit margins this also gives a
better opportunity to business to control the function effectively.
Backward Integration
It is also called upstream integration when a business vertically integrates with higher
supply chain businesses to expand its business in market. For example, Prufrock has the
opportunity integrate backwards as it is currently a retail coffee shop and it can become
distributors of coffee beans and other products to increase the profitability and grow effectively.
Balanced Integration
This is the types of integration in which the business has the opportunity to grow
forwards and backwards by collaborating with different business and increase market share
effectively. Prufrock can also merge with other cafe to facilitate this type of integration and
support growth effectively.
Advantages
 This helps the company to avoid the competition from supply chain and also increase the
efficiency of the company to become more profitable in the market.
 This also reduces the bargaining power of suppliers and customers as it increases the
uniqueness of products and services to gain better growth.
 Vertical integration also increase the sales and reduce per article cost to develop its
products and invest in innovation of new products to attract more customers effectively.
 By vertical integration company also develop healthy relation with end consumers which
help businesses to understand needs and wants to customers to reduce extra wastage of
resources and provide specific products.
Disadvantages
 Vertical Integration is very ineffective for small businesses as it requires large capital to
operate. This also increase the expenses of companies.
 Vertical integration method is inefficient as the business can not focus on one supply
chain
Key drivers for Growth
Customers
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These are key driver which help to increase the growth of any businesses they are the end
consumers of all the services and products and are willing to pay to satisfy their needs and wants.
Technology
Information technology is a leading factors which helps business to analyse growth
opportunists and formulate effective strategies to achieve those objectives in the available
resources.
Assets
Asset includes all the resources which increases the economic activity of the business and
support business operations to achieve objectives and grow effectively. Human resources are
also very essential assets of businesses.
Funding and Profitability
Capital is fundamental requirement of any business to increase its operation and grow in
market. Funding also helps to develop new products and improve supply chain efficiency
effectively.
Risk Management
After having all the factors available in the business it is very important for business to
increase the efficiency to manage risk and increase the opportunities in market effectively.
P 2. Analysing Growth Opportunities With Ansoff Matrix
Ansoff Matrix is the Planning Grid which help to choose from different strategies which
are the best suitable for expanding the business in the market (Burke, 2017). Prufrock have to
analyse the opportunities which helps to grow its business and also increase its position to
compete in the market. There are four strategies which are determined by Prufrock Cafe which
can be useful to increase the growth of business and attract more customers.
Market Penetration
Market Penetration Is one of expansion strategy which focuses on the existing product in
the exiting market. In this strategy business need to increase the value of products and services
with the help of lowering the prices or increasing quality which help the customers to increase
their satisfaction level and become loyal to the business. Sales is also increased with the help of
promotional activities which help to regulate the products and services in market faster which
will reach the customers more effectively.
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Advantages
This strategy also helps to increase the efficiency of activities like distribution channel
and offers or discounts to loyal customers. This increases customer base to increase sales and
support the growth of business organization.
Disadvantages
This strategy restricts business to grow and expand.
Product Development
Product Develop strategy focuses on develop new products in existing markets to
increase sales and promote growth of business firm (Buehring and Liedtka, 2018). This is done
with the help of external analysis of factors present in business environment to understand
market trends and create new product according to customer's wants and needs to increase sales
and profitability of business firm.. Collaboration with competitors to develop new products also
provides opportunity increase customer base. Partnerships also helps to increase the information
about all the strategies which both companies are using to improve the quality of new products
and services to attract customers.
Advantages
This strategy helps to provide product differentiation for customers which helps business
to retain them
Disadvantages
Moderate risk due to development of new products as it increase uncertainness of growth
in market.
Market Development
Market development is a strategical planning which helps to expand business in new
market with existing products (Buchan and et.al., 2019). But if the market does not have any
competitors it will increase the profitability to maximum and increase growth.
Advantages
This strategy also provides domestic and international expansion of business with
existing products to promote the growth
Disadvantages
This strategy has a higher risk in success as new market will have different market factors
which can decrease the efficiency with many competitors
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Diversification
Diversification is the innovative growth planning of business which focuses on
development of new products in new markets to expand business.. With the help of resources
which are already available in new market business can decrease the cost of production and
lower the prices for customers to achieve stability and increase opportunities to grow.
Advantages
This strategy has very potential as helps to increase the customers base with innovative
products which help to increase their satisfaction and also make them loyal to company
Disadvantages
High capital investment increases the high risk for business to increase the growth
opportunities.
Recommendation
Prufrock have to adopt product development strategy to grow business and increase the
opportunities. Business have to develop new green coffee for customers. As according to
customers behavioural patterns, it was evaluated that they are mire health conscious and avoid
unhealthy foods and drinks (Abor, 2017). With the help of Green coffee Prufrock and Increase
customer base and grow business to compete in market and achieve core competency. This
strategy will help Prufrock to increase profit margins and increase the quality of services with
new technologies which increases customer satisfaction and customer loyalty of Cafe.
LO 2
P3 Potential Sources of Funding
Funding is a simple act which takes place in organization for provision of resources
which are required to fulfil needs, projects and programs which take place. This is in a form of
money and this process is known as funding. Options which business has for funding are as
follows.
 Venture Capitalist
Investors who give this venture capital so that they cannot just help but give their
personal experience in organization as well to deal with small or starting up in market. Funding
are given to organization when there is high potential for growth for profit or high risks involved
(Onu and et.al., 2019).
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Advantages: There is a sense of guidance which is visible in organization when these
types of funds are found by organization. There is a lot of experience and past knowledge of
market is shared which can help organization to capture market better. Disadvantages:
Company can loss control which is not a good sign for a business which has started up because
they have a better vision and mission for themselves. Direction for organization will change and
clarity will not be present in cafe.
 Personal Saving
Owners put in their personal saving in business so that they can fund themselves and
grow business accordingly. There are a lot of advantages and disadvantage for owner to figure
out before funding is provided to business.
Advantages: There will be full control over business and ownership in business will be
complete. This process can help organization to have a control on excessive spending in business
as well. Disadvantages: Of this funding type is that there will be no personal money for family
or any emergency in the future.
 Debt Financing
Borrowing money and returning it in future is debt funding. In case, business is unable to
pay fund back on time then the lender can acquire the asset to themselves.
Advantages: Is that organization will be able to plan for future better and there will be a
stability in budgeting. Disadvantages: Is that business can be lost if they are unable to pay back
funds on time and that can be bad (O’Donnell, 2017). Strategies and techniques have to be made
in such a manner that business can pay back otherwise they lose control on business completely
and assets can be in danger if fund is not paid.
 Angel Investor
Angel investors provide funds to start-up's or entrepreneurs who need this help. They
take ownership in company as well but there are a lot of challenges which can be faced by the
angels.
Advantages: Is that angels are more experienced and can help the business to grow in
market. For a start-up it is more suitable that they take funds from this source than venture
capital. Disadvantages: Is that they are not very transparent in nature which is difficult for
organizations to find them and contact them. Control is lost by owner in the start-up (Ward,
2016).
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Funding sources for Prufrock Cafe
Most suitable fund source for Prufrock cafe is that they can opt for debt financing
because that will be a safer way of getting amount which is required. Control on business will be
in hands of owner and product green coffee is going to be accepted by customers since change of
customers is towards healthy products.
LO 3
P4 Design Business Plan for Growth
Section 1: Executive Summary
The mission of Prufrock cafe is to make the customers have a different take on the coffee
and have a better experience in the products therefore the cafe is improving the experience so
that they can have a better profitability. Product development is being used by Prufrock so that
they can gain the funds they need to expand themselves. Prufrock cafe is starting a new coffee in
business which is green coffee. This is going to be accepted by customers and after a lot of
analysis the cafe wants to launch this product. Targeting the audience is not what the cafe is
doing because customers want to experience different products and this can be a great profit for
the company. It is very important for cafe to launch new product so that they can get competitive
advantage in market which is a very important factor for the Cafe.
Objectives
 To increase sales of new product of Prufrock cafe, green coffee by 10% till the end of
year 2020.
 To enhance consumer experience by 10% in upcoming 5 months.
 To increase the market share by 30% till the end of year 2022. To increase the profitability by 20% till the end of year 2020.
Company Description
Prufrock cafe is situated in London and there are 13 coffee professionals who are helping
the business run in market. The aim of the organization is to provide the customers which
quality, friendly environment and passion in providing the customers with coffee.
Product and Service Description
Services of the cafe is quality which the customers appreciate and are making the
organization have a better customer base for themselves. Green Coffee is getting added in cafe so
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that cafe can make a larger impact on customers because there are a lot of customers who are
shifting towards healthy products. This is why adding this product in cafe is very essential.
Section 2: Business Overview
There is a great advantage with Prufrock cafe because there are a lot of changes which
the cafe is getting from time to time so that they can satisfy the needs and demands of the
customers. The sales of the organization are good because they are targeting for a product which
is consumed by most of the people. The fit of the organization in market is good because of the
target they have in market which is going to be good for the overall functioning of the cafe. The
new trend which has come in market is having green coffee so that customers can take care of
their health and lose weight which is being followed by Prufrock so that the customers can have
the best of experience with this cafe.
Existing competitors in market are not accepting the changes in market so well as
Prufrock which is giving the company an extra advantage for a long run in market. This is going
to be a unique feature for the cafe which can attract more customers and make them their loyal
customers so that they can have a better long run in market and profitable.
Section 3: Market Analysis and Competition
Competition in United Kingdom is huge if Prufrock wants to get a larger base for
themselves in the country (Saito, 2018). It is very important for the cafe to get a new product in
market so that they can get a place for themselves which will make the customers in the cafe
increase. Since the competition in the country is so high therefore it is very important for them to
increase the value for themselves in market. This product is required in the cafe because the
customers are becoming health conscious which is why the cafe will have to get changes in the
cafe according to the expectations of the customers.
Value of the cafe is to provide the customers with the best quality and satisfy the needs of
the customers. Services of the cafe has improved but to get a new product the services will have
to be perfect so that the customers get attracted to the cafe quickly. The long run for the cafe is to
expand them in the country which will make the cafe a better standard for them. The sales in the
company is going to increase because there are a lot of factors which are in favour of the
company and the competitors are very slow with the changes to come in the cafes.
Section 4: Marketing and Sales Plan
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Pricing of the new product which is green coffee has to be kept according to the
customers who are coming in the cafe. Skimming pricing strategy can be used by the cafe to
introduce product. It is after that green coffee makes place for then the prices of the product can
increase as the demand increases for the product.
Promotions will have to be made by the cafe to make the product a success since
promotion will help the cafe to make the customers aware of the new product which is being
introduced by the cafe. Media is the best source that the cafe can use so that they can make the
product reach the customers faster and that will make the product get the right response.
Section 5: Organization and Management
Democratic management style will be used in cafe so that they can make the employees
of the organization motivated and the customers can get the best of services. The employees can
put in their experience and knowledge in the development of the cafe in the country which the
organization will really require at this stage (Johnson and et.al., 2018). This style will help the
organization to get a competitive advantage in market and get a stronger workforce for
themselves. The salary of the employees is increased because the changes have to come in
effectively which is why the workforce has to be motivated. This is a private organization which
is why this can make the most popular cafe in the locality since they are not dependent on
anyone else and the changes can be made easily.
Section 6: Operations
On a delay base the organization will have to update their website so that the customers
can be updated about the changes which have taken place. The services have to be well
maintained and the cleanliness will be maintained as well on a daily operation. The product
which the cafe is coming up with is not going to take a lot of time to be prepared for the
customers which are a great advantage for the cafe. Supplies which are required to make this
product a success is going to be very beneficial for the cafe since it is cost friendly. The staff
which is working in the cafe is skilled and knowledgeable which is why getting the changes in
cafe is not going to be difficult. The services have to be maintained if the cafe wants a long run
in market and that will make the cafe very popular in the locality.
Financial History and Funding
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Prufrock cafe has funded itself by using Debt financing which they are going to continue
using for the future as well because it is very secure and they will not have to give a stake to
anyone else in business.
Section 7: Financial Plan and Projections
The budget for this expansion is going to be 20,400 overalls so that the organization
can make this company expand themselves in the market. Marketing is very important for
the cafe so that they can reach out to the customers faster and update them about the vision
they have for the future.
Start-up expenses Amount (£)
Legal 1500
Promotional material 200
Contractors 600
Insurance 100
Others 200
Total 2600
Start-up assets Amount (£)
Cash required 15000
Start-up inventory 25000
Other current assets 7000
Long term assets 50500
Total assets 97500
Total requirements 100000
Start-up findings Amount (£)
Liabilities 16000
Accounts payable 1500
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Other current 8000
Long term liabilities 60000
Total liabilities 85500
Investors 0
Total start-up findings 85500
It is very important for the cafe that after the new product is launched the organization
will have to reach to a breakeven point so that they can start making profit. There have to be
right decisions to make the company reach their breakeven point so that the company can have a
better functioning for themselves.
Advantages
This is going to be very helpful for the organization because there is going to make the
customers of the café get new products in the market from the café which is going to get the cafe
a competitive advantage. Customers always need something new that is why this is going to
become a major step for the company and this will attract more customers in the market and
make the café get a higher profit margin.
Disadvantages
The disadvantage of this is that there is an investment which is required by the café and
the café has opted for exit strategy which is not a good factor for the company on the portfolio.
This is going to make the competitors have a higher advantage before the café and the market
share of the café is going to be limited.
LO 4
P5 Assess Exit or Success Options
There are chances that the organization does not make profit in the market therefore they
have to have options in front of them so that they can make a profit out of the loss could face.
 Employee buy out
By using this method, the employees of the organization will be more motivated to work
since they have chances of becoming the owner of the organization (Heidrich and Bridgens,
2019).
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Advantages: Employees of the organization will be motivated and they will put in all
their hard work because they know that there are chances that they can become the owners of the
company. Disadvantages: The right skills in the employees will be missing which will make the
organization become unsuccessful.
 Liquidation
Selling the business to a company which is interested in buying it. For small businesses
this is a feasible option since they can sell the asset and get profit from it.
Advantages: There are no more Debts which the organization has to face after the
business is sold. The decisions will be taken by the new owner and the employees will get a
different owner in the company. Disadvantages: The asset of the company will be sold.
Directors loan account has to be paid off which can turn out to be a legal matter for the
organization.
 Public offering
This is done to raise the capital of the company by giving them equal share in the
organization.
Advantages: Capital of the business will increase which can be used for expansion or
any other use in market. Disadvantages: Control over the company will be lower of the director
in the organization. There has to be transparency in the organization with the outside
shareholders.
 Owner’s Exit
The owner leaves the ownership of the company and departs from the organization. This is
another exit plan which can be done for the café but there are some disadvantages and
advantages which are as follows.
Advantages: The advantage for the café is that there will be more ideas and innovations
which can come in the café and that is going to be very helpful for the café to grow in the
market. Disadvantages: This is going to be a great disadvantage for the company because the
decision making of the business will lose and the organization will lose their unique feature and
also the clarity in the café.
 Exit
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There is going to be no trading and there will no producing a particular product in the market
which is not good for the café. There are a lot of disadvantages for the café which are going to be
as follows.
Advantages: The advantage is that there is going to be a loyalty of the customers with the
same products of the café and no innovations will be done by the owner and the café in the
market. Disadvantages: There will be no new product for the customers which is going to be
very bad for the company which is not a good factor for the organization.
 Merging
When a big company buys the organization is merging. This is a win-win situation for the
bigger industries as well as the small business.
Advantages: More research and development can take place in the organization if there
is merging of the cafe. Even the resources can be saved by the industry and getting across
countries is also better (Mansoori and Lackéus, 2019). Disadvantages: Different company
backgrounds will find it very difficult to merge together and there will be lesser customer
satisfaction since there will be lesser options for the customers.
Exit strategy for Prufrock Cafe
Prufrock cafe is using the employee buyout exit strategy for the cafe to function better.
Control will still be in the owner’s hands because the employees will not have the right methods
to direct the other employees. Through this strategy Prufrock cafe is making the employees be
motivated and it will help the cafe to function better.
CONCLUSION
From the above report it can be concluded that market analysis is very essential to grow
business and determine all the opportunities present in the market. It also helped to understand
all external factors of business environment to identify threats of competition. This report also
evaluated that growth of business organization could be effective with proper funding from
market. This also helped to understand the market structure and customer's behavioural pattern to
maintain the consistency in market and achieve competency to lead market and increase
customer loyalty.
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