Planning for Growth - Analysis of Growth Opportunities for Prufrock Coffee

This report analyses the potential of the growth of Prufrock Coffee. It covers key considerations for evaluating growth opportunities, Ansoff's growth vector matrix, potential sources of funding, and exit or succession options for a small business.

Planning for Growth

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
P1 Analyse key considerations for evaluating growth opportunities and justify these
considerations..............................................................................................................................3
P2 -Evaluating the opportunities for growth by applying Ansoff’s growth vector matrix..........5
M1 - The options for growth using a range of analytical frameworks to demonstrate the
understanding of competitive advantage within an organisational context.................................6
D1 - Critically evaluate specific options and pathways for growth, taking into account the risks
of each option and how they can be mitigated.............................................................................6
P3 - Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source............................................................................................................7
M2 - Evaluating potential sources of funding and justification for the adoption of an
appropriate source of funding for Prufrock coffee......................................................................8
D2 Evaluating potential sources of funding with justified argument for the adoption of a
particular source or combination of sources................................................................................9
P4 - A business plan for growth that includes financial information and strategic objectives for
scaling up a business....................................................................................................................9
M3 – A detailed business plan for growth and securing investment, setting out strategic
objectives, strategies and appropriate frameworks for achieving objectives.............................10
D3 - A coherent and in-depth business plan that demonstrates knowledge and understanding of
how to formulate, apply and achieve business objectives successfully.....................................11
P5 – Assessing exit or succession options for a small businesses explaining benefits and
drawbacks of each option...........................................................................................................11
M4 – Evaluating exit or succession options for a small business comparing and contrasting the
options and making valid recommendations..............................................................................11
D4 - Critical evaluation of the exit or succession options for a small business and deciding an
appropriate course of action with justified recommendations to support implementation........12
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Planning is a vital process in every business. A business plan outlines the objectives of the
business and guides us through each stage of business to achieve short-term and long-term goals.
Having a good business plan helps people in the smooth conduct of business. A business plan
allows organisations to review their performances. A business plan covers various factors of the
business like marketing aims and strategies, financial options and succession strategies.
Successful companies regularly access their performance according to the plan to achieve their
targets effectively and efficiently (Torrellas Darvas, 2020). In this report, we will analyse the
potential of the growth of Prufrock Coffee. It is a London-based coffee shop that is serving great
coffee and food on Leather Lane for over a decade.
MAIN BODY
P1 Analyze key considerations for evaluating growth opportunities and justify these
considerations.
Coffee is one of the most liked beverages in the world and it is consumed all over the world. The
UK is the largest consumer of coffee in Europe. To evaluate the growth opportunities in this
market Porter’s five forces model can be used.
Competition in the market – The competition in the UK coffee industry is high because few
big players are dominating this industry. There are also so many small scale coffee businesses
that create competition in the market. Starbucks and Costa Coffee are dominating the coffee
industry in the UK and they will be the toughest competitors of Prufrock coffee. In addition,
there are various small coffee shops concentrated in different regions. These shops also create
competition in their specific regions (Baumann, Cherry and Chu, 2019).
Potential of New Entrants – Barriers to entering the coffee industry have increased in past. That
is why the potential threat of new entrants in the industry has gone down. Setting up a small
coffee shop does not require a big capital investment that is why small specialised coffee shops
are prevalent in the UK. And these small businesses possess the potential to expand their
business and compete within the industry. Big players in the industry use their economies of
scale advantage to minimise this threat.

Substitute Product – The threat of substitution of products is moderate in the industry. Some
big beverage companies offer caffeinated soft drinks to substitute coffee. Tea is also one of the
major substitutes for coffee. Prufrock coffee constantly experiments with new ingredients and
techniques to give customers different food and coffee products which helps them to stand out in
the market.
Bargaining Power of Customers – The bargaining power of customers is high in the coffee
industry because there are so many competitors who are offering almost similar products and
services. Switching cost for customers is also low in this industry. The company should create a
loyal customer base to tackle this threat.
Bargaining Power of Suppliers – The bargaining power of suppliers is low in this industry,
there are many suppliers available in the market. Many companies produce their coffee beans
which is the main ingredient of coffee. Prufrock uses sustainably sourced ingredients from
sustainable suppliers.
SWOT analysis is another framework that can help the company to identify internal and external
factors, as well as current and future market opportunities and potentials.
Strengths
 The team of Prufrock coffee is highly
motivated and full of enthusiasm.
 The company has a diverse business
they are not just a cafe the company
also sells coffee equipment. The firm
also runs a coffee school that provides
professional coffee-related courses.
 The company is serving food and
drinks for more than 10 years and has a
loyal customer base
Weaknesses
 The company is only operating with
only one outlet that’s why they have
limited market share and limited sales
area coverage.
 Weak financial reserve, if the company
wants to expand their business they
need to raise capital from the market.
Opportunities
 Prufrock coffee has an experienced
team they should expand their business
and set up more outlets.
 Demand for home service delivery has
Threats
 Franchise of some big brands can be a
threat to the company.
 Competitors in the industry are quite
aggressive. They have economies of

increased significantly in past the
company should start delivering their
food products and beverages
(Nikolaeva, 2018).
scale and that’s why they can enjoy
more margin. To compete with big
players Prufrock coffee should work
with low margins initially.
VRIO analysis is a framework that helps businesses to understand the advantages and resources
that gives them a competitive advantage in the industry. Prufrock coffee can apply this
framework to understand how they can gain a competitive advantage and maximise their
potential.
Valuable – Prufrock coffee's highly experienced and motivated team is the resource that is very
valuable for them. Also, they have a diverse business which helps them to maintain their
profitability even if one business is not doing well. These resource helps them to take a
competitive advantage over their competitors.
Rare – The company offer coffees with special flavours and quality. These special flavours are
the result of their regular experiments with ingredients, this resource is rare to find. Their loyal
customer base is also rare because in this industry finding loyal customers is hard.
Imitable - There products are hard to imitate because they have made these products with lots
of hard work and experience. The company should patent some of their products so that other
cannot copy their products.
Organised – The company has a organised management system and they have a skilful
workforce who perform set processes to provide maximum customer satisfaction.
P2 -Evaluating the opportunities for growth by applying Ansoff’s growth vector matrix.
Ansoff Matrix is a framework which help management to identify growth opportunities for
making better marketing strategies. Prufrock coffee can use this framework. This matrix is
developed by Igor Ansoff and it is also known as “Product Market Matrix”.
Prufrock coffee can use this framework to develop their business in existing or new market by
identifying business opportunities.

Market Penetration – This is the least risky strategy, It refers to selling existing product in
existing market. This strategy can help the company to increase their market share and sales. By
increasing the investment on marketing and advertising can help company to implement this
strategy. Reducing the prices of products and services also help companies to use market
penetration strategies. The company can also introduce a coffee subscription plan for their daily
customers to increase sales and profitability.
Product Development – This strategy suggest companies to increase there product portfolio for
existing market. The company have developed so many different flavours and drinks with their
constant experiments. The company can invest in research and development to investigate
market needs and consumer desires, then they can introduce some new products to utilise market
opportunities (Matricano, 2020). A company should always keep on using this strategy so that
they can gain a competitive advantage in market.
Market Development - Selling current products in new markets or regions can help Prufrock
coffee to develop their market. This strategy will be the best fit for the company, they can take
advantage of their best quality products by taking them to a new domestic market. This strategy
can be a risky strategy because it requires a good amount of capital to start new outlets.
Developing new markets for business help companies to grow by approaching new customers in
a planned manner. For using this strategy effectively better market segmentation and customer
targeting strategies are important.
Diversification –It refers to selling new products in new markets, the company is using related
diversification strategy very well. They have a diverse business which is related to coffee
industry. The company sell coffee equipment’s and different coffee related books and
merchandise. Also they run a training centre where they provide professional courses for
students who wants to develop their skills and knowledge in coffee industry.
M1 - The options for growth using a range of analytical frameworks to demonstrate the
understanding of competitive advantage within an organisational context.
By using various different frameworks like, SWOT, VRIO and Porter's five forces the company
can analyse growth opportunities in the market and how they can gain a competitive advantage
in the industry. With above discussion, it is clear that experience in the industry and a team of
highly enthusiastic and motivated people is the strength of the company. That's why the company

can use market development strategy to expend their business and grow as an organisation.
Company's loyal customer base has always provided them a competitive advantage in market. By
increasing their product portfolio, the company can take advantage of their customer’s base.
D1 - Critically evaluate specific options and pathways for growth, taking into account the risks
of each option and how they can be mitigated.
The firm have different options to grow, they can use market penetration strategy which is the
least risky strategy. Prufrock coffee can try to penetrate their existing market with their existing
products. The risk with this strategy is, it might not work with markets where prices are already
set. Other strategy that the company can use is market development strategy (Bacon and Tate,
2019). They can enter into new market or new regions with their existing products. This allow
companies to increase their market share and profitability. This strategy need big investments
because the firm needs to open new outlets. To mitigate the risk of failing in this strategy the
company need to make an effective plan before implementation of strategy.
P3 - Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source.
Assessing potential sources of funding is important for every business. Generating fund is a vital
factor to expend a business and for small and medium businesses it is even more important and
hard to raise funds because they usually lack capital reserves. Prufrock coffee needs to find the
best way to raise funds for the growth of their business. The potential sources of funding
available for them are mentioned below -
Bank Loans – In bank loans, banks lend money to the borrower for a certain time period. Banks
usually don't like to take risks and that's why they prefer to finance existing a successful business
(De Bernardi and Azucar, 2020). The company can use bank loans to raise funds because they
are risk free and banks usually charge a fair interest rate on loans. Also there are various
government schemes available for small and medium businesses by which they can get loans
with minimum interests.
Crowdfunding - This source of funding is becoming popular these days. There are several
crowdfunding websites which bring businesses and investors together. With this source of
funding businesses can raise amount of capital from large number of investors. Crowdfunding

allow businesses to showcase their idea and enthusiasm in the fundraiser description, if the
investors can connect with the vision and plan of businesses the fundraiser can be very
successful.
Angel and Venture Finance – Angel investors are the persons who invest in firm in exchange
of some equity in the business. Entrepreneurs usually look for raise fund from these investors
because they bring their expertise and market knowledge in the business. These investors invest
in businesses if they see a potential of growth (Casagrande, 2020). These investors can help
businesses in many ways because they possess skills and knowledge of market.
Peer to Peer Landing – This source includes obtaining funds from individuals. There are
websites which connects peoples who want loans with peoples who can lend money. This
process is fast and persons with low credit scores can also take loans with this method.
Source of Funding Advantages Disadvantages
Bank Loans Banks loans are safe and
provide loans with low interest
rates. Lenders do not share
ownership of their business
with banks.
Taking a loans from bank can
be complicated and time
consuming at times. Banks
need some form of collateral
and they only finance if they
see their money will be safe.
Crowdfunding Crowdfunding is a fast way to
raise fund. If the fundraiser
perform well this can grab the
attention of media which can
be valuable for marketing
aspect.
Failed fundraisers can face
damage in reputation of
business. If fundraiser do not
achieve target any pledged
money return to customers.
Angel Investors Raising fund from angel
investors include less risks and
these investors are experts and
can provide there valuable
inputs in business.
Borrowers lose control over
their business if they use this
source of funding. It is not
easy to find investors who are
interested in your business.
Peer to Peer Landing It is an online process hence, it P2P websites pass bad debts to

is fast and convenient. People
with low credit score can take
loans with this method.
debt collection agencies if the
borrower fails to repay the
loan. This can take borrower to
the court.
M2 - Evaluating potential sources of funding and justification for the adoption of an appropriate
source of funding for Prufrock coffee.
Prufrock coffee need to analyse various sources of funding to choose the best suitable way for
them. Bank loans can be the best way for raising funds in they want to take benefits of the
government schemes and bank loans will also allow them to have full control on their business.
Another source of raising fund that the company can consider is crowdfunding because it can
help them to test public reaction on their plan and idea. Crowdfunding brings many investors in
the business who invest small amounts, these investors can become loyal customers of the
business (Xu, Song and Bi, 2021). If the firm is willing to share their equity with someone else,
then they can look for a angel investor for their business.
D2 Evaluating potential sources of funding with justified argument for the adoption of a
particular source or combination of sources.
After analysis of various sources of funds, the company can easily identify the best source that
they can use to raise fund. The company can adopt a combination of sources to raise funds. For
expending their business and market development they need a big amount of investment, they
can raise these funds from bank loans (Lämmle, 2020). The company is doing well in the market
from a decade so they have a goodwill in market, hence they can get a loan from bank easily. For
new product development the firm can raise capital through crowdfunding. Crowdfunding has
some advantages, if the fundraiser gets attention of media the company can create brand
awareness and can enjoy free marketing of their product.
P4 - A business plan for growth that includes financial information and strategic objectives for
scaling up a business.
Business plan for Prufrock coffee -

Executive Summary: - The company is planning to expend their business by opening new
outlets in domestic market. The company serves great coffee and delicious food made from
sustainably sourced ingredients. The company is also looking to increase their online sales for
which they will invest on their website and digital marketing.
Business Overview: - Prufrock coffee is a Central London based coffee company which is
serves great coffee and delicious food. The company also sell their merchandise, equipment and
coffee beans online. The firm also operates a training center where they teach professional coffee
related courses to students.
Mission: - The mission is to open more outlets in UK and to create a big, diverse and loyal
customer base by providing best quality and delicious coffee and food.
Vision: - The company's vision is to create a brand which will be a household name for the
people of UK in future. The company wants to emerge as market leaders in coffee industry by
serving food and beverages made from sustainably sourced ingredients.
Objectives: -
 To set up new outlets with same customer service and quality of product.
 To increase online sales by investing on digital marketing and upgrading website.
Financial information: - The company need to raise a big amount of fund for scaling up their
business. They can use a combination or sources to raise funds the company have sufficient
capital reserve to invest on their e-commerce website. And to set up new outlets they can take
bank loans.
Growth Strategy: - The firm can use market development strategies to grow their business.
Prufrock coffee has a very small market share and by developing market in new regions can help
them to serve more customers which will lead the company towards growth. The company has
been using diversification strategy very well in small market now they can use the same in a
broad market.
Marketing Mix – It is a set of marketing tools used by organisations to achieve their marketing
objectives. It includes 4 P's which are as follow -
 Product – For effective marketing of products it is important for businesses to make
differentiation in their products (Friedman, 2019). The major products at Prufrock are

their food and beverage items. The firm always keep experimenting with ingredients and
techniques and that's why they a unique and best product to offer.
 Price - The firm can use value based pricing strategy. To company's competitors are big
players of the market and they enjoy the economies of scale. To compete with them in
pricing, value based pricing strategy can work.
 Place – The place is also a vital factor in marketing of a product. They should open their
new outlets near colleges or universities or where footfall of youngsters in more.
 Promotion – Various methods of promotions can be used. The firm can use digital
marketing, magazine and radios to promote their products.
M3 – A detailed business plan for growth and securing investment, setting out strategic
objectives, strategies and appropriate frameworks for achieving objectives.
Prufrock coffee need a strategic business plan for scaling their business. Having a business plan
help businesses to achieve their objectives effectively and efficiently. The company can use
make full use of their investment by implementing correct businesses strategies. Market
development strategy would be the best fit for the firm they can serve more customers and can
develop new market by successfully implementing these strategies (Rudawska and Renko,
2018). According to the business plan the company's objective is to generate more revenue from
their online sales. For that they should focus on digital marketing which can help the firm in
creating brand awareness and generating more online sales.
D3 - A coherent and in-depth business plan that demonstrates knowledge and understanding of
how to formulate, apply and achieve business objectives successfully.
To achieve business objectives successfully every organisation, need a business plan. A business
plan helps companies to check the performance of company towards the objectives. Setting small
objectives help companies to achieve their organisational goals. A goal should be specific,
measurable, attainable, relevant and time based. A business plan includes various strategies
which can help businesses to achieve their objectives. A plan provides road map to the
organisation that how the objectives will be achieved and when.

P5 – Assessing exit or succession options for a small businesses explaining benefits and
drawbacks of each option.
A business succession plan states that how, when and to whom your business will pass to another
person or company. Most businesses overlook business succession options while making a
business plan (Alomari and AbuHjayyer, 2020). To assess every succession options is important
to make sure that business run smoothly after some important people left the business.
Succession options for a small business: -
Passing business to a family member - Many people wants to keep their business in the family
and that's why they make plan to transfer their company or rights to their relatives at certain
point. You can choose and groom the person you want to transfer the business. It is hard to find a
family member who is capable for handling the business.
Merger and Acquisition - In this exit strategy, a business either merges with or purchased by
another company. This strategy allows businesses to negotiate the price of your merger and
acquisition but this process can be long and time consuming.
Selling to Partners or Investors - This is the most used exit option by small business. A person
can sell their stack in the company to one of their partner or investor. This is a easy process and
it does not affect business. It may be difficult to find partners and investors who area willing to
buy your stake (Lai and et.al., 2022).
M4 – Evaluating exit or succession options for a small business comparing and contrasting the
options and making valid recommendations.
The company should evaluate various exit or succession option before making a business plan.
They can consider passing their business to a family member so that they can decide to whom
they want to transfer the business this option will also help them to groom the person who will
handle the business in the future. By using this way the business will remain in the family. This
option does not completely separate someone to a business, seller remain in the business in some
sort of role. Prufrock coffee can also use this exit option if some important people from the
company leaves the company.

D4 - Ccritical evaluation of the exit or succession options for a small business and deciding an
appropriate course of action with justified recommendations to support implementation.
With above analysis of exit options, we know that there are two exit options which Prufrock
coffee can use. They can pass the business to family members or they can sell their stake in the
business to a partner or investor in the company. The owners can look to transfer their business
to their relatives which can help them to stay connected with business even after transition
(Ugoani, 2020). If they find it difficult to find suitable person in the family who can manage the
business after them, then they can look to sell their stake to a partner or investor in the company.
CONCLUSION
In this report it is concluded that it is important to make a solid business plan in order to
achieve short and long term goals of the company. A business should use various theories and
frameworks to identify opportunities which can help them to make a strong plan to gain
competitive advantage in the market. Also in this report we discuss that how a business can raise
funds from various sources. Further in the report we discussed the importance of setting
objectives for a business and how the company can achieve these objectives. The exit options
available for small businesses were also discussed in this report.
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