Planning for Growth - Analysis of Growth Opportunities for Prufrock Coffee

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