Planning for Growth

This report discusses the importance of planning for growth in businesses and explores different growth opportunities, funding sources, and strategies. It focuses on Ella's Kitchen, a UK-based organic toddler and baby food company, and examines market penetration, product development, market development, and diversification as growth strategies. It also discusses venture capital as an important source of funding for SMEs and highlights its benefits and drawbacks.

Planning for growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Examining different growth opportunities.............................................................................1
P2 Opportunities for growth through applying ANSOFF'S growth vector matrix.....................3
TASK 2............................................................................................................................................5
P3 Important sources of funding available business along with their drawbacks or benefits.....5
TASK 3............................................................................................................................................6
P4 Business plan.........................................................................................................................6
TASK 4............................................................................................................................................7
P5 Exit alternative for small businesses along with advantages & disadvantages.....................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Growth is one of the important factor which is needed by firms to operate their entire
functions and activities successfully (Gielnik, Zacher and Schmitt, 2017).. Planning for growth
consist different types of activities which all are used by firm in order to implementation of
unique strategies as well as plans. Thus, each and every firm required to have effective plan for
further growth to sustain for long period of time at marketplace. Therefore, planning and growth
is considered as most important factors within firm as it plays crucial role. In this report Ella's
Kitchen has been taken as an organisation which is headquartered in UK was founded in the year
of 2006. this company deals with organic toddler and baby food and sold in supermarkets
including Denmark, China, Finland, UK and many other Moreover, this report includes key
considerations of SMEs to examine growth opportunities. There are few methods of funding
along with business plan. Lastly, several ways of small business owner can be exit or implement
for future growth.
TASK 1
P1 Examining different growth opportunities
Every business plans for its growth. Small businesses wants to become medium
businesses, medium businesses wants to become large businesses and to become bigger in their
sizes and activities they plans for growth. A strategic growth plan is necessary for every business
to make when they are about to expands itself. A business can determine the growth
opportunities through porter's generic strategies. It is a model in which has four strategies
accordingly the company could select any one which it feels appropriate. The strategies are Cost
leadership, Differentiation, cost focus and differentiation focus. The porter's generic strategies of
Ella's kitchen is as follows-
Cost leadership – In cost leadership gain the cost leadership in an industry by producing
the products at very low cost. The sources through which a company can gain cost advantage is
varied and also depends on the type and structure of the industry. They can gain the cost
leadership through economies of scale, usage of advanced technologies, favourable raw materials
and other factors. It is been said that if a firm sustains and achieves the cost advantage then it
will perform above average in its industry as it can command prices at or around the industry
average. As in case with Elle's Kitchen, the company can gain cost advantage through many
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ways such as availing raw materials where they can purchase it in low prices, adopting the
advance technology which increases the productivity with low cost, eliminating or reducing the
middleman in the process of outbound can also helps the company in reduction of this cost. From
such activities the firm can achieve cost leadership.
Differentiation – In this strategy, the firm tries to be unique and different from other companies
present in an industry along with some dimensions which are valued by the buyer. In
differentiation strategy, the company picks one or more attribute according to the needs of
customers and uniquely positions itself into the market. It provides unique features or attributes
with a premium prices. As in case with Elle's Kitchen, the company provides products which are
uniquely for babies and toddlers. The company makes itself unique by providing organic baby
food to into the market. Apart from this targeting the babies industry is itself a unique element
for the businesses (Gielnik, Zacher and Schmitt, 2017).
Focus – In this strategy the firm focuses upon a narrow segment and within that segment the
firm tries to achieve either a cost advantage or differentiation. The main purpose of this strategy
is that the needs of the target group can better cater by focusing totally on it. The company who
practice this experience customer loyalty which also makes its competitors to compete with them
directly. As in case with Elle's kitchen, the company focus on a particular group of segment i.e.
babies and toddler. It exercises differentiation focus by catering the needs of his particular
narrow segment with premium prices. This firm has also succeed itself in gaining their customers
confidence by providing them with organic and trusted food.
The growth opportunities of Elle's kitchen can also get analysed through PESTEL analyses. It is
an analyses where the company evaluate the external factors which do affect the business
activities. The PESTEL analyses of Elle's kitchen is as follows:-
Political- Political factors includes government policy, political stability, corruption, foreign
trades policy, tax policy, labour law, trade restrictions and so forth. In short it is the degree to
which the government have control on the businesses. Elle's kitchen is a UK based company and
the company has political stability which benefits all the businesses. But during Brexit, the
company did face some issue regarding its operations of business activities as majority of
companies had no idea about how they need to operate after Brexit. Brexit was a political issue
which affects all the businesses in UK, and so to Elle's kitchen.
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Economic factors- Economic factors includes economic growth, exchange rates, interest rates,
inflation rates, disposable income, unemployment rate and so forth. The Company Elle's kitchen
has expanded and open itself into the countries which has good economic situations like UK,
china, Norway, Denmark, Sweden, US and so on. Though after Brexit the company did face
some financial drop into UK but later with the years it gets better.
Social Factor- Social factors include population growth rate, age distribution, career attitudes,
safety emphasis, health consciousness, lifestyle attitudes, cultural barriers and so on. It also
includes the taste and preference of people and through social factor the thinking and behaviour
of people regarding a particular topic. Elle's kitchen recognizes the need for baby foods and tries
it to fulfil them through their products. They produces the products which are organic and
healthy for baby's health (Gielnik, Zacher and Schmitt, 2017).
Technological factor- This factor includes technology incentives, level of innovation,
automation, R&D activity, technological change and awareness and the like. The company has
establishes itself into many countries and to keep accountability the company has to adopt
information technology management which unable the company to keep and maintain records.
Environmental- The environmental factor includes weather, climate, environmental policies,
climate change, pressure from NGOs and the like. This factor has gain major lime light in the
recent times that all the business are following and marketing themselves using sustainable
product. The company Elle's kitchen has adopts the production procedure which is
environmentally friendly and also practice the sustainability development.
Legal factor- Legal factors include discrimination laws, anti- trust laws, employment laws,
consumer protection laws, copyright and patent laws, heath and safety laws and so on. Every
business needs to operates its business activities within the stated legal laws and regulation by
the government. Elle's kitchen follows all the laws and regulation of the government and with
according to the countries it have establish in. Proper following of laws also helps the company
in gaining the trust of customers. The customers generate a trust on the company and promises to
stick to the company they are purchasing (Bravo-Biosca, Criscuolo and Menon, 2016).
P2 Opportunities for growth through applying ANSOFF'S growth vector matrix
Ansoff's matrix was given by H. lgor Ansoff in order to identifying different types of
tools and techniques used by organisations for increasing their growth of product as well as
market. This matrix considered as backbone of firm as they can select best strategies to boost
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their business level within competitive scenario. There are different types of strategies which are
used by Ella’s kitchen, those are as follows:
Market penetration: According to this strategy firms are able to sell some kind of same
things within the same market. Along with this approach generally develop best new marketing
strategies in order to encourage people so that they can choose product as per their desire. In
regards with above Ella’s kitchen they can use this approach for selling those products which are
demanded in their existing market. This can be beneficial for them to adopt this strategy for
growth because it is less costly and effective. Companies do not need to make too much effort
for marketing.
Risks within this strategy:
 Missed opportunity- An organization which manufactures a premium commodity loses
the opportunity to sell it as a cheap product. The goods may be rejected by customers
who prefer quality pieces. A business could significantly miss revenues because of the
increased demand for "indulgent" goods. Same as for above company they may Miss Key
opportunity for gaining higher profit if they continuous to sell their premium products in
same market.
 Poor company image- Such a corporation may choose to resist a market expansion policy
because it has other premium lines that offer luxury goods. Revenue of the other product
lines may be affected by utilizing market expansion approach for one drug. When the
cheaper product is a simple domestic commodity in a wide variety of companies,
consumers would definitely get to know the cheaper product better than those who prefer
luxury. Ella’s kitchen image can also affected negatively if they focus on this strategy
and due to which their profitability can be hampered.
Product Development: After considering market penetration it is necessary for firm to
focus on product development in order to bring few changes within goods and services. It helps
businesses to develop new market as it is require creating new product at marketplace. It
accomplishes entire needs and wants of consumers within the competitive market. In the Ella’s
kitchen they can adopt this strategy for launching new products in existing market. By help of
this they can gain higher profit at lower cost. This is so because they will not require making
expenditures on advertisement of their products in their existing market. (Gabrielsson and
Gabrielsson, 2013).
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Risk within this strategy:
 Evolving markets- Although new product creation is a strategic approach to an increasing
customer-like environment, even as company produce new goods, the same preferences
can change. Customers may not experience thrilling something that is significant before
company start the product creation phase before they are ready to sell the latest product.
Same as in the above company, they may face this risk because customers cannot be
attracted towards new products.
 Possibility of higher risk- In this strategy, another risk is that under it companies may
face issue of high risk. It is so because it is not guaranteed that new product will succeed
in existing market. For Ella’s kitchen, they may face loss if they launch product in same
market.
Market Development: According to this approach, firms are able to analyse market
situation along with existing products into the marketplace. On the other side, business firms are
required to maximise market share with the motive of developing best customers base. In regards
with Ella’s kitchen, they can apply this strategy to enter in new market with same products.
Though this strategy can be risky because it is not fixed that their product will attract new market
customers.
Risks:
 Costly- It can be costly for Ella’s kitchen because they have to develop new product and
for this purpose they will require proper research about need and demand of customers.
 Risky- as above strategy, this is also risky that customers can take time to accept new
company’s product in starting phase.
Diversification: Within the competitive scenario, firms are having huge pressure from
several situations due to manage and control several activities for sustaining at market place. As
per this, customers are having large number of demand in order to fulfil their needs and wants by
focusing their market share as well. In relation with Ella’s kitchen, they can adopt this strategy if
they have enough amounts of funds to develop new product for entering into a new market. This
has below mentioned risks such as:
Risks:
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 A diversification into a different sector of the industry needs specific skills. The lack of
experience in the new area can prove a setback for the business. Same as for Ella’s
kitchen, they may face this risk due to lack of skilled staff members.
 A poorly managed diversification or unnecessary optimism will concurrently cause an
enterprise to expand into so many different directions. In this case, financial constraints
and lack of care will affect all old and new industries of the organization. Same as for
above Ella’s kitchen, they can face this issue due to lack of effective management.
From all these strategies, Ella’s kitchen must adopt diversification strategy. This is so because it
may bring more scope for profitability.
TASK 2
P3 Important sources of funding available business along with their drawbacks or benefits
Financial activities always considered as most important part of firm as they plays crucial
role for the. With the help of using ample financial tools firm can develop best way to invest
shares to achievement of specified goals or objectives. Apart from this, it increase productivity or
efficiency of firm. In regards with Ella’s kitchen, they are require to concentrates on monetary
funds through observing internal and external factors by which they can increase their value of
brand and achieve targeted goals. For instance, there are two types of ways of funding those are
helpful for SMEs that enhance operational activity of business. Those are as follows:
Venture Capital: It is suitable way for SMEs of funding as using this tools small
business can establish unique projects as well as business start-ups with innovative ideas by
which they can achieve targeted goals and objectives in an appropriate way. Therefore, this tool
is used by large number of small firms so that they can run business accordingly. Some of the
drawbacks and benefits are mentioned below:
Benefits: According to this source of funding it can be said, as it give huge chances to
small firms for establish new project with innovative ideas. So that they can achieve proper
growth effectively.
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Drawbacks: On the other side, main disadvantage of this source, it is generally depends
upon capitalist funding to develop proper growth of business. Sometime, due to this firms can
get loss towards managing business activities (Messner, 2013).
Bank Loan: This is one of the best way of funding for small firms. With the help of this
SMEs are able to take loan from bank in order to run business within the successful manner.
Along with able to overcome issues from the organisation. On the other side, bank generally
takes securities papers from the firm as trust during the giving loan. Therefore, it is useful for
firm to further development into its business growth.
Benefits: Main benefit of bank loan is that, it gives loan to firms by which they can
manage their investment and able to achieve its targeted goals in an appropriate manner. Thus, it
is helpful for them to take advantage while taking loan from bank.
Drawbacks: Main disadvantage of this funding source is that, it directly charge high rate
on firm if they are not able to return loan money on time. Thus, it can be risky for them.
TASK 3
P4 Business plan
It is the document which includes huge information of several research programmes
which is conducted by firms in order to achieve targeted goals and objectives. Thus, it is
essential for firms to make business plan with having innovative ideas to overcome risky factors
from the business. In context of Ella’s kitchen, management team of this organisation able to
formulates effective type of business plan so that they can achieve goals successfully. Business
plan of respective organisation is going to be discussed below:
Company Overview: Ella’s kitchen was established in 2006 within the United Kingdom.
It is dealing with huge variety of organic toddler and baby food sold within the supermarkets of
various countries. Along with respective small organisation has 30% share of UK within the
baby food sector (Eijdenberg, Paas and Masurel, 2017).
Mission and Vision: In relation with Ella’s kitchen it can be said that, mission or vision
is based on establishing healthy bond with several employees at workplace. With the help of this
they can make better ways in order to think more innovative among project so that they can
attain competitive scenario. On the other hand, they generally target those customers or kids who
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can easily buy their products or services in a proper way. Thus, it will increase their probability
at marketplace so that they can achieve their targeted goals on time.
Promotional Strategies: For developing ample number of tools and strategies required
by firms in order to reach high goals in stipulated mode. In context of Ella’s kitchen, it can be
said that, if this SMEs will follow different types of promoting channels they can make
themselves attractive in front of their competitors (Zeuli and O'Shea, 2017). For this, they use
TV, radio, newspapers, magazine and many more factors that promote firm's goods and services.
On the other side, with the help of using large number of promoting channels or strategies they
can handle every situation of business and able to maintain ways of developing good culture at
workplace. Therefore it is necessary for firm to focus on promoting strategies before developing
business plan. If talk about UK government there is political ratio is stable so that this
organisation can easily promote their products and services via using large number of tools.
Thus, it will develop good image of this firm in front of their competitors, so that they can
directly achieve their goals without facing issues on regular basis.
Financial plan- For a given duration, budget is also a one-year financial program. Expected sales
and profits, capital, expense and investment, properties, liabilities and cash flows can also be
included. This is used to communicate, in tangible words, future strategies for actions or events
by businesses, states, family members and other organizations. For above business, a cash budget
is prepared in such manner:
Cash budget for Ella’s kitchen
Particulars Amount (In £)
Revenues:
Estimated sales 1200
Loan from bank 1500
Total revenues (A) 2700
Expenses:
Wages 800
Rent 150
Telephonic charges 30
Interest on loan 270
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Total expenses (B): 1250
Net surplus (A-B) 1450
The above mentioned cash budget is showing that company will be beneficial for starting phase
of innovation if they will follow this plan. As they may gain net surplus of 1450 pounds in the
first year after making expand of their business (Burns, 2016).
P5 Exit alternative for small businesses along with advantages & disadvantages
In order to sustain long period of time at marketplace, it is necessary for firms to make
exit alternatives to achieve huge success. Therefore, it is required for every firm to consider large
number of techniques by which they can make best possible outcomes to gain better ways. If talk
about small businesses there are large number of competitors, thus they are needed to have
several methods to attain predetermined goals. There are different types of activities which is
followed by Ella's Kitchen, those are as follows:
Merger and Acquisition: This is one of the best activity used by managers within lots of
organisations in order to know different kind of concept as well as issues in between employees
and firm (Castaño, Méndez and Galindo, 2016). Another side, merger and acquisition refers to
the combination of different organisations who are dealing with financial process on regular
process of appropriate product. With the help of doing such kind of activity they can achieve
desired goals of business and able to wind up overall methods which is used for doing these
assorted transactions. Apart from this, merger and acquisition considered as purchasing assets as
well as known as exchange shares for assets. For betterment of merger and acquisition firms
must willingly take effective investments in order to achieve large number of benefits. With the
help of using this term firms can easily achieve competitive advantages along with overcome risk
factors in a proper way (Ye, Xiao and Zhou, 2019). If talk about Ella's kitchen, there are ample
amount of factors that developed few issues while merger and acquisition. In order to reduce
those sorts of factors respective firm has been applied unique strategies or tools by which they
can easily cope up with current elements to achieve targeted goals or objectives. For creating
unique image of this brand manage used different types of tools and methods by which they
provide better products and services to their customers and able to grow successfully. Thus, this
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firm do not have any kind of merger and acquisition and perfectly growing. There are few
benefits and drawback of this approach, those are as follows:
Benefits of Merger and Acquisition
 It is considered as most helpful part for firms as both strategies makes great combination
of two firms along with increase productivity of firm at high level.
 Both term offers large number of factors for firms by which employees perform well with
putting their efforts. It is useful for reducing risk factors from firm so that they can achieve targeted goals.
Drawbacks of merger and acquisition:
 Sometimes, few problems can be raised while merger of two companies. On the other side, it develop huge competition for firms due to increasing economic
scale.
Liquidation: It refers to process of accounting through which an organisation able to sell
their goods and services with the aim of achieving targeted goals and objectives in a perfect way.
It also include safeguarding customs duties in order to reduce risk factors from the firm. In
regards with Ella's kitchen, this process use by management team in order to make proper
strategies for selling product and services in a proper mode. There are few benefits and
drawbacks, those are going to be discussed below:
Benefits of liquidation:
 This approach frequently implements on several ways as in this government directly
revealed different types of legal actions.
 There are not much debts in this process. Lastly, it is very easy for every firm to use in order to sell goods and services without any
problem.
Drawbacks:
 Main disadvantage of this aspect is sometimes amount constantly pending.
 On the other side, manager of firms are directly required to pay liability from their
earning funds.
 Sometimes firms can lose their valuable goods due to liquidation approach.
From the above processes merger and acquisition strategy used by Ella's kitchen in order
to reduce different kind of issues from the firm so that they can create better environment at
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workplace (Bravo-Biosca, Criscuolo and Menon, 2016). It has direct impact on employee's
working performance so that they can achieve their desired goals. Thus, it increase firms
productivity as well as probability at marketplace.
CONCLUSION
As per the above mentioned report, it has been concluded that planning for growth is
most important phase of business by which firms are able to run their business successfully.
Therefore, it is necessary for firm to focus on their targeted goals those will be beneficial for
firm's growth. In this report Ansoff's matrix has been used by managers of firm in order to give
effective position of their goods and services. Along with PESTLE factor has been used that
identifies several concept of environment in which firm can easily pride their goods and services.
Moreover, there are two types of funding sources has been described which is helpful for
maximisation of organisational growth to capture market conditions. At last, business plan has
been elaborated in this report which is necessary for firms to develop before completing any kind
of task within firm.
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REFERENCES
Books and Journal
Bravo-Biosca, A., Criscuolo, C. and Menon, C., 2016. What drives the dynamics of business
growth?. Economic Policy, 31(88), pp.703-742.
Ye, S., Xiao, H. and Zhou, L., 2019. Small accommodation business growth in rural areas:
Effects on guest experience and financial performance. International Journal of
Hospitality Management, 76, pp.29-38.
Castaño, M.S., Méndez, M.T. and Galindo, M.Á., 2016. Innovation, internationalization and
business-growth expectations among entrepreneurs in the services sector. Journal of
Business Research, 69(5), pp.1690-1695.
Burns, P., 2016. Entrepreneurship and small business. Palgrave Macmillan Limited.
Zeuli, K. and O'Shea, K., 2017. Small business growth. Economic Development Journal, 16(1),
pp.15-21.
Eijdenberg, E.L., Paas, L.J. and Masurel, E., 2017. Decision-making and small business growth
in Burundi. Journal of Entrepreneurship in Emerging Economies.
Messner, W., 2013. Making the compelling business case: Decision-making techniques for
successful business growth. Springer.
Gabrielsson, P. and Gabrielsson, M., 2013. A dynamic model of growth phases and survival in
international business-to-business new ventures: The moderating effect of decision-
making logic. Industrial Marketing Management, 42(8), pp.1357-1373.
Gielnik, M.M., Zacher, H. and Schmitt, A., 2017. How small business managers’ age and focus
on opportunities affect business growth: a mediated moderation growth model. Journal
of Small Business Management, 55(3), pp.460-483.
Olesen, K. and Carter, H., 2018. Planning as a barrier for growth: Analysing storylines on the
reform of the Danish Planning Act. Environment and Planning C: Politics and
Space, 36(4), pp.689-707.
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