Planning For Growth

This document discusses the factors that help in examining growth opportunities and the effective sources of funding for business expansion. It also provides insights into Ansoff's growth matrix and strategic objectives for scaling up a business entity.

Unit 42
Planning For Growth
Student Name: Georgiana Ramona Nedelea

Table of Contents
Table of Contents.............................................................................................................................1
INTRODUCTION................................................................................................................2
TASK 1............................................................................................................................................2
P1 Various factors which help in examining growth opportunities along with their
justification.............................................................................................................................2
P2 Growth opportunities with the application of Ansoff's growth matrix............................4
TASK 2............................................................................................................................................5
P3 Effective source of funding and discuss it’s advantages and disadvantages.....................5
TASK 3............................................................................................................................................7
P4 Business plan which includes financial information along with strategic objectives for
scaling up a business entity....................................................................................................7
TASK 4............................................................................................................................................8
P5 Examine exit or succession option for an organisation with their drawbacks and benefits8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Planning is the most important aspect of a enterprise which is required for completing the
pre-determined goals and objectives for an organisation in specified time frame (Osiyevskyy,
and et. al., 2013). This is defined as the planning and making of several strategies which are
required for maintaining a good image in market and helps in gathering value in marketplace.
The small business enterprises require to help the economy of the country effectively in order to
sustain successful in market. A pre-planned business plan will help in attaining the desired
growth and development of the company. A good planning helps a company to build a good
reputation and capturing a large market than the rivals. The following report is based on a small
business of UK i.e. Little Italian Soho. This is a small that is established in London on the year
1995. This hotel has a combination of fine dining, a good wine list, music and dancing which has
become one of the most known restaurants of UK. The topics which are discussed in this report
are crucial considerations for evaluation the growth possibilities and various ways for finding
funding of business. At last a business plan is discussed which involves ideas and objectives and
also this report will include ways of exiting or succession.
TASK 1
P1 Various factors which help in examining growth opportunities along with their justification.
Growth is termed as an essential aspect required in a business for sustaining success in a
marketplace. This helps in contribution to enhancement in market share for a business. In case of
Little Italy Soho, this is small business that is established in UK and it is earning a lot of profits.
This restaurant has an objective to expand business in different market and increasing the
customer satisfaction. This restaurant has a lot of opportunities to expand its business and it has
to do effective work in accomplishing the targets and goals of the company in less time. There
are few key considerations that are helpful in growth and success of business. These are
discussed below –
Porter's generic strategy: This is a necessary strategy utilised by the companies for
determining the competitive edge of business. This helps in knowing and analysing whether
business is earning profits or not. There are basically four types of strategies that are used in the
business and these are helpful in enhancing the performance of business and establishing a
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competency in market. This helps in expanding business in different areas and also provides
analysis of actual performance and growth of the organisation. Different strategies of Porter is
discussed in the following paragraph-
Cost leadership: according to this kind of strategy, the business is concerned about
quality products and service and selling them at an affordable price to the consumers. In this kind
of organisations, the main objective of these businesses is to ensure appropriate good and
services are delivered to the customers.
Differentiation: in such strategy company focuses on providing new innovative products
to the customers. This builds the customer’s interest and attraction towards the services of
company. In context of little Italy SoHo is advisable to the company to provide new dish Pasta
sandwich to customers and enhance company’s image and reputation. This differentiation in
products line up will be helpful in capturing a larger share of market.
Cost focus: The main focus of company is on niche market under which products and
services are sold at very low price. The Little Italy Soho restaurant can meet the demands and
needs of customers easily.
Differentiation focus: This strategy focuses on building uniqueness in the product or
service. This focuses on creating new innovations in dishes and attracting a lot of customers in
case of the Little Italy Soho.
PESTLE analysis: It is also an analysis that the Little Italy Soho can use and identify factor in
the external environment which can influence operations for a business organisation. The Pestle
of this restaurant is given below-
Political: Political factors are one of the crucial factors which can influence activities for
an organisation. The political circumstances in the country are stable hence there are no
problems in operating business activities in this country.
Economical: This is related with the factors like inflation rate, GDP, economic growth of
the country etc. In case of the Little Italy Soho restaurant the economic condition of UK is very
favourable, and business can be easily operated in such country.
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Social: It is important for the Little Italy Soho restaurant to take care about customers of
UK market as these people are more health conscious and diet conscious
Technological: The application of latest technological advancement in context of
organisation can offer better outcomes in terms of producing quality dishes and meals
(Mitchelmore and Rowley, 2013). With the assistant of this company will be able to expand their
business at new marketplace and capture high market share.
Environmental: This factor is essential for a business in building positive image at
marketplace. The services provided by the Little Italy Soho restaurant to customers follow the
environmental laws and the packaging of the products is also eco-friendly. This consideration of
the ecological concerns will be helpful in enhancing market share through positive goodwill.
Legal: It is important for the Little Italy Soho restaurant to conform with all the legislative
and regulatory requirements so that there is minimum disruption when it comes conducting
operations for an organisation.
P2 Growth opportunities with the application of Ansoff's growth matrix
Ansoff matrix is considered as a useful marketing tool that helps business organisation in
finding out best feasible strategy through which they can grow their business operations in an
appropriate manner. It includes numerous of strategies through which business organisation can
find out alternative way of their growth. The various strategies through which growth could be
availed are diversification, market penetration, product development, market development
(Kutllovci and Shala, 2013). With reference to Little Italy Soho, it can be said that the company
operates its businesses at small scale. Therefore, its owner has planned to conduct analysis on
Ansoff Matrix for identifying best feasible growth matrix. All of these strategies are described as
below:
Market Penetration: The strategy clearly emphasis on offering active products in
existing marketplace. According to this, it can be said that Little Italy Soho is required to focus
on identifying niche market in existing location so that they can increase their customers. As a
result, it becomes easier for them to improve their sales performance in effective manner. Here,
the company can influence customers by improving quality of their services so that customers
can be satisfied at highest level.
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Product Development: This strategy states that business organisation is required to
introduce new product in existing marketplace. With reference to Little Italy Soho, the company
can use this strategy by using introduce few more food items in their restaurant within UK and
the new dish offered in Little Italy Soho is Pasta Sandwich. This strategy seems to look effective
for the company as with this the restaurant can increase its product portfolio that helps them in
attracting local customers as they are getting huge variety in the same location (Love and Roper,
2015).
Market Development: According to this strategy, businesses are suggested to focus on
introducing existing product at new marketplace. With reference to Little Italy Soho, it can be
said that this company can use this strategy for growth by opening up their chain of restaurants in
other cities of UK like Bangor, Bath and Belfast. This strategy will allow Little Italy Soho, in
approaching new customers available at different geographical locations.
Diversification: Diversification is considered as the most risky strategy because it
focuses on launching new products in new marketplace (Rydin, 2013). This strategy simply
requires huge capital for its success so that promotion of their products and services can be done
in right manner which will aware maximum people about their services. With reference to Little
Italy Soho, it can be said that this strategy is not feasible for the chosen company as it is small in
size and does not have much financial back up to bear this growth strategy.
On the basis of above discusses different strategies, it has been analysed that product
development is best strategy for Little Italy Soho as it financially feasible for this company. It
can be said that, in order to grab this strategy management team of Little Italy Soho can
introduce some new dish Pasta Sandwich in their menu (Rigas and Nawar, 2016). This will
directly attract existing as well as new customers because, they are getting variety of food items
at the same place. This will ultimately improve sales performance of Little Italy Soho which
also increases their profitability in positive manner.
TASK 2
P3 Effective source of funding and discuss it’s advantages and disadvantages
In order to run the business operations in an effective manner, funding plays very
important role. Generally, funding is an important aspect which is used by almost every
organisation for the smooth running of business functions. With the help of this, management
team of the company easily operate its functions and achieve the goals in an appropriate manner.
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In the present context of Little Italy Soho, entrepreneur has already invested £30000 to run the
business smoothly but they required £400,000 in order to expand their business at the
marketplace of UK. For gathering funds, chosen company adopt both internal and external
sources, with the help of which functions can be carried out effectively. For collecting £50000
owner uses both the sources of funds. These resources can be better understood with the help of
following points:
Internal sources: Internal sources refers to those sources which exist within the
organisation. Under this source, company can raise their funds by gathering funds by retaining
profits, sale of assets, controlling working capital and so on (Weber, Geneste and Connell, 2015).
External sources: All these sources are available outside the company where owner can
collect and gather funds from different sources available at the marketplace. These sources
include crowd funding, bank loan and many more.
 Crowd funding: This can be considered as one of the paramount approaches used for
collecting funds used by various owners and entrepreneur in order to run their business
functions. Majorly, it is conducting through online portals which includes social media,
websites and many more. With the help of this method, a venture can raise capital in
small amounts from ample number of individuals rather than collecting huge amount
from small number of individuals.
◦ Advantage: One of the major advantages of this factor is that it will attract large
number of customers and lenders which improves the brand image at the competitive
marketplace.
◦ Disadvantage: On the other hand, disadvantage of this source is that it involves
various legal formalities which make it more difficult and complex as well.
Bank loan: Along with this, one of the major external sources of funding which is quite safe and
secure is bank loan. Various financial institutions provide bank loans to businessmen for carrying
out their functions effectively. In bank loan, bank provide short term as well as long term loans
to their customers and charge a fixed amount of interest for a specified period of time (Rodríguez
and Nieto, 2016). With the help of this source, Little Italy Soho will be able to collect amount in
an easy and effective manner, so that they can easily run their business operations.
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◦ Advantage: In case of bank loan, one of the biggest advantages for the company or
business organisation is that it is cost effective, safe and secure. Also, bank provide
funds in very low interest rate which is beneficial for the company.
◦ Disadvantage: On the other hand, drawback of this source of fund is that repayment
is the burden for organisation. For this they need to increase their profits and reduce
their other expenses.
From the above-mentioned sources, Little Italy Soho adopt Bank loans for collecting
huge amount of funds. It is one of the safest and easiest method where a fixed amount of interest
should also be given to the bank along with the principle amount after a fixed amount of time.
TASK 3
P4 Business plan which includes financial information along with strategic objectives for scaling
up a business entity
A business plan can be said as a document that is produced while making a new plan to
assure growth and development of business (Xheneti and Bartlett, 2012). This plan helps in
providing a right path that helps a company in accomplishing the specified objectives in a given
time frame. It is necessary for The Little Italy Soho restaurant to formulate and implement an
effective plan for grabbing future possibilities in market expansion. A business plan consists of
company mission, vision, goals that helps in operating business in different markets. The main
objective of making an effective business plan is to grab attention of large number of investors
and customers of this restaurant. The business plan for The Little Italy Soho Restaurant for
making an effective business plan is mentioned below –
Executive summary: The Little Italy Soho restaurant is a small restaurant of UK that
provides a wide range of Italian dishes and fast food to customers. The main thing that attracts
customers towards this restaurant is it’s delicious and mesmerising food that customers can’t
resist. The Little Italy Soho restaurant has invested an amount of £20000 for expanding business
and making more profits. This restaurant has certain steps for enhancing the brand image and
reputation in the market. It is essential for a business to understand different aspects so that brand
image for a business could be enhanced.
Vision: The main vision of the Little Italy Soho restaurant is to increase a lot of customers
by providing quality and delicious food.
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Mission: To provide quality fast food and Italian dishes at an affordable price and increase
the profits of this restaurant
Objectives: The main smart objective of this restaurant is to make expansion of its
business in other market place of UK within next 3 years. Along with this they wants to enhance
their sales of products by 10% in next 2 years.
STP: It is an abbreviation of Segmentation, targeting and positioning which is undertaken
by the business organisation for classification of its population. It is helpful analysing the
offerings and communicating this to certain group and attaining good profits.
Segmentation: This is a technique where a business segment or divide its market according
to a specific basis or criterion. This restaurant has segmented its market on the basis of consumer
behaviour and age demographics.
Targeting: This organisation will target potential customers who like fast food and Italian
food from consumer behaviour segment. From age demographics segment, this restaurant will
target people of age between 18 to 45.
Positioning: The Little Italy Soho Restaurant established in UK used market penetration
strategy to grab attention of customers by offering them high quality products and services at
affordable cost.
Financial information: It is important for new restaurant to raise capital so that expansion
activities can be carried out in the ideal manner. The Little Italy Soho is a new restaurant that is
dealing in restaurant that serves fast food and meals, the main objective of this hotel is to
improve its overall growth. In context of Little Italy Soho restaurant, entrepreneur is having
£25000 but the required money for running business activities in an effective manner for
increasing quality in survives of this restaurant is £200,000. So, for managing remaining money
company has chosen to take fund from various sources such as bank loan, overdraft, angel
financing and many more to gather adequate fund. The undertaking of different sources of
raising capital will be helpful in undertaking of expansion activities ultimately leading to
maximise profitability for the organisation.
TASK 4
P5 Examine exit or succession option for an organisation with their drawbacks and benefits
Business environment plays very crucial role while conducting and implementing various
activities of an organisation at the marketplace (Mitchelmore, Rowley and Shiu, 2014). For a
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company, nature of the business environment is very complex as well as unpredictable. It affects
the overall performance and productivity of company. The exit approach helps the management
of the company to know what is not going right in the company and how to retain customers.
And for this, management team of Little Italy Soho should select exit approach in order to exit
the marketplace. There are various ways along with pros and cons are as follows:
Liquidation: It refers to a process within which management team of the company
decides to wind up their business operations. For this, they sell all their assets and repay to the
creditors. Undertaking this approach, company can easily close their business activities.
Advantage: One of the major advantages of liquidation process is that it aids the owner's
and top management authority of the company to repay their debts without any burden. Along
with this, it is the process which avoid any kind of legal actions for a business enterprise.
Disadvantage: Along with the advantages, this factor holds some disadvantages also
which affect the overall winding process (Martin and Namusonge, 2014). By adopting this
technique for winding up company can lose their skilled and highly talented employees.
Sell the business: It is the another method under which owner can sell their business to
the third party. Also, the third party can include, managers, employees, stakeholders of the
company who have their keen interest in order to buy and run the business.
Advantage: Advantages of this option is that it will improve the motivation level of its
employees (Blackburn, Hart and Wainwright, 2013).
Disadvantage: On the other hand, disadvantage of this factor is that its employees are
unable to take over the business due to their lack of experience, skills as well as qualification.
With the help of above-mentioned exit strategies, Little Italy Soho adopt sell the business
strategy. In this, they sell their business to the third party and these parties can be managers,
employees and so on. With this company can easily exit from the marketplace.
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CONCLUSION
It can be concluded from the above report that planning is considered as the process for
an organisation for achieving the growth at marketplace. Also, by developing effective plans
organisation can effectively enhance their performance and achieve the desired goals effectively.
Along with this, for achieving success and growth it is very important for a company to examine
external factors which can be done through undertaking of PESTLE and Ansoff's matrix. In
addition to this, company adopt various sources of funds such as bank loans, crowd funding and
many more for running the business operations. At last, business plan plays very important role
in order to expand their business activities at the competitive marketplace.
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