Planning for Growth: Analysis of Ella's Kitchen Business Strategies

This report provides a comprehensive analysis of growth strategies for Ella's Kitchen, a UK-based organic food company. The report begins with an introduction to the importance of planning for sustainable growth, followed by an in-depth analysis of key considerations, including PESTLE and BCG matrix analyses, to identify growth opportunities. It then evaluates various growth strategies using the Ansoff Matrix, recommending product development, and assesses financial resources. The report further develops a business plan for growth and examines exit strategies for small business enterprises, including their benefits and drawbacks, concluding with a summary of key findings and recommendations.

PLANNING FOR
GROWTH

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1 Analysis of main consideration of development opportunities in company's perspective....1
P2. Evaluation of opportunities of growth..................................................................................4
LO2..................................................................................................................................................6
P3 Assessing financial resources available to business along with their Benefits and
Drawbacks...................................................................................................................................6
LO 3.................................................................................................................................................8
P4. Designing a business plan for growth...................................................................................8
LO4................................................................................................................................................11
P5 Exiting strategies for a small business enterprises and their benefits and drawbacks.........11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Planning for Growth is an appropriate area of practice for an organisation which requires
the organisation to appropriately and effectively ensure a sustainable growth for the company. It
is an important aspect for a firm that is related towards enhancement of its sustainability, as well
as its competitive advantages within the marketplace (Wey, 2015). Hence, in this relation, the
report below is based on Ella's Kitchen, that is one of the most recognised organic food
organisations within the United Kingdom. The company currently deals in organic toddler food
items and looking to enhance its business practices to further grow within the market it operates
in. Therefore, the assignment covers an in depth analysis of key considerations that the firm must
consider when evaluating its growth opportunities, along with assessment of various methods
through which funding could be accessed by the firm. In addition to this, the report also covers
development of a business plan, along with communication of how best the business could be
scaled up. Moreover, the report also includes assessment of various ways in which the firm could
exit the business and implications of several options.
LO1
P1 Analysis of main consideration of development opportunities in company's perspective
In order to identify growth opportunities, a person can apply two basic model name
PESTLE analysis and BCG matrix (Wu, 2015). PESTLE analysis is used for identifying impact
of external factors on operations of an organisation. PESTLE stands for Political, Economical,
Social, Technological, Legal and Environmental. BCG matrix is a product portfolio which
classifies goods on the basis of their growth rate and market share. It is used to determine
product category in which company should do further investment . BCG matrix has four
quadrants star, cash cow, question mark and Dogs.
PESTLE Analysis:-
 Political Factors:
Political factors are impact of government policies, regulations bills,taxation system,
fiscal policy on the functioning of the company. In terms of political power , UK has a good
stand. UK has constitutional monarchy form of government in which sovereign authority is king
or queen. UK is politically stable therefore there is abundance of growth opportunities for Ella' s
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kitchen . Less fluctuation in political system enable streamlined operations of the company
however Brexit create cognitive state in trading world to some extent but soon it will recover.
 Economical Factors:
Economical factors includes inflation rate, foreign exchange rate, interest rates which
have a significant impact on the growth of company. In the indices of nominal GDP, UK possess
5th rank in the world. UK is a rich nation where people have very high purchasing power. There
is no price sensitivity among consumer hence Ella' s kitchen has wide scope of growth. High
GDP is favourable conditions for a company. Company should focus on quality rather than cost
cutting. Company should spend in effective marketing in order to increase brand equity which
would helps in increasing conversion rate.
 Social Factors:
Social factors refers to the culture, belief and lifestyle of citizens of the country.
Company have to take into account that whether culture and belief of people allow them to
purchase their product or not. Populations of UK are increasing day by day. Birth rate is
exceeding death rate. Death rate decreased due to advanced health remedy available in the
hospitals. There are huge opportunities for Ella' s kitchen to expand their business. UK' s
citizens like to wear suit and uniforms. They often wears suit in parties and offices. Hence
cultural factors acts as catalyst for firm's growth.
 Technological factors:
Technological factors defines how new innovation, invention, research and development
affect the operations of a company. UK possess highly advanced technology. Ella' s kitchen can
take the advantage of advanced technology in their operations. Company should devote money
and time in research and development in order create superior technology which would helps in
creating good brand equity. Company can use advanced technology machines to make good
quality product. Country have large number of sharp mind who can create high end technology.
Firm must utilise their expertise. Company have to continuously improve their technology and
procedures to survive in the market.
 Legal Factors:
Legal factors somehow collide with political factors because laws are made by
government. Legal factors comprise of labour laws, safety standards, consumer protection and so
on. Laws of UK promote the welfare of employees. Ella' s kitchen cannot make workers more
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than 8 hours a day. Company have to strictly follow the laws. If company violate any law than
that firm is liable to pay fine. Ella' s kitchen must provide minimum wages to employees.
Organisation cannot increase their profit margin by reducing salary of employees. Company
should focus on enhancing quality instead of reducing cost of products.
 Environmental Factors:
Environmental factors are concerned with natural landscape like climate, weather, land
distribution, natural resources and so on. UK has a good climate because it is has influence of
oceans on its all four sides. UK did not have fertile land therefore it import food grains from
other countries as a result price of food grains is high. Country has a good per capita income
therefore people are never price conscious. Ella' s should take into account there should be
proper disposal of waste. Good climate attract tourism therefore Ella' s kitchen have the
opportunity to feed foreign tourist (Tian, 2016).
BCG Matrix
 Star:
Commodity category which have low growth rate and high market share are considered
as Star. These products consume more capital and provides more return to a company. These
brands have the potential of becoming cash cow in future. These brands are in their growth phase
of product life cycle. Infant and toddler food of Ella' s Kitchen private limited comes in the
category of star. These products are running successfully in the market and have the capability of
becoming cash cow in upcoming years. Company should invest in marketing of these products to
increase awareness of consumers towards firm's goods.
 Cash Cows:
Goods of which growth reaches to maximum level and possess large market share is
called cash cow. Cash cow brings maximum revenue to a company with least investment . There
is no scope of further growth of these brands. These products have strong positioning in the
minds of consumers. Cash cow of Ella' s Kitchen is smoothies. Smoothies has a good market
share. This brand is well accepted by consumers. Company should do investment in the
production of these goods on a large scale. There is no need to invest in advertisement of these
products because these brands already have excessive popularity.
 Question Marks:
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The products which have high growth rate and low growth rate comes in the Question
mark quadrant of BCG matrix product portfolio. These are new launched goods category of a
company from which company expects handsome revenue. Company expects high profit and
market share but the actual result only time can tell. These products are in introduction phase of
product life cycle. These commodities can become star or dog in future. Snack and frozen foods
are question mark products of Ella' s Kitchen. Company have to invest high capital on
advertisement of snacks and frozen foods. If product run successfully than only company should
do further investment otherwise should stop production and withdraw their invested money.
Hence, Ella' s Kitchen should investment on marketing of star and question products by
the revenue earned from cash cow. Firm should manufacture cash cow goods on economies of
scale that means mass production of goods which is generating excessive profits. Organisation
should reduce the investment on advertisement of cash cow product instead they use that capital
in upbringing of star and question mark commodities. If question mark that is Frozen food and
snacks get fail in the market than Ella' s Kitchen should not do further investment in these
product category (Plotnikov and et. al., 2015).
P2. Evaluation of opportunities of growth
Ansoff Matrix is a framework used by marketers to analyse the risk associated with their
strategy. It is also known as market expansion grid. This matrix was created by H. Igor Ansoff in
the year 1957. It suggest four strategies based on type of market and products. The four strategies
are market penetration, product development, market development and diversification.
 Market Penetration:
It is a marketing strategy in which firm takes efforts to promote their existing goods in
existing market to increase market share. Market penetration strategy can be performed in
various ways like reducing price of product to fascinate existing and new consumers. Increasing
sales promotion activities like discount voucher, cashback, loyalty cards, exchange schemes, free
samples and so on. Purchasing rival company of same industry also helps in increasing market
share. Market penetration aid in beating the competitors. It can increase market share to large
extent if executed properly. For example, market penetration strategy is of bike taxi aggregator
Rapido which initially give heavy discount to customers to capture bike taxi market.
 Product Development:
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In this marketing strategy, company produces new products to satisfy the needs of
existing market. This strategy requires proper research and development in order to identify the
need satisfying power of commodity. This strategy is useful when marketer have thorough
knowledge of market and potential to create an innovative solution to the existing problems. For
examples, Amazon initially sells books of paperback edition now amazon also sells kindle
edition to cater the need of consumer who are fond of reading books but does not have enough
space and money for paperback editions. Another good example of product development strategy
is newly launched battery powered toothbrushes introduced by leading toothbrush companies
like Oral B and Colgate Palmolive. (Mugo, Minja and Njanja, 2015)
 Market Development:
Market development refers to the strategies which are used to enter in new market with
existing product. New market can be demographic or geographic. In demographic context, firm
target new segment of population by changing positioning statement. In demographic context,
firm target new regions of native country by establishing new supply chain system or in new
country either by exporting or by opening new manufacturing unit in that country. For examples,
Sports equipments firms like Adidas recently launched their products in china. US based cab
aggregator Uber commenced its operations in Asian Markets.
 Diversification:
Diversification is a marketing strategy in which firm enter in a new market with a new
product. This is the most riskiest strategy among but all but risk can reduced by adopting related
diversification strategy. Extensive diversification can divert organisation's focus from their core
product. There are two types of diversification, related diversification and unrelated
diversification. In related diversification, company develop those products which have a link to
existing product range in any dimension. For example, toothpaste manufacturing company start
manufacturing of toothbrushes. In unrelated diversification, firm develop those product which
have no connection with existing product range (Mazza, 2017).
Hence, in context of the company, Product development seems to be the best strategy for
Ella' s Kitchen. Company should use this strategy to increase market share and to aggravate their
growth. Firm should develop new product for existing market. Consumers are always excited
towards new product. Customers always think to try new commodity. Firm should develop
Quinoa cereals. Quinoa is a superfood which have many nutritional benefits. It is a source of
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various nutritions like iron, vitamin B, protein and fibre. It is rich in protein and lacks fats. It is
gluten free food. Health benefits of superfood Quinoa Cereal will surely encourage health
conscious customers to purchase new goods for their children. Ella' s kitchen should make
cereals from quinoa in various flavours like pineapple, mango and strawberry. New product
launch create an extra ordinary good perception toward company. Customers will assume that
new product is superior than old products. As a result they definitely buy that product and rest of
things word of mouth publicity will do. Positive word of mouth publicity would enhance the
brand equity of the company (Mason, 2015).
LO2
P3 Assessing financial resources available to business along with their Benefits and Drawbacks
Finance is the most important and essential resource which is required by every business
irrespective of their size, nature and motive. Money enables organisations to perform their
activities in accurate manner with sole objective of attaining all predetermined goals. The funds
which company raises can be from internal or external sources. The internal sources defines as
those finances which the business owner acquired by themselves such as from close family
members or friends and from their personal investment. In this section external sources of
finances are discussed, along analysing their Benefits and Drawbacks. Some sources of external
finances are as follows which can be used by Ella's Kitchen.
This is an small organisation which produces organic baby food and toddler food. The
company make sales through supermarkets of UK and other countries around the world. Ella's
Kitchen make sales in international waters and deals through supermarkets and for acquiring
better market company needs funds for exploring new opportunities. Therefore, some financial
resources are elaborate below which are potential source for Ella's Kitchen to raise funds.
Bank Loans- The most easy and less time consuming source is bank loans. It is facility
service which bank render to public in which they can raise money easily for fulfilling their
purposes. Interest rates are involved and some official formalities needs to be completed by the
company (Li, Mobin and Keyser, 2015). Benefits- Bank loans are easily available to general public which shows its flexible
feature. Also, very low interest rates are associated with it which gives ease and comfort
to individuals.
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 Drawbacks- Bank loan facility is for all individuals but includes thorough evaluation
process of the background and other information of the applicant which sometimes can
be time consuming. The delays in finances can make organisation to lose some
favourable opportunities.
Angel investors- These are those investors who supports small businesses to run and
expand their business smoothly by providing them funds. These transactions is done by
exchanging equity ownership in return of money. These funds which are rendered by angel
investors is considered as one time investment, made by close family members most of the times. Benefits- Primary feature of angel investors is they are ready to risks for the business and
easily lend money to the owners for their growth and expansion. Also, the repayment
duration of borrowed money is flexible and providing ease to business owners.
 Drawbacks- Control over the company is lost, as equity is exchanged for money this
reflects that the owner of entity will gradually lose control over it and have to be
dependent on investors. This will result in reduced efficiency and productivity of firm.
Trade credits– Another very efficient source of finance is raising trade credits. This is
basically a financial assistance which is given by other firms by whom entity is dealing. These
parties are mostly suppliers of from whom company acquire their raw materials for developing
their finished goods. Benefits- Trade credit facility render organisation an advantage of no need to pay cash
upfront at the time of purchase and purchaser can stock up their inventory at the time of
demand. If the credit history of company is good it is a really easy and efficient resource
of funding (Lê and et. al., 2016).
 Drawbacks- Trade credit facility is given by doing some paper works and any delays or
negligence in repayment can cause legal actions against the entity which will harm its
goodwill and reputation.
These are some methods which can be used by Ella's Kitchen owners for raising capital easily
and in short-duration form outside the business. They just have to keep in mind small points
which can cause problems for company and mitigate them while considering these resources.
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LO 3
P4. Designing a business plan for growth
For an organisation like Ella's Kitchen, it is highly imperative that a business plan is
formulated which is effectively subjected towards ensuring proper growth and scaling up the
business within the marketplace. In context of the organisation, Product Development has been
chosen as an appropriate strategy for the company that it must implement effectively to scale up
the business within the United Kingdom and acquire a larger market share effectively. For this
purpose, the business plan for Ella's Kitchen is elaborated below:
 Vision and Mission:
The vision and mission of the organisation is to appropriately improvise the lives of
children through ensuring a healthy relationship with food. For this vision, the mission of the
organisation is to produce healthy food items, work with skilled individuals, as well as, get
involved in effective projects (Lambert and Oatley, 2017).
 Corporate Values:
The company values are quite effectively associated with an appropriate adherence to the
lives and well being of children, as well as that of other stakeholders. For this purpose, the
company emphasises on sustainability, environmental protection, as well as ensuring that the
food manufacturing process is quite healthy and enhances the durability of the product for longer
usage.
 Stakeholder Expectations:
There are certain stakeholders that the firm must consider in order to implement the
strategy towards the firm's growth. Hence, some of the prominent stakeholders in this regard,
along with their expectations are stated below:
◦ Customers: These individuals are the reason for existence of the organisation that are
responsible towards buying the company's offerings. They expect that the firm brings
in better range of products with enhanced health benefits for the children and a high
variety to choose from. Thus, product development strategy would help the company
in achieving the same quite effectively (Keough, 2015).
◦ Employees: They are the support system of an organisation who accomplish the tasks
effectively in order to push the company towards success. They expect that the
company provides them better growth opportunities, an effective working
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environment, as well as a better and more efficient tools and equipments to further
increase their performance within the firm. In this context, product development
strategy would be requiring the company to include a separate division for the
company's new range of products, with better equipments and more effective training
within the same (Hess and Sorensen, 2015).
◦ Shareholder: They are the ones who invest their financial resources within the
company and expect a better and higher return on the same. In this context, the
product development strategy would be quite effective in relation to providing better
returns to shareholders of the firm through providing a new range of food items for
the children that would be resulting in a higher revenue for the company.
 Entrepreneurial Strategies:
The new range of products for the organisation would be new and improved organic
Quinoa Cereals that would be coming up with different flavours that would be coming in
TerraCycle pouches for the toddlers that would be recycled, as well as could be stored for more
duration without depletion of the food items. For these items, there are two prominent strategies
that are discussed below:
◦ STP Approach: The firm would be implementing segmentation, targeting and
positioning as a strategy that would be associated with targeting a specific market for
the new range of products of Ella's Kitchen. For this purpose, the firm would be
segmenting geographical and demographical segments, upon which the firm would be
targetting individuals from the urban areas of the United Kingdom that are densely
populated and whose kids would be aged from 1 to 3+ years. As for positioning, the
company would be having these products within its physical outlets as well as within
its website, along with e-commerce channels such as Amazon (Güneralp, Perlstein
and Seto, 2015).
◦ Marketing Mix: As for marketing, the product strategy of the company would be
diversification as it would be bringing a new range of flavoured cereals. Moreover,
penetration pricing would be implemented by the company for its new product to
enhance its market share and revenue. In context of place, online as well as offline
distribution channels would be used by the firm to make the product range available.
As for promotion, Ella's kitchen would be using the firm's website, as well as social
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media handles such as Facebook, Twitter and Instagram to promote the product
effectively (DODDS, DIMANCHE and SADOWSKI, 2018).
 Financial Information:
For ensuring a prominent investment for this new strategy, it is necessary that the
company projects the financial transactions which the organisation would be incurring while
product development and distribution. Hence, the same has been reflected before effectively:
As per the above information, almost £10,000 would be the initial investment for the
organisation to product its new range of products, as well as distribute the same within the
market place. As for sales, the credit sales would be about 2,500 units in the first month,
followed by 10,000 units in the forthcoming periods.
 Evaluation:
For evaluation and monitoring, Key Performance Indicators would be used by Ella's
Kitchen, wherein, profit, sales, as well as positive social media reviews would be taken into
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