Unit 42: Planning for Growth Report - Prufrock Coffee

This report provides a comprehensive analysis of business growth strategies, focusing on key considerations for Small and Medium Enterprises (SMEs). It begins with an introduction to planning and its benefits, using Prufrock Coffee as a case study. The report then delves into Porter's Generic Strategies and the Boston Consulting Group (BCG) Matrix to evaluate growth opportunities. It further explores Ansoff's Matrix as a strategic planning tool. The report also examines various sources of funding, including bank loans, peer-to-peer lending, crowdfunding, and angel/venture funding, with a focus on their suitability for a coffee shop business. A detailed business plan is developed, including an executive summary, company description, and analysis of products, services, and marketing strategies. The report concludes with a discussion of exit or succession options for small businesses. References are provided at the end.

PLANNING FOR
GROWTH

TABLE OF CONTENTS
INTRODUCTION....................................................................................................................3
LO1............................................................................................................................................3
P1 key considerations for evaluating growth opportunities...................................................3
P2 Ansoff’s Matrix.................................................................................................................7
LO2............................................................................................................................................9
P3 Sources of funding............................................................................................................9
LO3..........................................................................................................................................10
P4 Business plan...................................................................................................................10
LO4..........................................................................................................................................13
P5 Exit or succession options for a small business..............................................................13
CONCLUSION.......................................................................................................................15
REFRENCES..........................................................................................................................16

INTRODUCTION
Planning refers as the procedure of carrying out operation that is required for
achieving desirable goal over the period. There are several benefits of planning for growth
such as it offers a scenario of business that how to perform it. Additionally, planning supports
company to identify market that it is large or growing. It becomes easier for organization for
building revenue. Planning not only support to grow business but also create clear picture of
the competitors in market. Apart from this, it assists company to develop business strategies
which is used to take competitive advantage from competitors. Growth planning can be
defined as the strategic business operations which supports business owner to create plan and
tracks growth in their income. It permits organization to allocate their fewer resources for
adapting changes in the industry. It is executed by digital disruption and helps to differentiate
from competitors. Planning is the foundation line of the business which supports to create
growth of firm in different market. There is an example of Prufrock coffee which is
established in Holborn, London, UK. It offers square mile coffee along with varieties. It also
offers tasty seasonal food to customers. It is a small-scale business in UK. This report covers
key consideration for evaluating growth opportunities.
LO1
P1 key considerations for evaluating growth opportunities
Porter Generic Strategic Model
It is strategic tool which helps company to gain competitive advantage in order to
market scope. Competitive advantage refers as an advantage which is taken by the
organization over the competitive products and business in industry market. This model is
basically interpreted three strategies such as
Cost leadership: it is beneficial strategy which helps business to enhance profit by reducing
cost while keeping product price average (Bates, 2018). As result it makes industry as low
cost producer in its industry. As low-cost producer enables to generate various source of cost
advantage. This strategy creates sustainable growth for the business and also enhance its
market share in business market. It has some drawbacks such as it requires effective use of
technology in the production process.
Differentiation leadership: it is another strategy which helps business to seek unique
dimension which is widely valued by buyers. Differentiation strategy not only leads

uniqueness in product or services but also differentiate product from others. This strategy
leads innovation in business that automatically creates sustainability in firm. It has drawbacks
as well such as changes in customer taste. Additionally, various companies look for other
strategies which can be able to get greater differentiation in market segmentation.
Focus strategy: Focus strategy keep control on narrow segment and that segment which
efforts to accomplish either cost advantage or differentiation. It helps business to build
customer loyalty on firm and their products (Mohajan, 2017). Additionally, it also helps
company to create product portfolio which automatically leads competitive advantage.
Justification
Focus strategy is the best strategy for Prufrock coffee because it keeps control on both
type strategies i.e. cost leadership and differentiation strategy. Apart from this, it helps
company to become cost leader in industry market. Differentiation leadership supports
company to differentiate product from others. This strategy is applied for narrow market
segmentation so, it is the best option for company.
Figure 1 Porter's Generic Strategies
>

Boston Consulting Matrix
It is a planning tool which is designed to support a firm to create long term strategic
planning. Additionally, it assists a business to determine growth opportunities by exploring
its product line (Loredana, 2016). Boston consulting matrix is also k/a as growth or share
matrix. Generally, it is divided into four segments:
Dogs: Dog represents that product has low growth in market as result market share is
low as well. When companies have high number of dogs that shows product is expensive that
automatically reduces purchasing behaviour of customers it gives impact on market share of
company.
Question Marks: question mark displays that product has high growth but market
share is low. In simple word can understand company’s product are highly demanded in
market but get low in return. Due to low cost unable to upgrade financial position that
directly reduces market share of company. To influence market share there is a best option
invest nothing and create income by offering exiting product on affordable price that
automatically enhance market share.
Stars: stars sign shows that product has high growth and market share is high as well.
It can understand through an example. When company has high growth of product in their
sector and market share of product is also high. In that state, organization can invest high
fund as result it leads high profitability in economic infrastructure of company. If a company
keep shares on hold automatically enables to gain cash cow which directly improves brand
position in market.
Cash Cows: This sign represents that product has low growth but market is too high.
This category helps business to keep product growth low means limited product line but
generates high profit and cash by offering high quality services. In this category organization
doesn’t have to invest high funds for invention of new product. It can improve product
quality which automatically saves large funds and improves purchasing behaviour of
customers.
Justification

Cash cow is the best strategy for Prufrock coffee because it requires low investment.
It helps company to improve coffee quality by investing low funds that directly generates
high profits by influencing purchasing behaviour of customers (Ofori-Sasu, Abor and
Mensah, 2019). It is best strategy which Prufrock can applied for enhancing market share of
company. When organization financial performance is high as result can apply stars strategy
for achieving product growth in other market.
Figure: 2 BCG Growth-Share Matrix
P2 Ansoff’s Matrix
It is a strategic planning technique which is used by business for analysing and
creating their strategies for growth. It is also known as product or market expansion grid.
Ansoff’s matrix is used to analyse opportunities for organizations for enhancing their sales in
different market segments. It is classified into four strategies which is described below:
Market penetration
It is a beneficial strategy which helps business to focus on enhancing sales of current
products to a current market. It is generally adopted by as strategy when business has its

existing products and knows that it has high scope in target market (Shanbhag, Dutt and
Bagwe, 2016). Additionally, it supports business to gain competitive advantage from
competitors over existing products. Organization can implement this strategy by decreasing
prices to attract new customers or existing customers It also supports business to influence
market share by promoting growth of products
Product development
It is another strategy which is also used by various businesses. This strategy focuses
on exploring new products to a present market. Various organization applies this strategy by
investing high funds on R&D for developing new products in existing market. It helps
business to influence market share by promoting new product for expansion.
Market Development
This strategy focuses on new market by using existing product. It is also profitable
strategy which helps company to grow its existing product by entering into emerging market.
It is the second market growth strategy.
Diversification
The strategy is also known as growth strategy because it focuses on introducing new
product in emerging market. It is quite riskiest strategy because organization enters in new
market without experience so received outcomes can be desirable or risky. It can adapt by
organization when keeps clear strategic goal and updates for risk. Thus, type balance between
reward and risk can help company to differentiate brand from others.

Figure 3 Ansoff's Matrix
Justification
Market penetration is the best strategy for Prufrock coffee because it helps them to
promote exist products such as coffee in target market (UK). Additionally, it supports
company to influence market share in exist market. Therefore, it is profitable strategy for
organization.
LO2
P3 Sources of funding
There are many sources of funds a business can generate but in case of a coffee shop will
go for some short-term loans which will be preferable according to type of business.
Bank loans
It is the best source of funding where money is extended from a bank to other party in
term of agreement that money will repay. In simple word borrow money on certain
percentage from bank as compensation and repay amount on predetermined time (Rahman
and et.al., 2018). These loans are always cheaper in case of other type of funds raised. Easy
instalments are being allotted according to type of business. These are predictable hence a
business is prepared to pay a certain amount which doesn’t create burden on business. It has

some drawbacks such as It takes a long-term process to take a bank loan. It requires a
collateral security to take a bank loan. Additionally, they have to keep lengthy paper as per
requirement to get a loan.
Peer to peer lending
It is a type of crowdfunding which is used to enhance loans for public who need to
lend money from those people who wants to invest. It is also good option for small business
who wants funds for short-time. It is hassled free process because there is no requirement of
any compensation or lengthy paper for get a lone. It is not an expensive source of funding. It
can help business to reach all level of supporters of business. It can help small scale business
to get funds faster. It requires a proper teaching or knowledge to Acquire funds from different
individuals. Business is required to teach fundraisers to get funds. There are also times when
a business has to inspire and motivate fundraisers to get funds.
Crowdfunding
It is the practice of funding which is used by for public, businesses and trusts for
raising money. It is easy as each individual has to donate a small amount. It also helps a
business to promote its brand. It doesn’t Require a long time to arrange funds. It can take a
long-time is business doesn’t have a large audience. Sometime crowdfunding sites takes fees
to gather once from audience. Constant communication with donors is required for
crowdfunding.
Angle and Venture funding
It is a subcategory of venture capital where investor invest their funds into companies
and become shareholder of business (Madsen, 2017). On the other hand, ventures capital
where allows employee who wants to invest their funds in new business to keep hope get
high profit in return to them. It is less risky in terms of loan. It Promotes our business as well.
Requires less time in less knowledge. It’s an expensive process. There is always a lack of
control. It results in lowering the ownership rights.
Justification
Ban loan is the best source of funding for Prufrock coffee because it’s cheaper in case
of borrowing money as well as it doesn’t harm or brand image and an hour and in a place like

UK. Additionally, business gets redemptions from government for an innovative start-up.
Even government helps small business to offer bank loans which are cheaper and affordable.
LO3
P4 Business plan
Executive Summary
Prufrock cafe is a small-scale organization that operates in UK with small amount of
capital and resources established to earn profit. It is planning to expand its sales and
profitability by
launching organic food in its product range to satisfy needs of customers in effective
manner.
Thus, company has prepared business plan to identify various strength and weakness of
company that protect it from various threats and helps in gaining competitive advantages in
the market.
Company Description: Prufrock is a independent coffee shop that is located on Leather
Lane
founded by three coffee enthusiasts. It has 13 talented coffee professors with highly
experience and passion that helps firms in gaining competitive advantages.
Product and services: Company offers Tasty seasonal foods, friendly services and wide and
diverse retail selection and coffee to attract large number of coffee lovers.
Market Analysis: Firms is affected by internal and external factors of environment so
market
analysis helps in taking competitive advantages in the industry (O'Loughlin, 2017).
Pestle Analysis
Political Factor: Prufrock cafe operates its business in UK which is suffering from political
instability thus it has impacted sales, profitability and operations of company. As policies
of
government are not stable, high interest rate which increase cost of production of firm.
Economical Factor: UK is facing situation of recession and high employment rate that
means
people are less willing to make purchase of costly products. Therefore it has led to increase
in sale of company as Prufrock cafe offer qualitative and tasty foods at reasonable rates.

Social Factor: People of UK are high concerned about their health and demand more
organic
food in their diet so it forces Prufrock company to manufacture product that are organic in
nature.
Technological Factor: Due to digitalisation and increase use of social sites customers
demand that company should offer its products and service through online sites. As it
provide ease to customer by delivering goods at their door steps.
Environmental Factor: Resources available in environment are limited so it forces Prufrock
cafe to limit wastage of material while manufacturing product and deliver of services to
protect
environment. Thus, it leads to increase in profitability and sales of company due to
minimum
wastage and customers satisfaction.
Legal Factor: Prufrock company has to ensure various legal laws such as health and safety,
discrimination of employees and working hours while operating its business in the
industry.
Swot Analysis
Strength: Prufrock cafe strength lies in specialization in providing tasty seasonal food and
unique coffee to its customers (Council, 2018).
Weakness: Limited resource and capital is disadvantage for company in expansion of
business in the industry.
Threats: Increasing competition from large scale firms that have huge number of
employees
and resources.
Opportunities: Company has opportunities to expand its business by offering organic foods
in its product range.
Marketing and sales: Brand image of company to provide specialised coffee and tasty
seasonal food at affordable rates helps Prufrock cafe in marketing of newly launched
product.
Company is able to increases its sales by adding organic food in its product range. It also
planned to use hoarding and social media to attract large number of customers at
reasonable cost.
Organisation and management: Prufrock cafe is a small-scale organisation with fewer
employees and indefinite organisational structure (Mohammed, 2018). It is managed and

owned
by three partners who are extreme lovers of coffee established company to earn profit.
Daily operation: Its daily operations is to arrange resource, manage people and financial
requirements for meeting customers satisfaction.
Financial history and funding: Prufrock cafe raise its fund from personal saving of different
partners and taking loans from financial institute to established and operates business.
Financial Plan and projection:
Start-up expenses Amount (£)
Legal
Promotional material
Contractors
Insurance
Computers
Others
700
150
300
100
200
100
Total 1550
Start-up expenses Amount (£)
Cash required
Start-up inventory
Other current assets
Long term assets
Total assets
30000
17000
6000
52000
105000
Total requirements 110000
Start-up expenses Amount (£)
Liabilities
Accounts payable
Other current
Long term liabilities
Total liabilities Investors
Investors
Total start-up finding
14000
1600
7000
55000
77600
0
80000