Unit 42: Planning for Growth - Cafepod Coffee Strategic Analysis

This report evaluates growth opportunities for Cafepod Coffee Company, established in 2011, using frameworks like Porter's generic strategies, BCG matrix, PESTEL analysis, and the Ansoff matrix. It explores competitive advantages, market penetration, product development, and diversification strategies. The report also assesses various funding sources, detailing their benefits and drawbacks, and designs a business plan for growth. Furthermore, it analyzes exit and succession options for small businesses, comparing and contrasting them to provide valid recommendations. The analysis aims to provide strategic insights for Cafepod Coffee's future expansion and sustainability, with a focus on market development and attracting a larger customer base.

Planning for growth

Table of Contents
INTRODUCTION...........................................................................................................................1
P1 Evaluation of key considerations for growth opportunities .......................................................1
P2 Ansoff growth matrix.................................................................................................................4
M1 Options of growth by using a range of analytical framework. ............................................5
P3 Sources of funding with its benefits and drawbacks..................................................................5
M2 Evaluation potential sources of funding and justifying appropriate source of funding........6
P4 Designing a business plan for growth ........................................................................................7
M3 Developing an appropriate and detailed business plan for the growth and securing
investment ..................................................................................................................................7
P5 Assess exit or succession options for a small business with its benefits and drawbacks of each
option.............................................................................................................................................11
M4 Evaluation of exit or succession options for a small business comparing and contrasting
the options and making valid recommendations.......................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES:.............................................................................................................................14

INTRODUCTION
The planning for growth allows the organisation in assess how the company is
performing and key areas of opportunity are identified which helps the business in future
expansion. The company strategic plan defines the medium term to long term goals for
accomplishment. In the company, planning for growth is the strategic activity to track the
growths in regards to returns and planning is done by stakeholders (Afzalan, N and et.al., 2018) .
The report is based on Cafepod coffee company providing quality coffee to the customers. It was
established in 2011 by two South African friends i.e. Brent Hadfield and Peter Grainger. It's
headquarters is located in Filament Walk, London, Greater London, SW18 4GQ,
United Kingdom (CAFEPOD COFFEE, 2021). In the report the discussion is based on the key
considerations for growth evaluation and Ansoff matrix is used. Furthermore, sources of funds
and business plan is prepared. The succession and exit plan is also discussed for the small
business.
P1 Evaluation of key considerations for growth opportunities
The planning for growth is required by small or medium enterprises which implies
specific model and framework in the competitive environment to have growth opportunity. The
Cafepod coffee company uses several models which helps in business expansion and growth rate
of market is enhanced by gaining growth opportunities.
Competitive Advantage- It is described as the prime growth module in the business as
the competition in the market place supports the firms to conduct business in innovative manner.
When Cafepod coffee company serving coffee competing with competitors for the market share
and acquiring unique attributes which are valuable to consumers, resulting in competitive
favourable position (Ahani, S and et.al., 2020).
Porter’s generic strategy
This strategy describes how business increases its competitive benefit of organization by
applying appropriate strategy. This model was formulated in 1980 involving strategy of cosh
leadership, differentiation and focus.
 Cost leadership strategy- The organization gains the competitive advantage by reducing
in the cost market share is increased. The middle class are targeted by the Cafepod coffee
company to enlarge the market share which leads to ample consumer market mix. To
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have the high brand awareness and sales the Cafepod coffee company focuses on
affordable and easily accessible of produce. This strategy offers the advantage in
expansion of consumer base, brand recognition.
 Differentiation strategy- It is the type of the strategy used to differentiate its products
from the competitors having unique benefits. For expansion of customer base the
Cafepod coffee company focuses on unique product features. It takes the use of brand
logo to make strong brand image in the minds of consumer (Ali, Z and et.al., 2019).
 Focus strategy- In such strategy the companies are focused on resources for serving the
niche market. The Cafepod coffee company seeks the cost advantage in its target market.
To satisfy the customer expectations the Cafepod coffee company focuses on product
attributes by making the changes in the product.
In accordance to above cost leadership strategy is appropriate as it helps in gaining large
customer base by lowering the prices and offering discounts and creates the high brand image
and awareness.
Boston consultancy group matrix
This matrix is denoted as planning tool having the opportunity of growth in the firm for
goods & service. It includes the four elements which are determined on the basis of the market
share and market growth level on the criteria of high &low performance. The use of this matrix
in Cafepod coffee company will help in analyzing growth status and opportunities.
 Dog- It is the stage where the firm is having low market growth and share in the market
place having slow growth. The cash returns generated are low which does not require
investment in the Cafepod coffee company. The strategic choice of this stage is
retrenchment, divestiture.
 Question mark- In this large amount of cash is consumed but having the low market
share. It is known as 'problem child' where there is the potential to gain the market share
and becoming star. It is concerned with the strategic choice of product development and
market penetration. The close consideration is required by the Cafepod coffee company
as it comprises low market share in rapid growing market which consume high money
and incur losses (Boden, P and et.al., 2020) .
 Star- This stage describes the high market growth and high market share. The stars
comes in both category of cash generators and cash users. The strategic choice of this
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stage are vertical and horizontal integration. In this the Cafepod coffee company becomes
the market leader and uses the current products to penetrate the market which can be
done by improving its distributions.
 Cash cows- It is also called as 'milked' as it determines low market growth rate and high
market share. The Cafepod coffee company receive cash from cow and invest them in
stars to have the support for future growth. (Boden, P and et.al., 2020).
In accordance to above the market development strategies would be beneficial which will
help in improving the growth rate and share of the Cafepod coffee company to become star.
PESTEL Analysis
The PESTEL Analysis is the framework which helps the companies in understanding the
market dynamics and improves business continuously by examining the several external factors.
 Political factor- The impact of governments and policies on the Cafepod coffee company
is identified. The political integration and disintegration can be threat and opportunity for
the Cafepod coffee company as integration leads to market penetration and disintegration
leads to barriers for the expansion. The improving structure through governmental polices
creates opportunities for the customers and suppliers.
 Economic Factor- This factors determines the economic conditions affecting the coffee
firm. The opportunity is created for the Cafepod coffee company as the growth of
developing countries and decline in unemployment rates leads to gain more revenues
from several markets. The Cafepod coffee company will faces the threat of rising labour
as it will increase the spending for ingredients (Butler, D., 2019).
 Social Factor- It shows the social conditions and trends influencing the consumers and
coffee firm. The Cafepod coffee company has the opportunity of increasing the revenue
due to increase in demand for speciality coffee because of growing coffee culture and
middle class populations.
 Technological Factor- It is related to the technology advancement which is important for
decision making. The Cafepod coffee company can link its services from mobile
application to gain more revenue. With the help of technology the supply chain efficiency
can be improved. The availability of the speciality coffee machines for home use can be a
threat as availability of substitutes will increase to the company products.
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 Environmental factor- To enhance the sustainability standards and implementations the
increase in availability of sustainable business process provide the opportunity to
Cafepod coffee company. It makes the innovate products which are environment-friendly
and uses the recyclable materials for packaging the food products and other merchandise.
 Legal factor- This factors are related to the laws and regulations that impose restrictions
on the coffee business. The performance of Cafepod coffee company is improved by
satisfying product safety regulations. In developing countries employment regulation is a
threat for assessing labor market and competitive priced coffee beans. The workers are
protected in the environment by providing health & safety security (Cleberg, C., 2019).
P2 Ansoff growth matrix
For the business growth it is a strategic tool used in guidance for decision. It is technique
of strategic planning ma8intaing operations for the future purposes. For the expansion of
business operations Cafepod coffee company uses this model.
 Market penetration- To enhance the business growth the existing product is introduced
in the new market. This strategy helps in determining the high market share and growth
rate which benefits the Cafepod coffee company in the development. It leads to increases
in the sales by giving loyalty cards and rewards to the loyal customers or offering
discounts.
 Market development- It is also known by the name of market expansion. In this strategy
the expansion takes place in new market with existing products which can be done
geographically or demographically. The Cafepod coffee company explores new market
and targets new customer base which increases its market share and product sale. The use
of this strategy helps in improving business operations at various locations where it was
not present before to gain the profitability (Dadashpoor and et.al., 2018).
 Product development- In this strategy the company is encouraged in the current market
for expanding its product portfolio by introducing new product. The Cafepod coffee
company establishes new product for consumers by offering new and unique flavours of
coffee. For the promotion of the new flavours it can create awareness among people. The
strategic partnership allows with the limited financial investment for access new product
development.
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 Diversification- In such strategy new product is introduced in the new market. It is a
risky strategy as the company fully needs to operate in the new market with with new
product. The Cafepod coffee company offers several flavours and diverse versions of
coffee. It can diversification by offering breakfast or lunch along with its coffee. The
firm is engaged for the growth and development. The diversification takes in two forms.
In vertical diversification the new product is established in the current product line. In the
horizontal diversification the new product developments are launched and share similar
economic environments (Deng and et.al., 2017).
In accordance to above from all the Ansoff growth strategy the market development will
be appropriate strategy for the cafepod company as it will help in targeting new customers which
increases its customer base and leads to increase in revenue. It also allows the growth of the firm
and gets competitive edge over rivals.
M1 Options of growth by using a range of analytical framework.
To the Cafepod coffee company several growth options are provided which are benefiting
in maintaining the position and gaining more positive outcomes. In the context to the Cafepod
coffee company the growth options are porters generic strategy, BCG matrix, PESTEL analysis
and Ansoff model. All such model boosts the performance and helps in gaining large market
share and growth in comparison to rivals. The cafepod coffee company gets the opportunity of
expanding the business and product in the new market which makes them stars. The growth
option provides the opportunity in expansion of product and attracts large customer base. The
ansoff growth matrix helps in product development and market development which improves
overall performance by introducing new product with modification or existing product in new
market.
P3 Sources of funding with its benefits and drawbacks
The funding is the predetermination of the reserves which helps in growth of the
business. The funding can be for the purpose of the long term and shot term. To efficiently run
the business and for start-up several sources of funds are obtained. The raising of the funds can
be from the personal source or borrowing from bank. To achieve the long term actions of the
business plan the prearrangement of funds are taken (Friedmann, J., 2020). The productivity and
efficiency of the business in context to Cafepod coffee company is improved with the help of
source of finance. The several sources of finance are-
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 Retained earnings- In this the portion of net earning is maintained by the organisation
which is not distributed in the form of dividend between the shareholders and used for the
future purpose known as retained earning. The organisation profits depend on the factor
of dividend policy and net profit which is a internal source of financing. The Cafepod
coffee company apply this source to meet the additional requirements in the future.
Benefits- It is available in the organization as a permanent source of finance which which
do not create explicit cost in the form of dividend , interest etc. all the funds are internally
generated which helps in providing the flexibility and operational freedom. The business
capacity is enhanced to cover all the losses.
Drawbacks- The dissatisfaction can be created between the shareholders due to excessive
of undistributed profits which provides low dividends. In the organization of Cafepod coffee
company it is an uncertain source of finance as profits fluctuates. The company efficiency and
viability declines if there is inappropriate application of reserves of undistributed profi (Maharaj,
B., 2020). Trade credit- In this source the immediate payment is not made in making the purchase
of goods and services from one trader to another. In the buyer account the record is
appeared as sundry creditors. The Cafepod coffee company use this, as it has financial
position and goodwill. It is a short-term sourcing of financing.
Benefits- This source of finance convenient provided to customer if the credit worthiness
of the seller is known. The trade credit helps in promotion of the organization sales. On the
company assets it do not create any charge to have the funds.
Drawbacks- If the funds are easily available and provides flexibility the firm can bear the
risk of over trading. In comparison to other source of finance the limited amount of fund is
provided which is costly in raising money (McCann, P. and Van Oort, F., 2019).
From the above discussion all sources of acquiring funds are beneficial and important in
raising the funds in context to Cafepod company. The retained earnings helps in meeting the
future uncertainties and in future it can use for the other purposes. While the trade credit helps in
acquiring of raw material or other supplies without making immediate payment which improves
the sales and performance and leading to the growth.
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M2 Evaluation potential sources of funding and justifying appropriate source of funding
As it has been mentioned there are several sources of funding available to the Cafepod
coffee company. The retained earning and trade credit the beneficial source of funding as they
both provides the flexibility in the business continuation. No interest is created on both sources
of funds and in according to purpose of short term and long term of the cafepod coffee company
the the funds are provided. The appropriate source of funding is retained earnings as it helps in
meeting the future uncertainties by keeping some funds in reserves.
P4 Designing a business plan for growth
For the existence of any business the planning is important. The successful business
reviews its business plan to ensure it continually meeting its needs. The business plan helps in
the allocation of resources (Prakash, S. and Henry, J., 2019). It helps in attracting the new funds.
The business plan is in written form of statement for future describing the purpose of present
market position. The business plan is the road map rendering guidance for daily operations for
the firm efficiency. The several aspects are included in the business plan which is shown as blue
print. The elements included in the business plan are-
 Executive summary- The Cafepod coffee company was established in 2011 situated in
London offering coffee, hot drinks, snacks to the coffee lovers. The company offers
Nespresso compatible coffee, gourmet popcorn, coffee accessories, biscuits, chocolate,
breakfast treats, to coffee lovers enjoying a quality drinking experience. It provides the
comfortable and friendly atmosphere where the consumer receives the quality food,
services at reasonable price. The Cafepod coffee company offers the variety of choices to
the consumers. Foe the expansion of the organization the business plan is prepared which
also states company mission, vision, objectives and marketing strategy.
 Business description- The cafepod coffee company defines the business vision, mission
statement with the objectives. The vision of the company is to have the large customer
base and higher growth inn the international market. The mission of Cafepod coffee
company is to become the favorite coffee shop brand inn the world. It wants to provide
the best quality of coffee to the customers (Rudolf and et.al., 2018). To attract and retain
the most talented people in the company a well working atmosphere is created and for the
clients also to enjoy their coffee. The objective is to create the substantial income and
working environment where both customers and employees are treated with respect and
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dignity. To make the customers happy and having increment in revenue by 25%. the
variety of coffee will be offered which ranges to espresso to latte. It will also provide the
juice, soda and non-alcoholic beverages to person who wants something else. The interior
designing will be relaxing atmosphere.
 Market analysis- It covers the marketing strategy of segmentation, targeting and
positioning. The Cafepod coffee company can segments its targets on the basis of
demographic, geographic etc. to target customers and needs are satisfied. It takes the use
of various market segments on the basis of economic profiles, cultural groups, age groups
etc. In targeting, customers are targeted between the age group of 18 to 55 years in which
some prefer high caffeine and some prefers premium. Some customer likes to drink the
plain coffee and some of adds sweetener or creamer. It provides the high quality coffee.
The customer purchasing pattern is based on convenience, cost and quality. The middle
and upper class of customers are targeted. The cafepod coffee company targets to every
age group by providing them coffee in accordance to their choices. In the positioning
strategy the evaluation is based on how product is positioned to target the most precious
consumers. In the target consumer mind the brand is facilitated in the mind of consumers.
The Cafepod puts emphasis on the quality in order to satisfy the customers and cereats
the brand image in consumer minds by serving them quality coffee (Samander and et.al.,
2017 ).
 Marketing and sales strategy- The Cafepod company can procure the funds from
various sources for the purchase of raw material and other supplies. The cafepod coffee
company focuses on the business offering to customers and modifies the product line. It
involves the product such as coffee, tea, baked goods, smoothies etc. The pricing is done
in the such way that it can have the competitive advantage and uses the penetration
pricing by keeping to prices lowers to attract more customers. Cafepod company uses the
several promotional techniques for the brand promotion and it makes the pricing in such
way to attract more customers. The sales strategy would be such to differentiates the
products from other competitors by creating value proposition. The server can ask for
added items to the customers like sandwich which will helps in increase in the sales.
 SWOT Analysis- it defines to the strategic planning technique used by the organization
in assessing their potentials to complete the project.
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The Cafepod coffee company faces competition from many competitors such as CRU
Kafe, Good Juicery Pvt Ltd etc. as it offers excellence coffee drink in different varieties to
customers.
◦ Strength- The cafepod company provides the high service culture by keeping the
environment clean and offering high-quality services. The owner has the opportunity
to have direct interaction with customers. It has the strong brand image and stability
in the business due to loyal customers. To attract the large customer base it has good
brand image and brand awareness is created. It also possess the team of highly
skilled employees in making the coffee.
◦ Weakness- The Cafepod coffee company face weakness in less market data as
establishing in new market it becomes difficult to collect the data in niche market. To
provide the quality services and product it is to be done manually which is costly and
time-consuming. The market share of Cafepod coffee company is low as serving to
the several suppliers. The generalized standards products weakness the flexibility of
coffee company.
◦ Opportunities-The Cafepod coffee company has the opportunity of direct interaction
with the customers face-to-face. It can take the use of innovative techniques for
increasing and improving the business performance which can be in the form of taste,
seating arrangements etc. It can increase its customer base by offering the rewards
and discounts to customers which leads to increase in brand loyalty.
◦ Threat- The Cafepod company faces the competition from the competitors in the
pricing to attract the market which leads to a threat. The rise in prices of daily
supplies by the supplier is also an threat for the coffee company. The external
strategic factor reduces the market share of the company by competition based on low
prices (Sparkman, R., 2018).
Financial factors- It involves the financial plan outline the assets, liabilities and cash flow of the
business. It helps in determining the financial health of the cafepod coffee company. It comprises
of income statement, cash flow statement and balance sheet. The income statement helps in
knowing the total sales & expenses. The cash flow statement helps in determining business
ability for paying bills in short-term. The balance sheet summarizes the net worth involving
assets and liabilities.
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Exit strategies- In such plan the ownership of the organisation is sold to some other company
person. For the cafepod company selling in open market will be effective as only company
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owner is changed which may bring some new roles and products or modification in business and
attracting to large buyers.
M3 Developing an appropriate and detailed business plan for the growth and securing investment
The construction of detailed business plan provides the blueprint of the company which
helps in achieving the growth and profitability. With the help of business plan the cafepod
coffee company can makes the marketing strategies and objectives are achieved. While
constructing business plan it comprises of vision, mission, marketing strategies, financial
information etc. which is important in running business.
P5 Assess exit or succession options for a small business with its benefits and drawbacks of
each option
The conditions of the market are examined by focusing on the particular market options
of exit plan and succession plan. These options help business growth by taking the effective
decisions. The Cafepod coffee company considers the exit or succession plans for the expansion
of the business in new market.
Exit plan- It is a plan of leaving the business where the ownership is sell in company to
investors or another company. In this strategy the owner gets the way of reducing or liquidate
stake in the organization and makes substantial profit it the business is successful. The choice of
exit option influences decision for the business development. The Cafepod coffee company
considers this exit plan which benefits in knowing particular issues affecting their returns. The
company also needs to consider the financial situation and expectations. The exist strategies are-
 Liquidation- It defines to the procedure of selling off its assets or redistributing to
creditors and shareholders and business is closed. It can be done in two ways. (1) To
close and sell assets as soon as possible- In this business is closed and assets are sold.
The money is created by sell of assets, while valuable items such as clients lists or
business relationships are lost. The working is done with the liquidation experts for
ensuring right procedure is followed (Tsatsoula, E., 2018). The pros are it is relatively
simple and quick closing process depending on sale of assets. The cons are the money is
generated only from the sell and if creditors are there they will be paid first. (2)
Liquidation of business over time- It is refereed as 'lifestyle business' where the owner
takes funds out over time rather than investing them into business. The benefit are it helps
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in maintaining cash flow. The drawback is with draw of funds will affect the tax situation
and affects the sales value and growth potential.
 Selling business in open market- The purchase of already established business can be
an attractive option as it is less risky. To someone else the rights and responsibilities is
given in the market rather than considering single. The business owner is changed. The
benefits are the buyers are attracted if the financial condition of the business is good. The
goodwill of business can be incorporated into company value. The drawback are it is long
process in finding the buyer for the business in open market and for the valuation
business it can be complicated.
Succession plan- It is a series of logistical and financial decisions regarding who will take over
the business upon retirement, death or disability. It is a document which is intended to guide over
the change in ownership by having instructions. In the authority is transferred from one
individual to another. It is an ongoing process need planning and preparation for smooth
transition of ownership. The several options are -
 Selling business to co-owner- If the business is running with partners than co-owner can
be considered as potential successor. In the partnership a mutual agreement is drafted in
the event of one owner death the remaining owners will but the business interests. This
agreement benefits in ease burden of unexpected transition for the organization members.
In the buying selling agreement fair compensation is required to be given and allowing
remaining co-owners to control the business functioning. The drawback are it requires lot
of cash to keep in hand which is expensive.
 Mergers and acquisition-The succession plan of the departments is maintained which is
very useful for the company by merging one company with the another company to have
effective functioning and completing task together. The benefit is the skills and abilities
are enhanced which helps in dealing with the risks and uncertainties. The drawback is
there can be duplication of the operations which can be short coming.
M4 Evaluation of exit or succession options for a small business comparing and contrasting the
options and making valid recommendations
From the above, by evaluating exit and succession options, the succession planning
option of mergers and acquisition is appropriate for the Cafepod coffee company as it is bringing
new prosperity in the commercial investment and initiate new products. To make the company
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operations continue it will help and in the clients experience it do not bring any disruption. In the
exist option the owners closes the business. In the exit plan the business is close down but in
succession plan the company is either takeover or merged with another company which benefits
in the continuity of business.
CONCLUSION
It is concluded that the planning for growth is the important aspect in the company which
makes successful and gains profitability. The planning for growth helps in setting clear goals for
growth targets and provides the financial projection by managing the cash flow. In the economy
growth the strategic plan is the essential aspect which benefits the organisation in preparing
vision for future leading to growth of business. The company evaluates various growth models
and evaluates the sources of funding. Further it also makes the evaluation of the exit and
succession planning.
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ONLINE
CAFEPOD COFFEE, 2021 [Online] Available Through < https://www.cafepod.com/pages/our-
story>
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