Comprehensive Growth Planning Report for CafePod Coffee Co. Business

This report analyzes the growth strategies of CafePod Coffee Co., a UK-based coffee company, focusing on key considerations for evaluating growth opportunities, including competition, pricing, market share, financial viability, and risk assessment. The report applies the Ansoff Growth Matrix to evaluate market penetration, product development, market development, and diversification strategies, recommending product development as a suitable approach for the company. It identifies potential funding sources such as bank loans and personal investments, discussing their benefits and drawbacks. The report further designs a business plan for growth, incorporating financial information and strategic objectives, and assesses exit or succession options for the small business, considering associated advantages and disadvantages. The report aims to provide a comprehensive understanding of business growth planning for CafePod Coffee Co., offering practical insights and recommendations.

Planning for Growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Examine main considerations for evaluating growth opportunities along with justification
................................................................................................................................................1
P2. Evaluate the opportunities for growth with the application of Ansoff's Growth Matrix. 3
TASK 2............................................................................................................................................4
P3. Identify potential sources of funding along with their benefits and drawbacks...............4
TASK 3............................................................................................................................................5
P4. Design a business plan for growth including financial information and strategic objective 5
TASK 4............................................................................................................................................8
P5. Assess exit or succession options for small business together with benefits and drawbacks
................................................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Growth planning is a process in by which owners of an entity make plans which will help
growing the business by increasing the revenue. This involved management of limited resources
by allocating them efficiently in achieving the tasks. An organization adopt many strategies and
techniques for its growth (Mitchelmore and Rowley, 2013). It should be a continuous process
which needs review and monitoring for implementation. The company chosen in this report is
CafePod Coffee Co. which is located in London, UK. It covers key considerations for evaluating
growth opportunities, application of Ansoff Matrix, potential sources of funds along with its
benefits, development of business plan and how can a small business exit.
TASK 1
P1. Examine main considerations for evaluating growth opportunities along with justification
Growth opportunities are essential to increase the scope of business so that high revenue
and profit can be generated. This can be done in number of ways such as expansion of market,
product, diversification, acquisition and many more. It is necessary to have competitive
advantage in order to survive in the long run. Small businesses have limited opportunities for
growth because of lack of sufficient resources. There should be proper planning along with
strategies to be implemented within the organization for the growth. CofePod Coffee Co. is
exploring opportunities for increasing sales in UK to make a position in the marketplace. For
growth prospectives, different areas particularly strategies of competitors should be examined.
Therefore, variety of key considerations that can be taken into account by CafePod Coffee Co.
for growth opportunities are as follows:
Competition and competitive advantage- It refers to the situations of a market in which
an organization sells the goods at a price which is equal or lower than its competitors in order to
attract them (Rydin, 2013). There are many factors which are included in this such as cost
structure, quality of product, intellectual property, customer satisfaction and many more. It is
important to track the performance of competitors and analyse their strategies. In the context of
CafePod Coffee Co., it should be aware about its rivals and their working. Furthermore, their
position in the marketplace should also be considered in the planning. This can help CafePod
Coffee Co. to provide better quality in their products as compared to its competitors.
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Price structure- This includes the prices that are offered to customers for the products or
services of an organization. This consideration plays a vital role in growth of a business. While
paying the price, a customer wish to have expected perceived value. With regard to CafePod
Coffee Co., the existing prices should be checked and amended as per the needs of customers.
This can be done by going through historical data. Furthermore, the company should understand
the price strategies that are being implemented by different entities in the same line of business.
The prices should be favourable to customers along with offers like discounts. Prices which meet
the expectations of customers help it grown its business (Rahmanda, 2012).
Market share- It is the part of the whole industry or a market's total sales which is the
result of total sales made over a particular span of time. It reflects the number of customers who
are aware and using the products of a particular company. Every organization wish to have an
increased market share so as to enhance its sales and revenue. In the context of CafePod Coffee
Co., it should expand its business in those market where has colleges education institutions etc.
and have higher customers as compared to its existing level. The growth opportunities will give a
chance to increase its current market share. Market opportunities help in adding more market
share which reflects the total sales.
Financial viability- It is again an important factor for evaluating a growth opportunities.
This is regarding funds required by the company, estimation of cash flow, profit ratio etc.
Without financial viability, no entity can achieve its objectives resulting in difficulty to survive
in the market. CafePod Coffee Co. should analyse those areas or opportunities which offer high
viability and stability in financial resources. Budget is prepared which can be allocated as per the
need of the objectives. Financial viability helps in making decisions as it is the first elements in
decision-making.
Investors' reward- Organizations look for different kinds of investors who are willing to
invest in the business for a return (Berger, Wagner and Webster Jr, 2014). Therefore, companies
find avenues and prospects through which it can generate more revenue to be able to give higher
return to its investment. CafePod Coffee Co. should take into account the expected return of
investors so that more investors can be interested in making investments. Growth opportunities
should be such which provide high ROI.
Risk assessment- Risk is defined as the uncertainty which may create difficulties in
carrying business operations. These are unforeseen which affect desired outcomes. Also, it can of
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many types and there could be both positive and negative outcomes. Before taking up any
opportunities, CafePod Coffee Co. should asses the level of risk in order to reduce it. This is
important otherwise, the investment in expansion or any other growth strategy can be lost.
P2. Evaluate the opportunities for growth with the application of Ansoff's Growth Matrix
Ansoff Matrix is a tool which is used by organizations to assess, evaluate and plan
growth strategies. There are four different strategies which have connection with each other and
help in making plans which can help it grow. It was developed by mathematician H. Igor Ansoff.
He was also a business manager who had knowledge about how to grow business. The strategies
involved in this are market penetration, product development, market development and
diversification. Each type of strategy has individual purposes. CafePod Coffee Co. can choose
market penetration. This strategy of Ansoff Matrix focused on developing growth strategies by
which existing products are sold in the existing markets. This is helpful in adding sales to current
level and enhance market share of an entity. Furthermore, this strategy has four prime objectives
which are promoting sales, dominance in growth markets, pricing strategy to make the market
less competitive and increase existing customers through various schemes.
Market penetration strategy can be implemented for increasing profitability by selling
goods in the same market without any changes. Furthermore, the effective way to use this
strategy through attractive promotional and marketing activities. For this purpose, variety of
promotional tools and techniques can be applied. In between all these initiatives, CafePod Coffee
Co. should not lose its focus from public relations which is about making healthy relations with
its customers. Growth opportunities can also be achieved through market development
strategies where existing products are sold to new market. CafePod Coffee Co. can evaluate new
markets which are near to its current location. The new markets could be Cardiff Bay, High
street, Manchester and many other similar market. In this way, geographical limits can be pushed
as per the demands of the product.
Product development strategy a growth strategy organizations introduce new products
existing markets. In this strategies, new competencies and skills are required to be developed in
order to attract customers. Hence, it can be said that it involves creativity and innovation in
existing products to give them new design and look. It is effective to gain competitive advantage
as new products give tough competition to rivals. The needs of the customers should not be
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ignored as their satisfaction is important for survival. The new product could be flavoured coffee,
frozen coffee and so on.
The last strategy is diversification in which new products are launched in entirely new
markets about which the organizations have little knowledge. It is considered highly risky an
organization lack in experience. Therefore, before adopting this strategy, risk should be
evaluated and only that product and market should be selected which have high rewards. This
requires extensive research and study of new markets to ascertain demands of customers.
CafePod Coffee Co. is a small business company which has limited resources. Hence,
product development can work as the most effective method for growth. It need not invest time
and money in conducting a research for market however, only the demands of the customers are
required to be assessed so that new products can be developed which can provide them high
satisfaction (Prohorovs, 2014). In this, way it can increase its sales and generate high revenues
which can be utilised in making further expansion. New products should be created with
innovation and whole new designs in order to attract existing as well as new customers.
TASK 2
P3. Identify potential sources of funding along with their benefits and drawbacks
Funding is a way through which financial resources are raised which are utilised to
achieve the objectives of the company. It is usually in the form of money. There can be different
areas for which funding sources are accessed. Funds can be arranged through external as well as
internal sources. There are number of sources which can be accessed for raising funds. CafePod
Coffee Co. can consider variety of funds for growth opportunities by applying strategies like
market penetration. Same are as follows:
Bank loan- It is the most common way of raising funds by giving assets as a security. It
is obtained for a fixed period for an interest and is required to be repaid within the specified time.
CafePod Coffee Co. is a small organization which can raise money from bank as these are easy
and approachable gathering funds. The main features are that cost of raising this fund is low and
the amount of the loan can be adjusted as per the needs. The borrower raising this fund should
repay the principal plus interest amount to avoid paying penalties (Cheng, Cullinan and Zhang,
2014). It has advantages such as flexibility in which borrower is not required to worry about
making regular instalments on time. Furthermore, it is one of the cheapest options to raise as
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compared to overdraft or credit cards. However, there are disadvantages which is about
following strict requirements which affect the business and burden of repayment, where the
borrower has to make payments in order to avoid late fees.
Personal investment- In this source, the owners of the business invest their personal
income for financing the activities. This is the best way as there is no burden of repayment of
instalments. This is the savings of people owning the company. In the context of CafePod Coffee
Co., its owners can invest their savings in growth strategies and activities. This is know as
owner's capital which is usually preferred at the beginning of the business (Adina-Simona,
2013). Additional capital in the form of personal income can be infused to keep the business
running. Some of the advantages are that there is absolute control of the owners on the money so
they can invest it according to their wish. Apart from this, any profit earned from this investment
will not be shared among any other person. But the drawbacks are there may arise some
contingencies in which, personal saving may not be sufficient. Along with this, there is no
monitoring of the funds which can cause problem for the business.
Apart from this, there are financial institutions who are set up to finance small
businesses only. These institutions have their motive to promote small organizations so that they
can grow and make high revenue. It is also effective source by which money can be borrowed.
Furthermore, the interest rate is low which attracts small businesses to approach financial
institution. There are benefits such as money can be borrowed even when no other options are
available and it is a good option for raising funds for long term. On the contrary, rigid rules are
there which are required to followed and some financial institutions may appoint their nominees
on the Board to oversee the matters related to borrowing.
TASK 3
P4. Design a business plan for growth including financial information and strategic objective
Planning is a process which involves number of activities for developing growth
strategies by considering scope, objectives and strategies. Business plan works as a blue print
which provides direction along with all the details to achieve goals and objectives (Durst and
Wilhelm, 2012). By this, CafePod Coffee Co. can develop number of strategies related to
marketing, financial and operational areas. On coming to the strategic objective, CafePod Coffee
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Co. is proposing to increase its sales in existing market so that number of costs can be saved. It
has a sales target of 35% in coming one year.
Financial Plan
Pre launch cash budget
Cash Flow budget
Particulars Jan Feb Mar Apr May June July
Cash inflows
Investment 8000
Credit sales 2000 3000 3000 4500 1500 3500 4200
Total inflows 10000 3000 3000 4500 1500 3500 4200
Cash outflows
Fixed : Equipment’s 2000 2500 1500 2000 1200 1500 800
Variable : Direct material 300 300 200 300 150 500 300
Total outflows 2300 2800 1700 2300 1350 2000 1100
Net cash flow 7700 200 1300 2200 150 1500 3100
Opening balance 0 7700 7900 9200 11400 11500 13000
closing balance 7700 7900 9200 11400 11550 13000 16100
August September October November December Jan
1000 2000 800 1200 1500 3600
1000 2000 800 1200 1500 3600
200 300 100 600 300 2000
400 500 100 100 400 300
600 800 200 700 700 2300
400 1200 600 500 800 1300
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16100 16500 17700 18300 18800 19600
16500 17700 18300 18800 19600 20900
Feb Mar Apr May June July
3000 3000 4500 1500 3500 4200
3000 3000 4500 1500 3500 4200
2500 1500 2000 1200 1500 800
300 200 300 150 500 300
2800 1700 2300 1350 2000 1100
200 1300 2200 150 1500 3100
20900 21100 22400 24600 24750 16250
21100 22400 24600 24750 26250 19350
Post launch cash budget
Particulars Jan Feb Mar Apr
Cash inflows
Investment 8000
Credit sales 1200 2000 7500 3000
Total inflows 9200 2000 7500 3000
Cash outflows
Fixed : Equipment’s 2500 1200 1500 2500
Variable : Direct material 350 300 250 150
Total outflows 2850 1500 1750 2650
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Net cash flow 6350 500 5750 350
Opening balance 0 6350 5850 11600
closing balance 6350 5850 11600 11950
May June July August September October November December
5000 6500 1200 3200 1500 8200 1250 3210
5000 6500 1200 3200 1500 8200 1250 3210
1100 1500 1200 600 500 500 1200 700
100 500 500 250 450 250 1300 500
1200 2000 1700 850 950 750 2500 1200
3800 4500 -500 2350 550 7450 -1250 2010
11950 15750 20250 19750 22100 22650 30100 28850
15750 20250 19750 22100 22650 30100 28850 30860
Jan Feb Mar Apr May June July
1200 5000 2500 4500 1500 3500 4200
1200 5000 2500 4500 1500 3500 4200
2000 2500 1500 2000 1500 2000 200
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300 300 200 250 360 250 500
2300 2800 1700 2250 1860 2250 700
-1100 2200 800 2250 -360 1250 3500
30860 32160 32360 33660 35860 36010 37510
29760 34360 33160 35910 35500 37260 41010
The financial information cannot work without proper review and monitoring. Hence,
continuous monitoring of the plan is important to check all the activities are working as per the
plan. Controlling is another aspect which can not be ignored as it helps in evaluating the
performance of tasks with the set standard. This is done to ascertain the variance which can be
bridged with corrective measures.
TASK 4
P5. Assess exit or succession options for small business together with benefits and drawbacks
Exit or succession plan is made companies to build leaders who can run the business
without the presence of top management or executives. It helps in transforming people into
leaders and their skills so that business of an organization can be conducted successfully. Small
businesses often opt for this strategy to develop and grow their business. In this, existing leaders
are replaced by new successors. There are different options available to exit the business which
can be used by CafePod Coffee Co. Same are as follows:
Merger and acquisition (M&A) – It is refers to consolidation of companies to form a
new company or continue the existing with combined synergy. This option helps in forming a
synced effort in order to achieve goals and objectives (Titzer, Shirey and Hauck, 2014). It
involves acquisition, disposing off or both for increasing the profit of a desired level. CafePod
Coffee Co. can consider this strategy in which it can merge with other companies operating at
large scale. This will help it make increased profit and have presence in market of different
locations. A company gets tax benefits in the deal of Merger and Acquisition. Furthermore,
controlling power gets enhanced. However, there are certain drawbacks such as employees with
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knowledge about the working of the company and familiar with policies are not remain with the
company.
Joint Venture- This is suitable for businesses who are willing to pool their resources in
order to achieve specified targets. There could be new or existing business tasks. The time period
for which JV are established is limited to the attainment of specific task. Therefore, the
advantages are it is for temporary time period and nothing is permanent. However, it lacks in
security for the companies present in the deal.
Strategic alliance- In this strategy, two companies execute an agreement between them
in order to expand the business. This provides a way wherein business entities can pool their
resources in order to have new opportunities for business. The benefits are that business can
achieve their targets within time frame and gain recognition among customers. Some of the
disadvantages are the risks involved is high and conflicts can occur more often which may cause
problem in business.
CONCLUSION
From the above report, it has been concluded that growth opportunities must be explored
in order to increase profit and revenue. There are other objectives as well such as increased sales,
high market share etc. which can be achieved by planning for growth. Furthermore, there are
funding sources which can be accessed to raise financial resources for carrying the activities and
make the company success. Apart from this, variety of options should be evaluated to exit from
the market when the business fails to achieve the profit.
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