Unit 42: Analyzing Growth Opportunities and Funding for CafePod Coffee

This report, focusing on CafePod Coffee Co., examines key considerations for evaluating growth opportunities, applying Ansoff's growth vector matrix and Porter's Five Forces to assess market penetration, product development, market development, and diversification strategies, with a specific emphasis on introducing a new green herbal coffee. It analyzes potential funding sources, including bank overdrafts, trade credit, and angel investors, discussing their benefits and drawbacks. Furthermore, the report designs a business plan for growth, incorporating financial information and strategic objectives. It also evaluates exit or succession options for small businesses. The conclusion summarizes the key findings and recommendations for CafePod's sustainable expansion in the competitive coffee market.

Unit 42 Planning for Growth
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Table of Contents
Introduction........................................................................................................................3
Task 1................................................................................................................................4
Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organisational context............................................................4
Evaluate the opportunities for growth applying Ansoff’s growth vector matrix..............5
Task 2................................................................................................................................8
Assess the potential sources of funding available to businesses and discuss benefits
and drawbacks of each source......................................................................................8
Task 4..............................................................................................................................11
Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business............................................................................11
Task 5..............................................................................................................................13
Assess exit or succession options for a small business explaining the benefits and
drawbacks of each option............................................................................................13
Conclusion.......................................................................................................................16
References.......................................................................................................................17
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Introduction
Throughout the development cycle for organisation or firm, and the company tends to
be active in the 4 fundamental managerial roles – planning, administration, organisation,
and power. The key thing about this is growth planning. That is the management
component that establishes systems, regulations, and instructions to accomplish a
specified aim. If they are to be efficient, most other management roles must be
prepared. Employees at all levels are participating in preparation when priorities and
strategies for daily tasks and longer-term projects are to be identified. Planning is widely
recognized as the principal component of the strategic plan. Planning also offers the
company continuity and security and thereby offers a clear sense of time and intent
towards achieving several good goals (TRACY, 2019).
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Task 1
Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organisational context.
Development is an important part of efficiency but also an indicator of business
progress. Acquiring business acumen seems very essential to maintain and survive for
a prolonged period in globalised economic environment in which any businessman is
battling for the very same consumer spot (Bacal and Moore, 2009). Everything becomes
important for being strategic in either challenging and extremely competitive global
environment to pursue strategic progress and training processes (Reid, 2007).
Considering CafePod Coffee Co. a premium coffee café offering different kinds of tasty
and premium coffees to their clients (CAFEPOD Coffee Co. - Craft Coffee - Est. London
2011, 2021). CafePod Coffee Co. clients receives highly efficient and quality services
and furthermore gets innovative suggestions to make the high quality service more
outstanding and premium (CAFEPOD Coffee Co. - Craft Coffee - Est. London 2011,
2021). Recently CafePod Coffee Co. management taken decision of introducing a new
product into the market, the product named is Green Herbal Coffee. According to
management green herbal coffee is considered for the healthy lifestyle leading
individuals.
Porter’s Generic Strategies
Porter Five Fields covers buyers' purchasing power, sellers' negotiating power and new
competitors' threats, competition and substitution threats.
Bargaining power of suppliers - The negotiating power of providers indicates what more
power is traded for quality of the product (Hanlon, 2016). Where limited or start-up
businesses manufacture goods with different materials which other firm’s retailer,
suppliers have built negotiating strength. CafePod Coffee Co. providers may have little
negotiating leverage, for example, because top providers want high-premium coffee
goods.
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Bargaining power of buyer - The consumer could have negotiating power to do almost
the same thing as manufacturers' negotiating power. It is nevertheless used by the
clients. Related goods are harder to get because shoppers have less negotiating
leverage. CafePod Coffee Co. could have consumers' negotiation strength (Hanlon,
2016).
Threat of new entrants - The emerging markets' threat reflects the barriers to entry into
businesses. The challenge of new competition will stream into an established or start-up
market, like CafePod Coffee Co.
Threat of substitute - The switching cost applies to the willingness of the consumer to
use multiple goods (Hanlon, 2016). This ensures that consumers conclude that any
items should not be purchased. The newest entrants who join to claim they also have
latest model beyond competitive advantage always discover the threat of alternative
goods.
The last encounter throughout the loop is competitive competition. This transition is
defined and extends to the other companies under which the start-up company is
involved.
From the above porter’s five force model it seems that CafePod’s new product can be
valuable for the organisation as this product is not available in the market. As we all
know coffee contains caffeine which has a side effect to our health, but the product by
CafePod i.e. green herbal coffee will not contain any caffeine but will give the taste of
perfect blended coffee for coffee lovers. Treats to new entry is low as CafePod is
already in the market of coffee industry from long time and has a market hold.
Bargaining power of supplier and customer can be said to be not there as CafePod is a
premium coffee producer, with high quality products. There is no substitute product for
green herbal so consumers of CafePod will not have a switching option. Thus, it can be
said that Green Herbal coffee can give CafePod a value in the industry and the
organisation can reach out to more profitable business.
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Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.
Igor Ansoff, a very well-known management researcher, offered businesses a guide to
expand, either it introduces new or expand into new markets or merge those
possibilities. This guide is viewed as a grid of four categories that are determining
factors of objectives which are the poles of markets and economies (Reid, 2007).
Anoff’s growth matrix is used in every organisation to evaluate market growth, this
matrix is also known as product matrix or grid. This matrix illustrates the growth
opportunities by comparing between current or upcoming market goods with potential
and new customers (Bacal and Moore, 2009). The Matrix further splits into strategies of
4 different approaches for long-term sustainability that management needs:
Figure 1 – Anoff’s growth matrix (TRACY, 2019)
Market penetration
This is the initial position of the start for the matrix, in this phase organisation’s are at
low risk as they sell current existing market products to the existing customer base.
Penetrating into the market needs more promotional activity, branding, searching for
new customers in the market or attracting customer base from competitors to increase
the sales volume and revenue. After all, the expansion of the industry is limited because
these are apparent as the industry is penetrated and the output of goods thereby
decreases (TRACY, 2019).
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Market
Penetration
Product
Developme
nt
Diversificati
on
Market
Developme
nt

Pros - The approach of market penetration makes an organization develop fast in a
dynamic world.
Cons - Though the most part of the company's goods was pursued by this approach,
leading to the cost escalation, that then adversely influence the reputation of the
company.
Product development
The company launches a new brand in hopes of targeting the current market. This
transition usually involves considerable R&D and the expansion of the organization's
product range (Baisya, 2010). The method to product creation is used where companies
have strong business awareness and are willing to provide suitable innovations (Reid,
2007).
Pros - Fresh concepts contribute to creating new goods and new income. New income
could also be used to promote new innovations.
Cons - A company and a brand will always spend a great amount of time and money in
the phase of production in seeing an innovation failing in a market-test. Product
production will often entail an uncertainty and the risks of a bad concept have to be
covered.
Market development
Market development defines selling into new markets or new customer base of more of
the current products of organisation. As this approach seeks to target new groups of
customer base and extend more geographically through the growth in new geographic
regions (TRACY, 2019). Both mobile devices such as Iphone and Samsung could
penetrate the Japanese market, which is still not penetrated, and where they might use
the current skills to enter those marketplaces, also indicators of consumer expansion.
Pros - Market growth approach makes a company attract additional clients to its client
list. The business development approach brings customers from other markets to the
company in order to increase and makes everyone into potential customers.
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Cons - There are many other possibilities that maybe a business seems to be doing
excellently along the same marketplace with much the same item when introducing a
commodity into a new country or nation.
Diversification
A new product or service means higher risk for organisation, as this shifting from current
product placement to another product is commonly known as diversification. A very
strong management planning expert would benefit the business by evaluating the
resources and facilities to promote everything (Reid, 2007). For eg, the Apple Co. has a
high valuation yet this supported dominating the market by diversifying through newer
markets goods (TRACY, 2019).
Pros - If the economy expands consumers are adjusting their purchasing habits.
Diversification into such a variety of markets or product categories could ensure a mix of
peaks and troughs for the organisation.
Cons - Diversification into a new field of the economy requires specialized skills. Failure
to acquire expertise throughout the specialised area can be a drawback.
In conclusion product development strategy is best for CafePod Coffee Co., it is
because CafePod is a well-established coffee manufacturer and also have a very loyal
customer base. Customers of CafePod will be willing for a development or a new
product to get into the line, it can also be considered as customer satisfaction or
customer need. For every organisaiton customers are always wanting some
development in the product offered by the organisation, so such as CafePod will have
this advantage in planning development of product. Also CafePod has R&D team so
need not hire or won’t cost CafePod for initiating a new product development plan. Due
to a loyal customer base CafePod will be successful in this strategy.
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Task 2
Assess the potential sources of funding available to businesses and discuss benefits
and drawbacks of each source.
Businesses have to raise finance or capital, spend and create, or prevent competition if
businesses across increasing segments or markets are to expand (Baisya, 2010). A
businessman can create several economic models without financing; however, finance
is needed when developing an organisation. Company, funding, installations,
infrastructure, commercial guarantees as well as the essential workforce contracts are
paid out for funding. Funding finances the production of goods and even the
marketization and implementation of projects (Lind, 2012). Funding compensates for the
business model to attract more customers. Companies may collect funds from several
sources, some of the funding sources are discussed below:
Bank overdraft
Overdraft funds are granted when businesses spend out of their new business accounts
that surpass the available cash reserve in the existing business. An overdraft facility
provides businesses with access to short-term loans (Lind, 2012). The advantage of an
overdraft is that it is quicker, cheaper and businesses only borrow what they want. The
downside of overdrafts is that company properties are preserved. Thus, if the
corporation does not settle its overdraft, the creditor can seize on the enterprise.
Trade credit
Trade credit is a contract among companies and client for paying after the sale of
products or services purchased from the company (Bpp Learning Media., 2015).
Normally, the distributor gives a client an undertaking to eventually charge them, stating
a specified period or a deadline on which client needs to make the payment to the
company. The primary aspect of trade credit is that once the sale takes place with
enough profit is generated which makes the client available for repayment (Coffey,
2010). Only firms with a good payment background will consider trade credit funding
(Bpp Learning Media., 2015).
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Angel investors
Angel investors are influential people offering funding to an enterprise in return for an
ownership stake in the business. Angel investing is more intense than those of the form
of investment in friends and loved one's Circle, but is typically more severe than that of
a business (Lind, 2012). The advantage of this investment stream is that angel investors
are less restrictive than companies and flexible in partnership arrangements (Bpp
Learning Media., 2015). The downside to this strategy is that investors hardly take
follow-up contributions because of the significant risk.
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Friends and family
As a company, the firm will influence relatives, families, and partners to provide
investment which is normally allocated in investment instead of objectively evaluating
the business strategy based on a personal connection. The Friends and Family Phase
is also the primary financing that allows the company to raise further money with an
early investor or venture funding (Levinson, Levinson and Levinson, 2007). Investment
conditions are typically broad and are possible with certain equity or repayment
approaches. Friends and families also have very little capacity to judge the quality of
corporation, but due to their budgetary presence in the enterprise they appear to offer
recommendations (Coffey, 2010).
Venture capital funding
Venture capitalists are individuals who are ready to invest a considerable amount of
funds on investment in the business, but they tend to invest in firms only when the firm
is being acquired with another corporation or publicly owned (Levinson, Levinson and
Levinson, 2007). The venture capital investors are skilled traders who are all-cash
investors. Venture capital funders introduce access to a broad community of persons,
such as associates and interested parties (Coffey, 2010). Venture capitalists are
concerned about their invested money and they might take any measures required to
get the investment back, including the removal of anyone from the company and make
certain changes as per their willing.
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Task 4
Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business.
A business plan is a comprehensive legal statement which is the framework or the
outline of the specific aims that are set by the shareholders and other management
personals. Every business in the marketplace haves its own planning and process that
is objectified into the working plan of the organisation. Organisation management team
is highly instructed and asked to follow the plan and execute every process in the way
that is planned for the development of organisation. For example, every organisation is
bound to build a growing position for itself in the market with other competitors, thus to
reach the growth business planning helps company. Considering the position of Nokia
cell phones in the current fast growing technology, Nokia has vanished from the cell
phone industry due to not having the proper business planning build for the sector they
are working in, thus in the end result other new emerging companies like MI, Lava,
Oppo have taken the position and are dominating in the cell phone sector and also they
are direct competitor of the giant company named Samsung. To objective of this
planning is to set the goal, roadmap on how to achieve the company aims, the purpose
of the enterprise, how the financial sector to be planned and executed and plans to
grow in the marketplace with vision and mission of the organisation. The business
growth plan of CafePod Coffee Co. is discussed below:
Business plan for growth of CafePod Coffee Co.
Executive Summary
CafePod Coffee Co. clients require modern, healthy and high quality coffee, which
can make them stress free and keeping them health conscious and so on. The
mentioned clients of the coffee cafe above is aggressively growing and perhaps
businesses needs improvement which always offers high and quality service and
performance and composites (Kayizzi-Mugerwa, 2014). In this sector of industry
customer satisfaction is the main objective for all and CafePod Coffee Co.
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