SME Analysis Report: Cocofina Ltd. Business Performance and Strategies

This report provides a comprehensive analysis of Cocofina Ltd., a small business specializing in coconut-based products. It begins with an introduction to SMEs and a profile of Cocofina, detailing its ownership, history, activities, strengths, and weaknesses. The report then compares Cocofina's performance to a competitor, Worthenshaw, analyzing financial metrics like cash balance, net worth, current ratio, and debt-to-equity ratio. Task 2 focuses on strategies to overcome weaknesses, including introducing new products, revising pricing, maximizing equity, and improving customer loyalty. It further explores ways to strengthen and maintain current performance through quality management, market entry, and training. The report concludes by suggesting new areas for business expansion, such as new product development, opening more outlets, and online trading. The analysis assesses Cocofina's existing business objectives, reviews its business plans, and proposes an action plan to implement changes. Finally, it examines the impact of the proposed changes on the business and its personnel, and offers a plan for managing these changes, alongside an analysis of the company's performance over the past two years, providing a holistic view of the business's operations and strategic recommendations.

SMALL BUSINESS
ENTERPRISE

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
A.Profile of selected business organization.................................................................................1
B. Comparing the performance with competitor.........................................................................3
TASK 2............................................................................................................................................4
A. Appropriate actions to overcome weaknesses.........................................................................4
B. Analyze ways to strengthen and maintain current performance.............................................4
C. Suggesting new areas to expand business with justification...................................................5
TASK 3............................................................................................................................................6
A. Assessing existing business objectives and plans...................................................................6
B. Review business plans and suggest new areas for changes.....................................................7
C. Preparation of an action plan to implement the changes.........................................................8
TASK 4............................................................................................................................................9
A. Impact of proposed changes on business and their personnel.................................................9
B. Plan for managing changes......................................................................................................9
C. Analyzing business performance for past two years.............................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
European authorities defined small and medium sized enterprise (SME) as any business
who run operations through an employee base of 250 or less and annual turnover or annual
balance sheet value below 50 and 43 million euro. Federation of Economic Bureau Government
reported that there are 5.5 million SMEs operating in UK and employ 15.7 million people.
Government also offersan opportunity, aspiration and motivation to promote their unique
business idea and start business. Department of Business, Innovation and Skills is accountable to
make enterprise policies for SMEs to manage their activities. The current research report targeted
at examining and managing SMEs activities through change management and other business
strategies for the successful operations.
TASK 1
A.Profile of selected business organization
Name of the business: CocofinaLtd
Ownership structure: It is a private limited company which is owned by the members who
invest their money in the business (Spence, Schmidpeter and Habisch, 2003). Manishaben
Solanki and Jacob Thundil are playing the role of director and regulate, administer and control
day-to-day activities.
History/Background: The idea of establishing a business that will provide only coconut based
items was of Jacob Thundil. It was greatly inspired by his childhood in a renowned region of
India, Kerala that is famous for coconut.It was established in 2005 by a limited product, more
importantly, coconut water. However, over the period, with the growth, Thundil launched new
item also such as nuts and others and now, it operates 3000 health focused outlets.
Activities: Its key operational activities include delivering coconut-based food and drinks to the
users. Its product portfolio includes coconut water, baking ingredients, snacks and others.
Business Location: Field End Road, Ruislip, England
Strengths and weaknesses:
Strengths:
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 100% nature and pure product: According to nutritional information, Cocofina’s product
includes 0 fat, 5.2 gm carbohydrate, protein 0.3 gm and sugars 4.7 gm. The products are
highly fresh and healthy for this, it also won many awards (Cocofina Ltd, 2017).
 Its products are offered all around the world in 3000 outlets including Fenwick, Barrett,
Harrods, Whole Food Markets, Holland and other cities all over world.
 Strong revenue base, recently, in June, it reported revenue 3.6 dollar million through
sales.
 Expanded product portfolio: The business was started just with coconut water and now, it
offers pancakes, brownie, mousse, ice creams, maroon, snacks, coconut oil and other
items also (Cocofina Ltd, 2017)..
Weaknesses:
 It only offers coconut-based products, thus, its product portfolio is limited, however, in
market, many consumers may do not like this and prefer alternative healthy items.
 High prices: Many consumers opined that prices charged by Cocofina is high, thus,
premium prices are charged which does not provide great value to the users.
 Lack of loyalty: Consumers are not loyal towards the brand and availability of substitute
products at cheaper prices affect its sales also.
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 Heavy dependency on long-term debt to meet their financial need. Moreover, many of the
unpaid debts obligations which was ultimately settled by court affects its credit rating
adversely.
B. Comparing the performance with competitor
Worthenshaw is a leading dairy-free and sugar-free frozen pudding supplying company
which is an alternative for ice-cream founded by Kristy Henshaw which is giving competition to
Cocofine. Both the company’s performance is comparing to each other as follows:
(Source: Cocofina Ltd, 2017)
According to the results, it can be seen that cash balance of Cocofine got decreased by
99.53% which shows sudden decline and demonstrates lack of cash issues may be due to poor
management and unnecessary cash expenditures. However, its net worth got improved at 2.81%
to GBP 75.3k. Its current ratio for the year 2016 is 1.96:1 which shows good performance, still,
in comparison to the Worthenshaw at 2.83:1, it is still lower. Thus, it is clear that liquidity
performance of rival firm is much better, at the same time, retail benchmark current ratio is 2:1
that shows that Cocofine need to slightly increase their CR to reach to 2:1. Similarly, its debt to
equity ratio is 1.43:1 thus, company uses heavy debt and very less assets is financed through
equity funds, therefore, solvency risk exists because due to too much debt composition, financial
burden is very high (Goss, 2015). However, Worthenshaw is financed through 100% equity
without any debt that indicate strong solvency, although it is good in terms of monetary burden
but benefits of trading on equity are not exists in it. From the analysis, it becomes clear that
comparative firm is performing much well than Cocofine Ltd.
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TASK 2
A. Appropriate actions to overcome weaknesses
From the above carried analysis, it seems now clear that company need to revise their
current plans and make strategies to combat their week points. For this, business can adopt
following strategies, enumerated underneath:
Introduce new products: In order to eliminate the weakness of limited range of varieties,
it is advised to Cocofine to introduce unique offerings which are healthier and refreshing but in
different flavor instead of coconut. It will help organizing attracting those people who does not
like coconut but prefers eating well concerning their health. It will help entity in maximizing
their turnover and profitability also.
Revise pricing policy: In this area, Cocofine Ltd need to revise their pricing mechanism
by reviewing consumer feedbacks and thoughts whether they considered price as reasonable,
little bit expensive, cheap or highly costly (Cowling and et.al., 2015). In this, company can also
use software like price optimization system which educate organization about sensitivity of final
users and illustrate that how their purchasing decisions will be change at different prices, so that,
firm will be able to set right prices which is acceptable by all (Huq and et.al., 2017).
Maximize equity:As its capital structure highly consists of equity and very less amount of
debt, therefore, it must use equity more and repay debt for managing their business solvency
position. By this, it can reduce too much burden by minimizing fixed financial costotherwise
there is a risk that may took place in future, because, firm did not have sufficient cash as a result,
loan liabilities cannot be mitigated (Berger, Cowan and Frame, 2011).
Loyalty: Consumer relationship management software needs to be used by Cocofine Ltd
to identify consumer desires and produce required goods to satisfy their unmet desires.
Moreover, any complaints or difficulties faced by user need to be sorted out to build sound
relationship for unstoppable growth.
https://companycheck.co.uk/company/07358842/COCOFINA-LTD/financials
B. Analyze ways to strengthen and maintain current performance
There are number of ways by which Cocofine Ltd can enhances or improve their current
performance which is presenting here below:
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Quality management system: 100% pure, fat-free and natural coconut-based food items
and drinks is the main reason behind satisfied consumer base of Cocofine Ltd. Therefore,
managing quality and its assurance is the key technique that will retain its product quality. In this
regards, firm can use Total Quality Management (TQM) and six sigma are the best mechanism
of sbusiness success through customer satisfaction. It includes all the processes, activities,
services and culture which are essential for satisfying customers (Antony, Kumar and Madu,
2005).
Entry in new market: Although it service their offerings all over world in 3000 outlets,
still, in order to expand the business, Cocofine Ltd’s managers can enter into new markets also to
expand their presence worldwide. Market entry strategy will also facilitate the organization with
the competitive benefits and helps to beat rivals, such as Worthenshaw.
Training & development: In current era, companies need to invest in talent acquisition
and staff retention, thus, training & development program will be the best way to train, educate
and boost competitiveness among workforce (Giaoutzi, Nijkamp and Storey, 2016). It will bring
competitive parity to the business because consumers will be extremely satisfied by quality
services, staff polite and genuine behavior to help them in buying decisions. Moreover, such
members will also resolve consumer inquires and complaints professionally.
C. Suggesting new areas to expand business with justification
There are different areas where company can expand or developed to grab larger market
share, that are explained here as under:
New product development: NPD strategy aims at developing a new product which is not
yet offered by the company to bring attention of the consumers and get benefit of market
opportunity. As discussed earlier, that currently, the brand has created its image as coconut-
expert through offering coconut-based pancakes, mousse, ice-cream, brownie, macaroons,
therefore, it is an opportunity for the company to develop new organic products also with other
flavor which are 100% natural and pure. According to Euromonitor International’s health and
wellness, gluten free sector in UK is enjoying growing popularity which worth is expected to
increase from GBP320.7m to GBP417m by 2017 end (Carter, 2016). Thus, there is an
opportunity for Cocofine to produce 100% sugar-free food & beverage products to expand its
user base & share in the industry.
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Open more outlets: Although, no-doubt, Cocofine Ltd has succeed in the market with
growing popularity through its 3000 health-focused outlets and stores, still, it can open more
outlets to serve maximum number of audience with its 100% fat-free, natural and pure product
ranges. It will bring customer traffic; as a result, it can maximize its revenue base, operational
profitability and generate a great share in the market.
Online trading: Cocofine Ltd can engage with e-commerce through transacting goods
purchase and selling over the internet. In digitalized age, it is of great significance to expand the
presence of the organization across globe. This model will assist company to target more market
segments including business to business (B2B) and business to commerce (B2C) which enhance
its market position by offering great convenience where users can place order any time and get
delivery at home (Grant and et.al., 2014). Despite this, they can drop their inquiry and resolve it
on website, e-mail or just through a phone call.
TASK 3
A. Assessing existing business objectives and plans
Quality-centered: Cocofina focuses on quality and taste that is reflected in its products. It
is highly committed towards rendering 100% fat-free, natural, pure and health-centered product
to the consumers (Carter, 2016). Great taste and organic oil, chips, sugar, capsules, butter, nectar,
macaroon snack, amino product, creamed and grated coconut satisfies customer need
exceptionally.
Become a coconut expert: It received first award in 2005 for the Excellence in Food and
Drink sector where authorities said that people who desire and wishes health-conscious food and
drinks must choose Cocofina that generate brand popularity and word of mouth publicity. The
brand established their image as a coconut expert. By the end of 2015, the Guild of Fine Food
rewarded the entity with 7 Great Taste Awards
Healthy and honesty policy: Cocofina Ltd is targeted at delivering healthy coconut
goodies with humble and honesty. The brand reflects its healthy product portfolio, quality goods
and honesty, integrity and trustworthiness (Williams and Schaefer, 2013). For this, it uses
freshest ingredients and also provide proper details about their ingredients, additives and
preservatives used.
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Serve our community: It respects partnership policy in which it joins hand with other
firms for expansion. Cocofina Ltd has partnership with Action Against Hunger (AAH) which
protect malnourished children through providing them safe water and hunger solution. In this
respect, company donates 10 pence on every item sold all around the world with a minimum of
5000 pound every year.
B. Review business plans and suggest new areas for changes
According to the analysis made above, it is clear that undoubtedly, Cocofina made
wonderful progress and quality focused strategy to give great taste and 100% natural products to
all, still, there are few areas with which enterprise can be recommended to improve their
progress.
Corporate social responsibility: Although, company is committed towards community
through partnership with AAH, still, it owes other responsibility also towards consumers,
employees, investors and others which need to be satisfied. In this, Cocofina’s manager needs to
conduct training sessions for their workers, create a reward mechanism including both monetary
and non-monetary rewards and provide them promotional opportunities also (Giaoutzi, Nijkamp
and Storey, 2016). It also needs to take environmental measures for the waste reduction, disposal
and its proper management. However, CRM software needs to be used for maximizing customer
satisfaction level.
Website development: In current times, technology plays a major role in the success.
Here, organization needs to revise its website and create it more attractive and bring innovations
also. It should place all the details about various events and put images also for their corporate
initiatives, awards and workplace also (Grant and et.al., 2014). Thus, it is better to suggest the
company to focus on innovation also.
New Product development: Cocofina has increased its product range from coconut water
to multiple ranges; still, all are coconut based only. Thus, consumers who do not like coconut
cannot use any of the products, therefore, it is better to suggest the enterprise to launch new
product also which are sugar free and health-conscious. It will attract more consumer base and
maximize its market share.
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C. Preparation of an action plan to implement the changes
Strategy Time
period
Targets Resources Actions to meet target
Product
development
strategy
8 -10
months
To develop new
health-
conscious
product without
coconut usage
 Human resources
 Financial
resources
 Market research
and industry
outlook
 To assess consumer
desires and taste
 To conduct market
research to know
other popular health
products which are
driving larger demand
 To produce and
present the product in
the market
Innovation 5
months
To revise and
re-develop
Cocofine’
website to
promote
innovation
 Website
developer
 Fund
 Content writer
 To revise and revisit
website by website
developer to bring
improvements
 To include
information on
website about events,
awards and pictures
 To provide more
option to the
consumers to access
required information
Opening more
outlets
1 year To expand our
physical
presence
through
expanding
number of
outlets
 Funds
 Infrastructure
 Human
resources
 To conduct research
to know the best
location for
geographical
expansion
 To design new outlets
with innovative
infrastructure
Training and
development
3-4
months
To create plan
for training and
development
for our
colleagues
 Specialist
trainer
 Trainee
coordinator
 Financial
resources
 Technological
resources
 To interact with them
to know their training
need
 To match our
employee skills and
business required to
identify gap
 To conduct training
sessions to develop
talented workforce
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TASK 4
A. Impact of proposed changes on business and their personnel
Staff resistance: It might be possible that staff may resist adopting changes such as
innovation and digitalization, developing new products without coconut usage and expansion as
well (Bridge and O'Neill,2012). It is because, workers are familiar with the current operations
and it may be difficult for them to adopt changes easily and get familiar with them. Therefore,
staff resistance may be an issue faced by Cocofine Ltd.
Worldwide expansion: Opening more outlets and website redevelopment will definitely
attract consumes from all around the world and expand its presence (Williams and Schaefer,
2013). besides this, new product development will target other consumers instead of focusing on
existing buyers only which will boost its consumer base and market position as well.
High profitability: Through increasing number of outlets and more products in the
portfolio, it will be able to serve more audiences, which in turn, maximize its turnover and net
return from the operations (Halabí and Lussier, 2014).
Competitive strength: Greater consumer base, market expansion strategy through
worldwide geographical presence, extended product portfolio will increase competitive strength.
Moreover, trained workforce also provides competitive disparity from the rivalry, like
Worthenshaw.
B. Plan for managing changes
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Change management: Cocofina Ltd can follow above Lewin Change management
model for managing workforce resistance for bringing changes in the organization. At the
unfreeze state, manager need to create a familiar environment to make changes acceptable by all
the staff through participative leadership, open communication and other tactics. However,
actually people need some time to accept and participate actively in the change. Thus, in this
stage, people must be aware about the benefits of planned strategy. Lastly, refreeze stage consist
of supporting change through cultural management, leadership support, training and
development, reward system and others. All the ways will assist entity in successfully managing
the changes.
Human resources: In order to educate team about new product development and website
management, specialist training is planned which will develop knowledge, skills and competency
to a maximum extent. It will assist enterprise in maximizing staff productivity and reach goals.
Financial resources: As Cocofina Ltd will need financial sources for conducting
training, develop new product, develop more outlets and others, therefore, it will be satisfied
through sources like retained earnings and equity sources without any further debt, because,
company is already using too much debt thus, more debt collection might be risky (Cowling, Liu
and Ledger, 2012). Manager will also create budget and monitor it with the actual spending to
avoid the risk of overrunning cost.
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CHANGEREFREEZE

C. Analyzing business performance for past two years
Cocofine Ltd (2016) Cocofine Ltd (2015)
Current assets 369,416 496,092
Current liabilities 188,398 288,401
Current ratio 1.96:1 1.72:1
Debts 107,453 135,143
Equity 75,272 73,217
Debt to equity ratio 1.43:1 1.84:1
(Source: Cocofina Ltd, 2017)
(Source: Cocofina Ltd, 2017)
In 2015, Cocofine has a current ratio of 1.72:1 which rose up to 1.96:1 in following year.
Although current assets came down by 25.53% to GBP 369.4k, still, huge decline in the short-
term obligations by 34.67% to GBP 188.4k is the reason behind decreased liquidity. Above line
graph clearly presents that over last 5 years, company’s cash, current assets, net worth as well as
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current liabilities were increased till 2015, however, recent year showed negative results for cash
by 99.53%. Although in 2016, debtors got declined which indicates that company received some
sort of money from their receivables however, still, due to investment in fixed assets and
excessive expenditures resultant dropped cash balance. Moreover, it had made payment to a
considerable size of creditors this year. Besides this, although debt to equity ratio decreased from
1.84:1 to 1.43:1 because of payment to lenders and little bit increase in equity, still, it is too risky
for the company to hold too much debt as they need timely installments at some interest charges
(Huq and et.al., 2017).
CONCLUSION
The research made it clear that although Cocofina has developed a unique image as
expert in the coconut-based food and beverage items and won many awards also, still, in order to
strengthen their position, it is suggested to develop more products and open more outlets all
around world. However, on the other side, it is suggested to minimize its debt to avoid the risk of
poor credit rating and also focus on CRM and CSR initiatives to make consumer loyal and better
customer engagement. Lastly, it is found that company did not performed good in 2016,
therefore, it need to take cost-cutting decisions and also improve cash collection for maximizing
profit and liquidity position.
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https://www.campaignlive.co.uk/sector-insight-health-food-drinks/%7Bsubjects%7D/
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https://companycheck.co.uk/company/07358842/COCOFINA-LTD/companies-house-
data>.
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