Business Plan for Growth: Coffee Jobs, Mong Kok, Hong Kong

This report presents a comprehensive business plan for Coffee Jobs, a coffee house situated in Mong Kok, Hong Kong. The plan begins with an introduction and proceeds to evaluate the competitive advantages of Coffee Jobs within its market, emphasizing its location, ambiance, and menu offerings. The report then identifies opportunities for business growth, considering market development, product development, market penetration, and diversification strategies using Ansoff's growth vector matrix. The report then dives into the target market, competition, and potential solutions to existing challenges, such as limited space and competition. It also details the strategic objectives for growth, which include strengthening its position in the Mong Kok market, exploring new demographics, and expanding the business. Moreover, the report outlines the funding required for expansion, including estimated costs for legal expenses, rent, renovation, equipment, and marketing. Finally, the report discusses various funding options, such as crowdfunding and venture capital, and concludes with recommendations and exit strategies.

Running Head: BUSINESS PLANNING FOR GROWTH 1
BUSINESS PLANNING FOR GROWTH OF COFFEE JOBSS, MONG KOK, HONG KONG
Author Name
University

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Table of content
Introduction......................................................................................................................................3
Basis of competitive advantage for Coffee Jobs..............................................................................3
Opportunities available for the business..........................................................................................4
Options for growth...........................................................................................................................6
Options for financing the growth.....................................................................................................9
Recommendations for Coffee Jobss, Mong Kok, Hong Kong......................................................12
Exit and succession options...........................................................................................................13
Conclusion.....................................................................................................................................16
References......................................................................................................................................17

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Business planning for growth of Coffee Jobs, Mong Kok, Hong Kong
Introduction
This study highlight the different factors like competitive advantage, growth options,
funding options and exit strategies that need to be considered while developing a business
growth plan. To ensure complete understanding of the acquired information the business growth
strategies have been evaluated in context of Coffee Jobs, a small scale coffee house located in
Mong Kok, Hong Kong. Real examples from the organization and its market environment have
helped in acquiring a clear and detailed understanding of the aspects that contribute to a sound
and effective business growth plan.
Basis of competitive advantage for Coffee Jobs
The Coffee Jobs is one of the preferred coffee houses in the Mong Kok area of Hong
Kong. It is located in the Kowng Wa Street and is famous for its hip and quirky ambiance. It
offers a huge range of affine and non-caffeine drinks including an extensive range of lattes,
espresso, teas and soda drinks along with quite appetizing and sizable portion of meals. The
following are some of the factors that contribute to its competitive advantage in the Mong Kok
area as a coffee outlet (Foodie, n.d.).
The position of the coffee shop at a short distance from the Prince Edward MTR station
adds to its accessibility which is an important factor that helps in acquiring the preference of the
target market.
Mong Kok is the cultural hub of Hong Kong due to its position in the city. Its position as
of in short distance with the Tsim Sha Tsui, the flower market, temple night market, bird market,

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jade market and the ladies market makes it’s coffee shops and restaurants, preferred option for a
large number of people. This benefits Coffee Jobs largely, as the neighborhood allows the café to
cater to a considerable number of people.
Quite an extensive food and beverage menu caters to a variety of customers. Innovative
items such as Colaespresso and Greek mythology themed sodas intrigue the customers and
quality of the food and coffee served, helps in acquiring and retaining their preference (Foodie,
n.d.).
Availability of free WiFi and a number of power outlets allow freelancers to work from
the store premise over a cup of coffee or while enjoying a meal in the café. This also makes this
coffee shop a preferred location for young professionals to spend a couple of hours without
worrying about accessibility to internet or power for their devices (Foursquare, n.d.).
The trendy decoration of the restaurant including the stools beside the floor-to-ceiling
windows overlooking the street, the communal slab table and the vogue lighting makes it
extremely appealing to the young adult customers (Foodie, n.d.).
Opportunities available for the business
Problems and potential solutions
Despite the wide level of acceptance in the target market the organization’s business
prospect has often been observed as limited due to its limited accessibility. First, the existing
premise of the organization avails quite a limited scope for accommodating larger number of
consumers. On the other hand, it has no branches in any other part of the Mong Kok, which
limits its accessibility. This issue might be mitigated though development of the market by

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establishing more outlets of the coffee shops in different locations of Mong Kok. Presence of a
large number of coffee shops in the Mong Kok location makes it difficult for the Coffee Jobs to
acquire preference or loyalty of the larger share of the market. For resolving this issue the
organization might need to develop a strategy to promote itself to generate customer preference
and develop loyal customers through loyalty strategies.
Target market
Mong Kok is identified as the most congested residential and shopping district of Hong
Kong (Hong Kong Tourism Board, 2019). Its population density of 130,000 people per square
kilometers marks the huge scope that businesses operating in this location enjoy in terms of
accessibility to a large number of customers (South China Morning Post, 2018). In addition, due
to it having several neighborhood markets it hosts a large number of tourists that serve as an
addition set of potential customers to businesses like Coffee Jobs.
Customers of the Coffee Jobs mainly belong to the demographic segment of working
Chinese male and females from both with permanent jobs and freelancers that prefer to have a
community vibe around them while dining or stopping for a quick coffee. Another major set of
individuals that frequent the coffee shop belongs to the segment of tourists and independent
travelers of different age groups that prefer to explore Hong Kong from a local’s view point.
These are the two major segments of the target market that can be focused on while
implementing the business plan for growth.
Competition
The Mong Kok region itself houses over seventeen coffee houses and cafes which
include the large names in coffee and café industry like Starbucks and Pacific Coffee, which are

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widely known and accepted by the target market. Apart from them several independent cafés
also share the preferences of the target customers, limiting the prospect for Coffee Jobs to
acquire larger number of customers. However, very few of these companies make use of loyalty
programmes to retain the preferences of their customers which might separate Coffee Jobs from
the rest of the companies availing similar products in the market. On the other hand, while the
market giants like Starbucks and Pacific coffee focus more on the internationally acknowledged
tastes utilization of its knowledge of the local preferences and specific requirements of the target
consumer segments might help in developing a competitive advantage for the organization.
Options for growth
New market
Market development Diversification
1. Targeting other parts and other
segments (young adult and students) of
Mong Kok
2. Developing new products (drinks and
meals) for new customer segment (Benur
& Bramwell, 2015)
Market penetration Product development
Existing Market
3. Loyalty programmes for existing
customers along with price promotion to
attract more customer from existing
segment (Van Berlo Bloemer &
Blazevic, 2014)
4. Inventing and producing different
variants of beverages and meals for
existing customer segments and designing
related products (like packaged coffee)
(Burton et al. 2017)
Existing product New product
Table 1: Business growth options for Coffee Jobs as per Ansoff growth vector matrix

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(Source: Create by studengt)
The table above presents the four growth options that can be followed for the
development of the business of Coffee Jobs. The organization can plan its growth according to
the first option and establish its branches near colleges, office buildings and hospitals located in
Mong Kok district, where it could easily access young adults like students and fresh graduates as
customers. However, following each of the growth option mentioned above might entail certain
risks. For instance, if the organization follows the first option the organization faces the risk of
substantial financial loss in case the customers of the targeted segment do not respond positively
to the expansion (Hussain et al. 2013 and Martinet, 2016). If the customers of the newer location
or market segment do not show similar enthusiasm for its products as its existing customers the
organization would have to endure huge loss.
On the other hand, the second growth option would allow the organization to address the
needs of each of the customer segment separately allowing the organization to appeal exclusively
to every segment (Hutzschenreuter, & Horstkotte, 2013). There is little scope for utilizing
existing or similar products for different segments as the organisation would aim to serve
different segments of customers according to completely different set of menu (Su, & Tsang,
2015). While this requires separate skills sets it also requires a large amount of investment for
development and execution of the separate menu which might not be profitable for the coffee
shop (Hussain et al. 2014 and Loredana, 2016).
The third option offers promotional strategies and loyalty programmes as the means of
growth which has considerably low risk of loss of a lump sum amount of investment (Lin, Z., &
Bennett, 2014 and Laškarin, 2013). However, this option has the potential of generation growth

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for the business in a market which has scope for expansion for the business and the sector it
operates in. If the market reaches saturation the promotional strategy would not have any effect
on the consumer. Therefore it possesses the risk of not being effective, completely failing to
achieving its target.
The fourth option mentioned in the table is suitable for the growth of Coffee Jobs. Yet,
this strategy might be too generic and small for bringing substantial growth to the business of the
company (Benur & Bramwell, 2015). However, production and sales of the related product,
which in this case is packaged coffee variants, might be effective for Coffee Jobs to ensure
diversification of its business (Kokotovich & Dorst, 2016). It would also allow the organization
to have a tangible presence in the household of its consumers, which might allow them to
generate a sense of belonging with the brand.
From the discussion above it is evident that neither of the options mentioned above have
the potential of generating growth individually for Coffee Jobs without posing certain risks.
However, implementation of the first option might help in ensuring its growth in the most
effective manner. Initially the organization might begin with opening two new branches in
locations near two of the many colleges in Mong Kok. Later with a substantial number of
customers to establish market leadership the organization might proceed with the other options.
Options for financing the growth
Strategic objectives for growth
 To strengthen the hold of Coffee Jobs in the Mong Kok market
 To explore a new demographic segment of Mong Kok market
 To expand the business by 3% in the upcoming two years

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Funding required
The following table calculates the approximate amount of financial funding that would be
required for the implementation of the plan for opening two new branches of Coffee Jobs in
Mong Kok.
Different areas of expense Amount (HKD)
Legal expense 10200
Rent (security deposit and rent for first 6 months) 450000
Renovation and decoration 214000
Consultant 23500
Equipment 620000
Inventory 125600
Furniture 100000
Staff 126000
Marketing and PR (6 months) 117350
Research and development 24800
Taxes 14000
Others 300000
Total business expansion expense 2125450
Existing funds (approximately) 400000
Existing assets (Approximately) 130450
Total fund requirement 1595000
Table 2: Estimated fund requirement for the growth option identified

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(Source: Created by student)
Consideration of different funding options
Through the discussion above it is evident that the Coffee Jobs needs funding for
successful completion of the growth process, for which the organization needs external funding
worth 1595000. Following are some of the funding options available for Coffee Jobs:
Crowd funding
Crowd funding allows a business organization to acquire funds by collecting small
amount of capital from a large number of people (Lehner, Grabmann & Ennsgraber, 2015). With
the vast internet accessibility the coffee shop would not need to depend on one investor for the
financial resources. While this option appears to be safer for the organization, development of
the network might be difficult and time consuming. In addition, it also bares the risk of
overcomplicating the funding process.
Venture capital
Large investment is done in return of equity share in business. Such investment can be
acquired only when the venture capitalists perceive a business to be profitable (Zhou et al. 2016).
Considering the popularity of the Coffee Jobs in the Mong Kok area acquiring venture capital for
the business might not be difficult. However, as the venture capitalist invests a large amount of
resources therefore the owner might have to give away a considerable share of the equity
limiting their decision making power.
Angel investors

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Angel investors are the individuals or the group of people with the financial capacity to
fund a business venture in exchange for the share of equity (Drover, Wood & Zacharakis, 2017).
Due to their possession of equity the angel investors might also influence the business decisions.
However, it allows more flexible business terms which might help the owner of Coffee Jobs to
manage the business in more lenient way.
Bank Loan
Bank loan allows the business owner to retain the control over the business decision.
However, the business owner needs to shoulder the entire responsibility of the loss as the money
acquired through such sources need to be paid back to the bank with interest (Schwienbacher,
Baker & Welter, 2015). In addition, Coffee Jobs would need to complete a huge range of
documentation that requires considerable knowledge of the process and requirements.
Evaluation of the different funding options has provided the understanding that acquiring
funds from the local angel investors might be the most suitable funding option for Coffee Jobs as
it would allow the owner to benefit from the assistance of the experienced investor without
having to adhere to extremely rigid business term like venture capital. On the other hand, unlike
bank loans it would allow the owner to share the financial consequence of loss with the source of
the funding. Finally, it will avoid the complication and delay that entails crown funding.
Recommendations for Coffee Jobss, Mong Kok, Hong Kong
Completion of this study has allowed evaluation of different planning and strategic
options for business growth based on which it can be recommended to Coffee Jobs that the

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organization to expand the business opens new branches and acquire funding for this expansion
from angel investors.
Specific Open its branches around colleges in Mong Kok
Acquire investment from angel investors in Mong Kok that have experience in
coffee industry
Measurable Success of this recommendation can be measured through improved revenue and
customer base
Attainable Coffee Jobs has a strong market presence in Mong Kok therefore acquiring
resources would not be difficult with proper approach
Realistic Mong Kok is a large district with diverse commercial entities hence the strategy
is realistic enough for implementation
Time based The growth recommendation can be implemented within a year
Table 3: SMART recommendation
(Source: Created by student)
Actions Month
1-2
Month
3-4
Month
5-6
Month
7-8
Month
9-10
Month
11-12
Need identification
Resource requirement calculation
Planning for resource acquisition
Approval from board
Approach 5 angel investors in Mong Kok