Davison Canners: Analyzing Growth Opportunities and Business Planning

This report focuses on Davison Canners, a bakery in the UK, and its planning for growth. It begins with an introduction highlighting the importance of strategic planning and then analyzes key growth considerations using a PESTLE analysis and Ansoff's growth vector matrix, exploring market penetration, development, product development, and diversification. The report then discusses various funding methods, including crowdfunding, bank loans, and angel investment, recommending angel investment for Davison Canners. It culminates in the development of a business plan, including an overview of the organization, market analysis, and marketing and financial strategies, with the aim of building a larger customer base through local strategies and product innovation. Finally, it discusses exit or succession strategies, although this section is not fully detailed in the provided text. The report emphasizes the importance of strategic planning and financial considerations for business growth.

PLANNING FOR GROWTH

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO1 .................................................................................................................................................3
Key Considerations of Growth opportunities..............................................................................3
Ansoff's growth vector matrix.....................................................................................................5
LO 2.................................................................................................................................................7
Various Methods of Funding.......................................................................................................7
LO 3.................................................................................................................................................8
Development of a Business Plan .................................................................................................8
LO 4...............................................................................................................................................10
Exit or Succession Strategies.....................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................11

INTRODUCTION
Planning for Growth in any business is very necessary as it brings numerous changes to
it. In order to plan for growth, various business and strategic plans are implemented to improve
the overall progress of the company or business (Mell, 2018). Creation of a strategic plan is a
main component for growth planning. It helps in preparing a realistic vision for the future of a
business and maximize its potential for growth. Davison Canners Limited is located in
Craigavon, UK which is a part of the Fruit & Vegetable Processing Industry.
The following report will analyse the key considerations of the growth opportunities using the
Ansoff's growth vector matrix. The research will further discuss various methods of funding of
organization along with its benefits and drawbacks. It will also provide a business plan including
the financials and finally it will describe the various exit or succession options along with their
benefits and drawbacks.
LO1
Key Considerations of Growth opportunities
There are numerous factors to be kept in mind when discussing the factors which affect
the growth opportunities. Every organization has its own considerations to evaluate the growth
opportunities (Colomb and Tomaney, 2016). Davison Canners considers the factors of Pestle
Analysis to describe the growth opportunities which are as follows :
Political
These factors play a major role in the growth of any business. The bakery Davidson
Canners is also affected by many political factors like Tax policy, trade restrictions, tariffs and
many more. If in case the bakery wants to shift its operations in other country due to the
elections then it disturbs its overall performance.
Economical
These factors include various aspects of economy which decides the financial stability of
the country and the company (Thompson and McLarney, 2017). These factors can include the
economic growth rates, interest and exchange rates, inflation, unemployment rates etc. The
economic factors impacted the 'My Bakers' Bakery negatively which acted as a hurdle for its
growth.

Social
These factors are related to the cultural trends of society. Consumer behaviour plays a
major role in this which affects the overall sales of the bakery (Cowell, 2017). These factors can
include the age distribution, career attitudes, health consciousness and many more.
Technological
Innovation in the industry and in the country comes under technological factors. If the
bakery is not following the updates and latest technologies in its operational and promotional
activities, then it can be harmful for it to increase the overall sales which decides its growth
(Murdoch and Abram, 2017). It includes automation, technological incentives, R&D activity etc.
The Bismillah Bakery in UK has done a very rapid growth by following the advances
technologies.
Environmental
The ecological impacts on the bakery are due to these factors. The company must be
ready for any climatic changes. It can include weather changes, temperature, pollution, natural
disasters etc. also the company must perform all its operations environment friendly whether it is
in terms of packaging or delivery.
Legal
It is necessary for any enterprise to follow the laws of the country and get permission
from government for each and every activity to be done. Legal factors include the industry
regulation, licences and permits, labour laws, intellectual property etc. bakery can be forced to
shut down if it does not meet food safety standards set out in law of state.
Along with the factors of Pestle Analysis, there are some more considerations to be laid
emphasis upon while evaluating growth opportunities. The two main methods to achieve growth
is via increasing sales and the other one is via acquiring another company. Following is given the
research on both and their impacts on the growth of the Davison Canners :
Increasing sales
This is not achieved rapidly instead it requires a lot of efforts in marketing and customer
service. The bakery has to wait for a long time to see the results of the efforts done in the overall
activities. It offers slow and steady growth and can build strong relations with customers (Hood,

Clarke and Clarke, 2016). The Davison Canners can progress using this factor only if the
employees are totally dedicated to the operational and promotional activities but will take years
to enjoy the results.
Collaboration and acquisition
This method helps the company to grow overnight and gives the opportunity to boost
long-run competitive advantage along with increasing its position (Harrison, 2020). Acquisition
also provide the bakery to enter into new markets and target new customers rapidly with the use
of channels. 'Davison Canners' can collaborate with the 'My Bakers' to gain the partnership
advantage which will result in the rapid growth of the bakery.
It often becomes expensive and time-consuming which requires a lot of resources but has best
results. The small enterprises like Davison Canners are not financially stable with all the
financial resources, so they have to do certain type of financing to attain collaboration. With
financing, it can also collaborate with the valued brands which can increase its brand awareness
on a global level.
Ansoff's growth vector matrix
This matrix presents 4 strategies to grow and also gives the marketers an easy way to
think about growth risks. These 4 strategies are collectively represented in the form of a table
where the columns describe the products or services of the bakery and the markets are described
by the rows. Davison Canners uses these strategies for the growth in following iterations :

The above figure shows the 4 strategies of Ansoff's Growth Vector Matrix and their risks.
Market Penetration
The small enterprise can expand itself by clever marketing strategies neither expanding
the product range nor the market (Abdi, Elliot and Edalat, 2016). Davison Canners, being a small
bakery must take a little risk and decides to penetrate the market. It should also introduce regular
discount actions which will turn the passers-by into regular customers.
Market Development
The product remains same but the market is expanded in new areas. This causes higher
risk as if the bakery opens an additional store in the nearby or far areas to sell the same goods
there. But the bakery cannot foresee whether the orders are received in the new market or not.
Product Development
Here, the market remains same but the new product or a variant of existing product is
introduced. In the Davison Canners, it can implement this by providing rainbow cookies along
with the frosted cupcakes to the customers which will generate more turnover while maintaining
a constant market.
Diversification
This includes both the expansion of market and the product. This helps in developing
new customer groups along with certain risks. It is further classified into 3 types. For horizontal
Figure 1: Ansoff's Growth Vector Matrix
Source: What is Ansoff Matrix?, 2015

diversification, Davison Canners can introduce brownies also along with the existing products
whereas for vertical, it can start its own farm with cows for milk and chickens for eggs so that
the raw products can be produces organically (Pan, Chen and Zhan, 2019). In addition to this, it
can open its cafe to be less dependent on suppliers for distribution channels. Lastly, the owner
can take a big risk by introducing a totally new product like watches to guarantee a steady
growth.
So, if the above mentioned strategies are implemented effectively by the company, it will surely
contribute positively for rapid growth of the company. But Davison Canners, being a SME must
apply Market development, to attain a rapid growth in the new markets thereby increasing
customer relations.
LO 2
Various Methods of Funding
The companies use different types of funding to expand their business according to their
convenience but small enterprises mainly get benefited by the following types of funding :
Crowdfunding
The owners of small enterprises like small bakeries use this type of funding to raise their
capital (Shatskaya, Samarina and Nekhorosheva, 2016). This funding is achieved by collective
efforts of friend, family, customers, relatives and individual investors.
Advantages: It is a fast way to raise finance which can also be valuable form of marketing. It
analyses public's reaction along with tracking the progress. It can gain loyal customers,
feedbacks and guidance.
Disadvantages: It causes damage to reputation if projects fails. Competitors can steal the
confidential concept through crowdfunding site. It contributes negatively to company giving too
much business to investors.
Bank Loans
These are the quick and straightforward way to secure the funding and can be capital
repayment or interest-only (Mell, 2018). Numerous bank loans are available to meet the owners
individual and business financial requirements.

Advantages: These are major drivers of growth. It also provides capital for daily operations. It is
lent to people not having ready cash. These are much cheaper and flexible. The ownership also
remains only with the borrower only.
Disadvantages: It sometimes gives additional burden on cost of goods. It requires partial
payment from borrowers. Its repayment schedule is also strict and can penalize in case of delays.
It increases compliances.
Angel Investment
This is investment done by private individuals in other businesses. These mainly works
with small and mid-size start-ups or young companies.
Advantages: These are useful for owners who are in need of small amounts. These can help the
borrowers in decision-making process of business. It is much cheaper form of funding. No
interest rates are implied on borrowers.
Disadvantages: Investors sometimes take demands on company by being too much involved. It
is less transparent because it becomes harder to contact and research.
Going through the above funding sources, Davison Canners should use Angel investment
because though it is difficult to find angel investors but once find can act like God to the
borrowers. It does not charge any interest rates as sometimes the money can be in the form of
donation for helping the owners of small enterprises.
LO 3
Development of a Business Plan
Any Business, whether small or big should begin with a plan that helps in guiding their
decision-making and operational management (Colomb and Tomaney, 2016). The business plan
should keep the owner and the staff focused about reaching the company's goals. Davison
Canners designs the following business plan for the overall growth of the bakery.
Overview of the Organization
Davison Canners offers broad range of cakes and all bakery products all made from high
quality raw materials. Along with cakes, it also provides brownies, cookies, biscuits, waffles,

coffee and many more. Its products are always freshly served to the customers. It provides
comfortable seating arrangement to the customers who want to enjoy the meal at the same place.
It also packs and delivers the products systematically in the paper or biodegradable bags instead
of polythene thereby becoming environment friendly (Hood, Clarke and Clarke, 2016). The
products are available at the bakery from 10 am to 10 pm and are delivered online between 10
pm to 10 am. It also delivers the products at the doorsteps of the customers at suitable time
schedule. The bakery has online and offline mode of payment also which attracts more number
of customers.
The bakery, being a small enterprise need to research a lot about the existing policies in the
market. It has to compete a lot in terms of products and prices to boost itself in the areas nearby.
The market in UK is very competitive in terms of bakery products as the people there show
many interests in these products.
In order to compete with the existing players, the bakery must either reduce the prices of
products or can introduce unique products (Gegg and Wells, 2019). As it is opened recently, it
cannot reduce the price because it will result in the loss. So, it has to introduce new products.
Davison Canners wants to build a large customer base by concentrating on the business and
marketing strategies on local residents so that the bakery becomes stable.
Strategic Context
The main aim of the bakery is to expand itself in terms of the bakery products and the
market. It plans to build strong market position and increase its revenue through advertising and
promotions. Its goal is to increase the overall sales and thereby increasing profitability.
The bakery sells its products at average price (Pan, Chen and Zhan, 2019). So, the people of age
group 20-40 show much interest because they are employed and can spend this much amount for
bakery products (Murdoch and Abram, 2017). The bakery targets the areas where well-stable
people exist because lower class people will not be able to buy these products. So, the overall
sales will not be increased in backward areas.
The growth of the bakery is necessary as it used funding from angel investors so it has to repay
the amount in the given deadline. This is possible only when it gains a good profit margin.
Options Considered

Davison Canners chose market development so it will expand the existing products in the
new markets. It doesn't have financial issues as it took money from investors.
Benefits: It does not have to give interest to the investors as they have invested willingly.
Drawbacks: The investors sometimes involve too much in the decision-making of the
organization.
Timescale
The bakery expects the time of 1 year as it has chosen market development strategy in
which it will do all the promotional activities in the new market and will gain the profit rapidly.
Risks
Risks are expected as it is not sure that the products will be in demand in the new market
or not. But, to build customer relations, risks are to be taken.
Resources
It requires the capital which it took from the angel investors with no interest rates and the
raw materials are bought by the suppliers with whom the bakery has personal relations (Harrison,
2020). So, it gets the raw products at average prices. The best place will be decided according to
the capital it had.
Costs
This project will costs £15000 (approx.) including all the investments in location,
promotional activities, raw materials and everything.
Investment Appraisal
The payback period will be almost 10 months. It expects to get the initial investment in
10 months but the profit is expected in 1 year. The net present value is almost £15000. The
average rate of return is expected to be almost double of the initial cost.

LO 4
Exit or Succession Strategies
Sometimes, the business expects its exit within the 3-10 years. Following are the options
for the exit or succession of small business :
The main exit strategy includes Liquidation or Walkaway (Abdi, Elliot and Edalat, 2016).
Liquidation means quitting the business by selling of all assets whereas Walkaway is referred
when all debts are paid. Its pros are it is easy and natural with no negotiations and no worries
about the transfer of control.
The another one is Family Succession, passing business to a family member. Its advantage is the
owner can even retain some influence and involvement if desired. But the bad point is that the
owner sometimes get burdened with problems which led to business failure and it is a complex
process.
Bankruptcy is another exit strategy which uses legal method of closing business. Its advantage
is that the owner loses control of the firm but can continue its operation (Cowell, 2017). Its bad
point is that the owner is out as manager and the creditors owns the business.
Another exit strategy involves Initial Public Offering which offers stock in which the owners
shift the private holdings in public market. Its merit is that the owner will be on the cover of
Newsweek. The demerit involves that the owner spends time in selling company rather than
running it.
Acquisition is the another exit strategy which occurs when one business buys another business.
If the business has strategic value then it can benefit by paying more to acquirer than it is worth
to anyone else. But sometimes the business may be unattractive to other buyers.
One more exit option is Friendly Buyout which occurs when ownership is transferred to family
members or known people. Its good point is that the buyer can preserve the important things
about business. But, it can tear a company apart as emotions become ahead of needs because of
jealousies and promotions.
CONCLUSION
The research done above concluded that there are many key considerations to be kept in
mind while evaluating the growth opportunities of a bakery. It also analysed the different types

of funding along with their positive and negative impacts. The report is followed by developing a
business plan to scale up the business. The report is finalized by discussing some exit strategies
with advantages and disadvantages of their implications.