Planning for Growth: Strategic Analysis and Funding for Dunn's Bakery

This report analyzes growth opportunities for Dunn's Bakery, a small-sized bakery in the UK, using tools like SWOT and PESTLE analysis. It evaluates growth options through Ansoff's matrix, including market penetration, market development, product development, and diversification, ultimately recommending a product development strategy. The report assesses potential funding sources, such as equity share capital, loans from financial institutions, overdrafts, and borrowing from friends and relatives. It discusses the advantages and disadvantages of each funding option, providing a comprehensive overview of how Dunn's Bakery can achieve sustainable growth. Desklib offers a platform for students to access similar solved assignments and past papers.

Unit 42 Planning for Growth

TABLE OF CONTENTS
.........................................................................................................................................................1
MAIN BODY...................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Planning and growth refers to the notion where a business strives to generate mammoth
amount of profit and hiking its diaspora in the market (McKenzie and Sansone, 2019) Profit
making and business growth are sort of inevitable phenomenon for them a business gets run, the
report would be some key considerations for analysing growth opportunities with respect to
Dunn's Bakery which is a small sized Bakery product selling organization of UK. For analysing
the available opportunities for growth Ansoff's growth vector matrix will be taken into
consideration. Available sources of findings which may drive funds to the entity for its growth
are to be evaluated. At the end of the report a business plan would be fabricated and some exit or
succession options have to be presented along with their benefits and drawbacks.
MAIN BODY
Analysing key considerations for evaluating growth opportunities
For small business like the Dunn's bakery that is selling variety of goods to large number
of customers it is essential that proper growth opportunities are been identified so that new
customer market is gained and also there in increase in the revenues for the business. Moreover,
this might be done through analysing the internal and external environment that is as follows:
SWOT analysis:
Strengths
 Having the qualified and the
experienced staff that is expert in
handling variety of customers
 Use of the latest equipments to make
the delivery faster (Wayland, 2019.)
 Ability of offer big orders for any event
or special occasion
Weakness
 Increasing prices of the bakery products
due to the pandemic.
 Not enough branding and marketing
activities
 Operating in only limited areas in UK
Opportunities
 Scope of expansion in respect to menu
and locations.
 Opening new healthy diet trends
Threats
 Stiff competition from other bakery
stores
 Change in prices of the raw materials

through selling variety of products
 Focusing more on branding to increase
the customer base
(Sparkman, 2018)
 Hit of pandemic and decrease in the
purchasing power among the people
PESTLE analysis:
 Political factors: Various major factors such as political instability,, tax rates etc. also
affect the sales of company. Also, in context of Dunn's bakery that need to expand the
current business it can be said that political instability in any regions would only create
the negative impact on the business in long run . Also, frequent changes in the trade
policy would only affect the business operations badly.
 Economic factors: Factors such as import export restrictions, inflation, Brexit reforms
etc. would also impact the business and its working. Furthermore, higher import export
restrictions would mean that business would not be able to supply and the get the raw
materials from that particular region in the easiest manner (PESTEL Analysis, 2022.).
Moreover, higher inflation rate in the UK would decrease the purchasing power among
the people and reducing the sales of the business.
 Social factors: There are various factors such as cultural trends, beliefs, values etc that
keeps on changing from time to time and hence these need to be analyzed by Dunn's
bakery so that based on that various products might be sold in most effective manner.
Further, if these are not analyzed that it would only result in looses to the firm in the
future.
 Technological factors: In current era use of advanced technology is necessary as it
might, affect the operations of the industry and can change the purchasing power of
customers (Pistrui, Welsch and Roberts, 2019). Also, People are more attracted towards
online purchasing and get their products at home by using technology such as internet.
Thus, In order to maintain the sales of company Dunn's bakery need to use the latest
technology so that work might be carried out faster.
 Legal factors: There are certain laws such as minimum wages laws, employment act,
working hours etc that are important laws that need to follow by the Dunn's bakery so
that there is no government interventions in the future working of the business.

Moreover, these laws develop the trust among the people and build better brand image in
the long run.
 Environmental factors: In today's era, people are more environment conscious, so they
are moving towards consuming more Eco-friendly products (McLean and et.al., 2018).
Thus, Dunn's bakery's focusing majorly on developing Eco-friendly products and
reducing usage of natural resources such as water while making certain bakery products.
Moreover, by adopting such type of strategy, the firm would be maintaining
sustainability.
Evaluating opportunities for growth through Ansoff’s matrix.
For small bakery shop like Dunn's bakery in London it is very important to plan for
expanding in newer regions where the larger market share might be covered. Also, it can be said
that for identifying the best growth opportunities firm might use the Ansoff matrix so that related
growth methods and the risk associated with each of it might be identified in right manner.
Some major elements of Ansoff matrix are as follows:
Market Penetration: This is the strategy where the business is concern over increasing
sales of the existing products in the existing market so that more revenues might be generated.
Furthermore, this might be done either through either decreasing the prices of the goods or
through acquiring the competitor in existing market (Stošić, 2020). Thus, through using this type
of strategy the Dunn's bakery might assure fast growth to the business and have greater economic
advantages. However, the major disadvantage of using this type of strategy to the firm is that it
might impact current brand image of the business and also misses the opportunities of making
the luxury products as it is being labelled as manufacture of less quality and cheap items.
Market Development: This is the concept where existing products such as cakes,
sandwich and much more that are sold by the Dunn's bakery are sold into completely new
markets. Also, this might be opted when the firm wants to have new customer segment for the
business and wishes to enter into the new foreign market for more growth and success. Also,
such type of strategy might be successfully used when the company is not having enough
resources and wish to have larger market share so that more profits might be earned. Moreover,
this strategy is useful for supporting long term growth and generating more leads and sales for

the business. However, this strategy might fail badly in cases where cost in researching the new
market exceeds the benefits that are derived from it.
Product development: This is the strategy where company focuses on introducing new
products to the exiting market so that people are more attracted towards the business and are able
to consume more variety of food items for the company. Also, to use this strategy effectively
Dunn's bakery need to invest lot of funds into the research and development departments so that
best new products might be launched within the existing business (Midiwo and Ombui, 2018.).
Moreover, the company need to acquire certain rights if it wants to sell the other company
products during the certain period. Furthermore, this concept is successful when there is high
amount of funds availability and there is well qualified staff that is expert in selling variety of
goods in the market in efficient manner. Although the cited company might use this type of
growth strategy but due to ever-changing markets and increased number of competition in the
small bakery industries it might not work best and fulfil certain goals of the firm.
Diversification: It is concept where the completely new products by the company are
sold in the newer markets. Also, this type of strategy is riskier either it would reap the highest
rewards in terms of profits or sales or it might cause huge losses to the firm if the product is not
liked or is not in accordance with certain demands of the customers (Tey and et.al., 2021).
Moreover, Dunn's bakery might go for the related diversification where company launches the
products that are similar to the existing business such as launch of new sugar free cakes or might
also go for the unrelated diversification where completely changed products or food items are
offered in the market. For instance : Launching of the clothing items that part for the bakery food
items. Thus, having such of strategy needs to have the complete knowledge of the target market
and also the competitor strategy to gain maximum in the future. However, if company is not
efficient in knowing the customers needs and is only concern in demographic view of market
than it would only result in losses and ineffective operations in newer markets.
Discussing options for the growth and critically evaluating each of these options
The above all the options that are been discussed for the growth it can be said that the one
that might be adopted by the firm is the product development strategy as it would be able to sell
new products through investing less on the research and offering products having new attribute
so that more people are interested in purchasing (Al Suwaidi and et.al., 2020.). Also, if the
product development strategy works well for Dunn's bakery in the target market than it might be

able to sell this newly launched product into new markets later in the future. Thus, this strategy
will allow the cited company to gain competitive advantage in UK markets within the short span
of time.
Assessing the potential sources of funding available to the business
There are various sources of funds through which the business might be able to run
smoothly and carry out all the essential daily task for the business. Moreover, for the bakery
business various raw materials are required and also daily funds are required for conduct of
various business operations (Attaran and Woods, 2019). Some of long term sources of finance
are as follows:
Equity Share Capital: This is method through which shares of the Dunn's bakery are
sold in the market so that more revenues might be generated for time being. Also, these people
are considered the owners of the business and have full control
Advantages:
 No repayment requirement is required as only dividends in form of profits are distributed
among the public. It generally has lower risks compared to other methods of finance
Disadvantages:
 It has higher cost than in comparison to the debt capital
 It is very time-consuming and lot of efforts had to be put in.
Loans from financial institutions: It is another method through which the Dunn's
bakery would be able to get enough funds in form of term loans that have to be repaid with
interest in short period (Long-term and Short-term sources of Finance, 2022.)
Merits:
 All the control is in hand of the business and not the owners unlike equity share Bank loan is temporary and thus it does not require paying dividends.
Demerits:
 High interest rates might impact the business working
 Interest from bank loan is tax-deductible.
Short term sources of finance
Overdraft: This is facility where Dunn's bakery owner would have the opportunities to
withdraw more than the actual amount that is available in the current account.

Pros :
 It is flexible and allows the business to borrow anytime and is cheaper than bank loan Only paying the interest on the funds that is withdrawn
Cons:
 If the amount go over the limit than penalty fees need to be incurred
 the assets of the company might be personally liable if amount is not paid on time
Borrowing from friends and relatives: It is the best method in times of urgency where the less
or no interest amount need to be paid and is easily to arrange. However, major problems is that if
the amount in not paid on time than it can harm the relationships with business.
Selection and Justification of source
The one best method that might be adopted by the company current would be through
bank loans so that all the requirements of funds are met timely and also through new launch of
product in the market more revenues might be generated that will allow to easily the company to
repay the loan amounts.
Business plan
Company overview-
DUNNS bakery is a small sized bakery organization situated in UK. It came into
existence in the year 1820 in Northamptonshire. By Robert, it was started as a small family
business then it started getting growth. Now the entity is well-known for its products like bakery
and sweets (Erlina, Gunarto and Shofa, 2021)
Product-
DUNNS bakery is famous for its offered products such as cakes, Patisserie, Bread,
confectionery, sandwiches rolls and salads etc. the products are available in a wide range of
varieties and taste to satisfy the needs of customers.
It will provide new products which is bakery item with sugar free ingredients. The business plan
is very much viable since over the time such bakery items are in demand and having their
brighter future.
Situational analysis-
SWOT analysis- to analyse some associated aspects of the new product SWOT analysis is being
carried out as-

components
strengths  Having good ability to produce it.
 The sugar free products can be offered
on lower prices.
 It will help to meet demands.
weaknesses  The sugar free bakery products are not
offered ever by it.
 It is a new product so there is low
awareness among customers.
opportunities  May get bigger share of the market.
 Can attract such customers suffering for
diabetes. (Talvitie, 2021)
threats  Low prices may surge issues.
 There may be insufficient response
from the customers.
PESTEL analysis-
For analysing the external factors and their affects on the organization PESTEL analysis
is being carried out as-
components
Political  The political factors are stable so offer
good ability.
 The governments will also support such
products.
economical  Economy is experiencing good
upsurge.
 Growing labour cost may be a threat.
social  People are more conscious about their
health so the sugar free product will

help them.
technological  There is need to abide with higher
technology (Henriques, et al. 2022)
 To deliver product, market it, getting
feedbacks etc. it plays vital role.
legal  Restaurants laws are getting tougher.
 Safety standards are also there to abide
with.
environmental  It will be a good step towards plant
based diet so can hike environmental
betterment.
Competitive analysis-
Luminary bakery The old post office
bakery
Dunn's bakery
Products The Best attraction is
two tier cake, sticky
toffee etc.
Bread, sausage rolls,
flaky pastry, savory
filling etc (Fauzi,
2021)
Bakery items, sweets,
pastries, butter rollers,
cupcakes, dunns range,
wedding cakes etc.
speciality Providing both on
shop and online
services.
Only on shop, no
delivery services.
Both online and
offline services.
Service options Opens at 8 AM
And make all types of
products and services
available.
Only take away.
Organic products.
From 7 AM the stores
will be opened.
Takeaway and
delivery are available.
STP-
For drafting strong strategy STP model is being applied-

segmentation The market would be segmented on the basis
of needs and demands of customers.
There are a range of aspects such as culture,
gender, age and health factors would be taken
into consideration.
targetting The target market would be such people who
are suffering from some ailment, or are health
conscious where aged people would be
saliently targetted.
positioning “Cost leadership model” would be followed to
position itself in the market.
4Ps of marketing new product-
Products- Dunn's bakery would be offering sugar free bakery products consist a range of items
such as rollers, pastry, bread, sweets, cup cakes, other cakes etc.
The products will be made using sugar free ingredients in order to meet the requirements of such
customers who are avoiding using sugar rich products due to their health concerns or some other
reasons (Karrar, 2020)
Pricing- As Dunn's bakery decided to go with “cost leadership policy” so in initial phase the
prices will be kept lower, where prices of competitors would be taken into focus.
Promotions- To promote the new products a holistic approach has to be followed where both
traditional and non-traditional approaches shall be applied. For marketing social media platforms
offer wider realm.
Place- The sugar free bakery products would be made available by both delivery root and
takeaways.
Budget for the new product-
Budget for Dunn's bakery new product-
particulars Amount (in £)

Row material 3500
salary 5000
Marketing expenditures 2600
packaging 450
New equipments 7200
Administration expenditures 3500
Monitoring expenditures 2750
Total expenditures 25000
Monitoring-
For monitoring the business plan a well-articulated process has to be taken into practise.
Where some KPIs are also being used such as (Marcelli, 2019)
Revenue growth.
 Number of new customers.
 Profit margin on sugar free items.
 Demand graph.
 Customer satisfaction rate.
 Revenue per client.
To analyse the new business plan there are some benchmarks too. The role of
benchmarking is to provide a road map to the business in order to timely evaluate its progress.
Like the productivity element of the organization, efficiency, efficacy and return on investment
for new products etc. some realms would be covered using Functional benchmarks, competitive
benchmarks, strategic benchmarks, performance benchmarks etc. it would be helping business to
execute the plan in most appropriate manner.