Business Growth and Funding Analysis: Ella's Kitchen Report

This report provides a comprehensive analysis of growth strategies for Ella's Kitchen, a company specializing in organic food for babies and toddlers. It begins with an introduction to planning and its importance in business management. The report then delves into a PESTLE analysis to identify external factors influencing business expansion, followed by an application of Ansoff's growth vector matrix to explore market penetration, product development, market development, and diversification strategies. The report further examines various funding sources, outlining their advantages and disadvantages. A business plan for growth, incorporating financial information and strategic options, is presented. Finally, the report discusses succession options for Ella's Kitchen, considering their merits and demerits. The report concludes by recommending market development and market penetration strategies for Ella's Kitchen to foster future growth and brand enhancement.

Planning for growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK1.............................................................................................................................................1
Pestle analysis for analysing growth opportunities.....................................................................1
P2: Ansoff's growth vector matrix of Ella's kitchen...................................................................3
TASK 2............................................................................................................................................6
P3. Sources of funding with advantages and disadvantages.......................................................6
TASK3.............................................................................................................................................8
P4: Business plan for growth of Ella's kitchen...........................................................................8
TASK 4..........................................................................................................................................13
P5: Succession options for respective organisation..................................................................13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Planning is defined as the process of deciding what to, who is to do it, when to do it and
who is responsible for whom. It is the essential function of management that included
determining the objectives of business, formulation of plans for achievement of these objectives,
developing of timings & schedules and assigning task & responsibilities for implementation of
them (Burton and Jauniaux, 2018).
Ella's kitchen is a small business enterprise that makes organic food for babies and
toddler and sold them globally. The company founded in 2006 by Paul Lindley with its
headquarter in Henley-on-Thames, United kingdom.
In this report pestle and Ansoff's growth model is analysed for finding out the
opportunities for expansion of respective organisation. Further benefits & advantages of sources
of funds are considered. Business plan that covers financial information & strategic option for
business, succession options with merits and demerits with respect to Ella's kitchen are also
discussed within the report.
TASK1
Pestle analysis for analysing growth opportunities.
In terms of evaluating the opportunities for growth of Ella's kitchen pestle analysis is
used to identify factors that have huge influence in expansion of business (Chen and et. al.,
2019).
Completive advantage
In context of respective organisation offers products and goods made by traditional
methods at affordable prices so as to build customers base and sale volume of firm that has
prominent impact over business performance. Lower prices reflect competitive advantage for
Ella’s Kitchen.
Pestle analysis
Political: factors such as- political stability, tax rates, governmental policies impact the
business of respective firm. UK's governmental policies permit companies to enter into different
areas without any limit and also offer relaxation in tax rates from 28-30%. This creates
expansion opportunities for Ella's kitchen to explore its business within UK and increase
revenues of firm.
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Economical: It considered elements like rate of inflation & recession; economic growth
of country has large impact on the future growth of firm. Due to current pandemic situation
whole UK facing recession thus, it is hard for government to change the interest rates (Syssner
and Meijer, 2017). This impacts positive impact on the firm due to its lower prices and selling of
essential product.
Social: This factor of pestle analysis consists purchase habits, values & beliefs of
customers which affect the business. Changing lifestyles, trends and preferences this changes
customer’s interests and buying habits (Ghazizadeh and et. al., 2018). Thus, people wanted good
quality at favourable prices which have positive impact on respective firm in terms of exploring
business.
Technological: This included innovations & trends, use of IT and robotics that has huge
impact in long term growth and sustainability of business firm. Online shopping and home
delivery services are new trends in the retail sector. Country like UK is more involved in
technology. Thus, this factor has an positive impact on Ella's kitchen and generating expand
opportunities for firm.
Environmental: It is related to environment protection laws, reducing the pollution etc.
that impacts future existence of business. Government of United Kingdom is very strict in terms
of producing natural renewable resources and making country pollution free. Due to making
organic food products with use of natural resources creates positive impacts of this factor on
respective firm and generating growth opportunities for exploration of business within UK.
Legal: In this factor of pestle analysis health & safety laws, consumer protection laws,
governmental legislation are covered (Hoseinifar and et. al., 2018). UK is strict in terms of
consumer’s protection and labour laws that impact the firm in negative ways. Thus, it is
important for firm to consider favourable laws for employees at workplace and also considered
consumer protection laws for expanding business more within the country.
Thus, all these factors of pestle analysis create great opportunities for the growth of Ella's
kitchen due to considering of protection of customer's health and environment through its natural
and organic products. Political & legal conditions of UK are in the favour of firm and it reflects
options for company's future growth and sustainability within the markets of United Kingdom.
Ella's kitchen should use lower prices for its products for future growth of the firm.
Because of recession time in UK people shifted from use of essentials and necessary things at
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favourable prices (Huang and et, al., 2018). Thus, using of lower prices for its natural food items
will enhance sale and customers base of business which automatically reflects the profit
maximisation of firm. Company has an opportunity to expand its business in different areas of
UK so that it can run for long-term. Company already has a good brand image in small areas of
country by lowering the prices it can gain more customers and retaining existing customers. This
helps in getting competitive advantages over its rivalries (Jin and et. al., 2018). It is the good
strategy to attract customers of competitors by influencing them with similar products at lesser
prices. Thus, company can adopt lower pricing strategy which includes discount offers, selling in
bulk for gaining competitive advantages. This helps in getting competitive advantages such as:
 Increasing the sales and revenues of company over competitors.
 Gaining more customers and building brand image.
 Increasing profit of firm through maximising the sale.
 Attracting and getting competitor's customers by offering them same product at lower
prices.
P2: Ansoff's growth vector matrix of Ella's kitchen.
Ansoff matrix is the strategic device that provides framework for senior managers to
drive actions necessary for future growth and long-term sustainability (Ansoff Matrix, 2015). In
terms of Ella's kitchen this matrix is critically analysed as follows:
Market penetration: This strategy can be used by respective organisation to promote
existing products and goods in small & niche market for increasing market shares of firm
(Mohamed and et,. al., 2018). It can be applied in three ways such as- reducing prices to attract
new consumers, rising the efforts of promotion & distribution and acquiring a competitor within
same market. Adopting this strategy has some benefits and disadvantages considered below:
Advantages
 Fast growth: Through adopting this strategy Ella's kitchen can enlarge customer
base and creates competitive advantage which results in fast growth of firm.
 Economic benefits: Another important advantage of choosing market penetration
is it saves the cost of firm required for development of new products in order to
expand business.
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 Combat competition: By choosing lower prices oblige competitors to adopt
alternative strategies and this way respective firm can attract lost consumers and
put pressure on competitors to leave the market (Quinn and et. al., 2018).
Disadvantages
 Missed opportunities: Customers who are stick on exclusive and premium
products not affected by the lower prices of respective firm.
 Lack of result: Market penetration isn't effective for the situation when
respective firm wants to enter into different markets because of tough
competition with existing rivalries.
 Lowering industry prices: If respective organisation offering lower prices, it's
natural that competitors will try to match them in order to retain existing
customers.
Product development: This strategy is suitable when company wants to launch new
product into existing market (Shimizu and et. al., 2018). By adopting it respective firm can help
to breathe fresh life into business. Following are the benefits and disadvantage of it:
Advantages
 Growing professional network: People want to connect with experts and
innovators. Thus, using this strategy helps the firm in growing professional
networks like business to business or customer to business.
 Build a culture of innovation: New ideas of business helps to create new
products and revenues this leads to maintain innovative culture for respective
organisation.
 Helps to create higher value proposition: When respective firm can use product
development for satisfying consumers this generates higher value proposition for
business.
Disadvantages
 Increasing cost of business: By adopting this strategy increasing the cost of firm
for developing and launching new products that affects the cash flow of business
in negative ways.
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 Risk of fail: Huge time and efforts are required for market testing of the new
product to see the reaction of consumers towards the acceptance of new product.
Thus, it creates risk for respective firm in terms of developing new product.
 Creating unrealistic expectations: Product development strategy creates
unrealistic expectations for customers and not meeting with them will affect the
brand reputation of firm.
Market development: This strategy is applicable when company wants to promote and
market existing products into new and fresh markets. It helps in making business relevant &
interesting for customer as well as employees (Tedeschi and et. al., 2018). Following are the
benefits and disadvantage of this strategy in context of respective firm:
Advantages
 Rising customer base: Promoting existing products into new markets helps the
respective firm to attract more customers and satisfying them will increase
customer base of business.
 Increasing sales and revenues: Increasing customer base will automatically
enhancing the sales and revenues of respective organisation.
 Maximising profit: By using this strategy respective firm can gain more
customers & by satisfying them helps the firm to raise profit of business.
Disadvantages
 Increasing risk: Entering into a new market creates the risk for the firm and leads
the expenses of business.
 Not easy to fight with competition: This strategy not always effective for cope up
existing market and fighting competition from new competitors who have
experienced in their market.
 Increases cost of business: Entering into new market will increases the cost of
firm included in the activities such as- market research, advertisement.
Diversification: This strategy is useful when company wants to launch new and
innovative products within new industry (Yang and et. al., 2019). It helps in expanding the
business of firm and ensures future sustainability of the business. In terms of respective
organisation use of this strategy may impacts both positive and negative ways defined as follows:
Advantages
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 Increase market shares: By adopting diversification Ella's kitchen can introduce
new products, targeting new customers, entering & covering new regions helps
the firm in expanding business. It helps in rising market shares and enhancing
brand image.
 Sustainable business growth: This strategy helps the respective organisation in
increasing brand image with launching of new and innovative products. It helps in
creating long term sustainability of business within the industry.
 Helps in make more money: Through entering into new market and generating
more customer base leads to earn more money in the form profits and revenues.
Disadvantages
 Risk generating: Development of new product includes huge investments on
research& development thus, it creates huge risk for the firm.
 Increasing expenses of firm: Differentiation strategy required more money
which leads to maximise cost and expenses of respective organisation.
 Losing focus of firm: If company wants to expand it has to concentrate more on
the development of new product and attracting new consumers. Thus, company
lose the focus from existing markets.
As per the above discussion about strategies of Ansoff's matrix, it is suggested and
recommended for Ella's kitchen to adopt market development as well as market penetration. This
helps in expand business in different areas with existing products. It will save the time, money
and efforts of firm and creates opportunities for future growth and brand enhancing.
TASK 2
P3. Sources of funding with advantages and disadvantages.
Funding is undertaken as an activity that need prominent resources considering the
finance, projects and programs as it tends to form money in terms of making effective efforts on
time (Zhang and et. al., 2018). For this, effective sources include venture capital, donations,
credit and savings and so on. In regard of this, effective sources of funding are mentioned as:
Importance of funding:
 Funding is important in terms of establishing own business and also for hiring and
recruiting employees for attracting lot of customers.
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 It is useful for business in terms of conducting effective and prominent research to
identify the market needs and requirements for effectively running an organisation.
Sources of funding:
Bank Loan: It is undertaken as the amount in which money is being borrowed for the specific
period of time and also agreed for the repayment on schedule. The prominent amount of
repayment depends on the prominent duration and size of loan considering the rate of interest. It
is undertaken as the effective part for the financial structure that is available for the well-
developed and effective businesses instead of start up business. Benefits: The business is effectively guaranteed for the money considering the effective
time period unless they breach the loan condition. Moreover, the interest rates also tend
to fix terms easily in terms of forecasting the interest payments. Drawbacks: Bank loan represent the security that prominently tends to offer bank over
the assets of business. It relatively tends to depict the lack of flexibility for the interest
and also being paid for the excess finance.
Loan from friends and relatives: It is undertaken as the prominent loan agreement in which
businesses get funds from the friends, family and personal acquaintances for being agreeing to
take money from the business owner. It also tends to depend on the prominent parties that are
being involved considering the formal agreement. Benefits: Lending money from family and friends tends to offer flexible options to pay
off money as an individual get money with poor credibility and also with low interest
rates. Drawbacks: This type of funding has lack of clarity as both the borrowers and lenders
have different expectations from each other which they do not clarify because of good
terms.
Venture capital: It is considered the private form of equity financing that tends to offered by the
venture capital organisations and funds considering the early stage of business or to start-ups in
terms of deemed to have effective and high growth. It tends to return the venture capitalist that
relies on the growth of company. Benefits: This type of sources of funding has the effective network connections
considering the business community and these can become beneficial for company to
establish their own business.
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 Drawbacks: This type of source need high return on the original investment and also
tends to release the funds from time to time.
Therefore, by analysing the above discussed sources, Bank Loan is quite effective for
Ella's Kitchen in terms of developing their own business as it is more secured and has effective
guarantee for the loan pay-off. Along with this, the interest rates also get fixed for paying off the
loan amount.
Personal savings: It is also an important source of funding for successful implementation of
business strategies needed for effectiveness of respective business. This refers as the amount that
remains after subtracting consumer spending from disposal income earned in specified time
limit. Advantage: In terms of personal savings has potential to earn interest. Another benefit of
it is easy to open and access and providing FDIC insurance and security that has
prominent impact over successful allocation of required finance. Disadvantage: One of the major drawbacks of personal saving is minimum balance is
required. Another disadvantage of this source of finance is lower interest over as
compared to other resources and federal limits on withdrawal of personal savings.
TASK3
P4: Business plan for growth of Ella's kitchen.
Business plan
Executive summary:- Ella's kitchen is baby food producer with its 62 no. of employees.
It is an organic food manufacturer of UK and wants to expand its business (Yu, Yanxu and
Bojie, 2019). Here business plan is suggested to explore business within different areas of United
Kingdom.
Business details:- Company need to introduce & promote its existing products into new
markets in order to expand its business.
Vision: The vision of Ella's kitchen is to become no.1 baby food producer in UK with
long term sustainability of business.
Mission: In terms of respective firm the mission is to offer natural and organic products
to improve children's life by developing healthy relation with food.
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Objective: Ella's kitchen's objective is to gain 20% market share by 2022 from its into
new market in order to increase profit by 10%.
Industry and market analysis:- United Kingdom's food sector is already board and
covering vast area of retail industry. There are huge opportunities for respective firm to enter into
different areas of UK for exploring business. Country needs organic food producers of building
healthy lifestyles among children.
Competitor’s analysis: There are huge competition in UK’s food sector due to huge and
expensive food producers and manufacturers. It is the strength of Ella's kitchen of making
organic and natural goods that doesn't harm babies and develop healthy habits, already selling
food within country. On the other limited employees, not having huge brand image is the
weakness of firm. Company needs to gain brand image and increase market share to fight
competitors.
Customers and value proposition:- In order to expand business company's target
customers are babies below the age of 12. company offering organic food which is making with
healthy nutrition essential for growth of children. In order to gain competitive advantage
company should focus on good quality.
Marketing strategies:- Marketing strategies adopting by firm in order to expand
business are as follows: Products: In order to promoting existing product respective company should focus on
making product more healthy and use different flavours to attract more customers. Price: Company should focus on favourable prices with good quality to grab position
within new market. Place: In terms of distribution respective firm should focus on display products in new
stores and online stores.
 Promotion: Respective firm should concentrate on social media marketing and
advertisements to promote products in new market.
Operation plan:
Production: In terms of producing firms requires 1 hour manufacturing and producing
minimum m 50 units of product. Factors that affected the production process if suppliers of raw
materials, equipments and human resources required for manufacturing of product.
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Suppliers: For fulfilling the object of respective firm requires to build relationships with
suppliers of raw material who provide essentials such as- organic baby ingredients.
Management team & company structure:- In terms of fulfilling the requirements of respective
plan company needs to formulates effective teams and groupings of people as per their
experience and expertise.
Resources
Staffing: In terms of expanding business in new area company required to staff
employees. For this purpose firm requires 20-25 employees who can firms the duties of manager,
supervisor, labour etc.
Equipments: For execution of company's purpose respective firm needs machineries of
melting, backing, blender, mixture for producing goods and products.
Financing:
Sources of finance: For execution of business plan Company required 60% of fund from
external resources such as bank loan, public finance and 40% from company's own sources.
Financials projection:
Income projection:
INCOME STATEMENT
2014-06 2015-06 2016-06
Revenue 59893 62102 65512
Cost of revenue 41424 43045 45525
Gross profit 18469 19057 19987
Operating expenses
Sales, General and administrative 11340 11855 12850
Other operating expenses 3049 3040 3359
Total operating expenses 14389 14895 16209
Operating income 4080 4162 3778
Interest Expense 346 315 308
Other income (expense) -1190 -403 -2432
Income before income taxes 2544 3444 1038
Provision for income taxes 939 1004 631
Net income from continuing operations 1605 2440 407
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