Strategic Growth Plan: Small Street Espresso Company Analysis

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This report examines growth planning strategies for Small Street Espresso, a UK-based coffee shop established in 2012, offering coffee, cakes, and sandwiches. The analysis includes key considerations for evaluating growth opportunities, such as competitive advantages and the Porter Generic Model (cost leadership, differentiation, and focus strategies). The report utilizes PESTEL analysis to assess political, economic, social, technological, legal, and environmental factors impacting the business. It evaluates growth opportunities using the Ansoff Growth Matrix (market penetration, product development, market development, and diversification), recommending product development as a suitable strategy. The report also explores potential funding sources, including crowdfunding and bank loans, detailing their advantages and disadvantages. Finally, it outlines the development of a business plan for growth, incorporating financial information and strategic objectives, along with a discussion of exit or succession options for a small business, considering their benefits and drawbacks.
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PLANNING FOR
GROWTH
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1: Analyse consideration to evaluate the growth opportunity..................................................3
P2: Evaluate opportunities for the growth of an organisation.....................................................5
TASK 2............................................................................................................................................6
P3: Potential sources of funding available to business and elaborate the business and benefits
drawbacks....................................................................................................................................6
TASK 3............................................................................................................................................8
P4: Frame a business plan for growth which contains financial information and strategic
objective......................................................................................................................................8
P5: Exit or succession options for a small business explaining the benefits and drawbacks......9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
Growth planning refers to the strategic business activity that help the business to track the
growth in terms of revenue generation. It allows the organisation to make optimum utilisation of
resources and bring the significant changes that takes industry towards the right direction
(Christofakis and Papadaskalopoulos, 2011). If an organisation wants to diversify its business
then they have to incur long term planning in order to attain the objective successfully in an
efficient manner. For the better understanding of report Small Street Espresso company has been
selected which is situated in UK and established in 2012. It basically offer various variants in
coffee, cakes and sandwich to the customer. This report cover following topics such as key
consideration to evaluate business growth opportunity as well as various methods of funding.
Further, develop business plan to scale up business and access ways business owner can exit the
small business.
TASK 1
P1: Analyse consideration to evaluate the growth opportunity
Business development refer to the initiative and activity that help the business to make
effective business decision and expand its profitability successfully. The company performing
the planning as well as manages the business with the help of functional manager that takes the
business towards right direction. In relation to Small Street Espresso company offer various
types of food and beverages, also they provide efficient customer service to build long term
relationship with the customer.
Competitive advantage: Small Street Espresso basically provide the services to the
residence of UK who usually visit the cafe with their friends and partner to get the quality time
and experience rich products of company. The company usually adopt the competitive strategy
like it provide premium level of services and at affordable prices which even youths can leverage
who are the main target customer of company. Further, firm on the basis of changing trend bring
the changes in their business too in order to gain competitive advantage (Brinckmann, Grichnik
and Kapsa, 2010). This even help company to expand as well as prosper in an effective and
effective manner.
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Porter Generic Model
This model help the industry to gain long term profitability in order to achieve
sustainable development by gaining competitive advantage over the competitors. Company can
gain the competitive advantage from cost differentiation or by setting low price to attain the
desired position of company. These factor or Porter Generic model which is used by Small Street
Espresso is defined below:
Cost Leadership Strategy: Here the firm overpower their competitor by setting low price
of the product which is generally low from the competitors pricing. This is an effective strategy
that assist the firm to gain the benefit of huge customer base which helps to expand the market
share of company effectively.
Differentiation Strategy: Under differentiation firm adopt unique strategy that is
different from its rivalries and gain the interest of consumer (Sreedhar and et. al., 2018). Thus,
the unique attribute of product create the position in the mind of customer and help to gain
competitive edge over others.
Differentiation focus Strategy: Under this, Small Street Espresso cater the specific
market, like it serve the niche market by understanding the existing need and requirement of
customer. This help the firm to add more attribute and bring alterations in the existing product to
fulfil the needs of customer. For instance, company provide the high quality services, nice
ambiance, proper sitting area as well as reading corner so that the local residence can come and
perform the activities on the basis of their likings.
Cost Focus: Cost Focus strategy is basically used by company to understand the dynamic
environment and develop low cost strategy for niche market. Here, firm make sure they lower
down their expenses and manage the operations of business effectively so that company can
compel the customer to select them amongst competitors.
PESTEL Analysis
It is a macro environmental factors that affect the performance of business and help them
to grow effectively as well as efficiently.
Political: It include regulation, taxation policy as well as trade relation among the various
country that can help the business to operate effectively. These factor need to be considered by
Small street espresso for the effective growth and development of business. Thus, the company
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needs to adhere the policy set by government and set strategy accordingly to gain competitive
advantage over competitor.
Economical: This factor helps the firm to identify the demand of customer as well as
economic cycle so that the cafe shop can boost up their business by making financial
arrangements significantly. Thus, it helps to maintain stability and cope up with competitive
pressure (Barbour and Deakin, 2012).
Social: Company needs to identify the taste, attitude, culture as well as preferences of
customer to maintain the image of company in society. Like, Coffee is high is caffeine which has
negative (sleep disorder) and positive affect (weight loss). So the company can use healthy
ingredient and can promote customised services in order to maintain differentiation focus
competitive strategy.
Technological: As the selected company perform all the operations in UK which is one
ODF the fastest growing country in terms of innovation and adoption of latest technology. So the
company can use efficient brewing techniques and serve various variant that help to increase the
footfall of cafe.
Legal: It include the legal legislation like health and safety act and minimum wages act
which needs to be abide by company in order to conduct the operations effectively.
Environmental: The consumption of beverages like coffee highly influence by weather.
Such as most of the customer prefer to have coffee during winters to keep their body warm
which affect the sales of coffee within small street espresso.
P2: Evaluate opportunities for the growth of an organisation
Opportunities refer to the competency which exist in the external market and help the
firm to gain better position (Shafaghat and Shakeri, 2014). This basically helps the Small street
espresso to gain core competency that help to attain sustainable growth and development.
Moreover, selected company makes the changes in their business based on the external market
conditions which helps to formulate effective relation with customer.
Ansoff Growth Matrix
Ansoff matrix is basically designed by company to reach new area and increase the profit
margin to perform the business effectively. It include four strategy that help the firm to measure
the risk while launching new product or expanding business in new market (Reddy, Ambati and
Koduganti, 2015). For Small Street Espresso, the strategy is stated below:
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Market penetration: In the growing market economy this strategy is used by firm with
the purpose of growth. It is used to expand the market share of company and gain the opportunity
that exist in external market. This would help Small Street Espresso to leverage the profitability
and expand beyond the capacity limits of company. Further, this procedure is used to develop the
business and accomplish the market opportunity by acquiring the existing as well as potential
customer of business. Risk of a business is low in this strategy.
Product development: This strategy is used when the business expand its product line in
the existing geographical market. Here firm has the knowledge about the preferences of customer
in existing market due to which they plan to leverage their profitability by identifying the
external opportunity and deliver them new offering. This is a bit risky approach in comparison to
market penetration which is the safest way to enhance the customer base of company. It is the
right option for Small Street Espresso to adopt it to gather business efficiency and growth
position into the market.
Market development: Under this, firm makes the strategy to expand its market and offer
existing item in new geographical area (Burton, 2010). The strategy of developing business in
new market act as a core competency to experience new market and expand successfully. Hence,
company identify the taste and preferences of customer before switching in new market ion order
to mitigate the chances of loss or risk associated with expansion. It can be good option for Small
Street Espresso and also it is lesser risky.
Diversification: Amongst all the three strategy defined above diversifications is the most
riskiest one as company takes the advantage of economies of scale and launch the new product in
new market. Although it is an opportunity for business to prosper growth and compensate the
chances of risk via extensive research and make portfolio investment that leads to profit
maximisation. Thus, introduction of new product in market leads to long term sustainable
growth. Its highly risky strategy for the Small Street Espresso to grow its market operations.
Therefore, amongst the various strategy Small street espresso can adopt product
development strategy. This is an effective strategy that act as an opportunity for business to
promote the brand progressively by launching new product and cater the need of customer on the
basis of changing trend in an effective manner.
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TASK 2
P3: Potential sources of funding available to business and elaborate the business and benefits
drawbacks
Finance is an essential part of business that help the business to carry on day to day
activities and make long term investments. There are various option of finance and the company
chooses the most suitable ones based on their preferences and purpose of investment to meet the
needs of customer. Funding to any new and existing business is important to ensure pump of the
money in case of emergency or necessity of the venture. Also, it helps investor's to increase its
net worth in the market. Further, the fulfilment of required fund enable the company to execute
their plan and run the business operations within stipulated time period (Gamal, Abdel Ghaffar
and Alghezwy, 2016). In relation to Small business espresso can look for the sources of finance
for various purpose like extension of product line, promoting the brand through traditional and
digital media as well as acquiring the new building with the purpose to stretch the profitability of
firm. Hence, some of the sources of finance These which can be asses by small business are
explained below along with their merit and demerit:
Crowdfunding: It is one of the most popular method of funding where the detail
description is prepared by the company to attain the goal and make the profit for company. It is a
successful practice to raise the capital of firm by utilising the fund for various successful practice
of business (Balli and et. al., 2014).
Advantage: It is fastest as well as effective way to pitch the project and raise the fund
through online platform. It help the business to track the progress and promote the brand
Disadvantage: In case of project failure can affect the performance of business and
provide difficulty to reach the target (Lyee and Cowling, 2015). It require huge fund as well as
time to generate the interest in case of project launch.
Bank loan: It is one of the most commonly used source of fund which is seek by the
small business in case of extension of credit. It is not necessary that banks always guarantee the
amount as they primarily consider the creditworthiness as well as track record of company.
Moreover, bank loan can finance for long as well as short term on the basis of which selected
company has to keep some sort of security or collateral. Hence, sources of finance helps to back
up the business plan and meet the requirement of fund for company.
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Advantage: Bank loan provides the flexibility as bank do not monitor or bother the
amount of fund until unless the instalments are paid on time. It is one of the most cost effective
sources of finance that can be used to attain the objective of business.
Disadvantage: Bank require long documentation process as well as collateral needs to
pay in advance. If the small street espresso goes for variable interest rates then it become tough
for company to determine the future payments.
Brief analysis: After the above discussion, Espresso will considered “crowdfunding” as
one of the major source of financing, as they are small business and crowdfunding is also small
and tiny external sources. Threat of a recovery of fund is lower and there is no as such deposit of
any collateral security.
TASK 3
P4: Frame a business plan for growth which contains financial information and strategic
objective
Marketable strategy is an effective measure that help the company to attain the desired
position by achieving the business target successfully. In relation to small street espresso
develop the effective strategy to establish effective position and carry on the business effectively.
Company Description: Small street business is a small restaurant which is operating its
business since 2012 within UK. It offer various variant of coffee to the guest and is designed in
form of brick walls. Customer mostly visit this place along with their friends and can order
different food and beverages on the basis of their preferences.
Mission: The mission of company is to provide the ultimate experience to customer by
serving them high quality product and maintain the ambiance of coffee shop with the help of
friendly staff.
Strategic objectives: The objective of business is to generate sustainable income by
promoting the environment where customer as well as staff of company are considered as an
essential part of organisation and treat them with dignity. The main target of Small street
espresso is to expand the market share of company and increase their profitability by 10 %
within one year.
Products and services: Small street espresso mainly serve coffee and bakery items
including cakes and pastry.
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Target market: The target market of small business espresso is whosoever consumer
that prefer coffee including students, local business people, tourist as well as affluent locals.
Internal analysis: It include strength and weakness that help the company to identify
opportunity as well as threat (Chapin, 2012).
Strength
Small street espresso experience the
crowd of customer due to its high
quality product and ambience.
Customer find the place unique where
they can sit, gossip or read books.
Opportunity
With the changing trend most of the
friends prefer to go outside and have
coffee so company can promote its
offering via social media. This can help
to enhance the presence of company
and reach out to the potential customer.
Weakness
As coffee is high in caffeine that can
lead to adverse affect in the health of
consumer like sleeping disorder that
can affect the market of company.
Along with that people mostly prefer
coffee during the time of winters so
change in weather can hamper the
profitability of company.
Threat
There are lot of cafes who is into the
same business so increase in
competitive pressure of existing
rivalries can be threat to company.
With the change in trend and
consumption of healthy eating habits
can lower down the sales as well as
profitability of company (Grover,
Bokalo and Greenway, 2014).
Budget: Above given financial budget will be made for time period of coming 5 years as
follows:
FINANCIAL BUDGET PLAN
Particulars 1st year 2nd year 3rd year 4th year 5th year
Initial money 6000 8500 12000 14500 18350
Investment 12000 14000 25500 32000 13500
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Total 6000 22500 37500 46500 31850
Marketing outlay
Promotion 6500 3200 4300 3300 3250
Sales publicity 2200 2100 3300 2200 2000
Direct selling 4200 2500 6000 3000 4650
Total 12900 7800 13600 8500 9900
TASK 4
P5: Exit or succession options for a small business explaining the benefits and drawbacks
It is not essential that the strategy selected by company will always lead to positive
outcome or profitability there are chances of negative circumstances as well for which business
needs to choose the succession or exit option. This decision is usually taken by company in case
during the time of lack of resources that needs to be allocated for business as well as if the
business is continuously expressing loss. Hence, implementation of proper exit plan maximises
the valuation as well as cash proceed at time of closing.
Different approaches to leave business
Exit planning is usually conducted to make the effective strategy regarding leaving the
organisation by making minimum losses (Eddleston and et. al., 2013). It include the analyses of
legal, tax as well as financial options that ensure to maximise the value and meet all the
obligations that needs to be paid to the external party. Therefore, some of the ways to implement
exit strategy are defined below:
Advantages Disadvantage
Liquidation Liquidation is an effective
business strategy that help the
firm to pay back all its
It leads to the situation of
unemployment where the staff
look for other employment
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obligations or debt before
shutting down the company.
Along with that it helps the
firm to remain safe from the
legal actions imposed by
company. This mean firm can
easily explore the other
options.
options and start from scratch.
In context of business is not
left with any existing asset to
start the new business as all the
asset sold off top cover up the
expenses or liability of firm.
Sell of business in open
market
Here the business is sold to the
other owner at certain price
due to which it is an effective
process to attract the various
buyer and sell them at certain
price. Hence, this maximises
the chances of return for the
owner of business.
Most of the time it becomes
difficult for company to get the
buyer and sell marginally
profitable or loss making
company (Pumklin and et.al.,
2015).
Approaches to give progression of an enterprise
It is essential for company to understand the latest trend that lead to innovation and
accomplish the business target successfully. Herein, Small street espresso needs to develop
proficiently and gain long term advantage by successively planning for the growth of business.
Approaches for the progressive development of business are defined below:
Advantages Disadvantage
Utilization of skill
information
Access of quality education
and vocational training helps
the business to grow and
attain the target significantly.
The disadvantage associated
with this is that it is time as
well as cash consuming
process which require engages
huge effort of manager and
employee.
Digital Tools With the increase use of digital The main disadvantage is that
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media application of such tool
helps the company to get the
quick speed and solve the issue
within stipulated time period
(Yahui and Lijuan, 2015).
it is not necessary that each
individual as well as manager
have the complete information
to manage and control the
digital tool effectively.
CONCLUSION
From the above report it has been concluded that planning is a vital part that helps the
business to growth and attain sustainable development. It is essential for business to gain long
term competitive advantage for which they need to develop the effective strategy which is either
on the basis of low cost or differentiation strategy. Moreover, ansoff matrix is used by firm to
gain the opportunity and achieve long term success of business. Further, there are various
sources of finance amongst which the firm can select the most suited one and make the market
plan for business. Therefore, in case of loss there are exit option that can help the firm to
withdraw with less complications.
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