Foodholic: Growth Opportunities, Funding, and Exit Strategy Report

This report provides a comprehensive analysis of Foodholic, a multi-cuisine restaurant, focusing on its business growth strategies. It begins by analyzing key considerations for evaluating growth opportunities, including Porter's Generic Strategies, and a PESTLE analysis to understand the external environment. The report then applies Ansoff's growth vector matrix to assess various growth opportunities. It further explores potential sources of funding available to businesses, discussing the benefits and drawbacks of each. A business plan is designed, incorporating financial information and strategic objectives for scaling up the business. Finally, the report assesses exit or succession options for the small business, explaining the benefits and drawbacks of each option, providing a complete overview of strategic planning for growth.

Planning for Growth

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
P1 Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organisational context.....................................................................4
P2. Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.............9
TASK 2 .........................................................................................................................................11
P3. Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source.....................................................................................................11
TASK 3..........................................................................................................................................13
P4. Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business......................................................................................13
Cash flow statement:......................................................................................................................15
TASK 4..........................................................................................................................................17
P5. Assess exit or succession options for a small business explaining the benefits and
drawbacks of each option.....................................................................................................17
CONCLUSION..............................................................................................................................20

INTRODUCTION
Planning for business growth forms core endeavour for any business irrespective of its
size, nature or industry. Proper planning encourages optimum resource management, exploring
opportunities, coordinating efforts, strategic positioning and continual improvement that
ultimately helps a company to gain customers satisfaction by minimizing its cost of production.
The report is bases on a new venture that is Foodholic that is multi cuisine restaurant belonging
to food and beverage industry (Albert, 2017). The entrepreneurs with aim to attain growth in its
new venture has entered into contract with Corby Borough Council, Midlands. The report will
discuss about key considerations for evaluating growth opportunities. Further, project will also
explain various sources of funding available for business along with preparation of business plan.
Moreover, different exit options that organisation could considered in its near future is also been
explained in detail.
TASK 1
P1 Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organisational context.
Growth is a significant performance element and measure for success for a company. In
today's competitive business environment where every entrepreneur is competing for same
market space, attaining business growth becomes quiet important to continue to exist for a longer
time period. In context to UK, there are about 5.7 million private business recorded in 2017 and
SME's contributes to 60% of total employment for nation. Thus in this stiff and intense
competitive environment it becomes critical to be proactive to explore upcoming opportunities
for attaining success and growth (Allmendinger and Haughton, 2012). Thus, planning is integral
for achieving growth as it helps an entrepreneur to develop a blue print for growing business by
envisioning actions that are critical to be undertaken, expenses that are to be incurred, keeps
team focuses on track, saves unnecessary efforts, prevents decision fatigue etc.
Foodholic, is a sophisticated restaurant that is to serve global cuisines and beverages. It is
a partnership venture that is started with vision to become one of the leading restaurant chain
providing a wide variety of low caloric and organic Chinese, Spanish, Continental, Mexican and
other fast food and beverages. For attaining this vision and to be successful with its new venture
the owners has entered into a contract with Corby Borough Council that are interested in on site

catering facility for its Lodge Park Sports Centre and Midlands International Pools. This contract
will help Foodholic to attain growth and expansion as it will get opportunity of getting counter
services for offering their multi cuisines dishes at these centres. However, as this food and
beverage industry in UK is subject to intense competition it is essential for owners to ascertain
and consider some most prominent factors that could critically impact their business and its
profitability (Arasa and K'Obonyo, 2012. Mentioned below are the analysis of external
environment of the business along with generic strategies that could be helpful in determining
direction of Foodholic business.
Porter's Generic Strategies:
Cost Leadership: This generic strategy requires firm to become lowest cost producer in
its existing market for a given level of quality. The company sells its products either at average
prices to gain higher profitable edge over rivals or lower than market prices so as to attain large
market share. Through this strategy, Foodholic can target broader markets, control the cost and
overhead cost, reduction on areas like sales force, advertising, R&D etc.
Differentiation: Applying differentiation strategy a venture seeks out to be unique by
introducing new innovative product in its existing target market. Under this strategies firm offers
products and services that are customized as per consumers untapped demands and requirements.
The value addition and uniqueness offered by firm is awarded with a premium price. It allows
business to select best segment for whom those products/services perceived higher value at a
differentiation cost (Barbour and Deakin, 2012). It could be based on providing innovative
products, distinctive features, premium quality, after sales services etc. Through this strategy,
Foodholic can increase their market share and profitability by introducing new product in the
existing market.

Figure 1 Porter's generic strategy
Source: Porter’s generic strategy, 2018
Focus strategy: This generic strategy concentrates on narrow market within their existing
segment to attain either cost advantage or differentiation. It has two variants:
Cost Focus: This strategy concentrates on achieving cost advantage in its target market.
Under this strategy a company is not necessary required to offer lowest prices in market. Instead
it set prices of its products/ services low or competitive in relation to its business rivals within
target market. Through this, Foodholic can set their price of product according to their
competitors. This strategy is useful for getting huge customer base in less time.
Focus Differentiation: This strategy focuses on exploiting untapped needs and demands
of consumers within market niches. Applying this strategy firm offers unique products and
services that appeal to its customers in context to both product or service. For instance, some
under focus differentiation might concentrate to improve their sales channels such as providing
online facilities or might target certain demographic groups etc. Through this strategy, The
Foodholic can improve their sales and profit.
In context to Foodholic, which is a new venture Differentiation forms most suitable of all
the strategies. Applying this Foodholic could attain growth and market share by offering low

calorie and organic food items at relatively lower prices as compared to its other rivals. The
contract with Corby Borough Council will enable Foodholic to attain business growth by
providing catering opportunities to restaurant for its Lodge Park sports Centre and Midland
International Pool.
PESTLE ANALYSIS
Political Factors: The political factor of a nation greatly impacts restaurant industry as it
is subject to high government intervention that keep on introducing various regulations and
norms time to time for safeguarding people's health. There are various laws such as Food Safety
Act, 1990, The Food Safety Order 1991 etc. that every Foodholic is subject to adhere by to
maintain quality in foods and ingredients. Further, as EU used to be biggest supplier of wine to
UK and accounts for 70% of UK food and non-alcoholic drinks imports and exports Brexit is
likely to have major material impact on the sector. For Foodholic that might result in bearing
high cost for raw material and labour (Brealey, Myers and Marcus, 2012).
Figure 2 PESTLE analysis
Source: PESTLE Analysis, 2018
Economic Factors: These factors comprising of UK governments fiscal policies are
likely to affect business of Foodholic. It is as in case on heavy tax imposition on consumers
items, increased prices of ingredients after Brexit etc. Foodholic will have to increase its
cuisines rates that could minimize firms profit margins. For instance, due to increase in inflation
rate to 3.0% in November 2017 there is increase in bank interest rate from 0.25- 0.5%.

Social Factors: As people are becoming aware about their health, they look for quality of
food for which they are paying. They thoroughly inquire about food ingredients that are been
used in food preparation. Also in UK due to their busy lifestyle most of consumers prefers to
dine outside with family. Further, there is sudden enhancement in tendency of consumers
belonging to varies cultures and region to buy fast food instead of cooking at home. All these
factors appears to provide immense opportunities for Foodholic to cater demands of its target
audience by providing them wide variety of quality low calorie organic food at affordable prices.
Technological Factors: Foodholic could make use IT technology for sales promotion of
its restaurant. Under this, restaurant can make use of website, online social sites such as
Instagram, twitter etc. to communicate about restaurants, its various offers to large number of
audience in cost and time effective manner. Also Foodholic needs to maintained an efficient
updated inventory system to keep its consumers updated and to develop its mobile and social
application so that customers can place online orders.
Environmental Factors: UK government has incorporated several rules and regulations
related to firms to adopt environmental friendly approaches in business. Thus, to adhere by these
laws Foodholic make use of biodegradable material in its food packing. This secures nutritional
value of food item and is environmental friendly (Denton, Forsyth and MacLennan, 2017).
Further, Foodholic make use of solar panel system in their cooking range to prepare food items
that require low heating and shallow fry.
Legal factors: Foodholic is subject to follow various regulations incorporated under laws
such as Employment Act 1996, Health and Safety Act 1946, Various food legislations etc. This
helps restaurant to create lawful atmosphere in its business, to check its food quality and to
maintain a satisfied workforce.
SWOT analysis of Foodholic
Strengths
 Variety of food
 Quick service
 Flexibility of prepare dishes Variety of drinks
Weakness
 Lack of funds require to operate to a
big level.
 Lack of popularity.
Opportunities
 Huge market share
Threats
 Big players are giving hard

 Improvement in menu to attract more
customers
 Enter into new market to acquire
more customer Technological advancement
competition
 Government policies regarding food is
strict due to which company have to
maintain standards which is
increasing cost.
P2. Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.
Ansoff growth is to reap benefit for Foodholic to analyse various business opportunities
and to prepare most distinctive strategies to capture attention of its target audience. In addition,
this matrix will provide owners with an insight about most appropriate strategy to implement as
Foodholic is to enter in to contract with Corby Borough Council in Midlands. Mentioned below
are various strategies that Ansoff Growth matrix encompasses: Market Penetration: It implies company to sell its existing products in current target
market for attaining high market share. It is safest of all the four strategies. Company
adopting this strategy offers its products/services at affordable prices so as to cope up
with intense market competition. It involves minimum risk and concentrates on
increasing sales volumes by offering products/services that readily meets consumers
demands. Through this strategy, The taken firm Foodholic can easily penetrate the new
market for getting high market share as the firm is using the policy of affordable prices
for overcoming the competition in their segment.
 Product Development: This strategy focuses on launching an innovative product in
existing market by introducing modification in company's operations like process, R&D,
production etc. It mainly emphasizes in developing inner core competencies of firm that
can be driver for innovation and renovation for its products. Through this strategy,
Foodholic can provide their modified products to the customers which will enhance the
customer satisfaction.

Illustration 1: Ansoff matrix
(Source: Ansoff matrix, 2018) Market Development: Applying this strategy a firm is to focus on offering its existing
products/services in an whole new market where there is scope of vast business growth
and development. Under this enterprise concentrates on adding new product line,
emphasize on geographical market, features of products and conceptualization of new
product segment by adopting different pricing strategies. Through this strategy,
Foodholic can gain high market share and new customer base by offering the suitable
prices on their products in new country.
 Diversification: Diversification requires development of both product and market
simultaneously. It is the riskiest of all the four growth strategies as it includes two
unknowns, new products whose development issues are not known and new target market
that is supposed to bring problems of having unknown characteristics (Eddleston and et.
al., 2013). Therefore, for a company to attain higher profit and success by undertaking
this strategy it is requisite to develop excellence in both marketing and operational

functions. Through diversification, Foodholic can improve their sales and profit by
determining the flaws and defects in their products.
In reference to Foodholic the most appropriate strategy to be adopted will be market
penetration. The reason behind selecting this strategy is that being a new venture company
already is subject to high uncertainties and huge capital investment. Thus in this condition this
strategy forms to be safest and least risky to be applied by firm to gain high growth and market
share. Also as restaurant is to enter in to contract with Corby Borough Council in Midlands it
will help firm to capture large market share by providing low calorie organic food at relatively
affordable prices.
TASK 2
P3. Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source.
Foodholic is a partnership restaurant that offers wide variety of cuisines to its consumers.
With a aim to achieve growth and success restaurant is to introduce low calorie organic food
products that will help in meeting up the demands of UK population that is becoming quiet
health conscious day by day. With same purpose firm is entering into contract with Corby
Borough Council where in firm has £300,000 as its last limit to bid. Out of this the owners are
having £20,000 with them. However, for remaining balancing amount i.e. £280,000 company is
to evaluate various below sources of funds. Mainly financial sources are divided into two
category known as external sources of funds and other is internal sources of funds. External
sources of funds consist the following:
Bank Loan: These are most commonly considered sources for arranging funds for SMES. Bank
loan is the amount that has been borrowed from bank by a firm for certain time duration on
which it is subject yo pay a fixed interest (Fahlvik, Elfving and Wikström, 2014). For Foodholic
raising funds through bank loan forms most feasible and profitable option to meet up its capital
requirements as interest paid bank loan is deductible in tax.
Advantages
 The loan amount, length of term, repayment time, instalments and type of interest rate
can be accustomed to suit business involving both income generation and cash flow.
 Bank loan generally has lower interest rate in comparison to others sources of funds

 timely payment of loan and instalments enhances firm's credit scores.
Disadvantages
 The bank may not grant entire amount requested as company's financial situation is taken
into consideration. Default on repayment of loan amount can lead to increased interests rates for present and
future loans, collateral could be get seized, legal proceedings against firm etc.
Crowd Funding: It is another source of fund that is gaining popularity. It involves raising
capital or funds by using online and social media networks to ask individuals to contribute
money towards a business idea or project in exchange for goods, services or equity. It provides
a platform for investors who are having money to select from hundreds of projects and to invest
in idea of their interests (Gatukui and Katuse, 2014). For Foodholic crowd funding could be most
cost effective source to fulfil its funds requirements as with digitalization it forms to be easiest
and cheapest option to raise funds from public
Advantages:
 It provides an opportunity to business to communicate directly with its clients, to present
its product/service idea and to receive feedbacks recommendations for its improvements.
Thus, in increases chances of success for about to launch product/service by readily
meeting consumers demands. Also it give benefit of free word-of-mouth marketing for firm's products through
investors.
Disadvantages
 Although it is cost effective however it involves various legal formalities and complex
procedures. Moreover there is high degree of risk and uncertainty for an innovative idea to get stolen
or duplicated if in case company has not patent or copyright it.
Peer to Peer Lending: It refers to the method of debt financing that involves firm to borrow and
lend money without the presence of any official institution as a intermediary. These types of loan
too are subject to payment of fixed interest rates (Moseley, 2013). For Foodholic peer to peer
lending could provide excellent option to keep its business ideas alive and expands to expand its
operations.
Advantages

 More flexibility on loan amounts, loan terms and is fast. There are no early repayment charges attached to it.
Disadvantages
 It charges interest rate between 7%- 10% that is steeper as compared to bank loans Also interest charged on this source of fund is not tax deductible and loans are generally
provided for small amount only.
Internal sources of funds consist the following: Retained Profits: This refers to the large corporations with stock and shareholders who
reinvest the profit in business activities rather than paying dividends to its stakeholders.
This is an effective approach but disadvantage of this is that company do not have the
capital for expand its activities. Sale of fixed assets: This is another source of finance, in this company raise money by
selling fixed assets and reinvest the amount in business function as a working capital. It is
effective approach as company can quickly generate cash by selling of assets.
Angel Investors: These are the investors who invest in the small start ups and newly opened
enterprises. They are the person who have excess funds with them, they invest in the companies
without getting their name disclosed to the public. For the company like foodholic it will help in
them in achieving the target of operating in a better manner and achieve the plan of expansion
and growth.
Advantages
 This type of fund raising is much less risky then debt financing Huge amount of money can be retained from the investors so as to achieve the target of
growth and expansion.
TASK 3
P4. Design a business plan for growth that includes financial information and strategic objectives
for scaling up a business.
Business plan is a legal written document that managers of Foodholic are required to
prepare so as to take decisions regarding future strategies and course of actions. It aids firm to be
focused to accomplish its objective and aims within specified time frame by providing synopsis