Kaffeine: Unit 42 Planning for Growth Business Report

This report analyzes the growth strategies for Kaffeine, a small UK-based coffee shop, aiming to expand its operations. The report begins with an introduction to the competitive landscape and the importance of strategic planning for business growth. It then assesses Kaffeine's resources and core competencies. Task 1 explores growth opportunities, utilizing PESTLE analysis to evaluate political, economic, social, technological, legal, and environmental factors impacting the business. The Ansoff growth matrix is applied to identify market penetration, product development, market development, and diversification strategies. Task 2 examines funding sources available to small businesses. Task 3 outlines the development of a comprehensive business plan for Kaffeine's expansion. Finally, Task 4 discusses exit and succession options for small businesses, including their advantages and disadvantages. The report concludes with a summary of key findings and recommendations for Kaffeine's sustainable growth.

UNIT-42 Planning For
Growth

Table of Contents
INTRODUCTION.......................................................................................................................................3
TASK 1.......................................................................................................................................................3
P1) Key considerations to evaluate opportunities of growth in organizational context............................3
P2) Growth opportunities by applying Ansoff growth matrix.................................................................5
TASK 2.......................................................................................................................................................7
P3) Source of funds for small business units...........................................................................................7
TASK 3.......................................................................................................................................................9
P4) Business plan....................................................................................................................................9
TASK 4.....................................................................................................................................................12
P5) Describe the exit and succession options for small business along with advantages and
disadvantages.........................................................................................................................................12
CONCLUSION.........................................................................................................................................14
REFRENCES............................................................................................................................................15

INTRODUCTION
The present world is full with competition where a lot of substitutes available for a single
product and service. For surviving in this extensive competition, it is imperative to prepare
suitable growth strategies in order to ensure success in an efficient manner. Growth opportunities
can be acquired by small as large entities for enlarging business operations in significant manner.
However, there is requirement of proper planning and strategies formulation with an aim to
ensure business growth & enlargement. Apart from this, it is also required to analyze business
performance in timely manner and then choose a suitable way to exit from market, if entity is not
able to earn adequate amount of profit. With proper planning, it is possible to maintain success in
business for longer period of time (Osiyevskyy, Costa and Madill, 2016). In present report,
Kaffeine is taken into consideration which is small café of UK and offers different verities of
coffee. They are looking forward for business expansion in more locations across the country.
The present report includes detailed analysis of external environment for which PESTLE
analysis is applied significantly along with Ansoff matrix in order to evaluate different strategies
of business expansion. Additionally, it includes various sources of funds, business plan for
further growth and different ways of exit and succession within business setting. Furthermore,
planning of growth is crucial for maintaining substantial level of sales and profit irrespective of
uncertainties.
TASK 1
P1) Key considerations to evaluate opportunities of growth in organizational context
Resources capabilities: Growth is really important for a company but resources are also
required in order to implement the growth opportunities successfully. In context of Kaffeine,
they have a lot of resources which will help in realizing growth opportunities in successful
manner. They have efficient, qualified and competent employees who are able to interact with
customers effectively. Along with this, they also use necessary equipments and tools for
implementing growth opportunities in an appropriate way.
Core competencies: Core competencies provide competitive edge to company by differentiating
it from other companies. In case of Kaffeine, efficient and qualified employees are the core

competency of organization. Employees are not only competent but also have the etiquettes to
work in service industry effectively. With competent work force, organization is able to
differentiate itself from competitors by maintain a strong & competitive image in market place.
In current challenging environment, it is important for each and every business entity to
identity necessary opportunities of growth and success. Without identifying growth potential, it
is not possible to stay in market place for longer period of time. Market research is one of the
best ways in order to identify growth potential and opportunities. For this purpose, managers also
undertake external analysis for analyzing the external market place (Mattila, 2018). By this, they
get to know about opportunities present in external environment along with the threats,
uncertainties associated with those opportunities. Growth opportunities allow a company in order
to prepare suitable strategies for earning substantial amount of profit. These opportunities are
examine by applying appropriate tools of external analysis such as PESTLE analysis which is
widely used tools for gaining detailed insights about outside environment of business. This tool
further helps companies in order to prepare appropriate strategies for bringing growth in
business. In this regard PESTLE analysis is mentioned as under:
Political Factors: It is concern with government rules and regulations, political
environment of a country which significantly affects business operations. It is analyzed that
current rules & regulations get change with change in political parties and current government
that also influence business setting (Wang and et. al., 2018). In context of Kaffeine, they are
operating within UK. Here, political environment of country is stable and favorable for startups
and small companies. Necessary subsidies, grants are provided by government for facilitating
growth & development of small entities. This practice will prove beneficial for respective
company and will help in its further enhancement. In UK, government offers grants and other
kinds of felicitation to new and small ventures so that they can grow and succeed in an efficient
manner.
Economical factors: Economical factors depict the economical condition of a country which is
made with inflation rate, interest rate, demand, supply and such other factors. Economical
conditions put a tremendous impact over business. In case of Kaffeine, it is affected with present
economic state of UK (Riggs, 2017). Due to ongoing pandemic purchasing power of individuals
has been reduced which negatively affect business & its profit margin. Impact of pandemic has

been affected the economy of country in negative manner which will also affect the current level
of sales and profit margin of company.
Social factor: These factors are related with attitude, personality traits, and values of
customers. It is stated that customers are crucial part of business so, it is imperative to analyze
their needs & requirements for providing them products and services accordingly (Pili and et. al.,
2017). In context of Kaffeine, they are required to examine requirements of customers and then
provide products accordingly which will help them in order to stay in competition for longer
period of time. In addition to this, they need to modify working practices as per requirement of
current circumstances for which they are required to provide take away and home delivery
services. As per the current circumstances, respective company is providing home deliver and
take away facilities to customers. This practice will help in meeting with change requirements of
customers in an efficient manner.
Technological factors: Each and every entity is required to imply advance & efficient
technologies for operating business in significant manner. In this regard, there are a lot of tools &
softwares are used so that business operations can be carried out in proper & systematic way
(Knaap, Avin and Fang, 2017). In context of Kaffeine, it is a small café but nevertheless, they
are required to install necessary equipments such as highly efficient vending machines,
softwares, tools for providing better & effective services to customers. Technical enhancement
will help in order to bring efficiency and productivity in business. Here, use of different tools and
softwares are helpful in conducting business operations effectively and will also provide ease to
employees in order to conduct operations in an efficient manner.
Legal factors: For operating business in proper manner, there are some legal rules & regulations
formulated by higher authorities. Without these legal implications, it is not possible to run
business in an appropriate way (Gurran, Norman and Hamin, 2016) . In context of Kaffeine, they
need to follow different laws such as customer protection law, equality act, workplace safety act
and more. By applying these laws, they can easily eliminated legal hassles which might occur in
future period of time. It is stated that respective organization follows all the rules and regulations
prepared by higher authorities so that business can be operated in systematic manner.

Environmental factors: In current time, economical safety and security has become a
crucial part of business. With this intention, some essential rules are also formulated by higher
authorities and need to obey by each and every organization (Collings, Dew and Dowse, 2019).
There are norms related to waste management, recycling and reusing which are formulated with
an aim to secure & protect environment. In reference of Kaffeine, they follow environmental
friendly approaches and use bio-degradable cups for securing environment while serving
customers. All the necessary environmental protocols are followed by company for building
positive reputation in market place. In addition to this, they also obey reusing and recycling
activities in order to protect environment in significant manner.
The above discussion states that there are various opportunities present within external
environment which need be analyze significantly with the help of appropriate tools & techniques
in order to get positive results in future period of time.
P2) Growth opportunities by applying Ansoff growth matrix
Ansoff growth matrix is this framework that aims to provide opportunities of growth and
success within market. There are several ways through which business can be expanded but it is
really imperative to choose one suitable approach for business expansion and growth. There are a
lot of factors such as profit, resources, opportunities and more which need to be measured when
selecting one suitable strategy (Espinet and et. al., 2016). New product and services can also be
introduced for business enlargement. Ansoff matrix is a tool under which different strategies are
evaluated for the purpose of expansion. In context of Kaffeine, they are suggested to use this tool
by which they can select one appropriate and suitable strategies for ensuring future growth of
business. In this regard, certain strategies of Ansoff matrix are given below.
Market penetration: Under this, business is operated with existing products and services
in existing market place. It is considered as a crucial strategy for improving current level of sales
and profit margin in which business owners are likely to provide discounts and other kind of
offers for attracting customers (Channon and Jalland, 2016). Main aim of organization is to
separate themselves from the competition for attracting more number of buyers. In this, a
detailed and exhaustive market research is carried out for preparing necessary strategies with an
aim to gain attention of buyers. In context of respective company, they can also use market
penetration approach by lowering down their current price and offer discount to existing set of

customers. Apart from this, they can also use appropriate promotional tools for successfully
promoting products at wide level. It will help organization to attract significant number of
customers for meeting a separate presence in competitive marketplace.
Product development: New product is introduced and provided to customers under this
strategy for meeting with change requirement of customers. For developing a new product, it is
imperative to undertake detailed market research for gathering significant amount of information
regarding different factors such as current market trend, needs and desires of customers and so
on. However, getting acceptance for a new product is not easy but in this strategy, company used
to work in existing market place for longer run so they can easily get the acceptance from buyers.
In reference of Kaffeine, they can also adopt this strategy by developing new product like
organic, herbal and flavored coffee for the purpose of business expansion. In addition to this,
they can also add some new dishes, snacks in their existing menu which will help in earning
more amount of sales and profitability.
Market development: This strategy is related with targeting an entirely new group of
customers with existing range of projects. For this purpose, marketers are required to get higher
amount of information about different customer groups and then select an appropriate set of new
customer segment for business enlargement (ABDOLLAHI and FATTAHI, 2017). For
sustaining in new market place, it is required to collect significant amount of information in
terms of needs, desires and requirement of new customer groups. At present Kaffeine is being
operated at two locations of London and can expand business in more countries. It will allow
company to maximize sales and revenue for embarking growth within business setting.
Diversification: It is widely used strategy under which new product and services are
introduced in new marketplace. Although, diversification is really helpful in making strong
positive image and also helps in earning higher amount of profit but there is tremendous risk
associated with this strategy. It is required to be careful and diligent while applying
diversification in business. In case of Kaffeine, they can also use diversification by offering new
range of products like herbal and organic coffee to new group of customers. By ensuring
appropriate implementation of diversification organization can achieve tremendous rate growth
and success.

After going through with above stated points, it is assessed that market development is
an appropriate strategy for respective company which will going to assist managers of Kaffeine
in order to increase the current level of sales and profit margin. It will not only enhance the
market presents of company but also significantly contribute in business enlargement.
TASK 2
P3) Source of funds for small business units
In business, funds are really imperative so that different operations of a company can be
performed efficiently. In absence of funds, there is great difficulty faced by companies for
meeting with their daily requirements. For acquiring necessary amount of funds, there are
different sources have been identified which are mentioned as under.
Bank loan: It is a source of fund under which necessary amount is provided by banking
institution on which they are likely to charge a predefined rate of interest and this amount need to
be return after a particular period of time (Biani, 2018). For taking bank loan, it is required to put
assets as security. In context of Kaffeine, they can use this source for getting necessary amount
of fund.
 Advantages: It is considered as highly authentic and reliable source due to implication of
legal formalities and documentation. Apart from this, EMI facilities are also provided by
banks which provide feasibility to small business entities to return the amount of loan as
per their convenience.
 Disadvantages: It requires extensive paper work which sometimes becomes tedious and
time consuming.
Personals saving: In this, business owner is uses personal savings for completion of
business related tasks (Couch, 2016). Personal saving cannot help in order to meet with
requirement of huge funds. In reference of Kaffeine, it is a small café owned by an individual so
this source is feasible for meeting with requirement of funds at some extent.
 Advantages: Here, business owner invests own money thus there is no such burden to
repay the amount after a particular period of time. In addition to this, there is no

requirement of security deposit and any kind of documentation and also there is no
additional expense in terms of interest and others charges.
 Disadvantages: With personal saving requirement of huge points cannot be fulfilled.
Sometimes, it also developed a careless attitude in business owner as there is no
obligation to repay amount or interest to any external party.
Family and friends: Necessary amount for business expansion and running business in
smooth manner can also be taken from acquaintances (Khan and et. al., 2018). Here, amount can
be taken without fulfilling any documentation and formal process which is suitable for a small
company like Kaffeine for acquiring small amount of fun for a particular period of time.
 Advantage: With this, it is possible to get the money in fastest way as there are no
obligations of putting any security and completing legal formalities.
 Disadvantages: This is not an authentic way of getting funds. Sometimes, landers also
demand of possession in business which can hamper shareholding of business owner in
company.
After going through with above stated points, bank loan seems the most viable source
for Kaffeine to requirements of funds. Reason being, it is an authentic way and has the ability to
provide huge amount of money which will required for business expansion and growth
TASK 3
P4) Business plan
It is a document which depicts core activities of organization along with objectives and
plans to achieve set objectives within stipulated period of time. Business plan is made with
different marketing strategies & analysis, product & development plan, financial analysis and
more (Doeksen and Woods, 2019). It provides complete information about resources, equipments
which are required to realizing goals of organization. It makes an organizational enable to face
barriers effectively. In context of, Kaffeine, a suitable business plan is given as under:

Executive Summary: The present business plan is pertaining to business expansion by
Kaffeine which is a small café based on UK, offers different verities of coffee & planning of
growth and expansion.
Overview of company: Kaffeine is a café that follows the coffee culture prevails in
Austria and New Zealand with. It is currently operating at two different locations of London and
has an aim go serve quality products to customers in order to provide them overwhelming
experience. Kaffeine is working at small level with fewer amounts of financial & other
resources.
Mission and vision of company: Mission of company is to gain loyalty of customers by
providing them better & enhanced services. On other side, vision of Kaffeine is to make string
presence of brand in marker place for earning substantial amount of profit margin.
Objectives:
 To inflate the sales of organization by 40 % within upcoming two years.
 To increase in number of loyal customers for maintaining strong brand reputation.
 To enlarge business in more countries.
Market Analysis: Market analysis is a vital part of business plan under which managers are
required to analyze the current market trends for preparing suitable strategies. For this purpose
STP approach is given below:
 Segmentation: It is a strategy under which whole market is divided into small segments
based. In this, people having similar characteristics, attitudes are combined together in a
group so that company can target more number in best possible way (Levy, 2016). For
Kaffeine, the use demographic segment by dividing audience based on age, income and
other such factors.
 Targeting: It is the second stage under which suitable group of buyers is targeted for
earning significant amount of profit. Kaffeine is targeting youth segment belong from the
age group of 18 to 28.
 Positioning: It is the last stage of model which is related with poisoned the product and
services in positive manner among target segment. For realizing this goal Kaffeine uses

promotial and advertisement strategy so that customers have a positive perception about
their services.
Situational Analysis: It is also a crucial part of business plan which provides detailed
understanding about circumstances. In this regard, SWOT analysis is mentioned below:
Strengths Weaknesses
 It is stated that loyal customer groups I
the biggest strength of Kaffeine which
makes it different from other
competitors present in market place.
 Limited amount of resources and funds
is the major weakness of company as it
puts constraint to its future growth and
success.
Opportunities Threats
 Several opportunities of business
expansion and enlargement are
available for Kaffeine which will
significantly help in earning huge
amount of sales & profitability
 Competition present in market place is
the biggest threat for Kaffeine as it
provides an option to customers of
making comparison.
Financial Activities: This section of business plan is concern with acquisition of funds so
that organization can fulfill its predefined goals within stipulated period of time. In case of
Kaffeine, they will get adequate amount of funds through banking institutions for meeting with
future needs & requirement of business. For this purpose, financial projection is given below:
Marketing budget
Particulars 1st year 2nd year 3rd year 4th 5th year

year
Initial money 50000 9000 24000 30000 15000
Investment 21000 24000 30000 25000
Total 50000 30000 48000 60000 40000
Marketing
expenditures
Advertisement 1000 8000 3000 8000 5000
Sales promotion 2000 6000 3000 7000 5000
Direct marketing 9000 8000 3000 5000 8000
Total 12000 22000 9000 20000 18000
Available balance 38000 8000 39000 40000 22000
The above financial plan is based on requirement of funds for meeting with different activities.
Funds are required for the purpose of advertisement, sales promotion, marketing and more.
Preparing budget will help in gaining insights about expenditure so that company can acquired
necessary amount of money from suitable sources. The financial plan is prepared for different
years so that company can execute its operations in predefined manner.
Risk plan: There are ample of risks associated with business so, it is wise to be proactive
and identify suitable ways to face future circumstances in an effective manner. Kaffeine is
suggested to maintain contingency funds for dealing with future uncertainties effectively.