Milky Bread: Growth Strategies, Funding, and Business Planning Report

This report examines Milky Bread's growth strategy, focusing on key considerations for evaluating growth opportunities and applying frameworks like Porter's Generic Strategies and PEST analysis to assess the competitive landscape and external factors influencing the business. It explores the application of Ansoff's growth vector matrix to identify potential expansion strategies, including market penetration, market development, product development, and diversification. The report also assesses various funding sources available to small and medium-sized enterprises (SMEs), such as venture capitalists, bank loans, and angel investors, while evaluating the advantages and disadvantages of each. Furthermore, it outlines the design of a business plan for growth, considering factors such as market analysis, competitive advantage, and financial projections. Finally, it assesses exit or succession options for small businesses, providing a comprehensive overview of strategic planning for sustainable growth and business continuity.

Planning For Growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Key considerations for evaluating growth opportunities and justify within organization 1
P2 Apply Ansoff's growth vector matrix for evaluating opportunities..................................4
TASK 2............................................................................................................................................5
P3 Assess potential sources of funding available to business................................................5
TASK 3............................................................................................................................................7
P4 Design a business plan for growth...................................................................................7
TASK 4..........................................................................................................................................10
P4 Assess exit or succession options for small business......................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Planning for growth consists important part for small and medium firms to enlarge
business and revenue. Business person conduct market research which help them to gain
information about different opportunities, thereby utilise them to expand firm. Present report is
based on Milky Bread which deals with bakery item like bread and cake (Beatley, 2014).
“Provision of Bakery Products (Bread)” is government contract in which company has made bid
of £92,000. This assignment define key considerations that are porter's generic, PEST and
Ansoff's matrix to evaluate growth opportunities. SME's have shortage of money for which
funding sources are examioned for expanding firm. Furthermore, succession and exit options for
small business are also assess by executive which is mentioned in report.
TASK 1
P1 Key considerations for evaluating growth opportunities and justify within organization
Small and medium firms require to expand business for increasing sales and profitability.
For this, executive require to have knowledge about competitors for utilising growth
opportunities. Porter's generic strategies and PEST analysis are model which are used by
entrepreneur of Milky Bread. This help them to establish edge over rivals by examining impact
of external factors on business.
Competitive advantage: This concept is considered as one of main aspects in an
organisations which assists a firm to develop strategies by which it can give a tough competition
to other companies. Competition at marketplace affect business of Milky Bread in both positive
and negative manner (Chen and et. al., 2014). As if there is intense situation in market then it
assists firm to adopt effective strategies through which they can grab high attention of
marketplace.
Porter's Generic strategies: This framework was developed by Michael Porter that state
competitive behaviour that help an organisation to become successful in market. This is model
which is used by entrepreneur of Milky Bread to make long term benefits in respect to rival
firms. Thus, these are four strategies which are adopted by company in according to functionality
are described beneath:
Cost leadership: This tactic is used by firm whose goal is to become low-cost producer in
sector. For this, management uses effective technology through which raw material are used
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efficiently. Milky Bread is bakery shop in which executive uses advanced equipments and
employ experts. This help them to reduce manufacturing cost for providing items and services at
reasonable rates. Thus, firm offers products at lower prices than other for attracting large number
of buyers to generate sufficient revenue (Eddleston and et. al., 2013).
(Source: Porter's Generic Strategy Model, 2018)
Differentiation: This is another strategy which is used by firms whose aim is to provide
distinct products and services than competitor. Business person focus is to insert attributes which
customers require are present in item. For this, innovation in production are made by executive
of Milky Bread that help in completing and exceeding satisfaction level of customers. This aid
them to establish strong brand reputation and position in market. But if a company fails to create
creativity in products then it harms profitability of business as well.
Focus: This is strategy which is adopted by organisation that are conducting business in
niche market. Market dynamic forces and unique requirements of buyers are assess for providing
either low-priced or quality items and services to people. Henceforth, these are two variants of
this tactic which are described below (Galland, 2012Levy, 2016): Cost focus: It is strategy through which firm provide product and services in niche
market that consists people that require unique item. Executive can make benefit only if
product are offered at cheap prices that is lower rates than competitors. Differentiation focus: This is another tactic which is adopted by enterprise that select
specific niche segment to execute business effectively. Business person that uses this
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Illustration 1: Porter's Generic Strategy Model

strategy provide products and services in respect to demands of people. This help them to
increase market share for enhancing sales and revenue.
Executive of Milky Bread uses cost leadership strategy which help them to sustain firm's
position and reputation in market. Company offer products at reasonable prices which result in
attraction of large number of buyers. This benefit business person to enhance sales and make
profit in good amount. Thus, they are able to enlarge firm by creating strong brand image and
goodwill.
PEST Analysis: This tactic is used by executive to have knowledge about influence of
components which are outside firm. It is necessary that government, economic conditions,
people needs and technology are considered at time of business conduction of Milky Bread. Political factor: This component includes law and order which are formulated by
government for regulating functioning of organisation. Food Safety Act (1990) and Bread
and Flour Regulation (1998) are various legislation that food industry require to follow.
Executive of Milky Bread need to consider these act for making system function legally.
UK market conditions are stable which define that company have opportunity to expand
their business at global scale. This help them in providing standardized products to
people through which firm maintain its position and share in market (MacLeod, 2013). Economic factor: It is another element which comprises interest rate, inflation, exchange
rate that vary from one nation to another. Milky Bread is bakery firm which offer stapled
food to people. Business is affected due to high rate of wheat that influence on production
cost, thereby on rate of product. The per capita income persist in UK is high as this will
aid in increasing the number of sales through providing quality products to customers. Social factor: This component define that organisation provide products and services for
fulfilling demands and needs of people. In UK, majority of people are health conscious
which affect on sales of Milky Bread. For this, executive require to use whole wheat and
use less amount of emulsifiers for preparing bread. Thus, healthy products are delivered
in market which help firm to attract large buyers to enhance their sales and revenue
(Moseley, 2013).
 Technological factor: It is element which benefits firms to conduct production process
effectively by using appropriate tools and equipments. Research and development
activity are conducted by business person of Milky Bread to implement advanced
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technologies in system. Production process are executed effectively which help them to
manufacture quality food products and utilise material efficiently. Business person uses
online tools that is social media and firm's website. This helps them to increase market
reach and customer base.
P2 Apply Ansoff's growth vector matrix for evaluating opportunities
Business person require to knowledge about chances which can be used by them to
expand business. For this, growth opportunities are identified and examined with aid of Ansoff's
matrix. This help executive of Milky Bread to have information in respect to competency of firm
and resource availability (Schetke, Haase and Kötter, 2012).
Ansoff's growth vector matrix: It is a strategic planning tactic which state strategies that
businessperson can adopt for making growth in future. This tool was propounded by Igor Ansoff
helps organisation to enhance business and functioning. Milky Bread is small scale firm, so
executive can use any of these four strategies which are defined beneath:
(Source: Ansoff Matrix, 2018) Market penetration: This strategy is used by firm to enlarge business in existing market
and products. Business person of Milky Bread require to increase their customer base for
enhancing sales and revenue. For this, promotional techniques such as TV and newspaper
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Illustration 2: Ansoff Matrix

advertisement are used to aware people about firm. This benefit executive to attract
people from other market of United Kingdom (Todes, 2012). Market development: It is another strategy which is adopted by company to target new
market with existing items. For this, executive of Milky Bread require increase number of
branches in other nation to enhance market reach and clients. Company provide bakery
products which have short expiry time. Thus, if business is made online than fast export
services required to be used by firm. Otherwise, food items will get spoiled which may
ruin the brand image at marketplace. Product development: This strategy is used by firms to enhance market reputation in
existing one. Market research and survey helps business person to ascertain needs and
requirements of people. Changes in system that advanced technologies are adopted by
them to deliver innovative and creative items and services to buyers. This help executive
of Milky Bread to grab attention of large number of customers, by providing them
distinct products from competitors. Company provide healthy food items that is use
whole wheat for attracting health conscious people for maintaining market share (Valler,
Phelpsand Wood, 2012).
 Product Diversification: This strategy is adopted by companies to enlarge business for
enhancing sales and revenue. New product and market are two constraints which are used
by executive to increase customer base and offerings. Milky Bread is bakery firm which
require to make growth by providing innovative and creative food items. Different baking
activities and material are used by business person. This help them to enhance sales and
profitability.
Business person of Milky Bread uses market penetration strategy for increasing market
reach and customer base. TV and newspaper advertisement are used by them to promote and
inform people about their products and services. Besides this, online tool such as social media
are also used which aid firm to enhance revenue and sales volume.
TASK 2
P3 Assess potential sources of funding available to business
Small firms are started by individuals to incorporate new venture for implementing ideas
and making profit. It is necessary that entrepreneur find out different methods of funding which
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can be used by them to increase capital. Milky Bread is small scale company which require to
increase their market reach and customer base. Business person need to enlarge business and
activities, for this they assess potential sources of funds which are mentioned below (Seven
Types of Funding Sources for your Startup, 2018):
Venture capitalists: These are people which invest money in business for getting
ownership in firm. There are some start up companies which have great potential to grow for the
longer period and some wealthy investors are always ready to invest in those companies. Benefits: They provide business expertise, which can help in making business decision
and also support in different area like taxation, legal etc. Venture capitalist have good
connection with different business community, which ensures faster growth and success
of a venture.
 Drawbacks: Due to large size of venture capital, management have risk of loosing their
control. This result in rise of conflicts and disputes in respect to funding and other
decisions.
Bank loan: It is advance taken by an individual or business entity from a commercial
bank. Loan is extended for a specific period of time on a specified interest rate. Bank specifies
loans into different categories such as consumer, commercial, industrial, commercial, mortgage,
secured and unsecured loans (De Roo, 2017). Benefits: Bank loan has some advantages that is process of availing loan is easy and
faster, no need to give collateral for security of loan. In case of fixed interest rates, client
have knowledge about total amount payable for loan.
 Drawbacks: It has some drawbacks like it require large documentation which is time
consuming, client need to evaluate among various options available for loan and money
has to be paid at fixed time whether company is having profit or loss.
Angle investors: They are wealthy individuals who provides funding for a start-up, often
in exchange for an ownership stake in a company. It is an affluent individual who provides
capital for a business start-up, usually in exchange for convertible debt or ownership equity.
They are private individuals who invest in other business. They typically work with small and
mid-size start-ups, entrepreneur or young companies that need a injection of funds. Benefits: No need for collateral personal assets, no repayments or interest, better
discipline due to outside scrutiny, access to mentoring or management skills, access to
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your investor's sector knowledge and contacts and are free to make investments decisions
quickly.
 Drawbacks: Takes longer to find a suitable angel investor, giving up a share of your
business and less structural support available from angel investor than from an investing
company (Murphy and Fox-Rogers, 2015).
Therefore, these are different funding sources which are available to increase money.
Business person of Milky Bread uses bank loan and angle investors for getting funds for
government contract. Company has £20,000 and require £70,000 for which these are best
methods.
TASK 3
P4 Design a business plan for growth
Business plan is document which is formulated by business person to provide information
to stakeholders about organisation. Background of firm, vision and mission statement,
objectives, product, situational analysis and financial information are part of this plan (Brinkley,
2014).
Company's overview: Milky Bread is small scale bakery firm which have outlet in
Blackburn, United Kingdom. “Provision of Bakery Products (Bread)” is contract of government
in which company has made bid of £92,000.
Mission and Vision statement: Mission of Milky Bread is to enhance sales and revenue
by increasing market reach and customer base. Vision of Milky Bread is to provide quality food
items to create strong brand reputation and image.
Strategic objectives: Business person of Milky Bread frame goals for directing staff
members to function effectively. It is necessary that objectives are formulated in respect to
SMART criteria that is specific, measurable, achievable, reliable and time bound. Company's
objective is to increase sale of bread and cake by 10% in next two years (Abapour, Zare and
Mohammadi-Ivatloo, 2015).
Products and services: Company provides different variety of bread and cake at
reasonable prices. Whole wheat and other healthy material are used for producing healthy
products for health conscious people. This aid business person to grab attention of large number
of people, thereby enhance sales and profitability.
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Situational analysis: Executive of Milky Bread conduct SWOT analysis to have
knowledge about market conditions and system abilities. Strengths are evaluated by them for
utilising opportunities, while weaknesses and threats asses by them to prevent their affect on
business (Beatley, 2014).
SWOT analysis of Milky Bread:
Strengths:
 New and healthy bread and different variety of cake and pastry are introduced by
business person of Milky Bread. This help them to make product differentiation for
enhancing sales and profit.
 Bakery is located in high populated area where customers generally belong to business
class. This benefit firm to offer services to people which have less time for cooking. Staff are experienced which provide quality food items to people aid entrepreneur to
create strong brand image.
Weaknesses:
 Bakery items are perishable, so executive of Milky Bread require to sell them timely
before spoilage. Company offers bread and cake which define that there is less product diversification
which impact on sales.
Opportunities:
 Milky Bread had growth opportunity which is related with expansion of business and
increasing market reach.
 Bakery sector is growing at fast rate as people demand for these products are increasing
which benefit firm to have large customer base to enhance sales (Chen and et. al., 2014).
Threats:
 Milky Bread offers bakery items that is break and cake which are unhealthy for people.
Large population are becoming health conscious which affect on sales volume of firm. Company have substitute products and large rival firms which influence on their profit
and market share.
Financial information for scaling up business: Cash flow statement is maintained by
business person Milky Bread. This have them to have information about flow of funds in
different activities that are operational, financial and investment.
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Cash Flow Statement
For the Year Ending 31/12/18
Cash at Beginning of Year 22,500
Operations
Cash receipts from customers 4,25,875
Cash paid for
Inventory purchases (1,58,252)
General operating and administrative expenses (10,658)
Wage expenses (1,05,852)
Interest 8,502
Income taxes 18,780
Net Cash Flow from Operations 1,78,395
Investing Activities
Cash receipts from
Sale of property and equipment 35,564
Collection of principal on loans
Sale of investment securities
Cash paid for
Purchase of property and equipment (45,821)
Making loans to other entities
Purchase of investment securities
Net Cash Flow from Investing Activities (10,257)
[42]
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Financing Activities
Cash receipts from
Issuance of stock
Borrowing
Cash paid for
Repurchase of stock (treasury stock)
Repayment of loans (42,585)
Dividends (45,850)
Net Cash Flow from Financing Activities (88,435)
Net Increase in Cash 79,703
Cash at End of Year 1,02,203
TASK 4
P4 Assess exit or succession options for small business
Small firms require proper management for sustaining its position and share in market. It
is essential that business person have knowledge about succession and exit options. An exit
strategy is an entrepreneur's strategic plan to sell his or her ownership in a company to investors
or another company. It gives a business owner of Milky Bread a way to reduce or liquidate his
stake in a business and, if the business is successful, make a substantial profit (van Assche, Lo
and Beunen, 2013).
Liquidation - This is the close up shop and sell all the assets exit strategy. For small
businesses, especially those who are dependent on a performance of a single individual.
 Advantage: It is simple to wound business as there is no such hard legal formalities
required to follow. Before liquidation, company needs to repay entire due to their
creditors and money-lenders. There is no involvement of court and legal authorities for
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