New England Coffee House Growth Strategy: A Business Report

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PLANNING FOR GROWTH: NEW ENGLAND COFFEE HOUSE
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PLANNING FOR GROWTH: NEW ENGLAND COFFEE HOUSE
Table of Contents
Part 1: Investing in the Future.........................................................................................................3
Introduction..................................................................................................................................3
LO1: Analysis of the key consideration of SME and evaluation of growth (P1, P2, M1, D1)...4
Analysis of the evaluation of the growth opportunities...........................................................4
Justification of consideration within organisational context...................................................4
Ansoff matrix...........................................................................................................................4
Porter’s generic strategies........................................................................................................6
PESTLE...................................................................................................................................8
Critical evaluation of the risk analysis of the company...........................................................8
LO2: Assessment of various methods through which funding may be done and used by the
company (P3, M2, D2)..............................................................................................................10
Funding Sources of the organisation.....................................................................................10
Benefits and drawbacks.........................................................................................................10
LO 3: Development of business plan ( P4, M3, D3)................................................................12
Mission..................................................................................................................................12
Vision.....................................................................................................................................12
Aims.......................................................................................................................................12
Objectives..............................................................................................................................12
Strategies................................................................................................................................13
Budget....................................................................................................................................13
Funding sources.....................................................................................................................13
Summary................................................................................................................................15
PART 2: Developing an Exit Plan.................................................................................................16
LO4............................................................................................................................................16
Introduction............................................................................................................................16
Exit or Succession Options for the Business.........................................................................16
Benefits and Drawbacks of Each Option...............................................................................18
Recommendation...................................................................................................................20
Conclusion.............................................................................................................................21
References......................................................................................................................................22
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PLANNING FOR GROWTH: NEW ENGLAND COFFEE HOUSE
Part 1: Investing in the Future
Introduction
At present globalisation is the major trend that is helping the medium and the small business to
grow gradually gaining awareness of the consumers. The small business may be defined as the
small business those have employees less than 200 and the capital of the small business are
limited. At present according to the UK perspective it is seen that the market share of the Small
enterprises is almost 51.4%. The small business helps in creating placement and hence
strengthens the local economies that have an overall contribution to the Gross domestic product
of the country.
New England Coffee house is one of the medium-sized coffee shops present in the Cheltenham
in the UK. This is mainly a coffee chain that serves authentic coffee according to the demands
of the consumers in the UK market. This study mainly will analyse the growth opportunities and
the competitive factor of the New England Coffee house. Moreover, funding source of the
organisation will be discussed and future business plan will be depicted in detail
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PLANNING FOR GROWTH: NEW ENGLAND COFFEE HOUSE
LO1: Analysis of the key consideration of SME and evaluation of growth (P1, P2, M1, D1)
Analysis of the evaluation of the growth opportunities
The growth opportunities of the organisation lie in the establishment of the competitive
advantage over the competitors so that the business expansion may be done in an efficient way.
According to Bertozzi, Ali, and Gul, (2017), The Porter’s Generic strategy may be considered as
a tool to analyze the strengths and weakness of the organisation business strategies in the present
practical situation
Justification of consideration within organisational context
The small medium enterprises comprise of limited funding and they have to be very prompt in
analyzing the market situation. The internal and external strengths and strategies of the
organisation should be developed in an effective manner so that pricing is implemented in a
proper way and sustainable consumer base may be developed for New England Coffee house. It
is seen that growth factors are dependant mainly on the market opportunities and the internal
strength and weakness of the organisation as well
Ansoff matrix
Ansoff Matrix is one of the major tools that help the organisation to analyse in detail the market
penetration strength and the use of the specific strategy according to the budget of the New
England Coffee house. Moreover, almost 30 %of the business of the organisation is dependent
on the four factors (Ouma, and Oloko, 2017).
Market Penetration: Market penetration is considered as the most important component that
helps a small business to upscale its size along the time. New England Coffee house may enter
the enter new market by the help of establishing collaboration by actually retaining its own
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PLANNING FOR GROWTH: NEW ENGLAND COFFEE HOUSE
identity by maintaining the flavor of its own product. The suburban market may be penetrated by
the organisation to extend the consumer base by almolst15%.
Product development: The product development according to consumer needs is very
important. New England Coffee house may implement different types of Brewed coffee
authentic coffee to establish uniqueness in the product that should help in attracting authentic
coffee lovers. However, according to stats almost 60 % of population UK drinks instant coffee so
the instant coffee products should also be developed in marginal price with good quality (Bell,
Dyck, and Neubert, 2017).
Market development: Market development is one of the pioneer strategies that include different
promotional activities. It is seen that almost 70 % of the consumers are active in digital media so
promotional websites and USP of New England Coffee house should be uploaded. The
marketing strategy should include the proper pricing of the product to develop the market. There
should be physical promotional activities like sponsoring in community events to develop the
market (Yin, 2016).
Diversification: The diversification of the product includes increasing the price range and
variety of products that should help New England Coffee house too excellently increases it,
consumers. If diversification strategies and the product are done then the risk of bankruptcy in
the SME may reduce by 60.5%.
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PLANNING FOR GROWTH: NEW ENGLAND COFFEE HOUSE
Fig 1: Ansoff Matrix
(Source: Ouma, and Oloko, 2017)
Porter’s generic strategies
The competitive advantage in the organisational context of New England Coffee house may be
analysed effectively by the use of Porter's generic strategy
Cost Leadership: The cost leadership may be gained by New England Coffee house by
optimizing the product use thus decreasing the manufacturing cost of the organisation. The
selling price may be set a little low compared to the market price to be a leader in the costing
strategy in the market (Loredana, 2016).
Differentiation in Strategies of leadership: Differentiation strategy includes product and
service differentiation form the close rivals in the market. New England Coffee house may
develop the Brewed coffee with fine quality enhancing its supply chain and establishing a USP
on the consumers.
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PLANNING FOR GROWTH: NEW ENGLAND COFFEE HOUSE
Focus on costing
The focus on costing is done according to the needs of the specific market segments. During
penetrating in a new market the production cost should be maintained so that selling cost may be
on par with market cost to attract consumers. It increases sale by almost 15% (ABECK, 2017).
Differentiation focus: This is a strategy that includes the focusing on the diversified products so
that the quality of that product may be enhanced and maximum consumer base may be achieved.
New England Coffee house may focus on the traditionally brewed coffee lovers and focus on
differentiation of the traditional coffees to get competitive advantage
Fig 2: Porter’s Generic Strategies
(Source: ABECK, 2017)
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PLANNING FOR GROWTH: NEW ENGLAND COFFEE HOUSE
PESTLE
The macro factors are important that helps in setting competitive advantage by applying
appropriate strategies.
Political: The new government in the UK is formed and the government is attending stability
that should help in formulation favorable condition for the business for the café industry. It
enhances the chance for SME to make favorable relations with Government (Van Ham, 2016).
Economic: The economic factors represent that the GDP of the UK is almost 45,000 USD. It has
a favorable condition for business to grow with the consumers having good purchasing power.
Social: The social trend in the UK suggests that almost 50 % of the people are coffee lovers. It is
a good opportunity for the café industry to develop the business at an appropriate scale
(Michalski, Montes-Botella,. and Narasimhan, 2018)
Technological: The technology in the UK is developed and it includes good digital marketing
platforms that may be used by the organisations
Legal: The legal framework includes the use of the tax system that is adjusted and now it is
stable.
Environmental: The environmental friendly eco products are necessary as the UK policymakers
are giving stress on the environment.
Critical evaluation of the risk analysis of the company
Portfolio analysis
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PLANNING FOR GROWTH: NEW ENGLAND COFFEE HOUSE
The critical portfolio analysis is useful for startup companies like New England Coffee house. It
includes the MABA the market attractiveness business position that helps the organisation to
achieve sustainability (Koolwijk et al., 2018). The GE matrix explains that the instant coffee
lover is more in numbers than traditional coffee drinkers. New England coffee shop may perform
a balance between traditionally brewed coffee and instant coffee. Digital marketing may be used
to establish an effective website for the company.
Collaboration
The collaboration includes vertical integration that should strengthen SME like the New England
coffee to develop the supply chain management. Moreover, there is the concept of horizontal
integration that should include the formation of conglomerate by performing a merger with close
rivals. These may help to increase the growth of New England coffee by atleast15% (Eberle et
al., 2017).
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PLANNING FOR GROWTH: NEW ENGLAND COFFEE HOUSE
LO2: Assessment of various methods through which funding may be done and used by the
company (P3, M2, D2)
Funding Sources of the organisation
The funding source is one of the main necessities for the SME and steady flow of funds is
required for the startups to grow in the market. There are mainly three types of funding source
that may be achieved those are the long term, medium term, and short term funds. The long term
finance is required for sustainable development those includes capital ventures, equity shares and
long term loans from the government (Crépey, et al., 2017). Moreover, the medium term funding
is loans from public and private banks. The loans need to be repaid with interest in a specific
time frame. The quick funding source is the private investors and ownership based funds. Private
investors invest in SME to get a good amount of return compared to the market. Ownership
funds are also present that may be used by the New England Coffee house to develop their
business (Voineskos et al., 2017). According to the business expansion strategies, the private
investment and long term debentures may turn out to be a sustainable funding source for New
England Coffee house. This two funding source should help them to fulfill the requirement for
the long term as well as the short term finance.
Benefits and drawbacks
One of the major source benefits of taking funds from private investment organization is that the
money is processed in a very quick time compared to the public banks. However, the legal
complexities are there and the paper works need to be done in an efficient way. According to
Lane, (2015), public deposits are the safest funding source as their interest rate is low and there
is minimal chance of fraud in the public sector. The public funding process is slow compared to
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PLANNING FOR GROWTH: NEW ENGLAND COFFEE HOUSE
private funding. Public deposits may be hard to gather for a small startup. The capital ventures
have some benefits as the steady flow of money comes from the capital ventures form the big
capital organisations. However, the capital ventures have good more interest rates and
complication in the legal procedure is more
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PLANNING FOR GROWTH: NEW ENGLAND COFFEE HOUSE
LO 3: Development of business plan ( P4, M3, D3)
The business development plan should include appropriate mission vision and business objective
for the New England coffee house.
Mission
The mission of New England coffee house should establish a quality brand image in the market
by creating its original unique selling proposition in the market. The consumer's requirement
should be the optimum priority.
Vision
The vision of the organisation should include product innovation and development according to
consumer taste. Pricing and product maintenance should be the vision to achieve sustainable
development.
Aims
The aim of the New England coffee house is to grow in size and scale by ensuring a steady flow
of capitals and profit level should be enhanced by 15%. The aim also includes opening at least 5
stores.
Objectives
 To increase store numbers by 2 at least in the 6 months
 To increase the profit level by at least 10 %
 To increase revenue by at least 15%
 To optimize resource use by at least 10 % and reduce operation cost by atleast5%
 Enhancement in the consumer base by 10 %
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