Planning for Growth: Strategies for Catering Business Expansion

This report provides a comprehensive analysis of growth strategies for a catering business, addressing key considerations for evaluating opportunities, including Porter's generic strategies (cost leadership, differentiation, and focus) and PESTLE analysis. It applies Ansoff's growth vector matrix to identify market penetration, product development, market development, and diversification strategies. The report explores various funding sources, such as bank loans, venture capital, and government grants, along with their respective benefits and drawbacks. It then outlines the development of a business plan, including financial projections and operational strategies. Finally, it examines exit and succession options for a small company, considering their pros and cons. The report aims to provide a strategic roadmap for the catering business's expansion and long-term sustainability, offering insights into financial management, market analysis, and strategic planning to achieve its organizational objectives.

42- PLANNING FOR GROWTH

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Task- 1.............................................................................................................................................1
P-1: Key considerations for evaluating growth opportunities.....................................................1
P-2: Ansoff's growth vector matrix..............................................................................................3
Task-2..............................................................................................................................................4
P-3: Sources of funds, their benefits and drawbacks...................................................................4
M-2...............................................................................................................................................6
Task- 3.............................................................................................................................................6
P-4: Business Plan........................................................................................................................6
Task- 4...........................................................................................................................................10
P-5 Exit and succession options for the small company, their pros and cons...........................10
M-4.............................................................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Small and medium business enterprises are one whose number of employees, capital and
the revenue earned is below a particular threshold limit which is specified by the laws of
particular company. For the incorporation of a new business idea, prior the market research has
to be conducted which shows the growth opportunities, competitor analysis and the business
objectives of the company. The project shall be highlighting the growth opportunities in the
catering business by applying the Ansoff's growth matrix. It shall be discussing the various
sources of finance and the pros and cons that are attached with it. Apart from that it shall also
suggest the appropriate source of funds that the business should use to finance its operations. The
report shall be demonstrating the business plan that the company must apply in order to achieve
its organizational objectives. Lastly it shall be reflecting the options to exit or for the succession
of the catering business.
MAIN BODY
Task- 1
P-1: Key considerations for evaluating growth opportunities
The competitive advantage that can be gained in an industry among the other rival firms
can be assessed by the different techniques like the porter's generic strategies and the external
environment analysis by applying the model of PESTLE. Once competitive edge is generated it
is easy for the company to acquire the market share and maximize the profitability of the
company.
Porter's generic strategy Cost leadership strategy:- This strategy is focusing on leading the market by lowering of
the costs or reducing the profit margin of the company (Islami, Mustafa and Latkovikj,
2020). Decreasing the cost should be related to operational efficiency, better technology,
improved logistics and distribution system etc. Differentiation:-Differentiation is with respect to products and services that are offered
by the company. It can be in quality, quantity, packaging, features, technology etc. This
can be attained with research and developmental work, effective marketing tactics etc.
This helps the company in surviving in the highly competitive market (Hales and
Mclarney, 2017).
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 Focus:- The focus strategy caters to the niche market segment and targeting their specific
needs, the goods are sold at the unique selling point (Abdolshah, Moghimi and Khatibi,
2018). It can be applied with regard to the cost as well as the product of the company
where market share can be capitalized on the basis competitor analysis.
The catering business that has been planned to be incorporated in the market shall gain
competitive advantage by following the differentiation market strategy. This is because its
selling goods at high prices with higher quality so it can differentiate the goods at the similar
price to capture the market (Mungai and Ogot, 2017). Differentiation can be by changing the
menu, customizing the food as per the guests, better garnishing and specialization in a particular
meal.
PESTLE Analysis Political- The political instability in the market relating to the government rules and
regulations, policies, tax amendments etc. will affect the market of the new business. The
updates on the health rules and regulations is also a concern for the catering businesses.
They have to comply with these guidelines which lays additional cost burden. Economical- The interest rate, inflation rate, growth rate, personal disposable income are
some key economic factors that shall impact the business operations of a company. If the
interest rates are high the borrowing cost shall be more which shall then decrease the
scope for planning expansions (Perera, 2017). If the inflation rates are high then the cost
of purchasing raw materials shall be increased, ultimately making it less attractive for the
customers. Social- The social factors can be the trends that are followed in the market which are
based on the lifestyle changes of the people. The culture, traditions, norms, beliefs are
certain elements that affect the profitability of the business. For example the health
consciousness and the dietary restrictions nowadays are leading great impact on the
business. The businesses are bringing healthy products free from fats to meet the needs of
their customers. Technological- The technological advancements and the automation of the processes has
forced the companies to install the newer technologies and also train the employees to
operate them. This has simultaneously increased the costs and the turnover ratio of the
company.
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 Legal- The legal environment of the company specifies the legal framework within which
the company falls and the laws that are to be abided by the company. The laws related to
the catering business shall be the food safety standardization mark, health laws, storage
rules, packaging rules etc. are all to be complied by the company which incurs additional
cost.
 Environmental- Environment is also a huge concern for the companies currently as they
have to fulfil the corporate social responsibility, environment protection policies,
sustainable development and promote a clean and green society (Rastogi and Trivedi,
2016).
The new business idea 'Don't look further Catering Services' shall also experience the external
forces that are impacting its business operations. So it needs to plan accordingly to foster its
growth and development in the future. The main concern of the company should be the social
environment which is the recent trends and try to innovate the products and services accordingly.
Apart from that it should concentrate on the automation of processes which makes the services
faster and more efficient for the customers. And the environment and welfare of the society
should be the primary concern of the business.
P-2: Ansoff's growth vector matrix
The Ansoff's matrix is a product and market expansion grid which is used to evaluate the
growth opportunities and formulate strategies accordingly for the same. It analyses the risk and
return that is affiliated with each growth strategy. The “Don't look further Catering Services”
shall also use this technique to know which strategy of growth needs to be planned by the
business. Market Penetration- This growth strategy is focused upon increasing the sales or revenue
of the company in the existing market with the same product (Gurcaylilar-Yenidogan and
Aksoy, 2018). This can be done by using the low cost market strategy, in which the
company acquires the market share by offering the products at the lower costs. This shall
also generate competitive edge for the company. Product Development- The product development growth strategy concentrates on
bringing a new product to the existing market. This can be done by expanding the product
portfolio that is offered to maximize the profitability of the company. This can be done
intensive research and development in the area which helps the company in making
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innovation in the market. Apart from that another way of attaining the product
development is by making the strategic or collaborative partnerships and gaining the
benefits of synergy. Market Development- The market development growth strategy consists of entering new
markets with the existing products if the scope of new customer groups is there or some
niche market which is to be captured (Khajezadeh and etal., 2019). The new market can
be domestic as well as international to widen the target market which is to be captured by
the company.
 Diversification- This is the riskiest growth strategy where company altogether moves to
the new market with the new product. It may or may not be related to the older business
of the company. This type of growth depends on the business capacity as well as the
competitor analysis of the new market.
In order to plan growth strategy to expand the business of “ Don't look further Catering Services”
it has to check the viability of market and future growth prospects. The product development is
the best growth strategy currently for the company upon which it should determine its business
plan. It should focus on providing customized food products in the events that it conducts as per
the needs and desires of the customers (Rezaei, Khavariyan Garmsir and Ghaforzadeh, 2016).
Rather than buying the food products, wines and beverages it should focus on arranging for the
strategic partnerships with such dealers so that the profitability could be maximized by
minimizing the cost. This shall help in the attainment of the organizational objectives.
Task-2
P-3: Sources of funds, their benefits and drawbacks
The sources of funds depicts the alternatives from which the small and medium
enterprises can arrange the finance for smoothly and efficiently carrying out its business
operations. It can be either from the owned or borrowed funds, simultaneously changing the
potential risk and return that are achieved.
Some potential sources of funds that can be used by the newly incorporated business are:-
1. Bank Loans- This is the money that is borrowed from the banks or other financial institutions
for a specific period of time, at the specified rate of interest and at an agreed repayment schedule
by the company (Ali and Khalid, 2019). The amount can be secured by the business for the
purchase of fixed assets or any other technology for a longer period of time. For acquiring such
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loan the company has to submit its details regarding the plan and the returns that are forecasted
to be generated. If the officials find it viable they shall sanction the loan.
Benefits Drawbacks
 It is beneficial as it does not dilute the
control of the business.
 Since interest is a tax-deductible
expense and also the interest payments
are usually fixed so it facilitates
budgeting.
 The major disadvantage is that it is a
fixed obligation for the company and
has to be paid even if company incurs
loss.
 The loans are tough to qualify for a
newly incorporated business or start-up.
2. Venture Capital- It is a source of finance that is generally used for funding the start-ups or the
newly incorporated ventures. It is a type private equity capital that is invested in the businesses
which have growth potential in the future (Vinczeova and Kascakova, 2017). It is allotted for
medium term to long term in stages with the growth of the business. The venture capitalist in
return takes ownership chunks in the company and sells it off later at a profitable deal.
Advantages Disadvantages
 The source of fund does not pose any
fixed obligation as well as threat to
repay (Sources of Finance and Their
Advantages & Disadvantages, 2021).
 In this type of finance the company also
gets the valuable expertise, established
network and managerial guidance from
the venture capitalist.
 It leads to dilution of the ownership and
control of the company.
 Venture capital does not provide with
lump-sum capital but the money is
received in stages.
3. Government Grants- They can also be referred to as source of fund that is used by the
company, which is in the form of financial reward that is provided by the government, federal or
state (Balaban, Župljanin and Ivanović, 2016). It does not include any other type of assistance
neither the amount is to be repaid but it is essentially to be used for the stated purpose by the
company.
Pros Cons
 The most prominent advantage is that
the company can reap the benefits and
in return none is to be returned.
 It has wide availability and can be
availed.
 It can be used for specific purposes
only as specified by the authority.
 The most challenging part is the
application for such grants which has to
be qualified by various levels.
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M-2
The most appropriate combination of the sources that can be applied by the “Don't look
further Catering Services” for arranging the finance are the venture capital and bank loan. The
best capital structure is one which has parts of owned capital and borrowed capital
(Amornkitvikai and Harvie, 2018). This shall manage the leverage of the company by neither
diluting too much control nor posing more financial stress. In order to generate an efficient
balance of the risks and return both equity and debt capital should be included in the capital
structure of the business.
Task- 3
P-4: Business Plan
Overview
'Don't look further Catering Services' can expand its current market by planning for the
variety of events like weddings, theme parties, ceremonies/ galas, shows etc. and accordingly
customize the catering services for the clients. The target market shall be widened from the
business professionals, sports clubs, social groups which are among the higher income group
society. The services shall range from the planning event, decorations, marketing, catering
services and dining arrangements.
Vision
The vision of the company shall be focused upon providing the best quality services at
high-end prices which are value driven for the customers. It aims at being the leading event
managers of the country who can derive success for all the events or parties that are conducted.
The vision of the company is to build a healthy and prosperous society by fulfilling the corporate
social responsibility, recycling the wastages, clean and green environment.
Mission
The mission of the company is to maximize the level of satisfaction that is derived by the
customers by providing unique and standardized services. By ensuring this it will be able to gain
the customer loyalty to retain with the company in the future. The major goals are to boost the
profitability of the company and build the future growth prospects of the company.
Objectives
 To increase the volume of sales by 10%.
 To generate operational efficiency up-to 85% of the capacity.
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 To maximize the satisfaction level of the customers.
PESTLE analysis:-
Political
 The political instability is the major
factor that fails the business plan
formulated earlier (McKeever, 2016).
 Government interference, regulation
and corruption in the consumer service
sector.
 The changing pricing, taxation and the
employee benefit scheme.
Economical
 The interest, unemployment, inflation,
growth, foreign exchange and the stage
of business cycle are the various factors
that impact the profitability of the
company.
 The conditions of the market indirectly
influences the personal disposable
income, spending habits etc. of the
consumers.
Social
 The demographic characteristics of the
population like age, gender, religion,
culture, beliefs and value systems
impacts the reputation of the company
and in accordance with that the
acceptability is received by the
company.
 The lifestyles, trend, fashion,
modernizations are also important for
governing the prosperity of the
business.
Technological
 The technological advancements and
development are imposing higher cost
burden on the company, thereby
reducing their simultaneous
profitability.
 The automation of various processes in
the business operations leads to faster,
cost effective and efficient delivering of
services.
 It can also pose threat of higher
employee turnover because of
resistance to change.
Legal
 The legal compliance related to the
health and safety laws like
standardization of food products, full
disclosure policy, hygiene requirements
etc.
 Copyrights, patents and intellectual
property laws are also applicable.
Environmental
 Reduce the generation of waste by
using the 4'R policy which includes
reduce, recycle, reuse and reduce.
 It is focused with maximizing the
welfare of society by providing the
future generations a better place to live
through the sustainable development
(McKenzie, 2017).
SWOT analysis:-
Strengths
 The major strength of the company is
the high-end customer services with
quality services.
 Uniqueness and innovative business
model shall gain competitive edge in
the industry.
Weaknesses
 Brand awareness and the marketing
techniques are less efficient. The
company is lagging behind in the
presence over the digital platforms and
optimization of websites (McKenzie
and Sansone, 2019).
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 Lack of funds to finance the various
physical asset needs and the business
operations of the company.
Opportunities
 The major business opportunity for the
company is the automation of the
processes which shall help in the faster
and efficient offerings to the company.
 Media coverage is one such opportunity
that can be capitalized by the company.
Threats
 The high- degree of competition is the
threat to the company.
 The market changes is also a threat to
the survival of the company.
STP analysis:- Segmentation- The market segmentation is done on the basis of income class of the
society. The company offers high quality services at high prices to the higher income
group. The event planning is carried out for the business professionals, sports clubs,
famous known personalities etc. Targeting- The company is targeting the niche market which can afford higher priced
events and catering services (Ivanisevic and etal., 2016). Quality is the focus to derive
upon the customer satisfaction and assure their future loyalty.
 Positioning- The positioning is done in the minds of customers by the differentiation and
uniqueness in the business model of the company. The quality of the service maintains
the attractiveness of the deals that are offered by the company.
Marketing Mix:-
Product- The product is about managing events and offering catering services to the clients. The
strategy used is focused on providing the best quality, innovation and uniqueness in the services
as compared to the competitors.
Price- The goods and services are offered by the 'Don't look further Catering Services at high
end prices. The company focuses on the differentiation strategy rather than cost leadership and
wants to capture the market share based on their differentiated products.
Place- The distribution network that is involved in the operations is huge and widely spreaded.
The company will be opening various offline outlets for the easy accessibility of its services and
soon shall be approaching for the digital platforms to conduct online services (Alonso-Vazquez,
del Pilar Pastor-Pérez and Alonso-Castañón, 2018).
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Promotion- The company will be entering the highly competitive market so aggressive
marketing strategies are required to be conducted by the marketing officials. The advertisements,
positive word of mouth, search engine optimization, newspapers, posters, banners and an
optimized website are the ways to maximize the brand awareness of the company.
People- The human resource of the company will be efficiently managed by the talent
management, training, succession planning, reward and recognition. This shall boost their morale
and ultimately the operational efficiency of the company.
Process- The process used shall be automated and standardized avoiding any kind of
discrimination policy. This will improve the level of customer satisfaction.
Physical evidence- The physical evidence will be the excellent decoration, invitation cards and
presentation of the food in the dining.
Competitor analysis:-
Basis Don't look further Catering
Services
Seven Events Limited
Product Services are high quality,
unique and involves
innovation.
The products are similar to that
of existing competitors, low
quality and lower priced.
Price Goods and services are
expensive following the
differentiation policy.
Affordable range of products
following market penetration
through cost leadership
strategy.
Place Presence only on offline
stores.
It is present on the online as
well as offline channels.
Promotion Aggressive marketing
strategies are applied to
promote the brand.
Marketing strategies to retain
the current level of market
share.
Financial analysis:-
Operating Expenses Amount
Venue £1800
Catering £500
Entertainment £250
Decor £600
Audio-visual £1000
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Budget:-
Particulars Year 1 Year 2 Year 3
Sales 15000 15500 15250
Less COGS 4500 4620 4575
Gross Profit 10500 10880 10675
Less Operating Expense 2000 2250 2100
Less Administrative cost 500 620 600
Less Marketing Expense 1250 1500 1750
Less Rent of Venue 600 600 600
Less Interest on bank loan 100 100 100
Less
Event programming
cost 4000 3960 3990
Net Profit 2050 1850 1535
Monitoring and control:-
The monitoring, control and evaluation of the formulated business plan will be done by
the benchmarking technique. This technique involves establishing a prior benchmark using the
data of the competitor in the industry and providing them as targets that are to be achieved by the
employees. Further the actuals are matched with the standards and the deviations will be known.
Then actions must be taken in respect of the shortcomings and improvisations shall be made.
Task- 4
P-5 Exit and succession options for the small company, their pros and cons
The best exit or succession strategy is one in which suites the best to the business and its
future goals. As some owners may want the business to shut down and the others may want to
pass it to family, employees, directors etc.
Some key options that company can utilize to exit the industry are:-
1. Liquidation- It is one of the exit strategies that is taken up when no other options work for the
company. In this the business operations are closed and the assets of the company are sold. This
is often undertaken when the business is independently handled and is giving poor performance
in the market (DeTienne and Wennberg, 2016). This comparatively reaps lower returns for the
company as is based on the assets and not the goodwill, value of clients etc.
Advantages Disadvantages
 The major advantage for a struggling
company to exit the market using this
 The amounts received are lower as
compared to the actual worth of the
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