Unit 42 Planning for Growth Report: Business Expansion Strategies

This report provides a comprehensive analysis of planning for growth within a business context, using The Little One Coffee Shop as a case study. The report begins by analyzing key considerations for evaluating growth opportunities, including competitive advantages, such as cost leadership and differentiation strategies. It then delves into evaluating growth opportunities using Ansoff's growth vector matrix, exploring market penetration, market development, product development, and diversification strategies. The report assesses potential sources of funding, including bank loans and peer-to-peer lending. Furthermore, it formulates a business plan for growth, incorporating financial information and strategic objectives for scaling up a business. Finally, the report addresses exit or succession strategies for small businesses, offering valuable insights for long-term planning and sustainability.

Planning for growth

Table of Contents
INTRODUCTION...........................................................................................................................3
Part 1................................................................................................................................................3
P1. Analyse key considerations for evaluation of growth opportunities.....................................3
P2 Evaluate growth opportunities through usage of Ansoff's growth vector matrix...................6
P3 Assess potential sources of funding.......................................................................................7
P4 Business plan for growth and financial information along with strategic objectives for
scaling up a business....................................................................................................................8
PART 2..........................................................................................................................................12
P5. Exit or succession strategies for business............................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Planning for a growth is a strategic business activity which enables an individual to
formulate plan and track growth in terms of business revenue. It allows business to distribute
limited resources with an aim to make modifications within organisation through digital
evolution and offering distinguished services to their customers. For growing and sustaining
within competitive environment organisation need to build up effectual through which they can
attain growth within market. When organisation is looking forward for expansion then they need
to carefully examine each and every resource which is available or can be attained easily along
with other factors such as cost, services, human capital, etc. Organisation need to plan their
growth through expansion of their services by the use of latest trends, techniques and
equipments. To understand the concept of planning for growth, The Little One Coffee Shop is
taken into consideration. This was found by Ben & Lisa in 2009. They render their customers
with muffins, coffee and crepes. This report deals with growth opportunities along with sources
of funds & plan for growth of organisation. Apart from it, succession as well as exit options for
small business are also discussed.
Part 1
P1. Analyse key considerations for evaluation of growth opportunities.
It is tough for small businesses to catch or grab apt prospect in a competitive market. With
respect to this, management must devise strategies for their business accordingly for their
survival as well as upholding their existent position so that benefits can be gained from market.
The Little One Coffee Shop is a small shop which possesses less number of employees but they
made sure that they have proper strategies and plans for furnishing their services. For this they
have to take some factors into consideration, they are illustrated below:
Competitive Advantages
This denotes a condition where organisation or other coffee shop aims at producing
identical products and services at low prices in an effectual and efficient manner. This is a major
role of management of organisation to formulate as well as plan strategies by which The Little
One Coffee Shop can acquire competitive edge within market. For this, the organisation can use
Porter’s Generic model which is mentioned below:

Cost Leadership: This strategy will aid organisation to develop their unique position in
market by rendering services at reasonable amount. The Little One Coffee Shop can utilise such
methods or tricks for conducting market analysis and target audiences so that their requirements
can be acknowledged. With respect to this, the prices of services offered by them are kept low
and quality which is rendered by them is kept high in order to attract more number of customers.
Aim of this strategy is utilise the opportunities to fullest so that market shares can be enhanced as
well as its size. Thereby, leads to high competition within marketplace.
Differentiation Leadership: The goods and services which are rendered by coffee shop
cannot be compared with services offered by other competitors within the market. As The Little
One Coffee Shop provides high quality services which assist them to captivate large number of
customers. By the usage of these strategies, organisation can have innovative and unique features
in their services; this will enable them to enter in target market. An instance can be taken to
explicate this like; if The Little One Coffee Shop has creativity within services or they are served
in a unique way then this will grab attention of more number of customers. This will also create a
strong impact on buying patterns of their customer.
Cost Focus: With respect to this, emphasis is on niche market as they renders good and
services at low prices. With the assistance of this specific strategy, organisation can carry out
analysis of market as well as needs of customers and provide their services at low cost. It is
crucial for them to have this so that services & products can be designed accordingly. For an
instance, this strategy will aid to acknowledge exact requirements of customers which will aid
them to eliminate waste while producing their services.
Differentiation Focus: In context of this, organisation emphasise on furnishing their
goods as well as services by bringing innovations as well as creativity in their products. The
Little One Coffee Shop must examine what are the expectations of customers at specific duration
of time. By bringing differentiation in products, organisation can bring in opportunities for
survival in competitive market that will aid them to intensify profits and number of sales
incurred during specified time duration.
Competitive Advantage with Opportunities for Growth
With respect to growth opportunities, The Little One Coffee Shop is making use of
external environment analysis i.e. Pestle. By this organisation can acknowledge the various
factors which can create an impact on overall operations of business. They are illustrated below:

Political factors: The Little One Coffee Shop is opting to expand their services in China.
For this they need to have detailed analysis of regulations, rules, regulations, policies and other
crucial aspects so that they can have effective decision. This will assist them to conduct their
operations in a suitable manner by taking into consideration all the rules or policies which are
formulated by government of China. It will lead to identification of their business and gain
opportunities like enhancement in their menu or services within new market.
Economical factors: As The Little One Coffee Shop is expanding their business in other
countries then they need to assess purchasing power or behaviour of their potential customers in
an appropriate manner so that desirable outcome can be achieved. This will assist them to devise
strategies as per economic rates at given time interval. Therefore, it will lead to create
opportunities for growth of business within competitive market. By addressing buying behaviour
of customers, prices of commodities can be formulated so that more number of customers can be
acquired by them.
Social factors: This includes attitude, values and beliefs of individuals. It comprises of
factors such as age distribution, population growth, health concerns, etc. While expanding their
business, The Little One Coffee Shop needs to conduct a market analysis so that buying pattern
of individuals can be understood. By this they can have opportunities to stay strong within
market of China. Along with this, by the use of innovative methods, they can attract wide range
of customers.
Technological factors: For creating opportunities, The Little One Coffee Shop must
conduct suitable market research with respect to latest technologies which are used by other
businesses within same domain. By this they can have knowledge about the market and if they
are making use of enhanced technologies they can go with the same or make alterations to have
updates technologies. They need to provide uninterrupted innovation in products and services,
The Little One Coffee Shop is providing. Along with this, organisation can make sure that high
quality services are offered to their customers within minimum time.
Legal: There are various laws which must be followed by organisation for conducting
their operations and functions like consumer laws, health & safety, employment laws, etc.
Management of The Little One Coffee Shop needs to adhere to these laws so that they can carry
out their operations in desired manner and without any kind of legal trouble.

Environmental Factors: This factor is linked with environs which include climate,
pollution and weather. For creating opportunities in market, The Little One Coffee Shop needs to
analyse environment as well as ensure that they do not hamper it or create any kind pessimistic
influence on opportunities which they have. This will assist them to enlarge their business in
different countries which will lead to improvised sales which implies profitability.
This will assist The Little One Coffee Shop to carry out their operations in an effective
and efficient manner. Through this, they will be able to attain their goals as well as objectives in
suitable manner.
P2 Evaluate growth opportunities through usage of Ansoff's growth vector matrix.
A tool which aids in providing effectual guidelines to managers as well as executive for
formulation of strategies by which business can be expanded is referred to Ansoff’s growth
vector matrix. The Little One Coffee Shop can utilise this matrix for designing their strategies,
they are specified below:
Market Penetration: It denotes situations where organisation grows in their existing
market by furnishing same products as well as services. By maintaining market shares growth
opportunities can be enhanced by making some modifications in prevailing strategies and
services which are delivered. Along with this, The Little One Coffee Shop can make use of
promotional activities for making people aware of services which are furnished by them. This
might enable them to acquire more number of people. It will lead them increase market shares
within identical market.
Market Development: It is defined as a situation in which business will segment the
market in different geographical regions. In this case, The Little One Coffee Shop will make
minimal or no modifications within their existent services. For being successful organisation
need to ensure that they make use of unique technologies. If by this outcome attained is
increased then they can make use of same technology while expansion of their business in China.
Product Development: It implies a strategy where organisation will be bringing new
products in same market for expanding their market shares as well as profits. This comprises of
extension in products range which is available. Management of The Little One Coffee Shop can
invest in activities of R&D so that they can find out services which must be provided by them to
attract more number of customers. The emphasis is on expanding services rather than expansion
in new market.

Diversification: It refers to strategy where organisation aims at expansion of their
business in new market via innovative services. It is one of the risky factors as both products as
well as market is new, this denotes that there is high probability of failure or success. The Little
One Coffee Shop carries out appropriate and intense research with respect to market and
services.
Therefore, The Little One Coffee Shop can utilise product development strategies to
conduct their business operations. As by this they can bring in new innovations in their services
thereby attaining enhanced results along with this it is less risky.
P3 Assess potential sources of funding.
For enhancement of growth and success within competitive market, various plans and
strategies must be used. For this, various sources of funds are available to business for attainment
of objectives as well as goals. The sources of funds can be defined as means which enhances
operations of organisation as well as their working capital. The various sources of funds which
The Little One Coffee Shop can make use of are illustrated below:
Bank Loan: It is one of the common as well as easiest type of finance which is provided
to SME's. These kinds of funds are taken by bank for specific time duration and charging some
interest rate for the same. The Little One Coffee Shop can have funds from bank by taking loans
as it is secured method. By this they can expand their business successfully.
Benefits: They are illustrated below:
 Credit scores of organisation can be increased through regular payment methods of
instalments.
 This source of funding charges lower rates of interest with respect to other institutes.
Drawbacks: They are mentioned below:
 There exists certain legal formality which must be accomplished while furnishing loans
to organisation.
 In this monthly instalments have to make and if organisation fails then they have the right
to seize assets.
Peer to Peer Lending: It refers to financial creativity which connects borrowers to
search for unsecured loans with investors for attaining higher returns. With respect to this,

individuals take funds without any kind of financial institutions. The Little One Coffee Shop
must to make use of such funds as they are not secured.
Benefits: They are shown below:
 They render low interest rates as compared to other funds of funds.
 In this case, additional money is not charged for early repayments. It carries low interest
rates as compared to others.
Drawbacks: These are mentioned below:
 Individuals with high score can only get this type of loans, which acts as a major
drawback of this source.
 With respect to peer to peer lending, tax free interest and large amount of money is not
made available.
P4 Business plan for growth and financial information along with strategic objectives for scaling
up a business
For attaining success in the market, it is crucial for an organisation to develop objectives
and goals. For expanding, business plan must be formulated which includes information related
with various aspects such as mission, vision, etc. The Little One Coffee Shop wants to expand
their business in Germany, for this business plan has been presented below:
Concept of Business
It denotes process that includes information associated with vision, mission, products,
services, etc. With respect to The Little One Coffee Shop, they are shown below:
Organisation Product and Service:
The Little One Coffee Shop provides their customers with coffee, crepes and muffins.
Along with this, product depends on customisation options which are as per needs of customers.
Mission and Vision of Firm:
Mission is development as well as maintenance of image within market so that high
quality services can be produced thereby leads to enhanced profitability. Vision is to furnish high
quality services and goods to users so that requirements can be fulfilled in appropriate way.
Unique Selling Proposition
In context of this, The Little One Coffee Shop makes use of equity recapitalisation.
According to this, organisation can sell peculiar section of business to others for a certain time
period. This can be attained by legal agreements.

Strategic Objectives
 To enter in a new market via existent services and acquire 25% business sales in
upcoming 3 months.
 To render high quality products and services to consumers for attaining goals &
objectives in a suitable way.
Market Analysis
Management of The Little One Coffee Shop is making use of SWOT analysis which is
presented below:
Strengths Weaknesses
 Educated and skilled employees are
acquired by them.
 They have loyal customers due to high
quality services.
 They possess strong development and
research process.
 Restricted range as they do not possess
strong market image.
 Distribution channels are not suitable.
Opportunities Threats
 Expansion of business in international
market.
 Improvisation in their services by
adding new items.
 Variations in market due to changing
preferences of customers.
 Large number of competitors within the
market.
Financial Plan
Pre launch cash budget

Monitoring and Control: It is the last step of business plan where operations are carried
out in effective manner. In this step each and every stage is monitored so that goals can be
attained.
PART 2
P5. Exit or succession strategies for business
Each and every organisation has commenced with a primary motive to attain objectives as
well goals within given time duration. Such objectives as well as goals aim at overall
development of entities in a frequent way. For facilitating growth of organisation, the
management is responsible for carrying out assessment as well as evaluation of market to
acknowledge the importance of alterations in offerings’ of organisation. This will assist in
enhancement of contentment level which is attained by customers and market positioning of
entities within the market. Owing to the impact of external market forces, it is almost impractical
for organisation to attain their targets within stipulated time frame. In such kind of cases, an
organisation opts for exit approach due to continuous loss which is being faced by them. It looks
better of such organisation to go for exit so that they do not have to bear more losses. With
respect to The Little One Coffee Shop, they need to execute success or exit strategy according to
existing situation which prevails within the market. For choosing most relevant as well as
relevant strategies, the management of organisation can gain knowledge of different types of
succession as well as exit strategies which pertains as an option for entities. These strategies are
elaborated below:
Exit strategies
Organisation carrying out their operations at corporate world needs to gain sufficient as
well as adequate profits for surviving and sustaining within market for longer duration of time. In
case if organisation is not able to meet cost then they need execute winding up of business and
thus exit operations from market will save them from any kind of future losses. Different
strategic options exists which can be adopted by an organisation as an exit approach. Their
affirmatives as well as pessimist are illustrated below: