Planning for Growth: Strategic Analysis of The Little One Coffee Shop

This report provides a comprehensive analysis of growth planning for The Little One Coffee Shop, a business established in 2009 offering coffee, crepes, and muffins. The report begins by evaluating growth opportunities using competitive advantages and the PESTEL framework, focusing on a potential expansion into Germany. It then employs Ansoff's growth matrix to explore strategies such as market penetration, market development, product development, and diversification. The report assesses potential funding sources and outlines a business plan with financial information and strategic objectives for scaling up the business. Finally, it discusses exit and succession options for the small business, including their benefits and drawbacks, providing a well-rounded perspective on the company's future.

Unit 42
Planning for
Growth
1

INTRODUCTION...........................................................................................................................3
Part 1................................................................................................................................................3
Analysis of evaluation of growth opportunities.....................................................................3
Evaluation of growth opportunities by usage of Ansoff's growth vector matrix...................7
Assessment of potential sources of funding...........................................................................8
Business plan for growth along with financial information and strategic objectives for scaling
up a business...........................................................................................................................9
Part 2..............................................................................................................................................16
Assessment of exit or succession options for a small business along with their benefits and
drawbacks.............................................................................................................................16
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................18
2

INTRODUCTION
Group planning is a strategic business activity which allow business owners to conduct
planning and tracking growth of organisation in order to increase revenue. Planning benefits
business organisation to allocate resources in order to adopt changes that are prevailing in
industry that can be driven by different competitors or other factors (Addae-Korankye and
Aryee, 2021). In order to perform business operations in a systematic manner it is important for
organisation to develop an effective business plan in order to enhance growth in market. A
growth plan mainly defines as a systematic record for business future which set goals and targets,
strategies and tactics to accomplish them. In order to successfully expand business activities in
national or international market it is essential for an organisation to develop plan while
emphasizing upon certain aspects like resources, services, products and cost. Growth planning
allow organisation to have an overview of the manner in which business is performing as a
whole and prioritise key areas of growth in order to make further efforts.
Present report has been conducted on The Little One Coffee Shop which is offering
qualitative products and services to consumers. This Cafe was established in the year 2009 by
Ben & Lisa. This coffee shop offers crepes and mouth tempting coffee and muffins to
consumers. Report includes growth opportunity, business plan, sources of funds for
organisational growth. Along with this succession and exit option for small business is also being
discussed in present form.
Part 1
Analysis of evaluation of growth opportunities.
Small business organisations mainly face number of challenges to grab effective growth
opportunities in competitive market segments. In this it is essential for management of
organisation to develop effective strategies and further make plan for long-term survival and
attract market opportunity. In terms with The Little One Coffee Shop, this firm is operating its
business services with limited number of workers but have effectual plan and strategy. However,
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in order to assure growth and success it is essential to consider different factors which is
mentioned below:
Competitive Advantages
It is defined as a condition in which organisation prevailing in business environment in
respective industrial sector provide same or similar form of products and services to consumers
in lower pricing segment in order to influence large base of customer. In this The Little One
Coffee Shop management have responsibilities to formulate planning strategies effectively to
ensure higher competitiveness (AHMAD and AHMAD, 2021). With the help of Porter generic
strategy model The Little One Coffee Shop can attain competition as foundation for growth:
Resources and capabilities
 Main source of The Little One coffee shop is that it has highly talented and capable
employees.
 Along with this, they offer high quality products and services as compared to other rivals.
 However, in terms with weakness company invest less of digital media marketing
comparatively to other competitors.
Porters Generic Model:
Cost Leadership:
With the help of this strategy organisation can develop their position within market
segment by offering services at lower rate. In this The Little One Coffee Shop can undertake use
of methods as well as tricks to conduct market analysis and target audience in order to identify
their actual needs and demand. In this case by offering price of commodities in low range with
high quality will allow organisation to capture the attention of consumers. With the help of this
strategy organisation can have the opportunity for increase in market share as well as size which
help them to gain more competitive than other rivals.
Differentiation Leadership:
The goods and services are furnished by The Little One Coffee Shop is incomparable in
context with quality. This feature in their products allow coffee shop to set consumers strategies.
This allows organisation to bring innovative features in their services as well as products in order
to enter in a market segment (Baporikar, 2021). For instance, The Little One Coffee Shop with
creativity in their services and offering coffee with healthy options such as low calory can
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acquire higher number of consumers. This strategy will help coffee shop to influence buying
behaviour of consumers.
Cost Focus:
Within this focus is mainly on nice market as they basically furnish goods and services at
lower price segment. This strategy assist organisation to conduct market analysis and evaluate
consumer needs and further offer them services in affordable pricing segment. It is important for
an organisation to design their products and services as per the market trend. For example, this
strategy will aid The Little One Coffee Shop to identify consumers exact requirements through
which they can eliminate wastage in their production services.
Differentiation Focus:
In context to this organisation emphasize upon target group designing of goods and
services with the help of creativity and innovation in their products. It is important for The Little
One Coffee Shop to evaluate the expectation of consumers at present movement. With the help
of differentiation in products company can significantly create opportunity for survival in the
highly competitive market. This will further help them to enhance profitability and sales.
Competitive Advantage with Opportunities for Growth
In relation to growth opportunity The Little One Coffee Shop is under taking advantage of
external environmental analysis. For this Pestel framework is being adopted in order to
understand the factors that can affect organisation operations:
Political factors:
The Little One Coffee Shop have plan to make expansion of their business operations in
Germany. For this it is essential for them to evaluate political conditions in country in terms of
rules, regulations, policies, barriers and other political factors. This aspect of Pestel analysis have
higher tendency to impact decision making (Chatterjee, 2021). It has been identified that
Germany is having strong government and political system and have strong relationship with EU
and USA which is two major dominating factors in market. With this good political tie with both
economic giants Germany have many opportunities for business growth that will benefit The
Little One Coffee Shop.
Economic factors:
As per the economic analysis it has been evaluated that Germany is having high GDP
with high per capita income of individual. Furthermore, it has been evaluated that respective
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country have stabilized economic environment which helps in creating successful business
opportunity. In context with it has been evaluated that respect market offers strong economic
environment through which The Little One Coffee Shop can have number of growth
opportunities for business operations.
Social factors:
It is important to identify values, beliefs, attitude, health concern, population growth, age
distribution and other factors for an organisation if they are looking forward to expansion. In
context with The Little One Coffee Shop, it is essential to conduct buying trend analysis. It has
been evaluated from the social factors of Germany that Germany falls under the category of
world's best country to live in, as in this individual have high quality of life due to stable
economy and best education system. Further it has been evaluated the respective country is
social welfare state and offer hight standard of living. This provide a significant opportunity for
The Little One Coffee Shop to expand their business, as in this they can attract attention of
consumers with the help of their innovative services.
Technological factors:
To gain more competitive advancements technology plays essential role. It has been
identified that technology is having tendency to affect business operations if are not considered
in effective way. The Little One Coffee Shop is required to conduct appropriate research in order
to use technology in their manufacturing services in order to maintain high standards. With the
help of an interrupted innovation coffee shop can influence consumer. It has been identified that
Germany is among world's most technologically advanced country and promotes artificial
intelligence and use of technology. In this it is essential for The Little One Coffee Shop to
emphasize upon investing in technology as to ensure stability.
Environmental Factors:
This factor of Pestle analysis emphasizes upon pollution, weather, climate and other factors
of environment. In this is essential for The Little One Coffee Shop to make sure that their
business operation does not cause harm to environment. This coffee shop is looking forward to
expand in Germany. It has been evaluated that country is having strong laws to protect forests,
minimise air pollution, water pollution and global warming. Number of steps has been taken by
government sustainable energy initiative in which organisations are required to reduce carbon
emission rate. In this it is essential for The Little One Coffee Shop to implement waste
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management system and make use of renewable energy. This will benefit them to conduct cost
effective business operations while maintaining stronger ties with government.
Legal:
For a business organisation it is essential to conduct proper analysis of legal environment
of a country in which they are looking forward to operate. In terms with Germany this country
promote equality and does not discriminate against anyone (Cosenz and Bivona, 2021). Country
also welcome foreign investors. In this The Little One Coffee Shop is required to make sure that
their workplace promote equality and does not discriminate individuals. Along with his coffee
shop with the help of emphasizing upon different legal aspects such as employment law,
consumer law, health and safety law can perform their business operations without facing any
legal obligation.
Evaluation of growth opportunities by usage of Ansoff's growth vector matrix
Ansoff growth matrix is a systematic tool that assist managers and organisational executive
in furnishing guidelines to design effective strategies to accomplish business goals and objectives
for growth and expansion. With the help of this matrix The Little One Coffee Shop can
formulate strategies accordingly:
Market Penetration:
It is defined as a situation in which company menu grows itself in existing market place
with already existing services and products. In a growing market segment maintenance of market
share lead to by enhancement of opportunities and growth of organisation in terms of increase in
market shares. The Little One Coffee Shop can create awareness about their services and
products with the help of promotional services to increase their market share.
Market Development:
It is defined as a situation in which company made a look towards a progression in
market segment within different geographical locations. In this firm take advantage of their
existing offerings with minimal product development or services. In context with The Little One
Coffee Shop in order to be successful it is important for management to make sure that they are
taking advantage of new distribution channel, unique product, technology, innovative packaging
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etc. This strategy can be undertaken by coffee shop in order to successfully expand in the market
area of Germany with the help of their existing services.
Product Development:
It is a strategy in which company with the help of new product in same market segment
aim towards expansion in profitability and share. This strategy mainly involves extension in
project range for more competitiveness by making investment in research and development to
bring additional product acquisition of rights for producing some new services. The Little One
Coffee Shop management can serve consumers with the help of investing in R&D to evaluate
needs of consumers. This strategy mainly emphasize upon expansion in different categories of
goods and services in same market segment.
Diversification:
In this strategy organisation make expansion of their business in new market segment with
the help of new products and services. This strategy is comparatively risky from all the above-
mentioned strategies, as in this organisation make investment in developing new products and
services and also undertake to launch them in a new market (Ibrahim and Ali, 2021). As The
Little One Coffee Shop is a small-scale organisation thus this strategy will be risky care for them
which may cause them huge loss.
From the above analysis it has been identified that The Little One Coffee Shop can
undertake use of market development strategy in order to expand their business services to new
graphical area. In this it is essential for coffee shop to consider tailoring promotional message to
make consumers aware of their services and products. Along with this to successfully expand in
Germany coffee shop with the help of offering loyalty scheme and discount can successfully
increase brand awareness in market. This will help organisation to acquire attention of customers
in faster way.
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Assessment of potential sources of funding.
Finance is an important aspect for a business organisation which allow organisation to
manage their cash flow in order to meet expenses in order to conduct business operations in
effective manner. It is essential for an organisation to evaluate different sources of plans. There
are different types of an sources that can be used by The Little One Coffee Shop:
Bank Loan:
It is one of the easiest ways to acquire finance in terms with The Little One Coffee Shop
loan provide easy access to grant capital. In this bank provide funds to business for specific
duration of time for which they charge interest rate. This source of fund can be used by The
Little One Coffee Shop as a secure method that will help the organisation to acquire funds.
Benefits:
 With the help of this source of an organisation can enhance its credit source with the help
of regular payment methods of instalments
 For small scale organisation bank loan provide lower rate of interest that will offer a
significant opportunity for The Little One Coffee Shop to have money.
Drawbacks:
 In order to acquire funds from bank it is essential for an organisation to go through
number of legal formalities.
 If business fails to pay monthly instalment, then there is high chance that bank can seize
asset of company.
Peer to Peer Lending:
It is defined as a financial creativity which mainly connects borrowers to search for
unsecured loans with investor to attend high rate of return (Marsudi and Pambudi, 2021). In
context to this individual can acquire funds however it is not secured mode off of acquiring
funds.
Benefits:
 Peer to peer lending render low rate of interest comparatively to other sources.
 There is no additional money been charged for early repayments
Drawbacks:
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 In order to acquire funds from this source individuals are required to have high credit
score which is the major drawback of this source of fund.
Business plan for growth along with financial information and strategic objectives for scaling up
a business
In order to conduct business operation, it is important for an organisation to develop goals
and objectives in a systematic manner. In expansion business plan plays important role through
which company can operate all the activities the help of proper plan in a systematic and effective
manner. The Little One Coffee Shop is aiming to expand their business services in Germany for
this is mentioned below a business plan is being given:
Concept of Business
It is defined as a procedure which include information associated to vision, services,
audience, product mission etc. This following concept has been raised by The Little One Coffee
Shop.
Organisation Product and Service:
The Little One Coffee Shop offers services associated with muffins coffee and creams. In
this product mainly depends upon consumer customisation option in which they satisfy
consumers requirement according to their needs.
Mission and Vision of Firm:
Main mission for which coffee shop is operating its business services is maintaining and
developing image of company in market segment by offering high quality services and products
to consumers in most affordable pricing segment. Furthermore, vision of this organisation is to
render high quality services and goods as per consumer requirements.
Operational Strategy
In order to successfully expand in the proper use of Germany equity recapitalisation.
undertaken the use of consumer driven strategy in which the design services and products in
order to fulfil expectation of consumers. With the help of this strategy coffee shop is aiming
towards attracting attention of consumers towards their affordable services and products.
Unique Selling Proposition
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In this The Little One Coffee Shop will undertake advantage of equity recapitalisation. In
this organisation can sell particular section of business to others for certain period of time which
can be further fulfilled by legal agreement.
Strategic Objectives
 To offer highly qualitative services and products to consumers to fulfil business
objectives & goals within appropriate way.
 To enter in new market segment with their existent services with the help of invention
within a period of 5 months and acquire 20% of business sales.
Market Analysis
For market analysis, management of The Little One Coffee Shop is making use of SWOT
analysis which is shown below:
Strengths Weaknesses
 Main strength of The Little One Coffee
Shop is that, they have talented and
hardworking workforce.
 The Little One Coffee Shop offer high
quality products and services to
customers in affordable price segment.
 Major weakness of The Little One
Coffee Shop is that, they have less
investment in digital marketing.
 The Little One Coffee Shop have less
marketing channels comparatively to
other rivals.
Opportunities Threats
 The Little One Coffee Shop is having
opportunity to invest in digital
marketing through which they can
conduct cost effective marketing
operations.
 For more growth The Little One Coffee
Shop have opportunity to expand in
 Major threat that can affect The Little
One Coffee Shop growth is increase in
number of competitors in industry.
 Increase in international and national
laws in terms of conducting business
activities.
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new market segment.
Financial Plan
Pre-launch cash budget
s
Cash Flow budget
Particulars Jan Feb Mar Apr May June July
Cash inflows
Investment 8000
Credit sales 2000 3000 3000 4500 1500 3500 4200
Total inflows 10000 3000 3000 4500 1500 3500 4200
Cash outflows
Fixed: Equipment’s 2000 2500 1500 2000 1200 1500 800
Variable: Direct material 300 300 200 300 150 500 300
Total outflows 2300 2800 1700 2300 1350 2000 1100
Net cash flow 7700 200 1300 2200 150 1500 3100
Opening balance 0 7700 7900 9200 11400 11500 13000
closing balance 7700 7900 9200 11400 11550 13000 16100
August September October November December Jan
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1000 2000 800 1200 1500 3600
1000 2000 800 1200 1500 3600
200 300 100 600 300 2000
400 500 100 100 400 300
600 800 200 700 700 2300
400 1200 600 500 800 1300
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Post cash
Particulars Jan Feb Mar Apr
Cash inflows
Investment 8000
Credit sales 1200 2000 7500 3000
Total inflows 9200 2000 7500 3000
Cash outflows
Fixed : Equipment’s 2500 1200 1500 2500
Variable : Direct material 350 300 250 150
Total outflows 2850 1500 1750 2650
Net cash flow 6350 500 5750 350
Opening balance 0 6350 5850 11600
closing balance 6350 5850 11600 11950
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11950 15750 20250 19750 22100 22650 30100 28850
15750 20250 19750 22100 22650 30100 28850 30860
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Monitoring and Control:
Business plan is required to be effectively monitor and control in order to ensure that all
the activities are being executed in a systematic or plant manager. In this every stage is required
to be monitored to accomplish and goals for monitoring and controlling (SHARMA and
TEWARI, 2021). This will help organisation to identify issues on prior status and further
implement strategies to overcome them. In this The Little One Coffee Shop plan to take use of
different monitoring and controlling strategies. The Little One Coffee Shop with the help of
monitoring through regular status a different level by the project team will monitor and control
their business plan.
Exit strategy:
It is defined as a contingency plan that can be executed by an organisation to liquidate a
position in a financial assets or tangible business asset dispose. In terms with present
organisation, they can undertake use of merger and acquisitions as an effective exit strategy. It
will help in taking advantage of economies of scale.
Part 2
Assessment of exit or succession options for a small business along with their benefits and
drawbacks
Secession and exit options allow business organisation to evaluate whether to conduct
business operations. In this business can exit if they go through number of issues in their
business operations then they have a systematic process to dissolve or close business activities
from a market segment. While in order to enhance market share there are different type of
succession options available in terms with issues associated to production, quality and
employee’s behaviour. In this it is essential for them to take advantage of effective strategy in
order to survive in market segment.
Joint Venture:
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This is a form of strategy in which two organisations combine their resources to fulfil
common objective. In this there are certain regulation legal laws and rules which is essential for
organisation to abide (Susanto, 2021). In this strategy that The Little One Coffee Shop can share
their resources with other company in order to maximize business growth and market share.
However, there are certain benefits and drawbacks associated to this strategy being discussed.
Benefits:
 This method allows parties to access resources of each other without spending excessive
amount of additional capital.
 In this involved companies have authority to maintain their own identity and can later
easily return to normal business operations once joint venture is completed.
Drawback:
 The major drawback of this strategy is that lack of communication between partners will
lead both the parties to face huge loss.
Merger:
This is a situation in which two organisations who are already existing follow a single
legal documentation. In this method organisation requires specific profits and confirm that make
expansion of their business activities in a market segment. In this method The Little One Coffee
Shop by merging with other coffee shop in market segment can gain more competitive
advancements and market share.
Benefits:
 Merger allow organisation to increase market share in which new company gain larger
market share and can get ahead in the competition.
 The Other advantage of this strategy is that it reduces the cost of operation and helps
business to grow in new geographic area in effective manner.
Drawback:
 Main disadvantage with this method results in reducing competition and creates gap in
communication.
From the analysis of above exit or succession option for small scale business it has been
identified that, in order to expand business in Germany the most beneficial strategy that The
Little One Coffee Shop can gain is merger, as this strategy will not only allow to increase its
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market share and can conducted business operations in cost effective manner and can get ahead
in the competition (Zegarra-Mendez, 2021). Along with this merger allow The Little One Coffee
Shop to have easy access of talent. It also helps in reducing diversification of risk and benefit
coffee shop to reduce cost and overhead through share marketing project.
CONCLUSION
According to the above-mentioned report it has been concluded that in order to perform
business operations in a systematic manner a growth plan plays an essential role. It is a strategic
business activity through which business owner can practically plan and can organise goals with
target strategies. Business plan plays important role through which organisation can utilise their
time as well as other resources in cost effective manner. From this report it has been identified
that in order to conduct business activities financial planning is essential in which organisation
while evaluating the proper source of finance can overcome many issues. Along with this, from
this report it has been identified that exit of succession strategy is important for small business,
as this will allow them to further expand their business operations or exit if they are facing any
form of problem in business environment.
REFERENCES
Books and Journals
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Chatterjee, S and et. al., 2021. Digital transformation and entrepreneurship process in SMEs of
India: a moderating role of adoption of AI-CRM capability and strategic
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innovation. A tailored dynamic business modelling approach. Journal of Business
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Marsudi, A.S. and Pambudi, R., 2021. The Effect of Enterprise Resource Planning (ERP) on
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Susanto, A.B and et. al.,2021. Enhance SMEs Performance through Implementing Quality
Strategic Leadership, Trust in Leader, Strategic Planning. Quality-Access to Success,
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Zegarra-Mendez, H and et. al., 2021, February. Lean Manufacturing for Production Management
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