Prufrock Coffee: Strategic Growth Planning and Business Case

This report provides a comprehensive analysis of Prufrock Coffee's growth planning, focusing on competitive advantages, available opportunities, and strategic options. It utilizes the Ansoff Growth Matrix to assess market penetration, product development, market development, and diversification strategies, evaluating the risks associated with each. The report critically evaluates financing options for growth, including potential funding sources, and examines the current business situation, developing a detailed business case for investors using entrepreneurial strategies. Furthermore, it explores exit and succession options for the business organization, culminating in strategic recommendations for Prufrock Coffee. This detailed examination aims to provide a roadmap for sustainable growth and strategic decision-making within the company.

Unit 42 Planning for Growth

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
The basis of competitive advantage for the business-.................................................................3
The opportunities available to the business-................................................................................4
Applying Ansoff’s growth vector matrix with an assessment of the risk of each option-...........6
Critically evaluating option for financing growth and source of funding:..................................7
Critically evaluating current business situation, using entrepreneurial strategies and developing
detailed business case for investor:..............................................................................................9
Critically evaluating exit or succession option for the business organization:..........................10
Recommendation:......................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Planning for growth is the planning which the organization makes for making the position in the
highly competitive market. This growth planning enables the company to access the performance
as well as identification of the areas and the opportunities which will help company in the
expansion (Spiller, 2022). It is very important for the businesses to do effective planning for the
growth of the company as it provides them the overview of the overall performance of the
company. Prufrock coffee is located in the central London and it was founded by the three coffee
enthusiasts. This company offers the good quality coffee to its customers. This report will
discuss the basis of the competitive advantage for the company as this will help them to know
the basis of the competition as well as the opportunities which are available for the company.
Along with this, this report will also discuss the Ansoff's vector growth matrix and the risk
associated with each of the strategy for analysing the growth of the company. Further, it will
discuss the source of funding as well as the exit and succession options for the company and with
this, this report has also stated the recommendations for the company.
MAIN BODY
The basis of competitive advantage for the business-
Competitive advantage of the company can be created by using the resources as well as
the capabilities for achieving the low cost structure and the different product. The competitive
advantage are divided into wide range such as the cost structure, branding, customer service and
many more. These are considered as the most important basis of the competitive advantage of the
company. The competitive advantage of the Prufrock coffee can be done on the basis such as-
Customer service- When the company serves the good quality customer services to their
customers it helps them in the competitive advantage of the company. The Prufrock coffee
provides the good quality in the market which helps them to provide the competition to its
competitors. It is very important for the companies to provide the good quality services to its
customers as this will help them to have the good reviews by them and this will to increase in the
number of the customers.
Quality of Product- This is also the necessary basis for evaluating the competitive advantage for
the company as the company which is providing the good quality products to the customers helps

in increasing the brand image among the customers. Prufrock company is offering the good
quality products to its customers which helps them in building the trust and loyalty among the
customers and this leads to attract more customers. The company providing this will always stay
ahead in the highly competitive market (Yang, Yu and Liu, 2018).
Resources- The long term success of the company is highly depended on the internal resources
of company. This is the ability of the company to allocate these resources effectively and through
this develop the competitive advantage. The company having the efficient and the skilled human
resources in the company will help them to achieve the goals and objectives easily as by this, the
performance level of the company will be increased. Prufrock company is effectively allocating
the resources as well as the company has the skilled employees which helps them to have the
competitive edge.
Location- The location of this coffee company is very attractive and provides much relaxed
feeling to the customers. The company;s having the attractive locations as compared to the
competitors helps them to stay ahead in the market. Prufrock coffee company has much spacious
and the positive atmosphere which helps the customers feel much relax and enjoys there personal
time. This helps the company to compete in the highly competitive market because the location
of this company much different and effective as compared to the other coffee company.
Hence, the Prufrock company has many good points which will help the company to grow in the
future as well as to provide the competition to its competitors (Ávila, 2022).
The opportunities available to the business-
The opportunities of the company can be evaluated by using the several growth matrix. It
is very important and necessary for the companies to analyse their opportunities which will help
them to grow because this will help them to adopt them and effectively grow in the future.
Prufrock company's growth opportunities can be analysed by using the different growth
strategies such as-
Boston Consulting Group Matrix-
Boston Consulting Group Matrix also known as the product Portfolio Matrix. IT can be
defined as the business tool of the planning which is used by the companies to evaluate the
strategic positions of the brand portfolio of the company. This matrix is considered as the most
popular method for the analysis of the portfolios. This matrix is used by the companies to
compare the sales of the products with the sales of the company which is leading in the market

and having the same product (Birafane, Liu and Khalikov, 2020). Boston Consulting Group
Matrix is very popular tool which is used in the marketing as well as in the business strategy.
There are four quadrants in the BCG matrix such as-
Question Marks- These are the products which has the high market growth with the low market
share. The products of the Prufrock company has market growth as they are offering the good
quality services as well as the good quality product.
Stars- This quadrant of the stars includes the product which has the high market growth with the
high market share. The products of the Prufrock company are the market leader products because
they are growing rapidly.
Dogs- These are the products which are growing very slowly and the products also have her low
market share. The products of the Prufrock Coffee company are growing, so they do not come in
this quadrant.
Cash Cows- These are the products which are growing very slowly, and they have the high
market share. These products are also considered as the leaders in the market share.
GE-McKinsey Matrix-
This is the portfolio analysis which is used by the companies for the corporate strategy
for analysing the strategic business units or the product lines. It is the strategy or the tool which
provides the systematic approach for the businesses for prioritizing the investments in the
business units (Paletta, 2019). This matrix helps the company to determine the attractiveness of
the industry as well as the competitive strength of the company. This matrix is combined by the
two major dimensions such as the industry attractiveness as well as the competitive strength.
This matrix uses the multiple or the variety of the variables for the two dimensions.
Industry Attractiveness- this factors can be defined as the ease for the business units with
which they will be able to earn the profits in the industry. The company must consider the long
term growth potential with this dimension, industry size, profitability of the industry as well as
the entry and exit barriers for the company. Along with this, the company must also ensure about
the power of the supplier's and the buyers and all the other environmental factors which has he
ability to impact the attractiveness of the industry. This dimensions will help the Prufrock coffee
company to represent the profit potential of the industry. The company should consider the long
term change in the industry rather than the short term changes.

Competitive Strength- The company must evaluate the competition in the industry. There are
several factors which will help the business to understand the competitive advantage in the
industry. These are such as the brand awareness, profit margins of the business, customer loyalty
and satisfaction and many more. This dimension will enable the Prufrock coffee to measure the
competition of the business among the rivals as well as the ability of the company to compete in
the industry. The strengths of the company such as the USP as well as the sustainability provides
the company major strength to compete in the highly competitive market.
Partnership and Franchising: Franchising provides an alternative offer to the entrepreneurs for
expanding the business without the equity cost. The franchisee provides the capital which is
needed to open as well as operate the units by enabling or allowing the franchisor in growing
without incurring the debt. Franchising allows the large corporations to branch in other region
and grow the business. Same as this, the partnership also provides the opportunities to the
business for growing as partnership makes the business more competitive and by this they get
more exposure by offering the better product and services as well as the position to the business.
Prufrock Coffee can use this opportunities for growing the business.
Applying Ansoff’s growth vector matrix with an assessment of the risk of each option-
The Ansoff Growth Matrix is also known as the Product or Market Expansion Grid. It is
the tool which is used by the companies to analyse as well as to plan the effective strategies for
the growth of the business. This matrix was developed by the H. Igor Ansoff and it was first
published in the article of the Strategies for Diversification (ISIBOR and GBANDI). This growth
matrix helps the marketers of the organization in evaluating how the company can grow the and
implement the strategies for the growth. This matrix is categories into the four strategies which
enables the company to analyse the risk associated with each strategy for the company.
The four strategies which can be used by the Prufrock coffee to analyse the growth as well as the
risk related to each strategy for the company are such as-
Market Penetration- This strategy is used by the companies to focus on the increasing the sales
of using the existing products to the existing market. The company has the main aim of
increasing the market share by using this strategy that is the market penetration strategy. This
strategy can result in lowering the prices through the overall industry because the companies has
to lower the prices for outmatching the competition.

Product Development- In this strategy, it focuses on the introduction of the new products in the
existing markets. This move has to be taken which involves extensive research and development
as well as of the expansion of the products of the company. This is implemented by the
companies which has the strong understanding of the current market as well as they will provide
the innovative solutions to the company. The risk associated with this strategy is it may result in
unsuccessful of the new product as well as it also increase the costs.
Market Development- This is the strategy which helps the company to enter into the new
market with the existing products of the company. This strategy will be proved successful for the
Prufrock coffee when the technology will be used in the new markets. The following approaches
which are there in the market development strategy are such as catering the different segment of
the customers, entering into the new domestic market while expanding regionally as well as
entering into the foreign markets while expanding internationally. The major risk of this strategy
that the company may face while using as it requires large investments for the expansion of the
business.
Diversification- This is the strategy which involves company entering into the new market by
offering the new product to the customers. This strategy is much riskiest and this risk can be
mitigated by using the related diversification. Prufrock Company using this strategy will offer
them the greatest potential for increasing the revenues as it provides the opportunity for entering
into totally new market. Risk associated with this strategy is that it has the high rusk of the
decisions making as well as the financial risk as the returns may be reduces which are to be
provided to the stakeholders.
Prufrock company must follow the diversification strategy to grow the business as this will offer
them offering new products to the customers and this will directly contribute to the increasing
the revenue of the company.
Critically evaluating option for financing growth and source of funding:
Every business organization need funding to grow and expand their business across
different market, a company raise funds from different option that suit their strategies. When
company focus on growth process then they might look for those funding option that help them
to become financially stable for some period (Staniewski, Szopiński and Awruk, 2016). Prufrock
coffee can raise funds from different source for their expansion process, this coffee shop is
planning to raise funds from the best possible source, these are:

Business loan: business loan is one of the best source to gather funding, company can approach
bank and take business loan that allow them to gain long term financial help. Business loan
simply means company have to provide interest rate to bank according to the loan amount,
Prufrock coffee can raise funds from local bank under terms and condition they will be
providing. This coffee shop should take loan to expand their business because loan is easy to
return and company will gain stability for long duration. There are different type of loan a
company can acquire for example loan from friends and family to avoid interest rate.
Equity capital: Equity capital is another effective way to raise funds in business growth process,
in this company have to provide a portion of ownership to investor who will provide funds.
Prufrock company can raise funds with the help of approaching investor and providing them
certain ownership in return of amount (Dhaliwal and et.al., 2016). Equity funding is safer than
any other type as this allow company to avoid any kind of interest and also get expertise of
investor that help them to boost their growth speed. However, the Prufrock company need to
have effective financial plan to convince investor to invest in the company.
Angel investor: angel investor means those wealthy individual that have enough funds to invest
in the company, these investors examine business plan and invest according to their interest.
Prufrock coffee can approach angel investor for funding as they are one of the best source, these
investors will only provide funds after considering growth of the company (Jalalabadi and et.al.,
2018). If prufrock coffee in growing and have continuous growth then angel investor will show
interest in the company. However, angel investor put some terms and condition that do not suit
strategies of the company and this is quite risky as well.
Personal saving: personal saving is the best way to fund privately own business organization,
sole trader can put their personal saving in business and enjoy long term growth. Prufrock coffee
can invest their surplus profit in company, saving from profit will allow them to avoid reaching
other source (Jimon, Dumiter and Baltes, 2021). It is very clear that personal saving is best
source of funding but there is high risk associated with personal investment process. Investing
saving allow sole trader to enjoy huge profit, this type of investment can be channelized with the
help of strategies that is crafted by sole trader themselves.
Friends & family: Friends and family is great source of funding where sole trader can approach
their friends and family to gather funds, this type of funding is informal where sole trader do not
form any kind of legal contract with friends and family, but they set precaution to regain value if

any risk arrive. Funds from friends and family are low in risk but it is very important to pay back
these loan for building trust and keeping them as an option will allow company to raise funds in
future as well. Prufrock coffee can raise funds from friends and family and enjoy benefit related
to these type of funds.
Trade Credit: The trade credit is an agreement in B2B business where the customer can
purchase or buy the goods without paying any cash up front and can pay the supplier at
later on where the date has been schedules and set. This process or activity also can be used
for the growth and development of the finance and source funding. It will help and support
the business especially the start-up ones and can emerge the growth in definite manner.
Invoice factoring: It is also a way of business where to fund the cash flow by selling the
invoices to the third person or a party such as factory or a company at a discount rate. It
will allow the quick cash to the business and more flexibility for the client to manage the
find in definite order.
Critically evaluating current business situation, using entrepreneurial strategies and
developing detailed business case for investor:
Current situation: Current situation in the London for small business is quite stable because
things are getting normal after COVID-19 impact, SME in London have capacity to survive the
current market situation. Government of the UK have introduced several new policy for the
betterment of small scale, it is right opportunity to develop strategies to become competitive in
the market (Ivanyuk, 2021). Prufrock coffee is stable SME of London, this shop have survived
the worst market condition. Market situation is stable but current situation of business is not
stable, Prufrock coffee need investment to boost their growth. Requirement is investment is
quite high because this coffee shop in located at attractive point which means investment here
would be beneficial.
Entrepreneurial strategies: entrepreneurial strategies allow business to survive current
situation and become stable, there are certain effective strategies that can be adopted by
Prufrock coffee to grow, these are:
 Expanding service tiers: Prufrock coffee have opportunity to expand their service an
move from coffee shop to established restraint, this shop need investment because
expanding service will require budget. Adding new service may allow them to become

competitive and allow investor to gain surplus profit.
 Business expansion: Prufrock coffee can expand their business across nearby towns
and locality, it is the best opportunity investor have while investing in this shop. With
brand name and reputation, Prufrock coffee can survive the different market condition
and allow investor to enjoy surplus profit.
Financial projection: finance play vital role in every business organization, Prufrock coffee is
seek funding from investor. This shop is looking forward to for equity capital funding that allow
investor to gain ownership in the business, with financial projection investor can have a look
upcoming cost, these are:
Assets Amount
Capital $10000
Land & building $5000
Furniture $1000
Other $3000
Total $190000
Cost/item Amount
Expansion $1000
Menu update $500
New furniture/renovation $2000
Other $3000
Total $6500
Critically evaluating exit or succession option for the business organization:
Every business organization face high risk in the market, due to continuous failure,
company may have to adopt exit or succession option. When business fail to survive the market
then they look for best option to reduce up coming impact, company either can sell their assets
and holding and focus on new process, or they can adopt certain other option available (Hawkey,

2017). Prufrock coffee can adopt exist option if they fail to survive the market, there are certain
exist and succession option available with the company, these are:
Merge or acquired: merging business when failed is one of the best succession option that
allow company to reduce loss, this option help company to either perform partnership or work
under management of acquired company (Wennberg, 2021). Prufrock coffee can adopt one of
the option for succession, either to merge with same size business or allow acquiring to manage
business and take half of the profit. Prufrock coffee can adopt these strategies to avoid complete
shut down, they can enjoy stability provided by other business organization. Merging may
impact every key element of business including surplus profit, management and control over
finance. There are certain benefit and drawback of this option, these are:
Benefit:
 Merge and acquisition is one of the best option because this allows company to scale
their growth with other business, Prufrock coffee can scale their business as merger
company will have material and enough supplies.
 Lower labour cost can be seen when a business merge with other same size business,
Prufrock coffee can reduce their labour cost and can focus on only one important part to
survive the market.
Drawback:
 When two businesses merge together, then they have to complete certain legal duties that
cost heavy to both company. Prufrock coffee need to bear cost when merging but this will
safe their business growth as well.
 When two businesses merger, expense associated with deal may rise. Exchanging each
and every thing will cost heavy to business and may even impact business growth.
Liquidate business: Liquidating business is best exist option that allow company to reduce loss
occurring on continuous basis, this simply means company have to sell asset and holding to
recover their loss and end their business in positive manner (Bertschi-Michel, Sieger and
Kammerlander, 2021). Prufrock coffee can adopt this option by selling their assets and holding,
this option is one of the easiest option available that allow company to avoid any kind of cost.
However, this option impact relationship with employee, partner, customer and investor.
Business may not rise again because of this option as consumer and investor will consider this as
failed option. There are certain benefit and drawback of this option, these are:

Benefit:
 Liquidation avoid loss that occur in other type of business option, it is very clear that
company may reduce their cost and even end up in positive manner. Prufrock coffee have
this option to avoid cost occuring in the liquidation.
 When sole trader decide to liquidated their business then there will be no legal process
that stop the process as this is an individual chocice taken by sole trader themselves.
Prufrock coffee will be safe from any kind of legal process.
Drawback:
 When business liquidated, there are more drawbacks than benefit, company will have to
sell all their assets to repay debt. Other assets and may even personal liability will be
considered in liquidation process.
 Legal obligation can be seen when business become liquidate, company or sole trader
have face legal obligation even after liquidating their business and selling assets of the
company.
Management and employee buyout: MEBO means both management and employee take
control over business and jointly manage business process, this type of exist option allow
company to avoid complete shut down (Brill, 2017). Prufrock coffee can adopt this option to
survive the failure, management and key employee will control business and take some part of
the profit. Prufrock coffee may face challenges in managing their business with MEBO because
management and employee will take their own decision and turn company according to their
needs. MEBO is complex that should be ignored by the company.
Passing the business: passing the business means small sole trader will pass company to their
family member or someone they know well, this type of exist can be seen in small scale business
who failed at the starting phase. Prufrock coffee can adopt this option to become stable because
passing business to well known will allow company to get some time and reduce chance of
liquidation (Lemley and McCreary, 2021). This option will allow Prufrock coffee to depend on
person or management they as compared to unknown management team that will cost high to the
business organisation.
Recommendation:
More budget: Budget is one of the most important element company need to consider when
expanding, growth is impacted if company do not have budget because key practice of company