Sleepy Owl Coffee Growth Planning and Exit Strategies

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Investing in the Future and Developing an Exit Plan
Sleepy Owl Coffee

Contents
INTRODUCTION............................................................................................................................. 2
COMPANY OVERVIEW....................................................................................................................3
LO1.................................................................................................................................................4
P1............................................................................................................................................... 4
P2............................................................................................................................................... 8
M1............................................................................................................................................10
LO2............................................................................................................................................... 12
P3............................................................................................................................................. 12
M2............................................................................................................................................14
LO3............................................................................................................................................... 15
P4 and M3................................................................................................................................15
LO4............................................................................................................................................... 18
P5............................................................................................................................................. 18
M4............................................................................................................................................20
CONCLUSION............................................................................................................................... 21
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INTRODUCTION
This report is going to discuss in detail about the growth planning for small businesses. The
SME’s are generally considered as those business companies which have less than 250
employees and the turnover of the company is less than 50 million. The starting sections of the
report are going to be on the different consideration that is necessary for growth planning.
Then the strategies that can be used by the company for growth are explained using Ansoff’s
Growth Vector Matrix. The company chosen for this report is Sleepy Owl Coffee Pvt. Ltd. The
later sections of the report elegantly present a business plan for Sleepy Owl Coffee and analyses
that plan too. This report is also going to present the main funding sources of the company and
analyses them based on their advantages and drawbacks. The last section of the report covers a
keen description of the different exit approaches that the company can use and identification of
the best approach that Sleepy Owl Coffee can use for a successful exit.
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COMPANY OVERVIEW
Sleepy Owl coffee is a private limited non-governmental company. Sleepy Owl Coffee is a Cold
Brew coffee company. The company was started in 2016 with three friends Ashwajeet Singh,
Ajai Thandi and Arman Sood with headquarters in London. The company provides different cold
and hot brew coffee flavors and different innovative products based on coffee. The company
has a highly innovative culture. The company has got funding for €4, 39,425.00. The company
sells its products through online websites and custom orders. There approximately 62
employees working in the company right now (excluding the industry development) (SOC,
2019).
Figure 1 - Sleepy Owl Coffee Logo
Source – SOC, 2019
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LO1
P1
The key considerations for SME’s for evaluating growth opportunities are:
COMPETITIVE ADVANTAGE
Having a competitive advantage in the market helps in developing a strong foundation in the
market and is one of the main pillars for growth for any company. Any company which has
developed a strong competitive advantage will for sure gain more customers and their trust.
The company can evaluate its competitive advantage by the annual turnover generated by
them. The high rate of sales and market share can lead to higher competitive advantage (Pinto,
2010).
PORTER’S GENERIC COMPETITIVE STRATEGIES
Porter’s Generic strategies divide the competitive advantage of the company into two parts.
First one is the cost advantage and the second one is product differentiation advantage
(Tanwar, 2013). Sleepy Owl Coffee follows the product differentiation approach. In product
differentiation, the company presents its innovative and new products differently from the
other competitors to attract customers. The new and the innovative products make the
customer get attracted to the company and in turn, it increases the sales of the company.
Sleepy Owl Coffee launches the new and different variety of coffee products which are totally
different from the coffee products that are already present in the market. The main resources
and capabilities that the company possess for achieving competitive advantages are:
 Resources – Sleepy Owl Coffee has a total of 62 employees that manage different
activities and responsibilities in the business. The company also manages an innovation
and creative development department where highly skilled employees takes part and
develops new products. As an SME the company has enough number of manpower
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which can keep on continuing the innovation and creativeness of the company (Tanwar,
2013).
 Capabilities – The key capability of the company is maintaining the innovative cultures
and efficient utilization of available resources. The company develops and launches the
product in a totally new way which attracts more customers to them (Tanwar, 2013).
Figure 2 - Relationship among Competitive Advantage, Capabilities, and Resources
Source – McDowell et al., 2016
LINKING OF COMPETITIVE ADVANTAGE WITH GROWTH OPPORTUNITIES
The linking of the competitive gains of the company can be analyzed using the PESTEL analysis.
The external factors that affect the company will help in understanding how the competitive
advantage of Sleepy Owl Coffee is helping them to grow.
 Political Factors – The different political factors like government policies and political
stabilities can affect the Sleepy Owl Coffee. Therefore for making growth and
maintaining the competitive advantage, it is necessary to maintain the competitive
advantage the company has to consider the political factors (Rastogi and Trivedi, 2016).
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 Economic Factors – The economic condition of the company affects the sales and the
total revenue that Sleepy Owl Coffee gains. The employment conditions of the country
and the education level directly affects the manpower they hire and in turn their
performance (Rastogi and Trivedi, 2016).
 Social Factors – The social factor can highly influence Sleepy Owl Coffee’s overall
performance and market position. Hence it necessary that the company makes a
positive impact according to the current trends and keep in mind that the products and
the services may not affect the customer's social view in a negative manner.
 Technological Factors – The automation helps Sleepy Owl Coffee to develop more and
the technologies like social media and emails help the company to spread its products
and attract new customers. The main sales of the company occur online. SO clearly,
ignoring the technology can be a big matter of concern for them and staying upgraded
with technology will benefit the company in long terms.
 Environmental Factors – The products of Sleepy Owl Coffee get affected by the climate.
Hence the company should keep track of the pickings and the approaches by which they
can prevent or lower the environmental effect on the products of the company.
 Legal Factors – The laws and regulations like labor law and environmental protection
law may impact the performance and the competitive advantage of the company.
Therefor Sleepy Owl Coffee should keep a keen eye on the changing legal laws and
adopt the changes gradually for making progress (Rastogi and Trivedi, 2016).
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Figure 3 - PESTEL Analysis
Source – Narins, 2017
BCG MATRIX
BCG Matrix stands for Boston Consulting Group Matrix based on the name of the organization
which developed this model. BCG Matrix was introduced in 1970 and is a model that helps the
companies to evaluate their different products (Mohajan, 2017). BCG Matrix may not help to
evaluate the expansion of the new product and it also does not provide the financial
considerations for the products. But it can help the company by adding additional information
to the potential decisions made by the company. There are four main categories in the BCG
Matrix. They are:
 The Cash Cow – The products of Sleepy Owl Coffee brings the most revenue to the
company and helps them to increase the market share within the slow development
environment. The company gets more benefits in comparison to the investments from
these products (Mohajan, 2017).
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 The Dogs – These are the products that have their market share in slow development
and mature industries too. These products bring revenue according to the investments
not little more, not little less (just to keep the company going).
 The Stars – The products of Sleepy Owls Coffee that falls in this category are the ones
which have a big market in share in the fast-growing industry. Such products need huge
investments and proper advertisements so that they can maintain competition with rival
companies.
 The Unknowns – Such products have very less share in the rapid-development industry.
Generally, these are the products of a newly launched company and needs proper
analysis and attention (Mohajan, 2017).
PRODUCT LIFE CYCLE (Stark, 2015)
The introduction of new innovation and the products needs proper management and the
organization of the resources. The approaches for the introduction of the product must
consider things like maturity, introduction, growth and recovery for the product. All these
things are covered by the Product Life Cycle. The Product Life Cycle can help Sleepy Owl Coffee
to launch a new product in the market and manage at each step in order to increase its sales.
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P2
ANSOFF’S GROWTH VECTOR MATRIX
Ansoff’s Growth Vector matrix is a tool or a model that helps to analyze the current market
position of the company's products and then use that information to adapt the right strategy so
that the product sales can be increased and higher revenue can be generated. The Ansoff
matrix presents four different techniques in which the products can be positioned and targeted
in the market (Hussain et al., 2013).
Figure 3: Ansoff Matrix
Source: Unit, 2015
 Market Penetration – The market penetration technique helps Sleepy Owl Coffee to
penetrate the existing market by the existing product of the company (Hussain et al.,
2013). The main objective is to attract more customers in the existing market and
increase sales. This is done by launching creative advertisements, offers, etc. Sleepy Owl
Coffee uses this approach continues to add to new customers.
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 Market Development – This approach is used by Sleepy Owl Coffee for launching an
existing product of the company in a new market like e-commerce websites and direct
store sales. As a growing company, Sleepy Owl Coffee do not focus on using this
approach that much.
 Product Development – In product development the company tries to launch new
products in the existing market of the company. As being a company based on
innovation and creativity, Sleepy Owl Coffee uses this approach too often to introduce
new products in the market.
 Diversification – The riskiest but beneficial approach is to launch a new product directly
in a new market. This process is called diversification (Hussain et al., 2013). The
company develops a totally new market for the product.
The above study and the analysis made this clear that Sleepy owl coffee uses the Product
Development and the Market Penetration too much over the remaining two approaches. This is
because of the small development environment of the company. As the company will gain
enough market shares, they may go for the rest of the two approaches. This will help them to
increase product sales in a planned manner and gradually making the growth of the overall
company.
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M1
Porter’s Generic Competitive strategies can be used to successfully identify the options for
growth that Sleepy Owl Coffee uses for competitive advantage.
PORTER’S GENERIC COMPETITIVE STRATEGIES
These strategies were given by Michel Porter. These strategies can be used to gain a
competitive advantage in the market. These strategies were divided into three parts by Michel
Porter that is based on the cost and the product differentiation (Nandakumar et al., 2011). The
main strategies suggested were Cost Leadership, Focus, and Differentiation. As the name
suggests, the cost leadership strategy is something that the company uses to become the
leader in terms of costs in the market. The company attains this by reducing the cost of the
products. This approach is not well suited to Sleepy Owl Coffee.
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