Business Growth Strategies for Ozone Coffee Roasters

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Unit- 42: Planning for Growth

Contents
Introduction......................................................................................................................................3
Part 1- Investing in Future...............................................................................................................4
LO1 Analyze the key considerations SMEs should consider when evaluating growth
opportunities....................................................................................................................................4
P1 Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organisational context..........................................................................4
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix....................7
M1 Discuss the options for growth using a range of analytical frameworks to demonstrate the
understanding of competitive advantage within an organizational context...............................10
D1 Critically evaluate specific options and pathways for growth, taking into account the risks
of each option and how they can be mitigated...........................................................................10
LO2 Assess the various methods through which organizations access funding and when to use
different types of funding..............................................................................................................11
P3 Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source..........................................................................................................11
M2 Evaluate potential sources of funding and justification for the adoption of an appropriate
source of funding for a given organizational context................................................................13
D2 Critically evaluate potential sources of funding with justified argument for the adoption of
a particular source or combination of sources, based on organizational needs.........................13
LO3 Develop a business plan (including financials) and communicate how you intend scaling up
a business.......................................................................................................................................14
P4 Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business...........................................................................................14
P5 Assess exit or succession options for a small business explaining the benefits and
drawbacks of each option...........................................................................................................16
So these are the options available for the owner of the organization Ozone Coffee Roasters to
exit their business.......................................................................................................................17
M4 Evaluate exit or succession options for a small business comparing and contrasting the
options and making valid recommendations..............................................................................18
D4 Provide a critical evaluation of the exit or succession options for small business and decide
an appropriate course of action with justified recommendations to support implementation.. .18
Conclusion.....................................................................................................................................19
References......................................................................................................................................20

Introduction
Starting a small business requires a good innovative idea, business planning or strategies, a good
or suitable funding option and one more thing that every investor looks for is exit options from
the business. So the report describes all these points and covers all options for small business
from starting it to succession or exit. These all points are described within an organizational
context and the selected organization is Ozone Coffee Roasters. The Ozone Coffee Roasters is a
growing organization of London, UK, that serves coffee with providing some other food options.
With the increasing competitiveness of the market, a good strategy or plan for the growth of an
organization is crucial for surviving in the market. The approach or strategy of an organization
decides the growth and productivity of the organization. So for any organization, it is important
to have a good strategy by analyzing the growth opportunity and competitive in the market. So
the developed report covered growth options and opportunities, developed a business plan
including financial and strategic objective and shows the succession and exit options for the
organization Ozone Coffee Roasters.

Part 1- Investing in Future
LO1 Analyze the key considerations SMEs should consider when evaluating growth
opportunities
P1 Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organizational context.
The key considerations which are required to be considered for the growth opportunities of
SMEs are detailed below:
 Competitive advantage: This is one of the key consideration which SME should consider
while looking for the growth opportunity because with the implementation of competitive
advantage the SME can distinguish themselves from their competitors and improve the focus
of the company by lowering down the prices of the products.
The competitive advantage can be understood better with the application of Porter’s Theory.
According to this theory the SME can be capable enough to achieve the sustainable competitive
advantage by simply using the three primary ways which involve:
 Cost leadership
 Differentiation
 Cost focus
 Differentiation focus
Figure 1: Porter's Model

By using Porter’s model the SME can be capable enough of providing the sustainable
competitive advantage to the other competitors. The porter’s model consists of the strategies
which can be used by the Ozone Coffee Roasters.
Cost leadership: It involves providing the customers with the services at reasonable prices by
making continuous improvements in operations.
Differentiation: It involves providing the customers with the services which are different and
unique from the other competitive companies.
Focus: It involves that the company should be focusing on the specific target markets which are
eventually better than other customers.
PESTEL Analysis: It is a strategic business tool or market research tool which is used by SME
identification and analysis of opportunities by monitoring the external factors which are affecting
the business growth and success. Given below are the external factors:
 Political Factors in evaluating growth opportunities
The political environment can impact the business in many ways as it can add to a major risk
factor in the business growth and success therefore, it is required to be evaluated by SME in
advance. These factors involve:
 Political decisions influencing the social-cultural environment.
 Political decisions leading to the development of new technology
 The political decision can affect the economic environment.
 Increase and decrease in taxes.
These are some of the factors that might lead to hindrance in the successful growth of SME.
 Economic Factors: These are the factors which are related to the economy and are affecting
the growth of SME. It involves economic issues like consumer confidence, economic growth,
and business cycle and unemployment trends.
 Social Factors: These factors involve ethical, cultural and demographic factors which might
affect the growth of SMEs. The social issues can involve safety, education, religion, belief,
and age.
 Technological Factors: These factors involve providing technological advances to SME
which involve R&D (research and development), technological upgrades, and technology
lifecycle.
 Environmental Factors: These factors involve the factors related to economy and
geographical aspects keeping in mind the environment is not harmed with the business and
green ecological products and developed.
 Legal Factors Legal factors involves laws and regulations framed by the government which
can have positive as well as a negative impact on business. It involves tax regulations,
employment law, advertising standards.

Figure 2: PESTLE Analysis

P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.
Ansoff growth vector matrix is basically a matrix which consists of four strategies which are
related to the growth of the company that will be helpful in the achievement of the growth in the
existing products. This matrix is basically aiming to increase the share of the market by the
company.
Figure 3: Ansoff’ growth vector Matrix
This growth matrix can be helpful for the evaluation of growth opportunities for SMEs as it is
helpful as:
 Market penetration: It is the strategy to sell the existing product in the existing market with
improved focus.
Advantages:
It is helpful in improving the loyalty of the customers.
It is helpful in increasing market share.
It aims to improve overall customer value.
Disadvantages:
Profit margins are lowered down.
There is a risk related to a pricing war.
Company’s image might be harmed.

 Market development: It is helpful in the development of new markets which will be selling
the products to new customers.
Advantages:
Development of new markets.
Expansion of business.
Revenue is increased
Disadvantages
Evolving markets
Increased cost
Risky strategy
 Product development: The new coffee or new food item can be added with existing services
that will attract the consumers.
Advantages:
Attract new customers
Company is growing
Improvement in existing products.
Disadvantages:
Involvement of extra cost
Increased competition
Risk involvement
 Diversification: It is helpful in bringing out diversification in current business in related or
unrelated business.
This strategy is helpful for SME as it can be helpful for the business to identify the strategy
which will be best suitable for the company growth and also the strategy should be profitable at
the same time.
Advantages
Risk of losses is minimized.
Reducing the losses.
Maximum returns
Disadvantages

Loss in the diversified entity
The requirement of new skill sets
Growth opportunity is limited.
For Ozone coffee Roasters, among this strategy, the best two strategies would be product
development and market penetration where the café can try to expand the product selling by
inventing new types of food beverages along with coffee and also addition market penetration
can be done to attract the customers.

M1 Discuss the options for growth using a range of analytical frameworks to demonstrate
the understanding of competitive advantage within an organizational context.
The range of frameworks which can be used to demonstrate the understanding of the competitive
advantage within an organization includes PESTEL analysis, Ansoff’s vector matrix and Porter’s
model. The detail discussion of these frameworks is done in the above section and these
strategies or frameworks are very much helpful for the performance evaluation and success of
the small and medium enterprises as it involves the phases and steps which can be followed by
the SME to provide a competitive advantage to other companies and perform extraordinarily.
D1 Critically evaluate specific options and pathways for growth, taking into account the
risks of each option and how they can be mitigated.
The specific options which can be taken into consideration for mitigating the risk level rising
because of the growth in business include:
 Finding employees with special skills and capabilities who are talented enough.
 Management of cash flow should be monitored.
 Proper investment in technology should be done.
 The global presence of the company should be improved.
 Best practices must be followed by the company which will lead to success.

LO2 Assess the various methods through which organizations access funding and when
to use different types of funding.
P3 Assess the potential sources of funding available to businesses and discuss the benefits
and drawbacks of each source.
Funding is really essential for the survival of the business because without required funding the
company will have to face the serious consequences and will also have to bear the weight of the
debts. Basically, funding is considered as a fuel which is essential for the smooth running of the
business. There are various sources of raising funds, it is completely dependent on the company
from which source the company is asking for the funds. Given below there will be a discussion
about the sources of funding available to business by detailing its advantages and disadvantages.
Bank Loan: It is a source where the company can simply ask for a loan from the banks by
providing them with the required rate of interest on the money borrowed from the banks. Also,
company providers’ assurance to the banks that all the principal amount and interest will be
returned back.
Advantages
 Convenient and easily accessible: This is considered as an easy method for raising funds
because there are continuous depositing and withdrawing of the amount in the banks.
 Providing multiple options for loans: Banks are providing multiple options to businesses
like short term loans, long term loans and other types of loans.
 A bank loan is offering tax benefits: Bank loan is offering additional tax benefits and relief
from taxed to business firms.
Disadvantages
 The application process is lengthy: The application process for the bank loan is quite
lengthy.
 Preference given to existing business: The banks are providing the preference to the
existing business firms which is not a good thing for new SMEs.
 The entire amount is not granted: The entire amount applied for the loan doesn’t granted at
once. Banks are only granting the 70 to 80% of the total amount.
A loan from friends and relatives: Borrowing money from friends and families is also one of
the ways to raise the funds in order to run the business. Though this situation of asking for
money from friends and family is quite embarrassing it is also at the same time the easiest and
the quickest source.
Advantages
 Flexibility: There is flexibility in asking the money from friends and family. Also, there is
no specific repayment time period. Also, the interest rate is also quite low in such cases.
 Easy set up: It is very easy to set up as friends and families are well aware of your financial
conditions.
 Minimal charges: The interest rate charged is not applicable or is very low.
Disadvantages