Little Wonders Cafe: Growth Strategy and Exit Plan - Unit 42 Report

This report outlines a growth plan for Little Wonders Cafe, a small coffee shop in London, focusing on strategic expansion and competitive advantage. It begins by analyzing key considerations for evaluating growth opportunities using PESTLE analysis and Porter's generic strategies. The report then evaluates growth opportunities using Ansoff's growth matrix, recommending product and market development strategies. It assesses potential funding sources, highlighting benefits and drawbacks of each, including owner's capital, retained profits, loans, and venture capitalists. The report includes a business plan incorporating financial information and strategic objectives for scaling up the business. Finally, it discusses exit and succession options, weighing their respective advantages and disadvantages. This comprehensive analysis aims to provide Little Wonders Cafe with a roadmap for sustainable growth and long-term success. Find more solved assignments and past papers on Desklib.

Planning for growth

Contents
INTRODUCTION.................................................................................................................................3
MAIN BODY........................................................................................................................................3
1.Analysing key considerations for evaluating growth opportunities and justify these considerations
within the company...........................................................................................................................3
2.Evaluating the opportunities for growth applying Ansoff’s growth matrix.....................................5
3. Assessing the potential sources of funding for organization with its benefits and drawbacks.......7
4. Business plan for growth which includes financial information and strategic objectives for
scaling up business..........................................................................................................................10
5. Exit and succession option for a small business with its benefits and drawbacks........................13
CONCLUSION...................................................................................................................................15
REFERENCES....................................................................................................................................17

INTRODUCTION
Planning for growth or growth planning refers to the strategic plan or the business
activities that makes the owners of the business to plan and have the track of the growth and
revenue of the firm. It makes the organization to allocate the limited resources and can have
changes and save the resources in order to grow at the good rate. The benefit of having the
planning for growth is to make the company to know about its contingencies and helps them
in order to overcome from them. This report is based on the Little wonders Café which is
situated in London. It is basically the small restaurant or the coffee shop that has to bring
some new food in their coffee shop. The organization has the good planning in order to grow
in the competitive market. The current report will outline the basis of the competitive
advantage for the business and will critically evaluate the opportunities that are available to
the organization. This report will also outline the Ansoff growth matrix in order to make the
firm grow in the market. Further with this, the report will evaluate the different sources of
funding that are available to the organization with its benefits and drawbacks. It will include
the business plan for the organization in order to bring something new in the market. At last,
this report will outline the different exit and succession option by stating its benefits and
drawbacks.
MAIN BODY
1.Analysing key considerations for evaluating growth opportunities and justify these
considerations within the company.
In today’s business environment, it is important to understand the factors which can
impact business operations and Influence the customer buying behaviour. By using effective

strategy, company can easily find out the strength and weaknesses and also evaluate its
opportunities for growth and threat which can impact negatively.
Source: (PESTLE analysis, 2022)
PESTEL analysis- it is a strategic method used by company to evaluate the external
factors of business environment by breaking down growth opportunities and risks into
various elements which includes:
Political- when company implement any decision they first look at the policies made by
government. Political factors like trade restrictions, tariffs and tax policy can influence the
business operations (Achinas and et.al., 2019). Government encourages free business trading
through different types of schemes. Before implementing any kind of decision Little Wonder
cafe, UK has to go through policies made by government and keep track on changing policies
which can impact core operations.
Economic- It has been said that economic condition can influence the business operation
and buying behaviour of people. If the customer is not having enough income they cannot
make purchase. Economic factors take into account the various aspects of the economy. This
can impact the business operations which includes inflation rate, unemployment rates,

economic growth rates and interest rates. It is suggested to keep track on changing economic
factors to work effectively.
Social- Due to changing trends in the market, there can be change in supply and demand
of the products or services. The social factors refer to the changing trends in the customer
oriented market which can influence the buying behaviour of people. Hence, increase in the
population will increase the sales of company. It has been noted that every client has different
taste and preferences which needs to be taken into consideration while implementing new
strategies.
Technological- Nowadays, due to rapid change in the technology and innovation the
company has to quickly change its techniques (Christodoulou and Cullinane, 2019). If the
company is not following new innovative way, then they cannot achieve goals. However, it
has created pressure on companies to keep update their technology and invest more in that.
On the positive side, it is the biggest opportunity for cited organisation to adopt new
technology and use research and development to meet its goals and expand business globally.
For example- Little Wonder cafe, UK can promote its brand image through social media,
Instagram, Facebook, YouTube and marketing campaigns and other distribution channels.
Environmental- In today’s world people are more health and environment conscious,
they want healthy food, eco-friendly products or services and focus on maintaining
sustainability on the world. Nowadays, many company is promoting and encouraging people
to use organic food items, reduce food wastage and control pollution through measure steps.
For example- CSR initiatives include carbon footprint reduction efforts and energy sources.
Before implementing any new product line firm needs to focus on this factor and maintain
sustainability. This factor is an opportunity for the business growth.
Legal- any change in legal factors such as labour laws, licenses and permission, industry
rules and regulation, intellectual property can impact its business operations. Before
implementing any important strategy, the firm needs to go through health, hygiene, labour
laws and safety standards.
In order to gain competitive advantages and achieve business growth opportunity the
needs to utilize cost leadership strategy of porter’s generic strategies (Firoz Suleman,
Rashidirad and Firoz Suleman, 2019). This strategy says to increase profit margins by
reducing cost of products or services while charging industry average prices. They can easily

increase market share by charging low and affordable price to satisfy the needs of customers
and make a reasonable profit on each sale to maintain stability.
2.Evaluating the opportunities for growth applying Ansoff’s growth matrix.
Ansoff matrix is a method used by companies to plan and analyse their growth strategies
and maintain good position in the market. If company is planning to expand its business, then
they can take this method into account to successfully grow their business in the competitive
world. It is divide into 4 strategies:
Market penetration- In this strategy, the firm sells its existing goods or services to
existing markets. This strategy is less risky among all the other options available. By using
this method, business can increase its market share for its current products. By using past
approaches and detailed information about product company can design in a more effective
way. They can stimulate current customers to buy more with the help of effective marketing
campaigns, advertisement, schemes and lowering the prices. They can also encourage clients
to buy and use the goods.
Market development- This type of strategy is used by company when they want to sell
their existing products to new markets. They can expand its business in foreign countries or
any other region (Khajezadeh and et.al., 2019). By targeting different segments, the can find
out new potential markets via market research. With the help of distribution channels and
new marketing strategy the firm will be able to improve its growth opportunities. By
analysing PESTLE, they Little Wonder cafe, UK can find out factors which can impact its
business and know about threat and opportunity through it.
Product development- Here, the firm seek to launch new product to the existing market
by having several new options for new goods. With the change in innovation and technology,
the firm has to develop new product line to attract customers. Firstly, they need to conduct
market research in order to understand customer needs and secondly drive innovation and
develop new product line with the help of talented workforce.
Diversification- This is the riskiest strategy among all the above mentioned options. The
first risk concerns the uncertainty about the new product acceptance. Nowadays, customers
are more concern about product quality and they may be unwilling to try goods which is
newly launched (Suciati, Kurniawan and Iswahyudin, 2020). The reason behind this, they
have no past experience and fear to lose money. Due to heavy competition in the market, the

firm may not be able to achieve success. therefore, before implementing this strategy they
have to do deep research to provide deeper insights into new markets.
By evaluating the study, it has been noted that strategies like product development
and market development will be beneficial for Little Wonder cafe, UK.
3. Assessing the potential sources of funding for organization with its benefits and drawbacks
Sources of funding refer to the funds which helps the company to increase its capital
and productivity in the market. The companies always seek for having the funding from the
market as it helps the company increase its profitability and productivity. The main sources
of funding are the retained earnings, debt capital and equity capital (Bocquet, Cotterlaz-
Rannard and Ferrary, 2020). The business uses its retained earnings in order to expand its
market or to provide the dividends to their shareholders. The organization used to increase its
debt capital by using borrowing from the banks or by the private individuals. Business use to
obtain the equity capital by taking the ownership from the equity investors. There are various
sources of funding that are available to the organization with its benefits and drawbacks are
described below:
Sources of funding Advantages Disadvantages
Owners capital 1. It is very quick and
convenient method.
2. In this owner need nit
to borrow capital.
3. As no borrowing of
money so there is no
need of paying the
interest to another
party.
1. The owners may not
have the enough
savings or cash in
order to expand
business.
2. As there is lack of
cash it decreases the
productivity of
business.
Retained profits 1. It is very quick and
convenient method.
2. It is very easy method
to have the money.
3. As no borrowing of
cash so there is no
need of paying the
1. As there are no
retained earning it
will be difficult for
company to survive.
2. No cash for the
unforeseen problems
that may arise in the

interest to another
party (Sági and
Juhász, 2019).
future.
Family and friends 1. By taking cash from
family and friends it
makes the person to
have money at low
interest rates.
2. Less paper work is
there in order to take
money from friends
and family.
1. As due to less paper
work the person may
cheat in order to take
interest from another
party.
2. There may be
happening of the
conflicts and
arguments between
the family and
friends.
Bank loan 1. This is the very quick
and easy method of
accessing the money
2. The organization can
get good amount of
loan at any time.
1. The amount of
interest is high as
compare from interest
taken by family and
friends.
2. It is difficult for small
and new business to
have money from
banks.
3. Organization has to
keep the assets in
order to take loan
from bank.
Overdraft 1. This is also the quick
and easy method of
withdrawing money
from bank.
2. It allows the
organization to
withdraw money in
1. The banks used to
charge the high
interest rate in order
to withdraw money
more than the
available balance in
account (Pakhnenko,

the time of
emergency.
2019).
2. It is only provided for
the short- term only.
Venture capitalist 1. The small business
can easily acquire the
cash.
2. The small business
has potential to raise
the large amount
money in the
business.
3. The venture capital
may help the
organization to
provide those cash.
1. The owners of the
business used to give
part of their business
to venture capitalist.
2. The both companies
has different vision
and opinion about the
market.
Partnership 1. By having the
partnership with
another helps the
organization to have
quick assess of
capital.
2. The company has to
pay no interest to the
partners.
1. Owner has to give the
part of their business
to the partners of their
business.
2. The both parties has
different mission and
vision for the
company.
3. There may be
happening of the
conflicts among the
partners.

Share issue 1. This is also the best
way to acquire the
cash easily and
quickly.
2. In order to acquire the
money no interest is
payable.
1. The business used to
give the part and
share of the business.
2. The shareholders
used to receive the
dividends on the
share capital amount.
Hire purchase 1. The company can
take the expensive
assist and new
technology.
2. The amount can be
given in the parts.
3. New and innovative
technology can be
acquired by the
business (Balloch and
Koby, 2019).
1. High interest is
charged on the hire
purchase goods.
2. The assets is of owner
until the last and final
payment is paid by
the owner.
3. The owner has no
ownership till the last
payment.
4. Business plan for growth which includes financial information and strategic objectives for
scaling up business
Scaling up a business refers to the upraising and setting the steps to enable and
support the growth in the entity. This refers that the company has ability to grow without
getting hindrance (Abdel-Basset, Mohamed and Smarandache, 2018). Scaling up is defined
as the growth of the company in order to have the greater size and have the greater extent.
The business plan for the little wonder Café which is situated in London is described as
below:
Overview: The new organization is the little wonder café which is the small company
in the London. As it is the small company it has to make its place in the market and this helps
the organization grow in the competitive market.

Vision: The vision refers to the future image of the company which makes the
company to know about that what business has to do in the future time. The organization
should have the clear and focused vision in order to meet and achieve the goals of the
company.
Mission: The mission is the short- term statement of the firm which used to describe
about the action that the company take in order to have smooth flow in the competitive
market. It is basically the short-term objective of the entity and the organization has mission
to grow in the market and gain the competitive advantage.
Objectives: 1.The objective of the cited entity is to increase be increased by 20% of
the present year.
2. The organization has to increase its market share by 20%.
3. The company has to raise its revenue by the 40% in the coming year.
Operational plans: The operational plan refers to the documents which use to outline
the main work, activities and targets of the firm. These plans are undertake during the period
of time which is basically of the one year (Hatefi, 2018). The small organization must use the
single- use plan this will outline expenses and activities of the cited business.
SWOT analysis: The SWOT analysis refers to the business strengths, weaknesses,
opportunities and threats. The strengths and weaknesses are basically the internal to the
company and opportunities and threats are the external factors to the company. The SWOT
analysis of the small business organization is as follows:
Strengths: The strengths of the company
shows the important points of which helps
the company to have the rapid growth in the
competitive market (5 SWOT Analysis
Examples, 2022).
The strengths of the company are that as it is
the small organization it can attract the
customers by lowering the price of the
product as compare with another.
Weaknesses: These are the negative points
that decrease the profitability of company.
The negative point for the company it has to
provide its products at the decreasing rate in
order to attract the customers by which it
decreases the profitability of the company.
Opportunities: As it is the small restaurants Threats: By introducing new varieties of

in UK the company has opportunity to
introduce new variety of food product which
attracts the customers in order to try
something new in the market.
food product it is the threat that sometimes
people does not go with the changes its taste
and have the earlier products over the new
products.
Marketing mix: The marketing mix refers to the mix which includes the areas as the
overall planning of the market in order to bring new product. It includes the 4p’ s that are
product, price, place and promotion. The marketing mix of the small business organization is
described as follows:
Product- It refers to the goods or services that the company provides to their
customers. The new products that the company is launching the strawberry shake with ice
cream in the market.
Price: The price refers to the amount or value of that product that customers pay for
the product in the restaurant (Cheng, and et.al., 2021). The decided price of the new product
is so nominal affordable which is just for 400 for two shakes.
Product: The organization must take the appropriate decision in order to decide the
place of delivering the new products. As this products cannot be transported as it will be not
be packed so products so customers can have this product at that firm only.
Promotion: The organization can do promotion by having the advertisements on the
television, prints or on the social media platforms. It makes the customers to aware and has
knowledge about the new products in the competitive market.
Risk matrix: Risk matrix is defined as the matrix that is helps he company during the
risk assessment in order to assess the level of risk that may be face by company. This must be
assessed by the organization in order to produce the new product. The new product of the
company is having the high risk as there are many other firms and coffee shop who used to
sell the same type of products in the UK.
STP approach: This approach helps the organization to have the target market and
have position in order to offer its new and innovative product.