Vero Caffe: Analyzing Growth Strategies, Funding, and Exit Options

This report analyzes the growth strategies for Vero Caffe, a small coffee shop in London, UK. It begins with an introduction to business planning and then analyzes the considerations for evaluating growth opportunities, including Porter's generic model and PESTLE analysis. The report then applies Ansoff's growth vector matrix to determine market penetration, product development, market development, and diversification strategies suitable for Vero Caffe. It explores various funding sources available to businesses, such as bank loans, and includes a business plan. Finally, it examines exit and succession options, outlining their benefits and drawbacks. The report concludes with a summary of the key findings and provides references.

Planning for Growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Analysis of considerations to evaluate growth opportunities................................................1
P2. Application of Ansoff's growth vector matrix. .....................................................................4
TASK 2............................................................................................................................................6
P3. Sources of funding that are available to business..................................................................6
TASK 3............................................................................................................................................8
P4. Business plan.........................................................................................................................8
TASK 4..........................................................................................................................................13
P5. Exit or succession options with benefits and drawbacks of each........................................13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Planning is characterised as predetermined activity through which an organisation
performs practices to think about future activities for achieving desired results. In other words,
planning is practice of creating along with executing the plan to strengthen business existence
through meeting all objectives in effective ways (Angotti, 2018). All institutions plan various
activities and strategies that aids in achieving sustainable growth addition to development. To
gain understanding of planning for growth, Vero Caffe is selected which is small coffee shop
located at London, UK which serves to satisfy wants of local residents for distinct variant
together with flavours of coffee. Present report covers analysis of considerations that SMEs must
consider while evaluating opportunities of growth. It also includes various methods for accessing
funds, a business plan and ways to exit the business.
TASK 1
P1. Analysis of considerations to evaluate growth opportunities.
Planning is an essential function that includes deciding beforehand by managers to
determine future actions which includes what action, when to take, how to take and why to take
action. It is a concept of managerial action which incarnate skills of anticipating, stimulating and
controlling change' nature and direction. It empowers internal department to execute the tasks to
achieve goals through accurate direction. With proper planning, organisation like Vero Caffe can
attain milestones through emphasising towards developing innovative idea together with
planning things and activities with small number of manpower so that they can scale up the
business as well as satisfy needs of large customer base and retaining them.
Competitive advantage is said to the condition which puts the enterprise in favourable
together with superior position (Arzaghi and et. al., 2017). In this situation, business firms
leverage opportunities which are residing within macro environment for overcoming competitive
pressure. Through using Porter's generic Mode, managers of Vero Caffe can pursue competitive
advantage within selected market scope. The model assist in enhancing capabilities along with
gaining competing advantages over rival firms. It comprises following strategies:
Cost leadership: By adopting this strategy, organisation emphasis to cover large
population unit as well as mass market segment through offering diverse commodities at low
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prices. Vero Caffe can adopt cost leadership strategy for capturing larger segment through which
the entity can scale up its activities and can gain immense profits.
Differentiation leadership: The entity adopting this strategy generally focuses to serve
market through providing premium product quality and keeping high prices. In order to add
valuable attributes as well as targeting higher income group, Vero Caffe can use differentiation
leadership for gaining competitive advantages.
Cost focus: Through this strategy, business entities targets niche market by offering
suitable commodity as per preferences of particular market segment so to gain loyalty. At Vero
Caffe, adopting of cost focus strategy could help in attracting nice market and satisfying their
demand which leads in attaining competitive advantages.
Differentiation focus: With this strategy, business enterprise have aim to differentiate
population of target market segments and offering them distinct and unique products (Channon
and Jalland, 2016). When Vero Caffe have objective of building and maintaining brand name,
differentiation focus should be preferred for strengthening operation as well as sustaining in
market efficaciously.
From the strategies of Porter's generic model, Vero Caffe emphasis on cost leadership
strategy with the assistance of which the company produces premium quality commodities and
offers at low prices that helps in attaining competitive advantage aver rival business.
PESTLE analysis
An organisation exploits growth opportunity by analysing the factors that exists within
macro external environment and accordingly formulate strategies. PESTLE analysis is one of the
framework that help in analysing along with monitoring the surroundings in which the entity
functions. The managers of Vero Caffe can evaluate growth opportunities by focusing on the
factors that may impact revenue, performance and sales volume of company. The dimensions of
PESTLE analysis are analysed underneath:
Political: The factors that are connected with political system and government control are
political factors (Colantoni and et. al., 2016). In UK, there is generally stable political system and
these authorities promote development of small enterprises by providing various opportunities.
In context to Vero Caffe, the company needs to consider the rules, regulation, policies and
governance while performing operations and grab the opportunities and resources so to achieve
success.
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Economic: It includes such factors that are part of economic development such as stages
of business cycle, exchange rate and GDP rate. UK's economy is developing with rapid speed
that provide advantages to various entities such as Vero Caffe for developing business operations
by performing market research to understand economic situations of population and motivating
them to invest findings in the company. It will help in making strategies for perform sustainably
and achieving growth aspects
Social: It includes dynamism in taste and preferences, attitudes and power of consumers
which illustrates that entity needs to emphasis towards wants, needs and preferences of local
people the most. As local residents of UK have needs for tasting variants of coffee and by
offering diverse variants of confectionery products, Vero Caffe can grab attention addition to
interest of large customers that will lead in achieving growth opportunities.
Technological: It is majorly associated with various technological development addition
to innovational levels (Denton, Forsyth and MacLennan, 2017). As technological aspects in UK
are changing and Vero Caffe by adopting latest techniques in making products through machines
and delivering speedily can achieve benefit of developing the business to huge heights.
Legal: In UK, various types of laws are governed by political system that are necessary
to be followed by all types of institutions. Vero Caffe managers needs to abides the workings
with legislations so to sustain interest of their stakeholders. For example, performing operations
with accommodating legislation of health and safety can help in providing welfare to all.
Environmental: The factors that impacts practices of organisation in favourable or
unfavourable ways are environmental factors. It is important for management team of Vero Caffe
to work in such manner that they cannot harm the environmental surroundings. The entity needs
to undertake measures for reducing wastage and use reusable cups while offering distinct coffee
variants. Through working with green operation, such coffee shop gains benefit of achieving
growth opportunities.
Conclusion: the above discussion concluded that political interference, changes in
economical aspects, technological development, legislations and customer preferences are key
factors which requires effective consideration at the time evaluating growth opportunities for
Vero Caffe.
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P2. Application of Ansoff's growth vector matrix.
Ansoff's Growth Matrix: It is one of strategic planning tool that assist senior managers
and marketers to frame strategies in context to future growth (Gallent and Tewdwr-Jones, 2018).
It promotes business growth through various ways such as extending product portfolio or wide
spreading existing offerings within distant geographical locations. Following strategies are part
of the model:
Market penetration: The strategy in which business units emphasis to enhance sales
volume of current commodities within existing market. It can be done through decreasing current
prices, increasing distribution efforts and acquiring competitors. This strategy can be opted by
Vero Caffe for expanding sales volumes and driving customer satisfaction for beverage
commodities.
Advantages:
 With this strategy, sales volume are enhanced by offering variant of coffee products
within existing market by Vero Caffe.
 It improves business image as existing products are promoted with new tactics in existing
market.
 It also benefits in improving customer base by providing existing products at low prices.
Disadvantages:
 The strategy fails to provide wide development opportunities to the company as it only
improves workings in existing market.
 Intense competitive rivalry within existing market can hamper attracting wide customers
towards Vero Caffe.
 Indulging in market penetration have possibilities to affect level of organisational
innovation.
Product development: In this, new products are developed and offered to existing
market. It is done through research and development, acquiring rivals commodities and strategic
partnership (Gualini, 2015). By opting product development strategy, Vero Caffe can expand its
existing portfolio of commodities.
Advantages:
 By enhancing product range as per changing wants of customers can benefit Vero Caffe
to build desirable image and position in existing market.
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 With this strategy, entity can save additional costs in marketing and promotions.
 It benefits in leveraging opportunities for the purpose of introducing new product.
Disadvantages:
 In this strategy, huge investment are required to be done by Vero Caffe which can reduce
reserves of profits.
 It includes huge risks due to which situations of failures will be experienced by business.
 By indulging in strategic alliance, various internal conflicts as well as chaos may
influence operations in negative manner.
Market development: It is that strategy in which business enterprises are reluctant for
introducing their existing dealings within new market. To expand towards new customer
segments, locations and regions, market development strategy can be preferred by Vero Caffe.
Advantages:
 Through market development strategy, Vero Caffe can achieve beneficiary outcomes of
enhancing customer base by expanding in new market.
 It strengthens current abilities, potentials and competence of company to expand in
emerging market (Horowitz, 2017).
 With this strategy, long term growth are attained by entities.
Disadvantages:
 Entering into new area is generally risky for small company like Vero Caffe.
 While working with this strategy, huge obstacles are faced due to which huge
opportunities are missed which can harm operations of company to achieve goals.
 Business enterprises to promote the product in new market incurs huge expenditures for
marketing, promotion and distribution due to which overall organisational expenditures
increases.
Diversification: In this, business performs practices for introducing completely new
commodity in new market. It can be done with the help of related diversification as well
unrelated diversification. By using the diversification strategy, Vero Caffe can expand operation'
for launching new confectionery product in new type of market.
Advantages:
 It will benefit Vero Caffe in satisfying new customers needs and achieving their
satisfaction.
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 Companies can gain advantages of developing unique commodities for new market and
achieving competitive beneficiaries.
 In this, business enterprise maximises utilisation of underutilised resources to great
extent.
Disadvantages:
 The strategy can cause set backs fro Vero Caffe because of low experience in new
market.
 The changes in the new market can result in failures for new product growth (Kemp,
2018).
 Existence of competing companies can influence attention of customers to the new
product in negative manner.
Conclusion: From mentioned strategies of Ansoff's Growth matrix, Vero Caffe should
opt market development strategy along with market penetration strategy so to fulfil desires of
current coffee variants of same as well as new market. Both strategies will help in achieving
growth in the market.
TASK 2
P3. Sources of funding that are available to business.
Funds are considered as the fuel for business which assist in effectively carry forwarding
operations as per determined aspects. Funds are said to pool of money which is allocated in
distinct activities for particular purpose. Small business units along with start-up companies look
towards diverse sources of funds so to meet requirements of funds for executing organisational
practices efficaciously (Krueckeberg, 2018). Funding is important for business as to run the
business, managing daily expenses and expansion. In context to Vero Caffe, funding is important
as it acts as fuel for seeding money, acquiring assets, managing day to day expenses, maintaining
workings in variety of events and expansion. Following are few sources of funding that selected
entity can opt for reducing certain financial problem:
Bank Loan: One of funding sources is bank loan that includes creation of debt that is
repaid in future with added interest. It is obtained through financial institutions. Obtaining bank
loan is generally easy for Vero Caffe as financial institutions have made various policies for
small companies.
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Advantages:
 The advantage of using bank loan for Vero Caffe is that repayment are made on time that
reduces burden of debt on company.
 Limited obligations are involved in sourcing findings through bank loan.
 Interest involved in bank loan is generally tax deductible and have adjustable rate loan
through which business owners computes future payments easily (Mazza, 2017).
 As per the payer flexibility, interest rates are charged that helps in making repayments in
distinct instalment without any pressure.
Disadvantages:
 Financial institutions keep some amount from business as collateral security that impacts
on arranging such amount to pay to bank for Vero Caffe.
 The another disadvantage with such funding source is that when timely payments are not
done for loans, financial institutions seizes as well as sales business assets that causes
loss situations.
 Bank loans are taken as per terms and conditions that Vero Caffe fails to adhere and it
causes huge hurdles.
Venture capital: the another funding source in which capitalist or investors provides
capital and supporting services to small companies having objective of expansion but have
limited or no equities market access. For Vero Caffe, being small company it is difficult to obtain
funds from such source as the identifying and searching suitable capitalist and convincing them
to make huge investments is more difficult for the entity
Advantages:
 This funding source provides huge opportunities to expand in dynamic market.
 With this source, Vero Caffe is benefited in getting various guidances and expertise
consultations so to achieve success.
 There is limited obligations, terms and conditions for repaying funds when situations like
failures addition shut downs are faced by company.
Disadvantages:
 Venture capitalist generally invests funds in large quantity which can add huge liabilities
for Vero Caffe.
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 This funding source primarily redeems invested amount in 2 to 4 years which can hamper
other activities of business (Murdoch and Abram, 2017).
 Overall financing cost involved in venture capital source is expensive.
Loan from relatives addition to friends: In this funding source, business entities
approaches to their love ones to gain funds. It is easier fro Vero Caffe to obtain funds with such
funding source.
Advantages:
 The advantage of sourcing funds from this option is that lending is generally done on no
rates as well as lower rates.
 It is flexible source as it involves little stress for make repayments as no deadlines are
fixed.
 In this, interest of lender is generally connected with business profits.
Disadvantages:
 It does not involve any legal documentation that arises situations of chaos between the
parties.
 Using this, Vero Caffe can face circumstances of social awkwardness when fails to make
timely payment to their loved ones.
 In this source, transactions are more complex as well as creates misunderstandings too.
Conclusion: from the discussed funding sources, Vero Caffe should go with venture
capital option as the source not only provide funds but also provide assistance for managing the
practices or business.
TASK 3
P4. Business plan.
Business plan
Executive summary Business plan is termed to document that comprises details of
the company such as vision, mission together with strategic
goals (Piro, 2016). In addition, this plan includes market
analysis, financial projections, operations plan and risk plan.
Business details New product: Oatmeal Raisin Cookies
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Mission: Mission of Vero Caffe is to gaining control of large
market and rendering high quality of confectionery products.
Vision: Vero Caffe aims to capture leading position in
innovation and competing market.
Strategic objective: Vero Caffe have strategic objective to
acquire 18% market share for the new product addition to
enhancing profit reserves by 10% till 2021.
Industry and market analysis Industry size: At present, market size of confectionery
industry is more than USD 199.9 billion.
Competitors analysis:
Internal analysis: To analysing internal circumstances,
SWOT analysis is more preferred as it provides aspects of
strength and weaknesses that business have against its
competitors.
Strength Weaknesses
Vero Caffe has has strong
customer base as the
company offers variants of
products that enjoyed by all
its potential clients. In
addition, the entity also have
incomparable selling points
that satisfies preferences of
various segments.
Selected business enterprise is
small in size that have limited
employees which have low
knowledge in context to
preferences of customers.
Moreover, the organisation
also have controlled
experience to collect funds
from distinct sources
(Rodwin, 2017).
Opportunity Threat
Vero Caffe has opportunity to
opt digital technology
mediums for promoting the
new product internationally
Fierce competition against
Vero Caffe is threat which
enhances chances of
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and achieving business
expansion.
decreasing income reserves.
Market segment: Managers of Vero Caffe has segmented the
entire market according to demographic basis that is further
classified according to gender, age group addition to level of
education.
Targeting: Vero Caffe managers majorly targets demographic
segmentation. In this, targetted population is young age group
that have demands and tastes for the distinct cookies and other
confectionery commodities.
Customer and value
proposition
Target market segment for Vero Caffe is youngsters. They
must purchase organisational commodities as the entity
provides cookies and coffee having high quality along with
reasonable price. With this, customers can enjoy advantages of
premium quality with low price that will lead in saving
money.
Marketing strategy Marketing strategy of Vero Caffe are the following:
Product: The unique product of Vero Caffe is Oatmeal Raisin
Cookies.
Price: £20.
Promotion: Marketers of the business will promote the
product through pamphlets, word of mouth publicity and
social media (Todes, 2012).
Place: Company will perform practices to make available the
new product for customers at Vero Caffee that is situated at
London.
People: Digital marketing team, staff members as well as
manpower will be party of the new product.
Process: At Vero Caffe procedure for deliver the new product
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