Unit 53: Cafe Pod Growth Business Plan Analysis Assignment Sample

Introduction - Pod Expansion: Funding and Strategy

Café Pod Company is a specialized coffee-producing company that was founded in 2011 in London, United Kingdom. It is a small-medium scale enterprise that creates coffee pods and designs capsules in different coffee machines (CAFÉ POD COMPANY, 2023). It offers a choice of coffee blends, packed into appropriate pods that are companionable with popular coffee machines. The brand focuses on offering high-quality coffee with different flavors and preferences. The aim of the company is to provide a comfortable way to enjoy coffee at home or in offices with the use of single-serve coffee pod machines (Malesios, et. al, 2021). The brand is actively working on new innovations and gaining popularity in the market with its several coffee blend flavors and amazing tastes. The report will analyze the growth opportunities and competitive advantage of a small and medium-sized company linked to its capabilities, competencies, products, services, and opportunities for growth.

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Analyze key considerations for evaluating growth opportunities in an Café pod context.

The important key considerations for evaluating the growth opportunities in Cafe Pod include the understanding of competitive advantage, growth including resources, capabilities, competencies, products, and services, and then linking these factors with opportunities for the growth of the company. It contains an analysis of resources, capability, competency, competitive advantage and growth opportunities. The physical, human, and financial resources are the part of resource analysis. The manufacturing facilities help in evaluating the potential for increased production to meet increasing demand. The analysis of the supply chain by increasing its efficiency, ensures on-time delivery and cost-effectiveness. They can measure the effectiveness of company performance and its operations with various tools and expand their area of the distribution network (Surya, et. al, 2021). The financial part covers the investment capital, in which they determine the accessibility of capital for the expansion of the business and invest in the research and development process.

The measuring of the productivity of existing operations and how it can finance growth initiatives help the business in determining its cost-effectiveness aspect. Skills and leadership are a part of human resources. By evaluating the skills of the employees helps to innovate, market and produce high-quality products, giving knowledge of skills and expertise. The critical evaluation of leadership and management abilities and skills helps to drive the growth tactics of business. The competence analysis includes producing the ability of employees, and marketing and sales skill. The company checks the efficiency of technology or manufacturing units for producing high-quality coffee to fulfil the increasing demand of customers. They critically evaluate the abilities of the company in manufacturing and other functions to create new and innovative flavors, blends and products. The study of brand image, strengths and customer loyalty helps in creating brand goodwill. The company should know the ability of staff members to expand its area into new markets or regions. The assessment of the effectiveness of digital marketing and e-commerce skills helps in understanding the digital presence of the company. The competency analysis includes quality and innovation and customer service and retention.

The knowledge of innovation and technology support in offering high-quality coffee and offering customized services. They make innovations with new flavors and use sustainable packaging for their products. The analysis of business strategies carefully encourages them to ensure customer satisfaction and loyalty. To know a competitive advantage of their internal and external part, the company can use Porter's five force analysis, SWOT analysis and Ansoff matrix models (Torlak, Demir and Budur, 2019). The Ansoff matrix includes points such as market penetration, market development, product development and diversification. SWOT contains strengths and weaknesses in internal and opportunities and threats the external part. The Porter five force analysis includes competitive rivalry, supplier power, buyer power of customers, threat of new entrants and substitute or alternative products.

The growth opportunities include market expansion and product diversification of the company. The company explore new product lines in new markets and diversifies into coffee pods. The analysis of cooperation opportunities with coffee machine manufacturers and retailers helps in selling their coffee to a number of customers. They find new potential Markets or demographics in other popular destinations for increased penetration. A comprehensive valuation of resources, capabilities, aptitudes and competitive advantage is important to identify and take advantage of growth opportunities in the café pod industry (Street, et. al, 2022). An understanding of the market landscape and joining it with external opportunities is crucial to continual growth.

Evaluate the opportunities for growth, applying an Ansoff management tool.

To evaluate the growth opportunities for café Pod, an Ansoff matrix is perfect for the discovery of findings. Ansoff matrix also known as the merchandise expansion grid, is a framework used by management teams, businesses and the analyst community to help in planning and growing initiatives. The tool supports stakeholders in understanding the risks that are connected to various development strategies. This matrix helps companies in considering the possible risks and rewards that are related to various progression opportunities. Ansoff identified four strategies that should be considered to analyze café Pod’s development options using the growth vector matrix in the current market context. They are Market penetration, market development, product development, and diversification.

Market development

In this, the company introduces existing goods and services to untapped markets or consumer bases. The risks include unfamiliarity with new markets, cultural modulation, and the difficulties of competing in an unknown land. They invest in marketing strategies that attract new target audiences, build local partnerships, modify the coffee shape and structure to suit their preferences, and conduct in-depth market research to understand new demographic characteristics.

Market penetration

Each strategy has a distinctive set of risks, and effective implementation needs to mitigate these risks. Increasing the sales of existing products in existing markets includes adopting strategies such as increasing marketing efforts, running promotions, or modifying prices (Clarissia, et. al, 2020). The risks include brand reduction, overload and strong competition which may result in declining profits. Café pods can reduce these risks by maintaining customer loyalty with loyalty programs, increasing the quantity of their coffee by making high efforts and improving the customer experience with specific offerings or providing a positive atmosphere. Competitive market analysis and research can also help the company going forward.

Product development

Product development is the process of developing new goods or services for existing markets in manufacturing. The risks include lavish research and development, changeable consumers, and the chance that new product lines may fail. The Company reduce the risk of failure by understanding the offenders and demerits of the enterprise for scientific study and market research. They should also contain the website in the development process, using the focus viewpoint and test new things before launching them on a huge scale.

Diversification

The company introduces new goods and services into untapped markets to reach more potential customers and productivity. The risks that the company faces include high investments with no guarantee of returns, unfamiliarity with a new market, and diversification that may reduce brand equity. The business strategies include conducting and managing risks through market analysis and managing risks through a scientific approach (Goeyardi, Ramadhasari and Alimudin, 2022). They Form strategic alliances or procurements and ensure that new initiatives are connected with customer and brand expectations.

The Ansoff matrix helps businesses make strategic decisions about how to grow by evaluating the risks and potential rewards that are associated with strategies. It is an important tool for strategic planning, and decision-making and guides business in choosing the most suitable growth way according to their goals, resources, and risks coming in the way. Apart from various development options, mitigation strategies should be designed in such a way that these risks can be addressed effectively and misusing the strengths and resources of the organization (Hong, Luo and Lei, 2020). For the growth of the company, strategies must be regularly reviewed and adapted to consider market feedback and changes.

Assess the potential sources of funding available to businesses, in the café pod context, addressing the benefits and drawbacks of each source.

To meet the organizational needs, different sources of funding can be explored for a business like a café pod company. It is a food and beverage industry in the United Kingdom. The possible funding sources including the rationale to be taken into account for adopting them based on their particular organizational needs with their advantage and disadvantage.

Bootstrapping- Bootstrapping means the operations, that are funded through savings or income generated by the business. It is a good option for small enterprises and startups in the early stages. The café will be able to use the profits that are generated from coffee sales, which helps the business to continue its operations without taking external loans or selling equity.

Benefits

• Independence and control- business owners of the company are completely responsible for their decisions, functions, operations and the direction of their activities (Jayawarna, Jones and Macpherson, 2020). External investors and creditors do not interfere in the business decision-making process.
• Conservative financial approach- it promotes a more traditional and prudent approach in their business-to-business operations, promoting financial discipline and maintaining efficiency of products.

Drawbacks

• Limited resources- They have limited resources in business, are at a disadvantage in terms of growth opportunities and limited ability to develop the business speedily.
• Marginal growth- the company may have average growth due to limited institutional factors, competitors and access to significant foreign funding in a number of areas.

Loans or credit lines from banks- banks offer loans with different interest rates or credit lines. A loan can be useful for a company to finance working capital, growth and development or the purchase of equipment. Secured loans may offer lower interest rates, and also consider whether the company is in a position to provide collateral or not.

Benefits

• Access to Capital- this will allow businesses to provide instant access to large amounts of capital.
• Lower interest rates- bank loans can be a little discounted than alternative sources of financing.

Drawbacks

• Strict requirements- banks may require collateral, security or credit history, which may prove burdens for new businesses.
• Debt or loan repayments- monthly repayment is compulsory, irrespective of the cash flow situation in the company.

Angel investors or venture capital- Attracting angel and venture capital investors can provide café Pod, large funding for scale-up quickly. Angel investors who provide capital in exchange for ownership equity, and Venture capitalist firms that invest in high-growth companies, can be beneficial (Cumming, and Zhang, 2019). This option is perfect for businesses with high growth potential and that requires a significant amount of capital for expansion.

Benefits

• Expertise and networking- angel investors can offer useful advice, mentorship, or access to various networks to the company, except the capital.
• Flexible terms- Angel investors have more flexible terms as compared to traditional lenders.

Drawbacks

• Loss of control- the investors of angel firms often need a certain level of proprietorship or influence over the company.
• Potential conflict- if there is a difference in the approach or strategy of the business, potential conflict may happen.

Crowdfunding- The crowdfunding process allows entrepreneurs to raise money from a wide variety of people in exchange for rewards, shares, or previously purchased goods (Böckel, Hörisch and Tenner, 2021). Café Pod may be able to take advantage of crowdfunding if it has a loyal customer base or some unique selling plan that will request to the crowd.

Benefits

• Marketing and engagement- crowdfunding is a way to create excitement and engagement for potential customers and first-time adopters.
• Miscellaneous sources- it can raise small amounts from a large group or number of people.

Drawbacks

• Efforts intensive- the company takes a lot of effort and time to run a successful crowdfunding campaign.
• No guarantees of success- there is no assurance that the operation will be able to meet its funding objective or security.

Assess exit or succession options for a small business, addressing the benefits and drawbacks of each option

The café pod company have exit or succession points like other businesses that involve important decisions that directly affect the stakeholders, financial results and future directions. In this context, a critical evaluation needs recommendations to support various exit or succession points. Here is the assessment of critical evaluation:

Selling to a strategic buyer- The process of selling a business to another company who are a large enterprise or famous company in a related industry to gain market access, acquire intellectual property and take advantage of synergies (Kabul and Parlaktürk, 2019). In this, Cafe Pod wished to sell their business to another competitor or company that sees value in its brand, merchandise or market.

Advantages

• Maximized value - Strategic buyers, such as companies in competing or related industries, may be willing to pay a premium for interaction, market admittance or intellectual property.
• Market expansion - Collaboration with large companies or famous entities offers several opportunities like access to broader markets, distribution networks and human resources.

Disadvantage

• Loss of control - The collaboration can lead to loss of control of brand image and business operations.
• Cultural fault alignment - The difference between culture and vision could result in conflicts, and issues and affect the codes and morality of the company.

Management buyout- Management burnout refers to the acquisition of a company by its current management team, usually involving securing funding to purchase the business from its owners. In a café pod, their current managers may acquire the business from the existing owners to ensure regularity and maintain company culture and strategy. It also allows the management team to take over operational control and continue running its business.

Advantages

• Consistency or regularity- the current management takes charge of the business, by ensuring seamless transition and safeguarding the company’s culture and strategy.
• Confidence of stakeholders- if the management team is good established and capable, it can assure employees and investors.

Disadvantage

• Challenges related to funding- in this, managers may struggle to secure funding resources to purchase the business.
• Operational focus- management may concentrate too much on purchasing, ignoring daily operations.

Initial public offerings- IPO is a process of offering private company shares to the public line for the first time (INITIAL PUBLIC OFFERINGS, 2023). It permits the companies to be listed and traded on a stock exchange. Café Pod offer its shares to the public to raise large capital by using IPO. It makes the company publicly traded and subjects it to regulatory requirements (Megginson and Weiss, 2022). It also allows individuals to buy or sell shares in the company through the stock exchange market.

Advantages

• Capital Access- Availability of significant capital in business for the purpose of development or repayment of debts is permitted by issuing equity offerings.
• Greater visibility- An initial public offering (IPO) can expand the visibility of the brand and credibility in the market.

Disadvantage

• Governing compliance- In particular, the IPOs require strict regulatory requirements and continuous reporting, and adding operational complexity.
• The burden for short-term performance- Shareholders put pressure on publicly traded companies for short-term profits that affect the potentiality of long-term strategic decisions.

Recommendations:

• If there is a scope to take full advantage of the business values and continue its growth into bigger companies, it could be the best option. Cultural appropriateness and the conservation of company values and morals must be carefully considered.
• If a capable management team is in place and has an ownership interest, the continuousness and safeguarding of company culture can be ensured (Tutuncu, et. al, 2019). It may be essential to provide support in securing funding.
• If there are family members who wish to continue the business, a growing transition plan concentrating on leadership and skills development may be measured.

Design a business plan for organizational growth that includes financial information and strategic objectives for a business

Overview of the business idea: The café Pod is a small coffee shop that offers unique quality, and various flavors of coffee blends, a cozy and welcoming environment as well as outstanding customer service to their customers. The focus of the company is to provide an amazing and best coffee experience to their consumers and also ensure sustainable practices (CAFÉ BUSINESS PLAN, 2023). They make their environment relaxed, comfortable and fun-loving to attract more customers to their shops.

Product and service description: The coffee shop provides signature and different flavors of coffee blends that are made from natural beans, special drinks like cold beverages and seasoned lattes, gourmet snacks, pastries and healthy sandwiches, a peaceful environment and facilities include soft music and free Wi-Fi, comfortable atmosphere, goods and accessories.

Unique selling proposition (USP): The café pod company is famous for its strong commitment to using sustainable and ethical practices in their processes and using natural roasted beans in coffee making. They give an advantage to local community peoples of the rural area by purchasing natural and eco-friendly beans from them, which helps support the ecosystem. The idea of this company is not only to provide high-quality coffee to customers but also to take care of the environment.

Vision and objectives: The vision of the company is to become a global leading chain of high-quality unique blends and excellent customer services and experiences (Dohnal, et. al, 2019). The objective is to expand their revenue by 30-35% within two years, increase their area location to three, and earn a high customer satisfaction rate in upcoming years.

Objectives must be SMART: the smart objectives include specific, measurable, achievable, relevant and time-bound. The company's SMART objective includes revenue targets, expansion goals, market share, and customer retention.

For example:

• To increase revenue by 30-35% after two years.
• Tracking the quarterly sales growth to ensure the 30-35% target is achieved.
• By developing new marketing strategies, increasing the services and launching periodic promotions to achieve bigger sales.
• To connect with the objective of becoming a global leading coffee spot.
• Accomplish the target within a two-year period.

PESTLE analysis:

SWOT analysis:

STP approach:

The STP approach includes three main factors: segmentation, target, and positioning.

• Segmentation- The café pod targets professional and business class persons, young adults, students and classy families who want premium coffee with different flavors and a cozy atmosphere for relaxing.
• Target- The focus of the company is mainly on local areas, colleges and big and small companies
• Positioning- Cafe Pod positions itself as a premium, unique and local community-oriented with a commitment to sustainability and using ethical practices in its processes.

Marketing mix:

• Product- The Company has a diversified range of coffee blends and various flavors, organic and naturally sourced snacks, pastries, healthy sandwiches and many other snacks.
• Place- They provide unique coffee at competitive pricing with seasonal offerings.
• Price- The Company focus on expanding the area of the shop to urban and semi-urban areas and targeting high foot traffic sites.
• Promotion- They promote their shop through digital marketing technology systems, social media engagement, collaborations with local events and influencers and loyalty programs.

Competitor analysis:

Funding sources:

Short business loans- The company is finding potential sources such as banks, credit unions, or online lenders of financial institutes for loans to fund growth and new initiatives.

Partnerships and investments- They look for investors who are interested in the portfolio industry for the growth of the institution.

Crowdfunding- They use online platforms to raise funds from a wider base of depositors or supporters.

Government programs- They are looking for subsidies and grants (Setyawan, et. al, 2020). They are available for small businesses in the hospitality or environmental sectors.

Management team or structure: The management team of café Pod include the CEO, operations manager, marketing manager, finance manager, HR manager, food and beverage manager, and the organizational structure of the organization is hierarchical and flexible.

Budget: A budget of the company covers some necessary factors such as operational costs (rent, maintenance, inventory, packaging expenses and general expenses), marketing (advertising and promotion), employee salaries, benefits, emergency fund, research and development and miscellaneous expenses.

Monitoring and control: The Company should regularly monitor the performance of the business, key indicators, finances, metrics, operational effectiveness and customer satisfaction. They have to take necessary actions related to company objectives for the development of the company. The business plan includes all the important approaches and methods to ensure the growth and productivity of the company.

Conclusion

In summary, the report was about the evaluation of growth strategies in the café pod company context. In this, they analyzed the competitive advantage as a foundation of growth including resources, capabilities, competencies, products, and services and connected them with opportunities for growth. The estimation of growth by using various options and analytical tools helps businesses in considering and mitigating risks in current market situations. The company assessed the potential sources of funding based on the organizational needs with its benefits and drawbacks and critically evaluated the exit or succession points for the café pod. The report also included the business growth plan which reflects the comprehensive growth strategies that were aligned with organizational objectives. The strategies they included in the business plan had met the expectations of various stakeholders and the company.

References

Books and Journals

Abd Ghani, M.G. and Mohammad, N., 2021. The integration of logic model in business plan simulation approach for effective entrepreneurial learning. Jurnal Pengurusan, 62, pp.145-157.

Böckel, A., Hörisch, J. and Tenner, I., 2021. A systematic literature review of crowdfunding and sustainability: highlighting what really matters. Management review quarterly, 71, pp.433-453.

Clarissia, S.M.S., 2020. A study on Ansoff Matrix Technique: As a growth strategy and an adaptive learning technique adopted in the leading brand of products. BIMS Journal of Management, 18.

Cumming, D. and Zhang, M., 2019. Angel investors around the world. Journal of International Business Studies, 50, pp.692-719.

Dohnal, R., 2019. A Business Plan for a Café.

Goeyardi, G.M., Ramadhasari, D.R. and Alimudin, A., 2022. Market Penetration Strategy through Social Media Marketing to Create Consumer Loyalty. IJEBD (International Journal of Entrepreneurship and Business Development), 5(6), pp.1153-1161.

Hong, B., Luo, T. and Lei, X., 2020. Late-stage diversification of natural products. ACS central science, 6(5), pp.622-635.

Jayawarna, D., Jones, O. and Macpherson, A., 2020. Resourcing social enterprises: The role of socially oriented bootstrapping. British Journal of Management, 31(1), pp.56-79.

Kabul, M.O. and Parlaktürk, A.K., 2019. The value of commitments when selling to strategic consumers: A supply chain perspective. Management Science, 65(10), pp.4754-4770.

Malesios, C., De, D., Moursellas, A., Dey, P.K. and Evangelinos, K., 2021. Sustainability performance analysis of small and medium-sized enterprises: Criteria, methods and framework. Socio-Economic Planning Sciences, 75, p.100993.

Megginson, W.L. and Weiss, K.A., 2022. Venture capitalist certification in initial public offerings. In Venture Capital (pp. 371-395). Routledge.

Setyawan, I.R., 2020. Funding Sources Consideration in the Framework of Capital Structure Decision. International Journal of Innovation, Creativity and Change. www. ijicc. net, 12(8), pp.631-644.

Street, J., Barrie, H., Eliott, J., Carolan, L., McCorry, F., Cebulla, A., Phillipson, L., Prokopovich, K., Hanson-Easey, S., Burgess, T. and Smart Ageing Research Group, 2022. Older adults’ perspectives of smart technologies to support aging at home: Insights from five world café forums. International Journal of Environmental Research and Public Health, 19(13), p.7817.

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Surya, B., Menne, F., Sabhan, H., Suriani, S., Abubakar, H. and Idris, M., 2021. Economic growth, increasing productivity of SMEs, and open innovation. Journal of Open Innovation: Technology, Market, and Complexity, 7(1), p.20.

Torlak, N.G., Demir, A. and Budur, T., 2019. Impact of operations management strategies on customer satisfaction and behavioral intentions at café-restaurants. International Journal of Productivity and Performance Management, 69(9), pp.1903-1924.

Tutuncu, L., 2019. Earnings management and performance of management buyouts. Managerial Finance, 45(10/11), pp.1363-1381.

Online

CAFÉ POD COMPANY, 2023. Online. Available Through. : < https://www.cafepod.com/>

CAFÉ BUSINESS PLAN, 2023. Online. Available Through. : < https://pos.toasttab.com/blog/on-the-line/cafe-business-plan>

INITIAL PUBLIC OFFERINGS, 2023. Online. Available Through. : https://groww.in/p/what-is-ipo