Planning for Growth: Evaluating Growth Opportunities and Funding Sources for Ades Limited

This report evaluates growth opportunities and funding sources for Ades Limited, a grocery and related product merchant in London. It includes an analysis of BCG and GE matrices, Ansoff growth vector matrix, and recommended sources of finance. It also presents a business plan for Ades Limited's expansion and exit strategies.

PLANNING FOR
GROWTH

CONTENTS
INTRODUCTION.................................................................................................................................1
PART – 1...............................................................................................................................................1
Brief history of Boston Consultancy Group Matrix and GE matrix...................................................1
Difference between BCG matrix and GE matrix...............................................................................2
Recommendations based on the evaluation of the two matrixes........................................................2
Ansoff growth vector matrix for evaluating the growth opportunities for the business.....................3
Benefits and drawbacks on the suggested sources of finance............................................................4
Justification for the sources of funding by Ades limited....................................................................5
Arguments related to source obtained by ADES limited...................................................................5
PART – 2...............................................................................................................................................5
Development of the business plan.....................................................................................................5
Exit and succession options for the business and their benefits & its implications..........................12
Comparing and contrasting the exit strategies.................................................................................13
Justified actions with recommendations to implement by Ades limited..........................................13
CONCLUSION...................................................................................................................................14
REFERENCES....................................................................................................................................15

INTRODUCTION
Small and business enterprises are those firms which are commencing their business.
These companies have less than 250 workers and the average revenue being earned is about
50 million pounds. However, these SMEs have high growth opportunities. Considering this,
the current project also deals with assessing the growth opportunities and sources of funding
for the business in the first section of the report. The SME Company chosen for this project is
ADES limited company, which is a grocery and related product merchant of London. The
second section of the report focus on the development of business plan for growth and
effective marketing strategies are also being designed for the proposed business. The report
concludes with different exits opportunities and procedures.
PART – 1
Brief history of Boston Consultancy Group Matrix and GE matrix
Talking about the BCG matrix model it is being referred as an important planning tool
that makes use of graphical representation of the product of the company with the main effort
to support the firm in making decision regarding what should be kept and in which they
should invest more. It encompasses four categories such as cash cows, dogs, question marks
and stars.
BCG matrix model includes stars, cash cows, dogs and question marks. Focusing on the stars,
these are being referred as the product which are currently making too much cash for the
business however managing the position in the market place (Badrinath and et.al., 2017).
Cash cows are the earlier stars and also make too much cash for Ades limited as there has
been reduction in the growth in the market along with the minimum pressure from the
competition. Furthermore, if the product has low share in the market and lower rate of growth
than it is being referred as the dogs. The final one is the question marks which signifies as the
products which have high rates of growth however the product of Ades limited company has
not maintained a larger share in the market.
GE matrix on the other hand also makes use of multiple variables for determining the
two most important dimensions that is industry attractiveness and competitive strength. It
makes use of nine grids for measuring the strengths of the business unit. In regards with the
industry attractiveness of the Ades limited company, there are different dimensions that can
be utilized such as bargaining power of the suppliers, bargaining power of the customers,
threats of new entry, competitive rivalry and threat of substitutes (Moore, 2014). If the small
and medium enterprises such as Ades makes products with rare inputs than the suppliers will
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have the power of bargaining. Further, the threat of new entrants is moderate because there
might be some obstacles being posed by this industry on entry of new entrants as the grocery
and retail market of UK is flooded with different retail companies. Further, Ades also has
high bargaining power of the buyers as there are many options available to the customers.
The competitive rivalry is also very high because of the presence of different retail giants in
the market which are competing with each other intensely. Finally, the threat related to the
substitute is also very high as the customers have the ability to choose the other alternative
available in the market because of the low switching costs (Halt and et.al, 2016). On the other
hand, competitive strength signifies the manner in which Ades can flare as compared to their
competitors in the market. There are some factors which can be considered here such as
market share. The market share of Ades in the UK market, brand awareness, profit margin,
growth potential, loyalty and satisfaction level of the customers and uniqueness of the
products and services being offered by the company.
Difference between BCG matrix and GE matrix
Talking in relation with Boston consulting matrix, it is being referred as the model
which takes into consideration the growth of the business and market share being enjoyed by
the firm, however, the GE matrix helps the company in making strategic choices for the
product lines on the basis of their position in the grid (Daron, 2003). In addition to this, in the
BCG matrix market share along with the market growth are being considered as the important
factor whereas the GE matrix takes into account industry attractiveness and business strength.
Seeking help from the BCG matrix Ades limited company has been able to deploy their
resources effectively among varied business units. On the other hand, the with the help of the
GE matrix the company was in a position to prioritize their business units.
Recommendations based on the evaluation of the two matrixes
Based on the analysis of the two matrixes, it can be said that cash cows are being
referred as quite profitable for the business, for example, the fresh meat and fruits and
vegetables section of Ades limited company are cash cows because these are the products
which are high in demand. Thus, it can be suggested that the company must make use of the
revenue being generated from this group for reinvesting into the market segments which are
growing faster. In addition to this, the finest range of Ades limited are being regarded as the
star and therefore, it is important that the firm should invest more in these businesses for
defending the current share in the market along with the profitability levels (Kotler,
Armstrong and Opresnik, 2018). Furthermore, for Ades, neighbourhood markets are being
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regarded as the question marks and thus, it is suggested to the company to divert their
resources from the question marks to stars as making investment in these businesses is not
feasible as per the resources at hand and thus, resources must be employed in star businesses.
Ansoff growth vector matrix for evaluating the growth opportunities for the business
Prior following and considering any strategy, it becomes necessary for the firm to
make sure that the present business is of the firm is running quite well. Ades limited company
is planning and looking for the growth and expansion opportunities in the market after
BREXIT, however, they will need to ensure that their core business is not affected by these
new growth prospects. Besides, it is also vital that the company must not ignore their current
base of clients as they will underpin the success and growth of the business of Ades
(Hawkey, 2017). Thus, for the purpose of evaluating the growth opportunities being available
for the business of Ades, it is crucial to take into account Ansoff’s growth vector matrix.
Explanation of this matrix is being done below:
 Market penetration – Talking in relation with the market penetration, it simply means
selling same product in the existing market. The firm is required to search for the
novel ways of attracting customers and augmenting the loyalty towards their products.
In this, Ades can make improvement in their process such as extending the business
hours, making the products available to the business clients without any difficulties
and so forth. market penetration is very less risky because the existing resources are
leveraged by the company (Burns, 2011).
 Market development – This is being referred as the strategy in which new are
approached for selling the existing product. There are several options available in
front of the Ades limited like extending their market reach in different geographies
and regions, targeting new base of customers through using different sales channels
etc. further, this is regarded as the most effective strategy for developing markets for
products but it becomes risky when business is expanded in the new markets.
 Product development – In relation with the product developmental strategy, it
signifies selling of new products and services to the existing base of customers or
market. Ades limited can make use of this strategy if they want to have differentiated
products for remaining stable in the competitive marketplace. There is a medium level
of risk being involved in this strategy, as new products are offered to the customers.
 Diversification – This strategy involves selling of new products and services in the
entirely new market (Ha-Joon, 2021). Thus, it signifies that both the market and the
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product are new. Such type of strategy if adopted by Ades limited then they will have
to face more risk. Nevertheless, the risk factor can be compensated with the chance of
huge return. In addition to this, diversification will prove effective for the firm if the
company have already established business in the market.
Thus, from the evaluation being conducted above, it can be said that there are many
options which can be adopted by Ades limited company for expanding and adopting growth
opportunities in the market after Brexit. Different strategies were being suggested such as
market development, product development, market penetration and diversification through
application of Ansoff growth vector matrix, however the best strategy which is suitable for
the company is product development strategy (Burns, 2014). Since, the firm is presently
operating a wholesale and retail grocery super market, they have an extensive base of
customers in the UK market. This can be utilized by developing new products which are
being preferred by most of the people in London. Most of the people these days are searching
for the quality food and drinks and are avoiding unhealthy and oily foods. Thus, this need of
the market can be trapped by the company through adopting new product development
strategy.
Benefits and drawbacks on the suggested sources of finance
There are many types of funding available to business through which business takes
all the investment decisions regarding the cost of production and the revenue earned (Clark,
2018). The ADES limited is a small manufacturing company of United Kingdom and is
involved in various sources of findings which are as follow:
 Banking
This is the most important sources of funding through small business can take loans at
low interest rate with minimum risk (Pushkareva, 2019).
Benefit: It is useful because it provide access to credit to company and with minimum
risk. Provides easy monitoring and easy transactions for the company.
Drawback: It has a disadvantage of operating expenses and having high commissions
and the process is also slow.
 Venture capital
This capital is easy to get in the market because investors are getting high returns due
to high rate of interest (Strese, 2018).
Benefits: This easy way to get small loans from the investors by businesses.
Drawback: Its rate of interest is high because it has more risk from the investor’s side.
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 Peer to peer lending
In this the company can take loan from other business owners and peers from an
organisation. The company owners with good relations with other business owner or
friends can lend funds due to good relations.
Benefits: This is useful in times of emergency in the companies due to direct
lendings.
Drawback: This involves high risk because there is no guarantee of return of the
funds.
Justification for the sources of funding by Ades limited
ADES limited is a small manufacturing company of United Kingdom which is funding
its activities and services through banking. Because it the safe way of acquiring loans for
short time periods and involved less risk. ADES is a small business which required small
capitals for day to day activities and for some small investments in products and raw
materials. By funding loans from banks it can check all its business activities and feel secure
about the amount because of low rate of interest. Banks also provide access credit facility for
obtaining more loans in future with same interest rates.
Arguments related to source obtained by ADES limited
The ADES limited using banking for sourcing finance for small loans for the
investment purposes. This company should use joint ventures and peer to peer lending also
for obtaining small funds for immediate need. It should not obtain all its funding through
banks because if the company will take loans from joint ventures then it will get loans more
easily and no procedure related to document verification which leads the loan process lengthy
task. It should get advantages from other source of funding too.
PART – 2
Development of the business plan
Description of the business idea
Ades limited company desires to expand their business and looking for the ways of
creating opportunities for growth and consequently, based on the evaluating and
considerations being undertaken in the above section, it has been suggested to the business to
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adopt product development strategy, in which the firm will going to offer new products into
the existing market. Considering this, the firm is being planning to offer quality and healthy
food as well as drinks in the existing market of the company by opening a new café known as
“Ades foods”. The quality and healthy food and drinks are now becoming the routine
necessity of the locals as each and everyone is having some or the other health issues because
of the increased level of stress and exertion (Barrow, Barrow and Brown, 2012).
Furthermore, in the current times, there has been rise in the demand of the healthy and quality
food and drinks in the UK market and thus, this new product of Ades limited will emphasize
on providing best food and drink products to their valuable clients. For this purpose, the
company will need a fund of around £150000 start-up funds which will encompass expenses
in relation with salary needed for extra staff needed for food and drink preparation, payroll,
advertising, marketing, resources and many other expenses will include £122000, £140,600
and £154,500 respectively
Mission
The main mission of Ades limited company is to continue to augment their product
range like top quality and healthy food and drinks which they aspire to sale at competitive
prices for holding the wider share in the market.
Vision
Additionally, the main vision of the company to make upgradation of their small and
medium size business into the worldwide business through offering of quality products at
reasonable prices to their target market.
Strategic Objectives for scaling up the business
There are several small objectives of Ades limited company which they want to
achieve for the accomplishment of the major aim of the company and these are as follows:
 Making improvement in the profit margin of the company by 10 percent by the end of
the year 2022
 Meeting the expectations of the clients by supplying top quality and healthy food and
drinks products
 Making 10 percent improvement in the base of the customers, retention and loyalty by
the end of the year 2022
Segmentation of the market for the proposed business
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As noted by the Economic Times (2017), segmentation is being referred as the
marketing strategy which helps in distributing the target customers in some groups through
paying attention on the requirements and wants. There are different types of market
segmentations strategies which can be adopted by the company such as demographic,
psychographic, geographical and behavioural segmentation. However, for the proposed
business of offering quality and healthy food and drink at “Ades Food”, the firm will make
use of demographic segmentation. This strategy is being referred as the strategy in which the
market is being segregated on the basis of people-based differences such gender.
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Figure 1: Target strategy
(Kotler and Keller, 2015).
Target market
Speaking in volume in relation with targeting, it means mentioning of particular
customer segment by recognizing their specified wants and requirements. There are mainly
three types of targeting strategy that is differentiated, undifferentiated and customize strategy.
For the proposed new business, Ades limited company will make use of differentiated
and multi-segment targeting strategies. The main target market of Ades will men, women and
children.
Positioning strategies
As per Kotler and Keller (2015), market positioning is defined as the strategy which
deliberates in regards with the positioning of the business in the competitive place of market.
This strategy is being recognized along with the prices, promotion, services and products.
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Figure 2: Positioning map
Start-up cost
Start-up Expense Amount
Lawful £$1,200
Advisors £3,100
Flyers £4,580
Rental £3,420
Coverage £1,400
Renovation £11,800
Writing materials £500
Total £26000
Start-up Asset Amount
Needed cash £67000
Start-up stock £22000
Long-term asset £35000
Other assets £0
Total £124000
Total obligation £150000
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Sources of funding
There will be one major source of finance from which this new proposed business of
offering quality and healthy food and drinks at Ades food will be established and this is
taking loan from the bank (Menon and Malik, 2016). Ades limited will take loan from the
bank for amount £150000 as this is the total requirement for the proposed new business. The
bank loan will be secured.
Cash Flow Statement
CASH FLOW STATEMENT
CASH RECEIVED YEAR 1 YEAR 2 YEAR 3
Cash from operations
Sales £363,000 £522,400 £576,640
SUBTOTAL CASH FROM
OPERATIONS
£363,000 £522,400 £576,640
Additional cash received
Sales tax, borrowing, VAT, long term
liabilities
0 0 0
Sales of another current asset 0 0 0
New investment received £0 0 0
Subtotal cash received £363,000 £522,400 £576,640
EXPENDITURES YEAR 1 YEAR 2 YEAR 3
Expenditures from operations
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Cash spending £122,000 £140,600 £154500
Subtotal cash spent £122,000 £140,600 £154500
Net cash flow £241000 £381800 £422140
Sales forecast
YEAR 1 YEAR 2 YEAR 3
Sales
Food £200000 £250000 £176640
Drinks £63000 £122400 £200000
Other food items £100000 £150000 £200000
TOTAL SALES £363,000 £522,400 £576,640
Direct cost of sales YEAR 1 YEAR 2 YEAR 3
Beverage £65700 £92400 £95000
Food products £10000 £26300 £45000
Other food items £30000 £29000 £35000
SUB-TOTAL
DIRECT COST OF
SALES
£105700 £147700 £175000
Marketing strategies
 Social Media Marketing – Ades will make use of social media marketing strategies
such as Facebook, YouTube, Instagram and Twitter for targeting the local
communities and involving them in the business.
 Email marketing – In addition to this, email marketing will also be utilized for
gathering the emails of their valuable clients from the third parties for delivering right
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marketing messages in regards with the products and offering to their clients (Kotler,
Armstrong and Opresnik, 2018).
 Mobile Devices – Ades limited company can also make use of mobile and smart
phones for communicating with the clients and sending messages.
Exit and succession options for the business and their benefits & its implications
Due to Brexit in United Kingdom a lot of small businesses are suffering from huge
losses and most of them are shutting off its business due more debt (Kiyotaki, 2019). ADES
limited is a small manufacturing company has also suffered from huge losses due to Brexit
and covid -19. This company is planning in advance its exits and succession options for
futures.
The strategies used by ADES for exit and succession options
 Merging the business: The Company can merge or acquired its business from
another company with similar goals and sharing risk and profits equally. It provides
freedom to walk away from your business which is making huge losses.
Benefits: It provides you freedom to take break and negotiate your prices for selling.
Increase in market shares, reduces the cost of operation, expansion with new markets,
more profits, reduce competitions due to combining efforts of two.
Drawback: It is time consuming process because companies have to find the perfect
match for its policies. Raises prices or products and services, unemployment to many
employees, conflict of culture environment of each company, employee
dissatisfaction
 Liquidity: In this the company Ades can pay off all its debt and loans for fully
dissolved its business by selling all the assets. It is shutting down your business for
lifetime.
Benefits: The main advantage is this is simplest strategies and the owner no need to
worry about the business any more. Helps to overcome from financial losses, secure
loans and resources for the future, small business do not have to raise external capital
for debt payments.
Drawbacks: It makes the company have to suffer from huge loss because of selling all
the assets at old prices. The main problem is lower rate of return and loss of goodwill
for the future, and loss of jobs for many employees or staffs in the company.
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 Selling the business: This strategy is helpful by selling the business to any friends
and the peers so that all the dues are in the hands of others.
Benefits: This is easy to implement and after selling the owner is not responsible for
any risk. The owner can now invest in some other businesses or projects,
Drawback: Finding of right person to sell the business at profit is hard task. Finding
the right amount which is needed is time consuming process, it requires a lot of paper
work and creates employees dissatisfaction or conflicting culture due to resistance to
change.
Comparing and contrasting the exit strategies
Ades is a United Kingdom’s small business and due to Brexit the small businesses are
facing a lot of problems in surviving. By planning all the strategies and there pros and cons
the if Ades is using the strategy like merging the business then it will have to find a good
business with same nature so that they both can work smoothly for no conflicts. It is a time
consuming process and has benefits too but it is better than selling the business to peers or
friends. Selling the business it involves deep research on finding the correct person and
getting the same amount without any loss both this strategy involves lot of time Liquidity is
better option than the others too because it has less risk then the other source of exits.
Justified actions with recommendations to implement by Ades limited
The Ades limited should adopt the liquidity strategies for rather than other strategies to
save time and dissolve quickly coming out from the problems. This strategy by the company
helps to pay off all its debt and sell all the assets for closing the business (Kozjek, 2018). The
owner of this company will be free from every burden due to heavy losses and does not have
to think about anymore after shutting down. ADES will get all its security amount converted
into ready cash with its market price and can pay all its liability with the amount. It will be
the clearest and easiest way of walking away from all the risk and the problems and provides
financial freedoms from the uncertainty in the future.
Main reasons behind failure of the business and the manner in which this can be prohibited
It is quite known fact that the large amount of start-up businesses fails in their
business and this happens because of the different external as well as internal factors. As per
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Gard (2014), the key external factors that might result into the failure of the business is the
rapid evolution of the technologies with each passing day, rising number of issues related
politics comprising instability and uncertainty, rules and regulations of the government and
economic and currency fluctuations, alteration in society and different types of legislative
problems (Blanchard, Oncken and Burrows, 2011). On contrary to this, there are different
types of internal factors as will which might result into the failure of the proposes new
business of Ades limited company that is Ades food such as lack of effective management,
unavailability of funds, scarcity of trained staff and personnel, imperfect and wrong location
and so forth. Nevertheless, there are varied ways through which Ades limited company can
prevent or prohibit the failure of their proposed business. Firstly, it is important on the part of
the business owners to have detailed and comprehensive records of each and every activity of
the business. Through keeping records of financial transactions and other activities, the
management can keep a check and prevent the firm from any sort of financial loss. Secondly,
it is also important that the successful business owners must think in relation with the future
and look far away from the current situation for helping the business to fail. Furthermore,
clients are being regarded as the most important asset of the firm and thus, effective services
and quality products should be offered to them (Christman, 2015). Other than this, it is also
equally crucial for the business to execute effective marketing strategy for promoting their
products and services and for connecting with the clients. Following the competitors is also
essential to achieve an edge over them. This will further support the firm in sustaining
position in the market and will help them in prohibiting the business failure.
CONCLUSION
From the above report it is been concluded that for small business enterprises
there is a need to develop the strategies regarding opportunities and growths. Furthermore,
this report concluded that the ADES need various types of funds for running its business in
the market and has to plan various strategies for exit actions in future uncertainty. Lastly it’s
been concluded that by planning business plan Ades can know its financial positions,
strategies and objectives by and it also include the strategies related to the objectives in depth.
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Online references
Ades. 2018. Ades Foods. [Online]. Available through: <http://www.adesfoods.com/>.
[Accessed on 12thApril 2022].
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