Planning for Growth: Evaluating Opportunities and Funding Sources for Nisa

This report outlines the key considerations for evaluating growth opportunities for Nisa, a UK-based groceries wholesaler. It analyzes Ansoff's growth matrix model, potential funding sources, and business plan growth including financial information and strategic objectives. The report also discusses exit and succession options for small businesses.

Unit 42
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TABLE OF CONTENT
INTRODUCTON............................................................................................................................3
MAIN BODY..................................................................................................................................3
Analysing the key considerations for evaluation of growth opportunities and justifying this
consideration within the context of Nisa.....................................................................................3
Assessing the options of growth by applying Ansoff matrix model with evaluating the risk of
each options.................................................................................................................................6
Assessing the potential sources of funding available to businesses discussing the benefits and
drawbacks of each.......................................................................................................................7
Business plan growth including financial information and strategic objectives for setting up a
business.......................................................................................................................................9
Exit and succession options for small business with benefits and drawbacks..........................14
CONCLUSION.............................................................................................................................17
REFERENCES..............................................................................................................................18
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INTRODUCTON
Planning for growth is the main activity of the business organization as it makes the
business more profitable. This makes the company to different from its competitors and by this
company can expand their business. Nisa Company situated in United Kingdom is a groceries
wholesaler dealing in variety of products. This report will outline the key considerations for
evaluating growth opportunities by justifying it with the company context. These opportunities
will be evaluated by the Ansoff’s growth matrix model. Further this report will outline the
potential sources of funding available to businesses with its benefits and drawbacks. This report
will also show the business plan for the growth including its financial information and strategic
objectives for setting up a business and exit and succession options for a small business with its
benefits and drawbacks.
MAIN BODY
Analysing the key considerations for evaluation of growth opportunities and justifying this
consideration within the context of Nisa
The are many factors which are considered important for evaluating growth
opportunities. The research will be providing deeper insight into such opportunities. Rapid
growth is considered as a difficult thing to achieve mainly for companies who have newly
established themselves in market. However by considering different models and theories that are
designed for successful business succession organizations may gain deeper knowledge about all
position of organization and implement specific ways in order to enhance its performance. Such
consideration may be taken by gaining the company’s macro level analysis by PESTEL model
and Porters 5 forces model.
Porters five forces model
The model was brought into existence by Michael E porter for the purpose of evaluating
and assessing the strengths of the organization and providing them better positioning for
business expansion (Donahue and Timmerman, 2021). The theory follows the concept that there
exist five forces that attempts to determine the attractiveness and competitive intensity of
market.
Strategic analysts use this model to gain insight about whether the new products or services will
be able to be potentially profitable for the businesses.
The five forces are as follows :
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Supplier power: Assessing that how comfortable it is for suppliers to drive the prices up.
It also depends upon number of suppliers of the particular business and also uniqueness in
products of suppliers and switching from one supplier to another on the basis of cost,
Buyer power: This assessment is very essential for any organization as the buyers are
the most essential component in deciding success or failure of any business therefore it is
essential to drive attention of customers and also understand the importance of each buyer for
business.
Competitive rivalry: This factor analyses the amount of competition that exists in
particular field of business holder A business entrepreneur need to think both on macro and
micro level about the competitors they have in the particular field and figure out the weak and
strong ones.
Threats of substitution: It is easy for customers to switch from one product to another at
rise in cost, when there are more substitutes of the product available in market. This reduces the
attractiveness of market and also the power of suppliers.
Threat of new entry’s: New entries are attracted by profitable market and hence, they
erode the profitability of old marketers until and unless they have a strong customer back.
Therefore, porters Five forces analysis help the organizations in understanding profitability in
specific industry. Talking about NISA porters 5 forces analysis provides growth opportunities to
it by developing a understanding about different forces that affects the business.
PESTLE analysis
It is a macro tool which is used in order to get clear picture about the environment of the
industry, and facilitates the organization with political, economic, social, technological, legal and
environmental factors that can lay impact towards the business of organizations.
Political  The country’s political environment changes roadblocks, bans or
protests and disrupts the supply chain and services.
 The rise in sales taxes may increase the prices of the product and
lead to low sales.
Economic  Business activities are appreciated by wise governments which may
lead to favourable business environment in the retail industry and
they encourage more flow of money in market rather than holding
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down the money.
 Decline in business activities lead to unemployment and eventually
results in less spending by people.
 There is limit to which retailers can keep the prices of commodities
lower, and they can't go beyond certain level.
Social  Shopping trends depend upon many factors such as education,
residence in rural or urban livelihood etc.
 Demographic factors such as gender, race, age, education level and
income level of customers affect the business
Technologic
al
 E-commerce stores and online retailers may take the technological
benefit and advertise their product.
 Good website and catalogue of products may benefit the new
organizations in setting up their business.
Legal  Every country follows its own regulations, labour laws, and other
business laws which each organization is required to follow to
maintain the rules.
 If any business fails to follow the government regulations then it
may result in restrictions, ban or foreclosure of the business.
Environmen
tal
 Proper checks should be made on the expired products and disposal
of contaminated products.
 It is required for business to maintain the health standards keeping in
mind the health of customers.
Resources, capabilities and core competences of the Nisa
Resources Valuable Rarity Imitability Organization
Financial
Resources
✓ ✓ ✓ ✓
Technological
resources
✓ ✓ ✓ ✓
Human resources ✓ ✓ ✗ ✗
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Research and
development
✓ ✗ ✗ ✓
From the above VRIO analysis it has concluded that the organization financial resources
and technological resources are the core competences. Other resources like human resources and
research and development are needed to be developed by the organization.
Assessing the options of growth by applying Ansoff matrix model with evaluating the risk of
each options
This model is also known as Market/product expansion grid, this tool is utilized by firms in
order to plan and analyse their growth strategies(Cheung, Aalto and Nevalainen, 2020). The
matrix demonstrates four strategies that may be used by firms in order to grow and it also
examines the risk linked with each strategy.
Product development : The strategy focuses on introducing new products in an existing
market, In this strategy a firm is required to have a strong understanding of the market and
introduces a product having innovative solutions is order to meet the needs of existing market.
Business firms may attain competitors product and may provide more details and features in it in
order to make a better product which fits better to the needs of existing market.
Market penetration: It is considered to be the least risky strategy out of the four. In this
strategy the firms intends to sell its existing products in the existing market. Basically the firm
aims to increase its market share with this particular strategy. By decreasing prices of the
product and increasing efforts in promotion and distribution channels, business firms may
develop a large market for their existing products.
Market development: In this strategy the firms tend to expand their customer segments
and geographic region by entering a new market with their existing products. This strategy may
only be successful if the behaviour and preferences of consumers in new market is same as
compared to the existing market, If the disposable income of consumers in new market is more,
then only the firm will be able to gain importance and reach their profit margins.
Diversification: In this strategy the firms enter with a new product into a new market it is
a name given to growth strategy, this strategy is riskiest among the four. This may become
profitable if the new market offers increased revenue for the products as the product jumps into
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an entirely new revenue system. In order to make this strategy successful firms may have a
complete assessment of the market they attempt to enter.
Conclusion of evaluation of Ansoff's matrix
This model is important for the firm to analyse the market for their further growth. It
makes the organization know how to increase their market share and how to develop in the
market. It helps the company to know to expand its new market or not.
Assessing the potential sources of funding available to businesses discussing the benefits and
drawbacks of each
Businesses often need Capital or external funding for their business expansion in new location or
market, and to invest in development and research to figure out more
opportunities(Christodoulou and Cullinane, 2019). They often use the profits earned from their
business or seek investment from outside lenders for their projects. some sources of fundings are
mentioned below that are used by business firms in order to expand their business:
1. Personal savings :This is a personal money of a shareholder, owner or a partner to invest
in anything he wants. When any business borrows the personal money of owners,
partners or shareholders for financing their business needs it s termed as personal savings
Benefits:
 The owners will not seek collaterals to lend their money
 Since the owner has provided the loan it may be interest free or carry a very low
rates of interest.
Drawbacks:
 Large amount of funds are required for business succession and sometimes
personal saving may not be enough to meet the desired amount.
 Being an informal agreement, the owner may demand the money back in a short
time which may create a cash flow problem.
2. Retained profits: It is the remainder of profit left out after processing all payments of a
trading year. It is also known to be the undistributed profit of the company which is not
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distributed among the shareholders(Achinas and et.al., 2019.). This amount is saved as a
backup which may be used in times of financial needs.
Benefits:
 Since it is the own saving of organization therefore it is not needed to be paid back.
 Outsiders are not involved therefore, the plan about what is to be done with money may
not be disclosed to them
Drawbacks:
 Opportunity cost may be involved.
 These profits are not available for new start-ups, or businesses who have faced huge
losses.
3. Bank overdraft: It is the short term credit facility provided to current account holders by
banks(Loredana, 2017). This facility allows account holders to borrow more money than
the value of their account. It is a ideal funding source for short term cash flow issues.
Benefits:
 Security amount is not needed
 Quick and easy to arrange
 It is not included in calculation of gearing ratio of the firm as it is a short term
debt.
Drawbacks:
 There is a fixed limit to withdrawal
 Since interest is calculated on variable rate, therefore cost of borrowing is
difficult to calculate.
4. Loans: It is the amount of money borrowed by banks to carry out large and long term
business projects for development and expansion of the firm(Elavarasan, and et.al.,
2020).
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Benefits
 Large amount of money may be borrowed.
 Need not to be paid in short notice as banks don’t perform such practice. There is
a fixed amount which is supposed to be paid on fixed tenure.
Drawbacks
 Amount is required to repay on fixed date.
 Interest rate is charge for the loan amount.
 Gearing ratio of the company’s is affected by loans.
Business plan growth including financial information and strategic objectives for setting up a
business
Business plan refers to the document of the business which is usually made at the starting of the
business or to bring some innovative or new product in the market (McKenzie and Sansone,
2019). It shows the financial information of the businesses which helps them to grow in the
market. This business plan is based on the Nisa Company which is bringing new product in the
market. The company is bringing home made chocolates in the market and exploring its business
on the internet.
Marketing plan of the company: The Company must bring the new product on the
festive seasons as chocolates are most required by the people on the festivals.
Background: The Company is the retailer as it deals in the variety of products like
cosmetics, food store etc. The focus of the company for bringing the new product is to expand its
business in the market. As the organization is also expanding its business through online so the
health care people will be attracted by the home made chocolates.
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Vision of the organization: To become the organization more get more success and
complete the business process and achieves at least 55 percent of their investment. The company
must do the technological changes with the passage of time.
Mission of the company: The mission of the company is to make the company more
profitable by satisfying its customers in the market (Zhu, Yu, and Cao, 2020). The customer
satisfaction is most required by the company as at least 85% of customer satisfaction must be got
by the company.
Objectives:
To develop the business by introducing the new products and services and to satisfy the
needs of the customers by giving them the best products which they desire for. To differentiate
its products from its competitors this increases the profit of the organization.
PESTLE of the Nisa Company
PESTLE stands for the political, economic, social, technological, legal and environmental
factors which affect the business organization in order to be more profitable and successful in
the market. It describes the factors which are important for company to comply with these
factors in order to maintain and survive in the market.
Political factors include the tax policies,
trade restrictions, tariffs, government
policies, stability of the politics etc. These
factors may affect the Nisa company to
launch its new product in the market.
Economic factors includes the interest rates,
exchange rates, inflation etc. are the factors
which may affect the new product that is
home-made chocolates for the company as it
is little costly as compared to other
chocolates.
Social changes and the taste and preference Technological factors may affect the
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of the customers may affect the demand of
the home-made chocolates.
business of the organizations. As company
should use the best and latest technology
available in the market.
Legal factors includes the international
laws, available resources, quotas etc. The
company should focus on these factors.
Environmental factors include the change in
the climate, pollution etc. Before introducing
this product company must check and focus
on these factors.
SWOT Analysis of the Nisa company
SWOT stands for the strengths, weaknesses, opportunities and threats of the business
organizations (Kaushal and Mahajan, 2021). It helps the company to know about the factors
which are affecting the profits of the company.
Strength — The strength includes price,
unique features, expiry dates, taste etc. these
factors increases the strength of a company.
Weakness- The weakness of the company is
that its competitor may take its advantage in
any way possible.
Opportunities- This product may increase the
profit of a company. By introducing the new
products it creates the opportunity for the
company to expand its business in the
competitive market.
Threats- A threat for a company is that its
competitors might have the similar product
with a less price. This is the major threat for
the company to bring the new product that is
handmade chocolates.
Marketing mix of the company
Marketing mix is the process used by a company to promote its product in the
competitive market. The company should have the best distributors in the market with the best
price which increases their product’s demand and decreases the competitor’s product demand
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(Ansori, Sasongko and Poernomo, 2021). The company should use the best formulas and tactics
in order to promote their product to increase in demand and profit.
Marketing mix includes the 4P’s that is Product, Place, Price and Promotion.
Product: The company is introducing the new product that is the home-made chocolates that is
with the best price and the quality.
Place: The organization should have the best distribution channels which makes easier
for the customer to buy the new product.
Price: the price must be compared by the competitors in the market. The Nisa company
must decide the affordable price for their customers.
Promotion: the company can promote its new product by TV, online advertising, banners
in the market etc. which attracts the customers to buy that product.
STP Approach of the organization
It is a three-step marketing approach, through this they segment their customers, target
their customers, and position their customers (Coupland, 2017). This helps companies to select
right customer groups. This approach is profitable for their business. And these approaches are
as follows:
Segmentation: It divides the market into various classes of customers. The company
must focus on this segmentation process.
Targeting: The target of this new product is mostly the children which may increase the
demand for this product and will eventually lead to increase in profit of the company.
Positioning: it is the final step of this approach, that a company should position its
product in such a way that strikes the mind of the customer even when a small hint/tagline is
given to their customers.
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Budget for the Nisa company:
Budget is must for the company as it helps in control the financial position, finances, and
helps the company to know its financial position the competitive market. It then allows company
that where to spend money on and where to cut costs. It manages the resources and money and
helps in monitoring the expenditure and profit of the company. It improves the decision-making
of the company by making the budget plan of the company.
Budget functions Amount
Human Resources 28000
Raw material 15000
Marketing and promotion 5000
Total 48000
Monitoring and controlling of the organization
Monitoring refers to the process of the company which records and analyse the resources
of the organization. This includes the performance, demand and profit of the organization and its
products. Monitoring and controlling helps the company to measure its performance by its
planned performance and find the reason or cause on which they are lacking in order to gain
more profit.
For bringing the new product in the market the company is responsible to monitor the
available resources such as capital, raw material etc. The company should monitor their
product’s demand, supply and profit made from its new product. It is very important for the
organization for monitoring and controlling which makes the company to get to know about
their product performance in the competitive market.
Scaling up the plan for the business on the business plan
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Scaling up the business refers to the system in which the company is ready to handle
with the increasing sales, work system or increase in output in effective manner. There
are some tips by which the company can scale up its business:
Check with the competitors: Before introducing new product company can check its
competitors that the selling of that product by competitors is having demand in the
market or not.
Do not compromise in the quality and quantity: If the company is introducing the new
product in the competitive market it should not compromise in the quality and quantity of
the product. It should provide best to their customers in order to gain good profit.
Contingency plan and risk analysis on the business plan
Type of risk Likelihood Impact Person
Responsible
Contingency plan
Costumers
acceptance foe
new product
3 2 Research and
development
department.
Nisa before
introducing new
product must to
the proper
research and
development that
the customers
want that product
or not.
Technological
risk
1 1 Technological
department.
Company will
have substitute of
its technology if
its previous
machines is not
working.
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Exit and succession options for small business with benefits and drawbacks
An exit and succession options for the company is that the business owner decides to sell
out its company or to take or give share in the company to the entities or to the investors.
Succession planning of the business involves that who is going to take the business upon death,
disability or retirement of the person. The following are the exit and succession options for the
small business with its benefits and drawbacks:
Merger and acquisition: In this situation one business purchase another business by
giving it all rights is known as acquisition of business (Brand, 2021). This is done because to
expand its business or do diversification of the business in the competitive market. It is most
common and used strategy option for small business to adopt and get benefit in the tough
market. There are some benefits and drawbacks of this exit option are as follows:
Benefits
1. It reduces the entry barriers as market research is the costly for the small business. It
distributes the expenses between the companies which makes them easier to entry in
the market.
2. By doing acquisition it increases the market power and market share of the company.
It makes the company to stable in the competitive market.
3. As small business usually have less capital but by doing acquisition it can make and
access the more capital in the market.
Drawbacks
1. It may creates the disturbance between the companies after the acquisition
2. There may be the financial crises which are not accepted by the company in the
competitive market.
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3. This acquisition may reduce the differentiation of the products in the market as
consumers always needed variety of products.
Joint venture: In this there is a agreement between the two or more parties or company
who usually comes to perform a specific venture and get separated after the venture is
done by distributing the profits as per their ratio decided. It has various benefits as well
as drawbacks which are
Benefits
1. This creates an opportunity for the small business to work with the new and expertise
companies in the market which increases the profit of the company.
2. Both parties shares their capital and risk as per the ratio decide between them this
makes them to work with the less loss.
3. In this there are various ways to exit from the joint venture and do their own
business.
Drawbacks
1. The objectives of the company are not properly made as it is for a short period only
or for a definite venture.
2. This may creates the imbalances in the culture of different companies forming and
doing agreement for a venture.
3. The partners may not be trustworthy and it may also creates the lack of
communication between the parties involved.
Liquidation: It means selling of the property and assets of the business and finally
winding up of the company (Da Silva and Las Casas, 2017). This is usually done when
company is no more profitable and then they make decision to close their business. It has
its benefits and drawbacks which are:
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Benefits
1. The company can clear its all debts which are outstanding and which the company
was unable to pay out.
2. Terms on the hire-purchase on the property can be cancelled if the company is doing
the voluntary liquidation of the organization.
Drawbacks
1. The jobs of all the employees are taken off and the losses are also not recovered by
the company.
2. If the company has not paid the dividend than at the time of liquidation company has
to pay the dividend to its directors.
The Nisa company must accept the demerger and acquisition option for the exits and
succession option. As it is profitable for the company to acquire the or to take the share
of the other company and increase their growth in the competitive market.
CONCLUSION
From the above study it is evaluated the key considerations for the growth opportunities
by applying the porters model which describes the supplier power, competitor rivalry, threat of
substitutions, threats of rivalry in the market. Further its describe the potential sources funding
available to the business like retained earnings, loans, retained profits and personal savings with
its benefits and drawbacks of the organization. Further it also describes the business plan of the
new launched product by the company by evaluating the marketing plan, overview of the
company, vision of the company, mission, objectives, SWOT analysis, PESTLE analysis,
marketing mix including the four P’s that are place, promotion, price and place. This business
plan also describes the STP approach that is segmentation, targeting and positioning of the
product, budget of launching the new product and monitoring and controlling the product in the
market. At last this report outlines the various exit and succession option like merger and
acquisition, liquidation and joint venture with its benefits and drawbacks.
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