Planning for Growth

This report examines the growth opportunities for New Car Deals Ltd, a UK-based automotive company. It analyzes key considerations for evaluating growth opportunities, discusses various options for growth, explores funding sources, business plan development, and succession and exit strategies for the company.

Planning for Growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Key consideration for evaluating growth opportunities........................................................1
M1. Discuss the option for growth using a range of analytical frameworks..............................3
D1. Evaluation of options for growth.........................................................................................3
P2. Opportunities for growth applying Ansoff' s growth vector matrix.(New car deals) ..........4
TASK 2............................................................................................................................................5
P3. Potential source of funding available to business.................................................................5
M2. Evaluation of source of funding..........................................................................................8
TASK 4............................................................................................................................................8
P4. Business plan for growth .....................................................................................................8
M3. Appropriate and detailed business plan for growth and securing investment.....................9
TASK 4............................................................................................................................................9
P5. Succession and exit plan for small business and its advantages and disadvantages.............9
M4. Evaluation of succession or exit plan ...............................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Growth planning is a strategic action of business which allows owners to plan and
monitor the organic growth in their revenue. This enables organisation and businesses to
distribute their limited resources towards a common effort in order to adapt the changes in
industry which driven by digital disruption and differentiate from competitors. To better
understand this concept New Car Deals Ltd. United Kingdom is being selected. To analyse
growth opportunities in small medium enterprise there are some key consideration which is
being explained in this report. Ansoff's growth vector matrix for evaluating growth opportunities
is also being discussed in this report. Finance is an important part for organisation in order to
planning for growth, as there are different source of funding which can be availed business, is
being discussed in this report. An adequate business plan is very helpful in the growth of
business which is explained in this present report. There are different exit strategy option for
business in being analysed and discussed in this report.
TASK 1
P1. Key consideration for evaluating growth opportunities
Planning refers to the process of setting up goals and defining the ways to achieve these
goals effectively. This is simply enables people to deciding in advance that what is to be done.
Business growth refers to the expanding business operations by availing opportunities in the
market. To expand business of New Car Deals Ltd UK, there are some consideration which is
evaluated which are described as below:
Porter's Generic strategy:
The strategy is utilized by companies in order to identify competitors and take
competitive advantage. It can be used by New Car Deals Ltd UK in order to take competitive
advantage.
Porter's Generic Strategy:
This model has defined various strategies in order to avail growth opportunities. These
are as follows:
Cost leadership:
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The cost leadership strategy is mainly focuses on the getting more market share with low
price products and services. New Car Deals Ltd, UK can use this strategy by providing low cost
car services to its users in compare to the competitors.
Differentiation:
The differentiation refers to the make or deliver unique product and services to the end
users in order to take competitive advantage and avail growth opportunities. To put this strategy
in use effectively, companies are required to give more focus on the research and development.
New Car Deals Ltd UK, is providing quality and unique services by delivering products and
services directly to the door step of customers (Birley and Stockley, 2017).
Cost focus:
This is a strategy which mainly focuses in niche market and gives the low prices to
products and services. New Car Deals Ltd can adopt this strategy by satisfying niche market
customer needs and wants.
Differentiation focus:
This allows company to earn loyalty of customers by focusing on a focused market. The
company gives products and services with unique features and better quality.
New Car Deals Ltd chooses the differentiation strategy in order to expand and take competitive
advantage. As by delivering products and services to customer doorstep directly with help of
franchised dealership.
PESTLE analysis:
This analysis is done in order to evaluate the external factor which affects the business
and business strategy. In order to expand business of New Car Deals Ltd, evaluation of these
factor is very important. As analysis is being discussed as below:
Political :
Political factors are those which are related with political stability and tax policy of
country. As UK has stable political condition and regulators, so the political stability and tax
subsidies on business can be helpful for New Car Deals Ltd to make expansion of their business.
Economic :
This is an external factor which make direct impact on the organisation and its strategy .
The factor includes the GDP, unemployment rate, interest rates and exchange rate etc. As for
New Car Deals Ltd, it can be easy for grow their business smoothly as because United Kingdom
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has developed economy and high growth rate so there is fewer chances of recession in their
economy which will ultimately helpful for the New Car Deals Ltd.
Social :
The social factors are those which are related with demographics, social trends and
beliefs of customers which make impact on demand of company's products and services. As UK
has good literacy rate so New Car Deals Ltd has good opportunity to employ suitable candidates
for their company which contribute in expansion and growth of company.
Technological:
Technology is very dynamic and changing very frequently, so it is important to adopt the
new technology in order to be sustainable and competitive in market. New Car Deals Ltd need to
use latest equipments to provide the services to customers in order to expand their business.
Legal :
Legal factors are those which are related legislation, laws and policies which make
directly impact on the business operations. The United Kingdom have proper rules and
regulation regarding the terrorism so these activities are controlled so that it can be helpful in
expansion of business of New Car Deals Ltd (Foglesong, 2014).
Environmental:
This is related with climate condition, weather and environmental rule and regulation. As
UK have strict laws regarding the emission so New Car Deals Ltd needs to follow proper rules
and regulation which are formulated by government.
M1. Discuss the option for growth using a range of analytical frameworks
The company is planning to expand and grow their business and to make expansion it is
necessary to evaluate the factors and strategy which can make impact on expansion plan of
business. The option for growth can be merger, acquisition, joint ventures and strategic alliance
with other companies. As New Car Deals Ltd can use out of these option and can grow their
business. As Porter's generic strategy enables business to take competitive advantage by
analysing the business environment. With the help of differentiation strategy New Car Deals Ltd
can take competitive advantage and make grow of its business.
D1. Evaluation of options for growth
There are different options for business growth and expansion which is used by the
organisations. The main advantage of merger and acquisition is that this improves the purchasing
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power of company which overall helps in bulk orders and leads to cost efficiency also. As
disadvantage of this option is it can reduce competition in market which enables the new
company to enter in market. This risk can be mitigate by providing the competitive and
affordable prices to the customers so new entrants can be restricted. The benefit of joint venture
is that it provides the better resources to company and both parties shares the risk and costs. The
main limitation of this option is that cultural difference between company can arise conflicts. By
proper cultural trainings (Yokohari and Bolthouse, 2011).
P2. Opportunities for growth applying Ansoff' s growth vector matrix.(New car deals)
Every new business want to grow in competitive markets so they evaluate growth
opportunities such as for entering in new market or introducing new products. New car deals
owner evaluate growth opportunities by using Ansoff's growth vector matrix which is explained
below:
Ansoff's growth vector matrix is generally considered as market/ product matrix or grid.
This is a strategic planning tool which facilitates a structures that assist managers, marketers and
executives strategies for further growth. Igor Ansoff introduces this matrix in 1957. it links
business strategies of marketing with their usual important way. This grid shows four growth
strategies in which market penetration, market development, product development and
diversifications are included. New car deal select this matrix as it help them to show know about
risk which a specific strategy for growth may reveal them accordingly they switch from one to
other section of matrix. All four sections are mentioned below:
Market penetration:
Market penetration strategy is generally considered to be less risky. In this company aim
to sell their existing products in existing markets. For this, new car deals have identify new ways
so that they can maximise the loyalty of customers and attract customers for long time values.
So, for this they have to develop their order methods which will be easier for customers. And
also they have to increase their business time or form some adjustments which improve the
loyalty scheme for longer period (Lusardi and Mitchell, 2011).
Market development:
In Market development strategy company want to sells their present products in new
market. This is more risky than market penetration as they are targeting new markets. For this
new car deals have to follow some ways for their business growth such as new geographic
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markets, distribution channels, product packaging and dimensions and various polices for pricing
to attract many customers. For example – if new car deals sell their products in new market they
have to choose a geographic area, new campaign in which various sales channels to target
people. And also have to analyse product demand to see, that demand supports their business or
not.
Product development:
In product development strategy company mainly focus to launch new products in
present markets. This strategy need to improve new ability and necessary for firm to develop
change products that can appeal in present market. So, this strategy help new car deals to set
strategy to develop their product which is appropriate for their business. For successful product
development strategy new car deals have to focus on information about the needs of customers
and innovations and research and development of products. They also can influenced new
development by getting feedbacks from customers.
Diversification:
In this strategy company introduce new products in new markets. Here the risk is higher
than other strategies as they are moving towards new market with new product and without any
experience. This is considered to be 'suicide cell'. New car deals apply this strategy, so they have
clear ideas related to what they expects to increase from strategy. It provides opportunities to
expand their business and also get higher returns as risk is more (Makhamreha and
Almanasyeha, 2011).
New car deals used Ansoff matrix as it ascertain best strategies to maximise their sales
also assist them to describe the options clearly by using four strategies. From which company
uses diversification strategies that help to understand they market so they can easily open their
new shops in different part of world. Also determines which is better for their business based on
market position, availability of resources, infrastructure, budget and locations. This assist them to
know the risk level that is related with various strategy weighed up against expected returns.
TASK 2
P3. Potential source of funding available to business
Finance and funding is very important tool for every organisation. As every company
needs adequate fund in order to smoothly perform the operation of business. Similarly to expand
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and grow the business it requires enough funding. The company can use different source of
finance like internal source and external source. These source enables business to raise funds and
expand their operation in order to grow their business. These source can be used by the New Car
Deals Ltd in order to raise funds. The source and their advantage and disadvantages are
discussed below:
Internal Source:
Internal source of funds are generated by the business itself in the normal course of
operations. These are as follows:
Retained earning:
This is an internal source of finance which can be used by New Car Deals Ltd. In order to
raise finance. These are profits which left after paying a dividend to shareholders and drawing of
capital owners.
Advantages :
 Long term finance and nobody ask for the payments. No burden of interest.
Disadvantages :
 Not cost effective
Sale of assets :
This is another internal source of finance which states that sale the assets of business and
generate funds from internal source of business.
Advantage :
 This can work as short term or long term financing. No obligation for paying loan and interest on loan to outsiders
Disadvantages :
 Major drawback is assets are sold before it useful life.
External source:
The external source of finance are those which are generated outside business. There are
different source which are discussed below:
Bank Loan:
Bank loan is an external source of finance which is used by different companies and
business in order to raise funds for their business. Bank loan refers to the total amount which is
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borrowed from bank with an agreement on a predefine interest rates. This amount needs to be
repaid by the borrower in instalments with fixed rate of interest. It can be used by New Car Deals
Ltd in order to make expansion of their business.
Advantages:
 Company can pay amount in instalments with certain interest.
 As it can provide the huge amount to companies. Provides tax benefits as there is deduction for interest on loan.
Disadvantages:
 Burden of repayments.
 Need a collateral security for secured loans (BergdenVan, 2016).
Crowdfunding:
Crowdfunding is new concept in market which allows people to pitch large number of
people and make small contribution. This is typically raised via the internet by publishing catchy
video with new product or idea. As this can be used by the New Car Deals Ltd for raising fund
without any collateral.
Advantages:
 This is the prompt way to raise fund without any collateral. It enables company to come up with new product or idea.
Disadvantages:
 If company unable to raise fund than it can hamper goodwill of business.
 It takes long time to raise fund.
Angel Investors:
Angel investors are those who provides the finance to business in respect of equity stake
in their business. The angel investors are big business house which invest in the innovative ideas
and take stake in equity of their business. This can be used by New Car Deals Ltd as by coming
up with innovative way to provide services to car users.
Advantages:
 The main advantage is that it is less risky option for businessman.
 Not required to pay any interest and also repayment (Wiechmann and Bontje, 2015).
Disadvantage
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 It is time consuming process as an individual have to provide proposal project to the
investors.
M2. Evaluation of source of funding
There are different source of funding like internal and external which is used by the
business in order to raise funds. The internal sources are sale of assets and retained earnings etc.
These are considered as safe for raising finance but ultimately this will affect the cash flows of
business. There are some external sources like Bank Loan, crowdfunding and angel financing.
As New Car Deals Ltd can use bank loan as because there is flexibility to repay loans and
company can borrow huge amount of fund. There are various companies which choose this
method due to its flexibility in repaying loans.
TASK 4
P4. Business plan for growth
Business plan is document which shows that how a company can achieve their pre define
goals and objectives effectively. The plan is made by managers in order to expand and get
growth of business at marketplace. This plan gives insight of business regarding where to take
corrective action so business can perform smoothly. As plan includes the creation of budget,
strategies and deciding future action so that organisation perform more effectively. New Car
Deals Ltd is planning to expand their van business and introducing specialised commercial
vehicles. Business plan includes a procedures which are as follows:
 Vision: The company has vision to get high growth and reach at number one position
 Mission: New Car Deals Ltd mission is to provide quality in their automotive service
which satisfy need and expectation of consumers.
Strategic Objectives:
The main aim is to expand their van business and introduce new vehicles and increase the
profit of company in forthcoming years. As company want to capture more market share by
opening few small easily accessible and visible agent style office which mainly focuses on
personal leasing and interactively advertising their service. This can help people to save their
money in compare to walking into a local leader. To achieve its objective company have
introduced new websites and rebrand pipeline which will go hand in hand with further growth of
team (Senior, 2017).
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Financial information:
Organisation need to perform the various business operations and for smooth functioning
of these operations it requires the funds. Finance is an integral part for every company as various
business operations are performed in effective and efficient manner with the help of adequate
funds. The cost based activities such as advertisement, training to employees, acquiring new
vehicles and other business operation etc. requires the finance.
Total Forecasted Marketing Budget:
GBP
Particular Amount
Introduction of commercial vehicle 40000
Promotional expenses 4000
Advertisement expenses 5000
Training 1500
Total Cost 50500
The above budget shows the estimation about expenses which would incurred for
coming up with new commercial vehicles. This budget can be helpful for the company to get
insight of their expansion plan.
Cash budgets are taken on the assumption basis:
Cash Budget
Months
January
Februar
y March April May June
Beginning Cash Balance 110000 -539750
-
392000 -76750 48500 166250
Add: Budgeted Cash Receipts: 157500 285000 435000 562500 345000 288750
Total Cash Available for Use 267500 -254750 43000 485750 393500 455000
Less: Cash Disbursements -807250 -137250
-
119750
-
437250
-
227250 -219750
Cash Surplus/(Deficit) -539750 -392000 -76750 48500 166250 235250
Budgeted Ending Cash -539750 -392000 -76750 48500 166250 235250
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Balance
M3. Appropriate and detailed business plan for growth and securing investment
An appropriate business plan can be very helpful for the growth and securing investment
of business. Business plan helps the managers to work in a proper direction in order to achieve
the organisational goals and objectives. To grow the business it requires the strategic objectives
which achieved by the SMART goals means objective should be specific, measurable,
achievable, time bound and realistic. These pre set objectives motivates company and its staff to
give their best. Strategic framework refers to the a structured method which is used to define
how the project or initiative supports the key objectives. This framework comprises of business
objectives, approach, measurement and target. This enables the business to achieve the
organisational objectives effectively and efficiently (Ruming and Davies, 2014).
TASK 4
P5. Succession and exit plan for small business and its advantages and disadvantages.
The exit plan and succession should be followed by formulating strategies. To expanding
the business it is very crucial for company to have proper succession plan. It is not necessary that
expansion gives the positive results every time as it can be negative also for company. Manager
of New Car Deals Ltd need to form different plan and strategies for succession and exit in order
to smooth operations of organisation.
Different ways for succession and exit business:
For the growth and expansion it is important for company to develop the strategies of
succession. If company does not perform well and get success in their expansion plan than they
should have an exit plan. There are different exit and succession option which can be formulated
and used by New Car Deals Ltd. These are as follows:
Exit Options:
Winding up:
Winding up is a very common exit method which is used by companies in order to shut
down their business. In this process company sells their all assets in order to pay off its
liabilities. After paying off all liabilities if any amount left there than it would be shared with
shareholders and directors of firm.
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Advantages:
The main benefit of company liquidation is that debt of company is written off which
means key person can look for the new opportunities. After the liquidation, director receive the
sum amount so that amount can be used for making further investment.
Disadvantages:
The liquidation's main disadvantages are, assets of company is being sold in order to pay
off liabilities as these assets could be used in future business enterprise. As another limitation is
that all employees will lost their jobs (Olsen, 2011).
Selling in open market:
In this method, an ongoing business is being sold in open market and this can be
purchased by third party. The party who purchase this business can get the rebate while paying
taxes. As many companies use this option in order to sell their business as because it does not
affect the goodwill of company as it is owned by other party.
Advantages:
The main advantage of this open market selling is that it does not make impact on image
of business and current business operations are not going to change as other party is going to buy
this business.
Disadvantages:
The disadvantage of selling a business in open market is that the skill and educated
employees of firm may not loyal to company as this affects operations of business which
purchase that firm. In open market, every company can get to know about actual financial
position of company which can make impact of image of business.
Succession Options:
The succession option enables business to know what exactly what kind of action plan to
take, when and how to take. There are different option which can be adopted by New Car Deals
Ltd, these are as follows:
Selling of business to Co – Owner:
This is a succession option which can be used by the business owners as if business is
being founded with partner than co – owner can be the potential successor. There are many
partnership firms drafts a mutual agreement which states that in the event of one owner's
disability or death, the remaining owners will buy the business. As this agreement assure that
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they are given fair compensation and enables remaining co owner to maintain control of business
(Mehmet, 2014).
Advantages:
The main advantage of this, business does not need to look for another succession option
and ii will be carry out by those people who are aware about the operations of that particular
business
Disadvantages:
The major drawback of this method is that co owner need lot of cash to kept in their
hand. As to buy out shares of disable or retired partner co owner will have prepare themselves
with adequate source of funds.
Merger and Acquisition:
Under this, two similar size organisation come together and form a new enterprise is
known as merger. While in acquisition, one company takeover the another company and become
new owner of firm.
Advantages:
The main benefit of merger and acquisition is that this reduce further competition from
markets. As it provides the economies of scale and synergy benefits to company.
Disadvantage:
As major disadvantage of this is, it can increase the amount of debt in company and the
decision is in more number of people so conflicts can be arisen.
M4. Evaluation of succession or exit plan
The succession and exit plan are very important to formulate in order to face the
contingent situation. As there are different succession plan like merger and acquisition and
selling the business to co owner etc. These both plan have their benefits and limitations. As main
benefit of merger and acquisition is that it provides the synergy benefits to company. And other
option is selling the business to co owner which enables existing owner to buy out share of
partnership business. New Car Deals Ltd can use the option of merger and acquisition as it
allows to take synergy benefits and eliminate future competition from markets. The winding up
can be suitable exit plan for New Car Deals Ltd as because it allows director to look for new
opportunities in market (Matthews, 2013).
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CONCLUSION
In the conclusion it can be said that to evaluate the growth opportunities it is important to
use Porter Generic strategy in order to take competitive advantage. Organisation can avail and
identify growth opportunities with help of Ansoff's growth vector matrix. To make expansion it
requires the huge funds, there are different source which can be used by the organisations. A
proper business plan can be very helpful for achieving growth and strategic objectives. This is
very important for organisation to have the exit and succession plan in order to face contingent
situation.
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