Planning for Growth: Key Considerations, Ansoff's Matrix, Funding Sources, and Business Plan

This report discusses the key considerations for evaluating growth opportunities, including PESTLE analysis, BCG growth matrix, and Porter's Generic Model. It also evaluates growth opportunities using Ansoff's growth vector matrix, assesses potential sources of funding, and designs a business plan for growth. The case study of e5 Bakehouse is included throughout the report.

Planning For Growth

Table of Content.
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
P1 Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organizational context..........................................................................1
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix....................4
P3 Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source............................................................................................................5
P4 Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business.............................................................................................7
P5 Assess exit or succession options for a small business explaining the benefits and
drawbacks of each option.............................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Planning in business management is a function which is fundamental in nature that helps
an organisation in deciding the steps in an appropriate sequence that can be used by a company
in order to get results (Gumel, 2019). This sorted or sequential process helps an organisation in
many ways such as it helps it to get better effective results, enhances better productivity in
organisation, allows operations in an enterprise to function smoothly and in a sorted way. It is
important for every organisation to to plan its organisational operations as it ultimately leads to
better profitability and stability and also helps reducing risk indulged in decisions taken in an
organisation. For a better understanding, e5 Bakehouse is taken under consideration which is a
bakery shop in London in UK founded by Ben Mackinnon in 2011. This report will be a brief
discussion about growth opportunities for the respective firm with appropriate models,
opportunities for the firm with Ansoff's growth vector matrix and potential sources of funding
that are available to the firm. Furthermore in this report, business plan for growth including
strategic objectives and financial information for their growth will be discussed as well.
MAIN BODY
P1 Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organizational context.
In order to assess growth opportunities available to e5 Bakehouse, some strategic tools
and models were applied to the firm to that are discussed below as:-
PESTLE ANALYSIS:- PESTLE analysis is a strategic framework that is used by the
organisation to a study about the external forces or external environment of a firm (Alanzi,
2018). In reference with e5 Bakehouse, PESTLE analysis is as follows:-
 Political:- This factor of PESTLE analysis discusses about forces that affects a business
operations politically such as change in presidency of nation, corporate taxation policies,
trade policies etc. In reference with e5 Bakehouse, the political factors that might affect
the working of the bakery are taxation policies and change in presidency of UK.
 Economical:- These are the factors that are related to economical forces such as interest
rates, inflation, employment rates that may influence the working of an organisation. In
context to e5 Bakehouse, some of economical factors that might affect the working of the
firm are interest rates and employment rates.
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 Social:- These are the sociological forces in a business environment that affects the
operations of a business such as consumer beliefs, trends in market demographic
conditions etc. Herein e5 Bakehouse, consumer beliefs have a huge effects the firm's
operations.
 Technological:- These are the technical factors that relates in an organisation that affects
the working of a firm. Some of the forces in this factor are automation technology,
technical advancements, cyber security etc.
 Legal:- These are the forces in PESTLE analysis that affects a business's activities in a
legal manner. These factors includes industry regulation laws, consumer protection laws,
licenses and work permits etc. In reference with e5 Bakehouse, factors like consumer and
employment laws affects organizational operations of the firm.
 Environmental:- These are the geological factors in environment of a business that
influences the organisational operations (Shtal and et.al., 2018). These factors includes
availability of raw material and natural resources, climatic change, carbon footprints etc.
Some of the environmental factors affecting business in context with e5 Bakehouse are
availability of natural resources and carbon footprints.
BCG growth matrix:- BCG matrix is a strategic module which classifies a firms
products into different categories depending on performance of their products (Chiu and Lin,
2019). In references with e5 Bakehouse, BCG matrix for the firm is discussed as:-
1. Dogs:- These are the products of the firm which has low market share and is growing at
little to no speed as these products does not generally generates cash for the company.
Herein e5 Bakehouse, its coffee is considered as dogs due to it low quality and high level
of other competitive products.
2. Cash cows:- Cash cows are the products of a company that have a low growth rate in
market but has a relatively large number of market share that generates cash for the
organisation (Kader and Hossain, 2020). In reference with e5 Bakehouse, cakes and
pastry products are considered as cash cows of the firm as it has probably low growth in
market but produces a high amount of cash for the firm due to its high profitability.
3. Stars:- These are the products of a firm that have a high market share in market with a
high number of growth rate. These are the products that enhances greater profits for the
firm due to their high efficiency in market. In context with e5 Bakehouse, its bread is
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considered as cash cow for the firm as it has shown a great growth in market over the
years capturing a huge market share.
4. Question Marks:- This product in a company are classified as the products which tends
to have a high growth rate in market but fails to attain much profits for the firm resulting
in less profit generated for the company. In reference with e5 Bakehouse, the firms flour
products can be considered as question marks of the firm as they have shown impressive
growth in company over the years but has failed in achieving appropriate market share.
Porter's Generic Model:- Poster's generic model is a strategic framework module that is
used to evaluate the strategies that are available to a firm and suggests them the appropriate
model which can be used by a firm in growing their business (Islami Mustafa and Topuzovska
Latkovikj, 2020). In context to e5 Bakehouse, Porter's generic model is as follows:-
 Cost leadership:- This is a strategy is referred to as a strategy in which an organisation
can gain competitive advantage in market by reducing the cost of their product in order to
offer cheaper goods in market so as to gain cost advantage in market which will enhance
company's customer base in market (Ali and Anwar, 2021). This can be attained by any
firm through finding different ways that can increase the efficiency and effectiveness of
the firm.
 Differentiation:- It is a strategy that is used by firm which suggests to differentiate its
products from products of its competitors in market by adding a unique element or unique
specification in their product. This strategy not only helps the firm in differentiation of
their product but also helps them in charging premium prices for their differentiated
product.
 Cost Focus:- This strategy focuses on gaining competitive advantage in a focused or
specific narrowed down market by reducing prices of their product in that respective
particular segment in which they are focussed in.
 Differentiation Focus:- This strategy in Porter's generic model suggest the firm to
differentiate its product from other available competitive products in some unique
specified way and offer them to a segmented market or a narrowed target market and
charge premium prices for that differentiated product.
Recommendation:
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It is recommended to e5 Bakehouse to follow cost leadership strategy out of four
strategies stated in Porter's generic model as it will help them in enhancing greater profits
directly by reducing cost in various ways and offering them with a reasonable profit which will
help them in their survival in market.
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.
In order to evaluate opportunities that are available for an organisation in order for them
to grow in market so as to make greater profits, Ansoff's growth vector matrix is used which is
stated as:-
Ansoff's growth vector matrix:
In order to analyse a companies opportunities that can be utilised by them for their
growth, this matrix is a primal tool used by stakeholders of a company. It is a framework tool
that helps the managers or professionals of a company in analysing plans that are intended to
made with the goal for organisational growth (Dawes, 2018). It also helps stakeholders to
analyse the risk that is involved with the different growth strategies that are made inside the
organisation. In reference with e5 Bakehouse, the respective matrix is explained below as:-
1. Market Penetration:- This is the strategy in which the managers or professionals sells
their existing product into a familiar or existing market. This strategy indulges lowest
level of risk in Ansoff's growth vector matrix as there is nothing new to the organisation
which makes it easy for the firm to deal in leading to low density of risk in organisation.
This strategy includes lowering the prices of goods offered in order to attract more
customers in market, adopting new ways to increase marketing etc.
2. Market Development:- This strategy relates to increasing the market share by adopting
or growing to new market and introducing their existing product in that new market in
order to get more sales and customers (Matrix and Ansoff, 2018). Market development
strategy involves low level of risk as there is an existing product but its introduction to
new market may not give results as the organisation is expecting which makes this
strategy low level in risk. This strategy includes to create new market segment or
customer bas and entering into new markets that may be domestic or international.
3. Product Development:- This is the strategy that relates to developing their products by
introducing new innovative products in existing or familiar market so as to attract more
customers in order to get higher pace of growth. This strategy have a medium level of
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risk involved in it as there is an introduction to whole new products in market with the
possibility that the market or customer base may not accept that new product. Steps
involved in this strategy are investing in research and development sector to create a
whole new product, gaining the rights of selling other company's product, offering a new
product by branding the products that are originally produced by third party.
4. Diversification:- It is referred to as the strategy in which company takes initiative to sell
a whole new product in a new market segment in order to grow speedily. This strategy
involves highest level of risk in this matrix as the managers or professionals of the firm
decides to introduce a new innovative product in a whole new market. This strategy
involves two types of strategies:-
 Related diversification:- This is the diversification in which new products are
made but are likely to be related to older products in one way or another.
 Unrelated Diversification:- In this diversification, new products are produced in
the organisation which are not likely to be related with older products in any way.
Recommendations:-
For the growth of e5 Bakehouse, it is recommended to the firm to adopt product
development strategy from Ansoff's growth vector matrix as this will enhance the firms
profitability by introduction of new product in well known existing market. It will allow the firm
to sell new product and risk indulged in it can be reduced through appropriate research and
development that must be conducted.
P3 Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source.
In order for a company to grow, funding or investment plays an crucial role as without
proper investment, it is very hard for a company to grow. There are basically three ways in
which a company can source investment in it so as to ensure their growth which are discussed
as:-
Retained Earning:- As a business most important aim is to maximize their profit
through their business operations, they can hold a proportionate amount with themselves before
distributing it their owners and may invest the amount that was on hold by them into business
growth process (Yusra , Hadya and Fatmasari, 2019). This source of funding is referred to as
retained earning.
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Advantages:-
 The main advantage of arranging funds form this source is that there is no interest
charged as it is their own money which is earned by running business operations. As this
source of funding is arranged personally from from the profits that has been generated in
business over the years, no interest is charged on retained earning. But, in some cases the
a little interest can be charged as the profit earned from business operations is owner's
equity as they have earned in practically so the owners can charge a little interest on
investment made in the form of Interest on capital.
 There is no time-line in which they need to give back the invested amount as it is owner's
own capital which has been earned through business operations over the years, so there is
no time limit to return the money which reduces the stress of credibility on business and
it can operate with better efficiency. All business need to do in change of this invested
money is to earn an appropriate profit with it so as to ensure growth and stability of the
firm.
Disadvantages:-
 Withholding a greater proportion of capital or frequent withhold of funds may trouble
the owners as they are not getting appropriate proportion of profits. This is because
requirement of liquidity or money in business is constant and it needs a huge investment
to carry out its operations in order to ensure better pace of growth. Withdrawing a big
portion from profits earned on a frequent basis may upset its owners as they are not
getting their fair share of profits that has been earned by their hard work and continuos
focus on their business's earning.
 Retained earnings generally provides less funds to the organisation as it is a part of
profits earned and it may not be possible for a most of the firm to earn a massive amount
of profit that can help the enterprise grow on a large scale and also satisfy its owner with
the portion of profit awarded to them.
Debt Capital:- It is a form of raising funds in an organisation in which a firm liability
capital through bank loans or security deposits in bank or by issuing debentures to the general
public in order to raise funds (Albertus and Denes, 2020). A company can obtain debt capital to
source its expansion directly form banks by taking bank loans issuing some security to them in
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order to make assure the bank that their funds are in a secured place. Or a firm can issue
debenture in order to raise funds for their expansion.
Advantages:-
 Large amount of funds can be raised through this source of funding as bank or general
public may show interest in lending money to your business as they are paying an
appropriate interest on principal amount that has been paid by the lender and also
securities has been issued in form of some assets to the bank for bank loan or debentures
to debenture holders.
 It is a tax deductible source as interest is paid on loans that has been taken from banks
and debentures that has been issued to general public. This interest is charged from the
profits that has been earned by company which reduces their profits and directly leading
to less taxes to be paid on that profit.
Disadvantages:-
 It is also a loss for the firm as they had to pay interest amount with the principal amount
of loan which decreases the profits of firm. In cases of suffering loss by the firm, interest
on this bank loan or debentures are still paid until the principal amount with agreed
interest is fully paid up to the lender.
 It includes potential risk of bankruptcy as in order to raise funds the assets are deposited
as security regarding repayment of bank loan and they have right to sell those assets in
case of any default in order to procure their lend money and also money on debentures
are paid up to their respective holders even in case of insolvency.
Equity Capital:- It is a source of raising funds through issuing shares to the general
public in change for money and a proportionate part in ownership of the firm. After the purchase
of these shares, investors becomes shareholders of the firm and has the part of ownership in firm
according to the shares they purchased of firm (Vitolla and et.al., 2020).
Advantages:-
 Organisations can raise a massive amount of finances through this source if the general
public is willing to invest in respective business as in equity capital, share holders gets a
chance to be the owner the firm whose share they are purchasing.
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 In case of losses, the firms are not required to pay dividends on that shares as they are the
owners of the firm and it is not mandatory for them to take dividends even in cases when
a company is suffering losses.
Disadvantages:-
 These shareholders gets dividends of profits that is earned which means the firms need to
share its profits to all the shareholders.
 Process of acquiring equity funds requires a lot of time and documentation and also
charges them high cost in order to issue shares and for the public to buy them.
Recommendations:-
After a detailed study of sources of funding available to the firm, it can be suggested to
e5 Bakehouse to retained earning source of raising funds in order for them to grow they need to
raise funds so that they can expand their business. Retained earning will ensure stability of the
firm as they wouldn't have to borrow the money from outsiders which would not affect the
credibility of the firm.
P4 Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business.
A business plan is a set of overview of strategies that are made within in organisation
with the motive to create a successful business enterprise or to create affective plan management
in order for a firm's effective growth (Дрозд, 2022). In reference with e5 Bakehouse, the an
effective business plan which they should take under consideration is :-
Executive summary:-
e5 Bakehouse is a small bakery shop in London UK which was opened by Ben
Mackinnon in 2011 and has been operating since then. The firm is planning to introduce some of
the strategies in business operation in order to earn more of profits in market so as to ensure
growth of the firm.
Mission:-
e5 Bakehouse is a bakery firm which operates its business in an ethical and traditional
way and it mission is to carry out this legacy in operations to future generations as much as
possible.
Vision:-
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The vision of e5 Bakehouse is to work with development in their fundamental role in
agriculture sector in a renewed way so as to achieve better results.
Strategic Objectives:-
 To increase its operations and deal in international market
 To enhance better services in order to provide more of customer satisfaction.
 To increase its profit generated by reducing cost of production through searching
for various effective methods.
 To increase their customer base and generate loyalty in their customers and
employees.
Strategic options for growth:-
In order to ensure companies growth it should keep on working on research that may help
in reducing cost of production and increasing efficiency in business operations (Xu, 2020). They
also can introduce new products and adopt product differentiation strategy in their products so as
to attract more customers towards them and reduce the threats of competitors.
Marketing Strategy:-
In order to promote their product they use promotion strategies such as running free
campaigns, posting about their updates in firm and on social media sites such as Facebook and
Instagram. They should lay more importance to promote their upcoming products so as to reach
out to their customer base.
Sources of funds:-
There are a lot of sources of funds available for e5 Bakehouse such as taking bank loans
but while taking bank loans they should keep in mind about the interest rates on loans so as to
ensure better efficiency in results. They can also use retained earning as a source of their funding
so as to reduce their loss of money in paying interest on bank loans.
P5 Assess exit or succession options for a small business explaining the benefits and
drawbacks of each option.
Succession or exit strategy options:-
 Passing the business along to the family member:-
It is one of the major way by which one can exit from the ownership of their firm. This
methods states the selling of respective business to a family member or some in known but it
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should be kept in mind to properly disclose assets, liability and profitability of business to
respective buyer of the firm. One of its major advantage is that the seller can get an appropriate
value of business as the buyer may know the functioning of business due to his relation with the
owner. While one of the major disadvantage of this is that the major control still stays in hands
of old owner for a while as they are well known to the business and buyer may need help in
business operations.
 Merger:-
This is the type in which two suitable business combine into one so as to increase the
value of business (Regan, 2022). It helps a company grow in combined efforts. However merger
does not lead to transfer of ownership of the firm rather it makes you the owner of merged
company. One of the major advantage of merger is that terms, prices and conditions can be
discussed in order to form an efficient agreement. On the other it has a big disadvantage that if
the merged firm fails to function as expected, then it could end up all his revenues and even drive
the firm to loss.
 Acquisition:-
It refers to selling your business to another firm who may be willing to purchase your
business and give the ownership of business to buying firm as sever ownership from business in
all terms. It proves to be advantageous to the seller as it helps them to name the price of their
business to the buyer specially is the buyer in competitor. While on the other hand, it is hard for
the seller to choose an appropriate seller who is willing to buy the business as an inappropriate
buyer may not be able to run business well.
 Initial Public Offering(IPO):-
It is a form of exiting form business in which the owners offers share of company to
public so that they can be a partly owned by public and loose an amount of their ownership to
general public. A major advantage of this is that it also helps in raising funds through issuing
shares while on the other hand, its major disadvantage is that for small businesses it is a costly
method and charges lots of money and time in documentation.
CONCLUSION
From the above report, it can be concluded that planning for plays an important role in
smooth functioning of an organization in order for them to grow at a higher pace (Sell Guo, Li
and Keyser, 2018). There are a lot of measures they need to take and overlook before taking any
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step towards growth for which different models and frameworks such as PESTLE analysis,
Porter's generic model, BCG matrix Ansoff's matrix etc. which are already discussed in above
report in context to e5 Bakehouse. In order for a firm to grow, investment and funding plays an
important role and the firm which wants to expand need to take a keen look on sources that are
available to them and choose wisely the most effective way. After getting concluded the source
of funding, business to prepare an effective business plan stating their strategies and objective in
order to achieve goals effectively and efficiently.
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