Planning for Growth Assignment : Ansoff

PLANNING FOR GROWTH

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
LO 1.................................................................................................................................................1
P1 Key considerations for evaluating growth opportunities..................................................1
P2 Evaluating opportunities for growth applying Ansoff’s growth vector matrix................3
LO 2.................................................................................................................................................4
P3 Potential sources of funding available to businesses .......................................................4
LO 3.................................................................................................................................................5
P4 Business plan for growth that includes financial information and strategic objectives...5
LO 4.................................................................................................................................................7
P5 Exit or succession options for the small business.............................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Growth and development play significant role in analysing the cash flow and developing
plans for expanding any organization's operation. To become successful it is necessary for
business to remain attractive and profitable (Floyd 2015). Ansoff is software company which is
currently operating in UK, it aims at providing valuable services to clients. Organisation has 70
engineers that working on developing network of software which run on internet.
Present report will talk about the planning of Ansoff company. For this it will explain
various analysis, such as, Porter generic model, PESTLE analysis and Ansoff Matrix. This report
will also explain about funding options that is available for the firm in planning. A business plan
will also be developed for Ansoff . And in the last section of this assessment, different exit or
succession options will be discussed.
MAIN BODY
LO 1
P1 Key considerations for evaluating growth opportunities
Business growth opportunity is defined as increase in sale or business operation in order
to get maximum benefit out of it (Wu, 2015). Some important factor to be considered while
evaluating growth opportunity for Ansoff are as follows.
Potential for growth : Ansoff is required to critically evaluate the business opportunity
and identify its viability. It is important to identify the present cultural trend for expanding
business and making it profitable. Business has detailed plan for turnover and expenses which is
required for calculating profits and loss. For the evaluation of appropriate growth opportunities,
various methods can be applied by the company, such as;
 Porter Generic Strategic Model: This strategy helps in gaining competitive advantage
for the organization. There are basically three different elements that is included in this
strategy, such as,
Porter Generic Strategic Model
Cost Leadership Differentiation
 This process helps in focusing on the
cost of the product respectively.
 Focus is on becoming the lowest-cost
 In this, Ansoff can focus on their
product by making them different and
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producer in industry.
 This helps in increasing their sales.
unique from their competitors.
Focus: This is also one of the most important factor which can be considered by them. There
are two elements that is present in this, i.e.,
 Cost Focus: In which they focus on the cost of the products.
 Differentiation Focus: And in this, the focus on the uniqueness of the product by making
it in different style.
From all the mentioned factors, cost leadership will be a very useful for the organization
if they introduce their services at a low prices in the market as this will help in increasing their
customers rate and profitability as well. Furthermore, through cost leadership technique the
company will be able to make profits as by applying cost leadership theory they would take their
operations effectively.
 PESTLE Analysis: This process helps in identifying all teh external environmental
factors which can affect their business. There are basically six factors that is included in
this, which is explained below:
Political  This is the degree a government intervenes in the business of an
organization.
 Ansoff has to follow all the rules and regulations that are mandatory
for them to follow.
 The political stability will help the company to run their operations
effectively, on the other hand, political instability will ast as a threat
for the company as they won't be able to continue their business
operations.
Economical  Economic factors have a significant impact on how an organization.
 There are various economic factors, such as, interest rate control,
taxation policy, etc. which can affect their business activity.
 If the country has strong ecomomic condition then it would an
opportunity for the company to expand their business operations ,
0on the flip side if the country is facing the economic recession then
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it would a threat for the company to expand their business
operations.
Social  This has to carefully managed by the organization as it can affect
their performance.
 This factors include, purchasing behavior of their customers,
communicating with them, etc.
 It is important to deliver the best service to them.
 If the perception of consumer is changing in the favour of the
company's product then it is beneficial for the opportunity but if the
needs and wants of the consumer is changing frequently then it
would be a threat for the company.
Technological  As Ansoff is a software company, it becomes essential for them to
have all the latest tools and technology which can help them in
improving their business.
 It will also help in enhancing their brand image in industry.
 Technological advancement is an opportunity for the company to
expand their business operations but on the other hand it increases
the cost of the company.
Legal  This includes all the legal factors, such as, laws which has to be
implemented in the organization, for example, employment law,
labor law, etc. Further, legal factors helps the company to operate
their business operations fairly and if company is not following the
rules and regulations then it would destroy the reputation of the
company.
Environmental  This includes all the activities which can harm the environment and
has to be monitored very carefully by Ansoff .
P2 Evaluating opportunities for growth applying Ansoff’s growth vector matrix
Ansoff Matrix is a strategic planning tool which provide guidelines to management and
senior manager for growth and development of business (Ansoff growth matrix, 2017). This
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theory was proposed by Russian American Igor Ansoff. Ansoff company can use this model for
identifying growth opportunities.
Market penetration : This strategy help in expanding operations by offering innovative
and modified products to same market. It can be said that business gain popularity in the present
business circumstances by enhancing market accounted by Ansoff .
Above mentioned target can be achieved by identifying new clients and promoting
product aggressively so that it can grab attention of customers (Schaper and et.al., 2014).
Company can minimise its prices in comparison to other competitive, people generally prefer
buying economical merchandise.
Market development : It is an effective technique implemented by business to spread
out its activities to other geographical boundaries. Company can offer unique products by using
new technology to grab attention of people.
Ansoff can increase its sale by identifying segment of buyers which can be more
profitable. They have targeted university students by organising campaign and spread awareness
about specific software. Market development is the best strategy to attract potential customers
towards the same product.
Product development : This deals with developing of new products or modifying
existing products to satisfy requirement of targeted segment (Tsvetkova and Partridge, 2017).
Ansoff can increase its customer base by identifying desire of the buyers and implementing
changes on basis of it. Business spend huge amount of money in research and development
programs to discover market requirement. They can collect feedback from customers and make
modification on basis of it.
Organisation cam come up with joint ownership to get asses to the other firm's
distribution channel. Product development is essential when Ansoff has captured good position
in market and analyse that old product has reached at saturation level. To survive and earn profits
it becomes mandatory to satisfy its potential buyers.
Diversification : It is diversification technique which is implemented when the
commodity is newly introduced to the market. For example, Ansoff is technological company
which can expand its operation to antivirus for software, insurance etc. it is risky situation
because selling of new products in new market is difficult task.
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It is significant to have strategic planning about the success and develop necessary
infrastructure to initiate above mentioned procedure (Boerschinger, Svitavsky and Yoder, 2017).
Diversification can be successful if business has good supply chain to expand operation in new
geographic market. Many organisations decide to collaborate with other company to make it
more profitable and increase productivity.
The above approaches can be used by Ansoff company for increasing sale, it is
significant to grab best opportunity from the available alternates.
LO 2
P3 Potential sources of funding available to businesses
Ansoff has only £20,000 in their budget and they want some more amount to start their
business plan. To start up business and manage all its operation entrepreneur require funds and
resources. There are various sources from which funds can be made available some of them are
discussed below.
Investor : They are individual who invest funds in the business and expects return in
terms of money. On the basis of their experience and network of contact they provide business
with appropriate suggestion (Goodman, Bamford and Saynor, 2016). Investors get an
opportunity to supervise and control management of the company because of the risk involved in
financing business. They help Ansoff to grow and survive by focusing on economic returns.
Positive
Raising funds from investors can turn out to be fruitful because they evaluate feasibility of
project on basis of experience and knowledge. They are more concerned about productivity and
profitability of business.
Negative
Investors prefer investing money in big and successful projects as a result it becomes difficult for
small business to raise funds with this source.
Venture capital : Venture capital is a type of private equity which helps in providing funds to
small and emerging firms that are deemed to have high growth potential, or which have
demonstrated high growth. It can be a good options for Ansoff as well.
Positive
Venture Capital supports growth and development of companies which are at leading
stage and has dominating position in market (Mason and Harrison, 2015). Ansoff company can
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raise funds by this source as there is high growth potential and prefer to make innovative
invention.
Negative
It provides ownership to the external parties and organisation as a result decision making
process become more complex and lengthy. Funds can be by selling shares at public, they expect
healthy return on the amount invested.
Bank Loans: These are the most easy way to get fund for the business activity. This will help in
getting a good amount for their business.
Positive
Large capital can be accessed by entrepreneurs. Capital provided can fast-track the process of
income generation
Negative
High risk of Collateral loss, since it is an important requirement for loan grants.
LO 3
P4 Business plan for growth that includes financial information and strategic objectives
Executive Summary
This helps in understanding all the details that has to be performed in the overall business
plan. It will include, its objectives, vision, mission, etc. and also explained about the process
which will take place in the completion of this business plan.
Objectives
 Providing quality services to their customers at the economic cost.
 Expanding its operation to enhance profitability of business.
Strategies
Business increase its revenue by minimising its cost of operations with the help of certain
strategies. They target to expand activities online so that it become easy for customers to gain
knowledge about the software (Martinet, 2016 Littler, 2015). Performing all its operation on
official website will minimise expenditure of infrastructure. Strategies will establish good brand
image and grab the attention of potential buyers.
Marketing
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Company can target to add some extra features to existing software system to increase its
sale. Product expansion is successful in relation to technological advancement, they can add new
products to existing line. Marketing plan can include aggressive promotional activities to grab
attention of customers. Ansoff is client oriented company, they evaluate needs which is required
in driving more and more buyers.
Market analysis
Company can collect reviews form individuals about the products and services they are
delivering to them. On the basis of above feedback they can modify commodities, this lead to
building up of strong brand image.
Competition
To capture particular position in market it is crucial to evaluate procedures and policies of
information technological sector (DeYoung, R and et.al., 2015). Ansoff company can decide
price of services by comparing it with other firm in the same industry. If there are minimum
number of competitor this is turned out to be more profitable.
Website and technology
In the current business environment digital advancement is very important. Ansoff
company can develop their own website for strengthening revenue generation. Company can sell
products online and take feed back from outlined customers. This is beneficial for clients as they
have easy asses to products.
Funding and use
Company can raise funds for expansion and growth through banks and other financial
institutions. Ansoff keep aside part of profits in the form of retained earning and later on invest
in profitable projects. For expanding their business more in the industry they have developed a
business in which it includes all the expenses which they will require. Company need to have
certain flow of cash, budget is given as follows.
Business Plan for Expansion of Ansoff :
Advertisement £ 2 billion
Marketing £ 3 billion
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Research and development £ 4 billion
Payroll £ 5 billion
Total £14 billion
Revenue streams
Organisation earn revenue form investments made by them in the other projects and
plans. Ansoff generate income by providing satisfactory services to customers with the use of
appropriate technology.
LO 4
P5 Exit or succession options for the small business
Succession is defined as opportunity available to spread out business operations to increase
profits and revenue of business. Company can use these options of succession,
Merger : It is termed as an agreement between two companies to convert themselves in a
new organisation. It is essential for increasing customers base and minimising cost of operations
which is beneficial for growth. Merger can take place between two unrelated companies so they
can scope of growing themselves (Floyd 2015). It plays crucial role in present business
environment as it is required for achieving greater economies of scale and productivity.
Advantage
Merger is among popular operation for company planning for succession as it emphasis
on capturing large market share. Cost of operation of Ansoff company can be reduced as the
work will be delegated among workforce. Both companies offer innovative products and unite
their efforts toward mutual goals thus by increasing profits.
Disadvantage
Major drawback of this option is cultural clash ad two firms from different background
come together. Moreover, there are high chances of disputes and issues as they belong to
different cultural background.
Partnership : It is refereed as situation where two firms become and take mutual
decisions of providing valuable services. Partnership is a formal agreement between two parties
to share its profits and loss equally. All individuals have limited liability up-to the amount of
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unpaid share. It can be said that they mutually decide to take up all investment decision. Both of
them has control over all activities related to business and are responsible for debts and
liabilities.
Advantage
Entrepreneurs has easy asses to capitals and funds required to start up business, more
availability of resources. They have high borrowing capacity as they come together to
accomplish common goals (Wu, 2015). In addition to this they have more capable employees
and have higher growth opportunities. Moreover, company can change its structure easily
according the changing business circumstances. Partners have limited liability in case company
face in any financial crisis they do not have to give from personal assets.
Disadvantage
Each entrepreneur is jointly liable for all debts of business, they are representative of
each other. If partner make any decision it will be applicable to all partners and organisation.
This is expensive and complex procedure as it requires more legal formalities and accounting
services. Partners have different opinions and thoughts which can lead to disputes and conflicts.
If any of the member leave or join they have to value all assets gain which can be costly.
CONCLUSION
This project concluded about different consideration required for evaluating growth
opportunities out of which price structure is considered important. Company can decide its price
low in order to grab attention of customer. Further this report emphasised on Ansoff’s growth
vector matrix. Market development is an appropriate technique enforced by business to spread
out its commercial activities to other countries. Project has also explained about different sources
of funds which they can use in their business planning. End of this project concluded about
options which small business has to spread out its activities to gain profits and enhance
productivity.
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REFERENCES
BOOKS AND JOURNALS
Boerschinger, O., Svitavsky, K. and Yoder, A., 2017. Encouraging Small Business Growth and
Expansion: Ramsey COR Retail Market Analysis.
DeYoung, R. and et.al., 2015. Risk overhang and loan portfolio decisions: small business loan
supply before and during the financial crisis. The Journal of Finance, 70(6), pp.2451-2488.
Eriksson, P. and Kovalainen, A., 2015. Qualitative methods in business research: A practical
guide to social research. Sage.
Floyd, D., 2015. Planning for growth. Management Services.
Goodman, E., Bamford, J. and Saynor, P., 2016. Small firms and industrial districts in Italy.
Routledge.
Littler, D., 2015. Market Penetration. Wiley Encyclopedia of Management, pp.1-1.
Martinet, A.C., 2016. Ansoff, H. Igor (1918–2002). The Palgrave Encyclopedia of Strategic
Management, pp.1-2.
Mason, C.M. and Harrison, R.T., 2015. Business angel investment activity in the financial crisis:
UK evidence and policy implications. Environment and Planning C: Government and
Policy, 33(1), pp.43-60.
Mason, P., 2015. Tourism impacts, planning and management. Routledge.
Scarborough, N.M., 2016. Essentials of entrepreneurship and small business management.
Pearson.
Schaper, M.T and et.al., 2014. Entrepreneurship and small business.
Tsvetkova, A. and Partridge, M., 2017. The shale revolution and entrepreneurship: an assessment
of the relationship between energy sector expansion and small business entrepreneurship in
US counties. Energy, 141, pp.423-434.
Wu, F., 2015. Planning for growth: Urban and regional planning in China. Routledge.
Online
Ansoff growth matrix. 2017. [Online]. Accessed through; <https://www.kgmoore.co.uk/strategy-
tools-use-the-ansoff-matrix-for-evaluating-growth-opportunities/>
Factors considered for business growth. 2018. [Online]. Accessed through;
<https://www.kenyaplex.com/resources/3401-factors-to-consider-when-evaluating-viable-
business-opportunities.aspx>
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