Strategic Planning and Growth Strategies

The assignment focuses on strategic planning techniques used by Southern Business Technologies to expand its business operation. It discusses various tools such as Porter's generic strategy, Ansoff growth matrix, and PESTLE analysis that help in identifying threats and opportunities present in the market which may affect the company's operations.

Planning for Growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Key considerations for evaluating growth opportunities..................................................1
P2 Evaluation of growth opportunities by applying Ansoff’s growth Vector Matrix............3
TASK 2............................................................................................................................................5
P3 Potential sources of funding with their benefits and disadvantages..................................5
TASK 3............................................................................................................................................6
P4 Business plan for growth of business................................................................................6
TASK 4............................................................................................................................................8
P5. Exit and succession plan of a small business enterprises.................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Planning for growth means framing strategies for growth of association. In these days’
changes are taking place in business environment very frequently, so accordingly policies has to
be altered. Business can be grow with the help of proper implementation of strategies, analysis of
market, etc. this helps to alter business plans and policies. In order to grow business, changes
have to be analysed which helps in getting positive results (Arzaghi and et. al., 2017). This report
is based on small business enterprise Southern Business Technologies which deals in
telecommunication sector. They are thinking to launch broadband in Europe. They enter into
contract “Care technology diagnostic review” in order to raise funds for business expansion. In
this report there is discussion about key consideration for growth of SME, various methods of
funding, business plan and lastly, exit and succession policies.
TASK 1
P1 Key considerations for evaluating growth opportunities
Growth opportunities are more for small scale business. It is essential to analyse them
and then actions have to be taken. It is responsibility of managers to access market and then good
measure has to be taken for growth. Southern Business Technologies deals in telecommunication
sector, there is much competition in this sector. Hence in order to expand business market study
is necessary. Southern Business Technologies are thinking to launch broadband services in
Europe, so they have to research related consumer demand, competitor's policies, government
policies, etc. This helps to coop- up with changes and business can be explore in appropriate
manner (Batabyal and Nijkamp, 2014). There is requirement of marketing of service launch in
Europe which helps to increase brand image of Southern Business Technologies. There is
requirement of changes according to market trends, in order to compete with competitors.
Porter Generic Model is one of the best approach to analyse competition in industry. This
helps to frame policies according to market trends and compete in industry. This helps to
maintain good profitability in long run market. It is essential to know changes required in
techniques, so it ease in communication. This also helps in improve quality of services. In order
to enter new market, study of external factors is essential. Porter Generic Model performed by
managers of Southern Business Technologies is as under-
Cost Leadership: Cost leadership means policies which helps to set lowest cost in
industry. This helps to achieve economies of scale and resources are used in optimal way. This
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helps to attract consumers and make good and long term relations with them. If Southern
Business Technologies is able to achieve cost leadership, then they will be good performers in
industry and able to make expand business.
Differentiation: According to this features, managers of Southern Business
Technologies must come with approaches which deliveries something different in market. This
helps to make unique image in industry (Coale and Hoover, 2015). Differentiation helps to make
different image in industry and builds confidence among consumers.
Cost Focus: As per this element main objective of managers of Southern Business
Technologies must be cost effectiveness. They must provide services at cost which gives full
value of money. Consumer must be ready to pay money and get full return. This helps to
maintain good image in industry and increases consumer base.
Differentiation Focus: Differentiation focus talks about some difference according to
demand, purchasing power, income. This helps consumer to get every kind of services and there
is variety of consumer. Apart from this Southern Business Technologies must focus on targeted
consumer. This helps to give good quality services to consumers and hence they prefer particular
brand.
From the above discussed strategies differentiation focus is best because these days, there
is people prefer to avail services which are new and trendy in market. Southern Business
Technologies operates in telecommunication sector, so if they accept new changes and accept it
to their working style, then this is beneficial for growth in industry.
Apart from competition among rivalries there are some external factors also which affects
business expansion and growth. Managers of Southern Business Technologies has to alter their
policies in order to balance with those factors. These factors include change in government
policies, alteration in demand of consumers, etc. These are not in control of managers so they
have to modify organisational policies. These factors can be studied with PESTLE analysis.
PESTLE Analysis:-
It refers to a strategical tool which is used to assess various threats and opportunities that
are present in market and may affect the business operations. Following are factors that are
consider in PESTLE analysis: Political:- These factors includes changes that are brought by government or political
institution which have a direct impact over the business operations. Political system of
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Europe have strict governmental rule in telecommunication sectors regarding safety
measures (Ellman, 2014). Therefore, it proves to be a threat for Southern Business
Technologies in its expansion plan. As company has to meet all its privacy and safety
standards imposed by Europe government in order to survive in European market. Economical:- It includes various elements such as inflation, foreign exchange rate, trade
policies, tax rate etc. which influence the operations performed by a company. Due to
economic recession, there is increase in inflation rate of Europe (Eyvindson and Kangas,
2015). This inflation rate will negatively affect the business operations of Southern
Business Technologies by increasing the cost of company. Social:- This factor includes cultural values, taste and preferences of a society in which
business operates. Social factors have a direct influence over demand of company's
product or services. Demand for high speed network is generally higher in Europe.
Therefore, it is the biggest advantage for Southern Business Technologies as majority of
population in Europe belongs to working class people which relays on telecom industry
to carry out emailing, conference calling and meetings etc. Technological:- It includes various factors such as up-gradation of technology,
introduction of new technology in market etc. Europe is more updated in terms of
technological factors, as very frequent up-gradations takes place in handsets, networks
and services. So Southern Business Technologies is required to conduct deep market
research for adopting a technology which will be easily accepted by the European market
and will not get obsolete easily. Legal:- The legal factors includes various laws and regulations which are imposed by
government for operating business operations effectively (Fainstein and DeFilippis,
2015). It generally includes employment law, health & safety law etc. Tax rate and labour
tax is generally higher in Europe which may increase the cost of Southern Business
Technologies.
 Environmental:- This factor includes various climactic change, weather condition,rules
and regulations regarding the safety or protection of environment. These factors are affect
the performance of telecom industry to a large extent instead of any geographical
location. Changes in weather or climate may affect the network and also creates
disturbance.
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P2 Evaluation of growth opportunities by applying Ansoff’s growth Vector Matrix
For expanding business operation, it is very essential for a marketer to develop growth
strategies about a particular market before entering into it which help in achieving market
sustainability. For developing growth strategy, Harry Igor Ansoff present a matrix which
includes four quadrants that shows four different growth strategy (The Ansoff Model, 2018). This
model mainly focuses on company's present as well as potential product and assist in formulating
growth strategy.
Source: Ansoff Matrix, 2018
Above given image shows the four quadrant of growth strategies of Ansoff matrix which
help in achieving higher growth and success in market place. This model helps a company in
determining its product and market strategy which help in generating maximum revenue.
Following are the strategies given by Ansoff in their growth vector matrix model includes
following strategies: Market penetration:- It refers to a strategy where existing product or services is offered
in existing market at relatively lower price in order to achieve higher market share.
Market penetration is less risky and more focused toward increasing volume of sale as
firm has all the information regarding need and preferences of existing market. Market development:- This strategy includes offering of existing product or services of a
company into a new geographical market. Market development strategy is considering to
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Illustration 1: Ansoff Matrix

be more riskier as than market penetration because it is difficult to understand the
complexities of new market. Product development:- It refers to development and introduction of new product within
an existing market. This strategy is suitable for a business where the product is required
to be differentiated for achieving competitive advantage (Hawkins, 2014). For
implementing this strategy company is required to develop new competencies for
introducing a product that can appeal to existing market.
 Diversification:- It refers to a strategy where a business market a new product within new
market and is consider to be more riskier strategy. Diversification strategy requires huge
capital investment and excellence in both operational as well as marketing function in
order to gain recognition in new market with new product.
Among all the above explained strategy, Market development is appropriate strategy for
Southern Business Technologies as it wants to expand its business in Europe market with its
existing broadband services (Liu and et. al., 2014). By using this strategy company can expand
its customer base and is also helpful in better utilisation of resources which assists in increasing
profitability. It also support Southern Business Technologies in developing global presence.
With the help of market development, it is easy to achieve USP in industry. There is growth in
context of market development because with core product, new market can be targeted, so this
makes brand image of Southern Business Technologies good in context of telecom services.
TASK 2
P3 Potential sources of funding with their benefits and disadvantages
Southern Business Technologies is a UK based firm deals in telecommunication sector
and now planning for launching its broadband services in European market. It decided to enter
into a contract with “Care technology diagnostic review” for raising fund to execute its
expansion plan. Company requires £300000 for its expansion plan but it has only £20000. Now it
require to raise £280000 for executing its expansion process and this fund can be raise through
various sources which are explained below:
Bank loan:- A bank loan refers to the amount of fund taken on credit from bank for a set
period of time. After the maturity of this period amount will be repayable with interest which is
fixed by bank. For Southern Business Technologies bank loan is more feasible and adequate
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sources of capital as it can take loan for both short as well as long period of time (Mehmet,
2014). It is also beneficial for company as they get loan at interest rate which provide tax rebate.
Advantages:-
 Interest rate is fixed for the term so the amount of interest to be paid is already known to
the company.
 Another advantage of bank loan is that interest paid over loan is tax deductible if it is
taken for business purpose.
Disadvantages:-
 Sometimes bank demand for collateral security for approving the loan application which
make it difficult for start-ups to get their loan approved.
 If bank loan is taken over variable interest rate, this make it difficult to predict the future
payment as interest rate changes with market condition.
Crowd funding:- It is an financial method in which large number of people moderately
invest to funding a project. This funding campaign is generally conducted online through
dedicating crowdfunding sites usually social networking site (Rakodi, 2014). Using crowd
funding Southern Business Technologies can increase awareness among large number of people
along with getting fund for its business expansion.
Advantages:-
 One of the biggest advantage of crowd funding is that it is the fastest way to raise finance
in market without any upfront cost.
 Another advantage is that it is a good way to test the public's reaction regarding the
product and services.
Disadvantages:-
 Major disadvantage of Crowdfunding is that if project fails then it can damage the
reputation of business.
 Crowdfunding is not applicable to each type of project.
Over draft- This is facility to raise funds from bank for small period of time. This facility
is available for the customers who have good image in books. In case Southern Business
Technologies have less or zero balance, then bank provide facility of overdraft for payments. In
these funds less interest is charged. Advantage of this facility is low cost source and easily
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available. While disadvantage of this fund is if amount does not paid within specified time, there
is wrong impression on brand image of Southern Business Technologies.
From the above explained sources of fund, crowd funding is best suited source of fund
for Southern Business Technologies for financing its expansion plan. As by raising fund through
crowd funding, company will get an online platform for promoting its services (Sager, 2017).
Southern Business Technologies can get high media coverage which help in increasing brand
awareness and also get a chance to evaluate the views of targeted audience.
TASK 3
P4 Business plan for growth of business
Business plan refers to a written document which state business goals, objectives as well
as plans for achieving these aims along with background information of company. This
document is further used to formulate various strategies that help in performing business
operations much effectively. Following are the factors which are included in a business plan of
Southern Business Technologies:
Background information:-
Southern Business Technologies is telecommunication company which is headquartered
in England. It provide communication services that includes broadband, call charges, mobile
solutions as well as supply, installation and service of telephone system (Stein, 2018). Now,
company is planning for expanding its business in Europe market by launching its broadband
services.
Vision:-
Its vision is to become leader of telecommunication solution in Europe market.
Mission:-
Its mission is to achieve higher market recognition by providing cost effective
communicational solution to its customer.
Strategic objective:-
The strategic objective of Southern Business Technologies is to achieve expand its
business and customer base by introducing its existing broadband services to new market i.e.
Europe. In order to achieve this objective company is required to SMART objectives. It means
that objectives must be set by company that are specific, measurable, achievable, time bound and
realistic. Following are the SMART objective of Southern Business Technologies:
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 To maximize its volume of sales in European market up-to 15% by March 2020. To increase the revenue of company by 20% in one year.
Financial information:-
For launching its broadband services in new market Southern Business Technologies
requires huge investment for its set up and promotional activities. Therefore, company is
required to raise fund for financing these activities (Van den Berg, 2016). There are number of
sources available such as bank loan, crowd funding etc., that can used to generated capital for
executing its activities effectively. But before raising fund it is very essential to develop a budget
plan that will help in estimating the capital required by Southern Business Technologies for
executing its expansion plan:
Particular 31/12/18 (£) 31/12/19 (£) 31/12/20 (£)
Office rent 400 400 400
Promotional expense 900 800 600
Advertisement
expense
800 600 480
Cost of adopting new
technology
700 800 900
Catalogues 200 400 300
Total Cost 3000 3000 2680
From the above explained budget it can be evaluate that manager of Southern Business
Technologies are required to huge investment over promotional efforts for at-least two years for
introducing their product into new market. Company is required to invest capital in Catalogues
which help in providing the information regarding services provided by Southern Business
Technologies and price charged by them. So it can be interpreted that company is required to
invest £3000 for financing its operations in year 2018 & 2019.
Cash flow statement
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Cash flow statement of Southern Business Technologies is as given below:
As per above cash flow statement, it is identified that there is increment in cash from
operating activities in 2015 to 2016 by £178395 to £190875. while there is reduction in cash
from investing activities between year 2015 to 2015, so this is positive signs because of less
raising loans from other entities. In year 2017, there is less increment in cash as compared to
2016 by £60002.
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TASK 4
P5. Exit and succession plan of a small business enterprises
There are certain circumstances that may arise in future while performing business
operation and that may lead to huge losses (Van Oort, 2017). So, in order to overcome this
situation a business owner must always be ready with succession or exit plan which help them in
overcoming from insolvent position of company.
Succession plan:-
It refers to an strategy which includes passing on leadership and ownership right to
another person. Succession plan ensures that business operates keep on operating continuously
even after the key person move on to new opportunities or get retired. Following are the types of
succession plan that can be used by Southern Business Technologies :-
Merger & Acquisition(M&A):- Merger refers to a strategy where two different business
entities get combined with one another for creating a new venture. On the other hand Acquisition
refers to the situation when one large company take over the another business entity. These
strategies are basically adopt when a company want to expand its operations and market share.
Advantage:-
 Through M&A, companies can develop complimentary skills and advantage that help in
eliminating competition as well as result in generating higher revenue. Another major benefit is that by sharing marketing budget the purchasing power of
Southern Business Technologies increases which leads to decrease in cost.
Disadvantage:-
 Major disadvantage of this strategy is that increase in size may leads to dis-economies of
scale for newly formed company.
 Differences in working style and culture of two companies may be different which may
bring conflicts at workplace.
Exit plan:-
The exit plan refers to a strategy formulated by an entrepreneur for selling out company
to another investor either after achieving predetermined objective or to mitigate from possible
failure (Wannop, 2014). Following point shows the best exit strategy that can be used by
Southern Business Technologies for overcoming future contingencies:
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Liquidation:- It refer to the closing up of business and selling all the assets of company
in order to pay-off all the debts. Liquidation strategy is generally adopted when a company is
facing insolvency and is not liable to pay its obligations
Advantage:-
 Using liquidation strategy company can pay-off all its debts and obligations more
quickly. Another benefit of this strategy is that director get free from all the legal formalities after
the liquidation of company.
Disadvantage:-
 Major disadvantage of liquidation strategy is that director of the company is personally
liable for all the debts.
 Liquidation provide lowest return over investment to the owner.
Selling business in open market:- It is a situation when a business owner may not want
to shut off business operations and is want to further continue its business operations, they can
sell their business in open market (Sager, 2017). This is very beneficial for owner as they get a
chance to earn actual value of their investment.
Advantage:- Assets and goodwill can be used at the time of valuing the business for sale which
maximizes the return of owner.
Disadvantage:-
 Finding buyer in an open market is difficult and long process.
 Businesses which are marginal profitable are very difficult to sell.
CONCLUSION
From the above explained report it can be summarized that planning is a very essential
factor for growth and success of a business enterprise. There are various strategical tools that are
used by Southern Business Technologies for formulating strategies for expanding its business
operation such as Porter's generic strategy, Ansoff growth matrix etc. Apart from this PESTLE
analysis is an effective tool which help in identifying various threats and opportunities present in
market which may affect the operations of company.
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REFERENCES
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105-116). Routledge.
Stein, J., 2018. Classic readings in urban planning. Routledge.
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Online
The Ansoff Model. 2018. [Online] Available through<https://www.smartinsights.com/marketing-
planning/create-a-marketing-plan/ansoff-model/>./
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