Planning for Growth Assignment : Crossroads Garage

Planning for Growth

Table of Contents
1. INTRODUCTION.......................................................................................................................1
2. EXECUTIVE SUMMERY .........................................................................................................1
3. Key consideration for evaluating growth opportunity.................................................................1
3.1 Porter's Generic Strategies.....................................................................................................2
3.2 PESTEL Analysis..................................................................................................................3
3.3 Evaluate the growth opportunity by applying Ansoff's model..............................................5
4. Source of funding which available for the business along with its advantage or disadvantage. .6
4.1 Internal source of finance.......................................................................................................6
4.2 External source of finance.....................................................................................................7
5. Develop a business plan which include the financial as well as strategic information...............8
5.1 Executive summary ...............................................................................................................9
5.2 STP Analysis..........................................................................................................................9
5.3 Financial information...........................................................................................................10
6. Evaluate the exit or succession option for the small size organization and explain their benefits
& drawback....................................................................................................................................11
6.1 Liquidation...........................................................................................................................11
6.2 Sale of Business...................................................................................................................11
6.3 Merger & acquisition...........................................................................................................12
CONCLUSION..............................................................................................................................12
RECOMMENDATION.................................................................................................................12
REFERENCES..............................................................................................................................13

1. INTRODUCTION
Planning for growth is the strategic concept where organisation develop various plans for
the future growth which helps in providing huge market share. Along with this, it increase the
productivity or profitability of the company. Organization has to develop business plan in order
to follow the step by step activity. With the help of this, management get the clear picture of their
daily activities and make them able to to complete their task in appropriate manner. Business
plan is important because it also include the source of funding. Crossroads Garage (Oxfordshire)
selected for the better understanding of this concept1. It is car dealership company which is small
enterprises and it has 34 employees sales in the 2011 was 7.47 cr.
This report covers the various topics such as growth opportunity and justify the
consideration within organizational context. Evaluate the opportunity by applying Ansoff's
Model and identify the source of funding which available for the business. In addition, it
includes the business plan which contain financial or strategic information and assess the exit &
succession option for the small business along with its benefits or drawbacks.
2. EXECUTIVE SUMMERY
It has been summarised that, this report contain the key consideration for the future
growth opportunity which include the Porter's generic or PESTEL analysis. Evaluate the growth
with the help of Ansoff's model which help the organization to take strategic decision. In
addition, it includes the source of funding, business plan and exit or succession option for the
organization.
3. Key consideration for evaluating growth opportunity
Organization have to develop effective strategy which help business to achieve
competitive advantage in comparison to their competitors and their products & services. An
organization can achieve competitive advantage after applying porter generic strategy. It will
provide the scope for the business extend their activities and functions which provide the growth
or further opportunities. Management of the business need to develop effective strategy where
they have to understand their customer, strength of the company, analyse their competitors and
their activities and hire skilled people for the essential information. After analysing all the aspect,
organization able to gain competitive advantage and grab the opportunities. Further analysis will
1 Abolhasani, S., and et.al., 2016.

be done with the help of Porter generic business model. This strategic model help the
organization to seek competitive advantage and it is mentioned below:
3.1 Porter's Generic Strategies
It is the strategic business model which help the organization to gain competitive
advantage in the target market. It include the three different types of strategy which provide the
opportunity for the growth. So Crossroads Garage use this strategic model for the competitive
advantage and it is discussed below:
Cost leadership: Under this strategy, business produce lower cost product which help the
organization in order to achieve their goals & objectives. With the help of this strategy,
organization set the lower cost which is cost effective and selling price of the product also low in
comparison to others. It will increase the demand which generate the productivity as well as
profitability2. Manager of Crossroads Garage should apply this strategy to increase the demand
of car and its related services. With the help of this, organization able to achieve competitive
advantage or gain the opportunity.
2 Batty, M. and Marshall, S., 2012.

Differentiation focus: This strategy focuses on differentiation of products in the one or
two targeted market. Organization concern for the narrow market with the variety of product.
There is one issue at the time of implementing this strategy is that customer have need or want
for the variety of products. So after analysing customers demand & desire, management of
Crossroads Garage have to build strategy and develop products to satisfy them. It will provide
the competitive advantage as well as opportunity to grow in the emerging market.
Differentiation leadership: In this strategy, organization produce various products for
the broader market. Basically, new product for the new market which is very difficult and
organization has to give lots of efforts to make this successful. It include the selection of more
than one criteria which is used by the customer in the market. Along with positioning of the
product which meet with all the requirement. Manager of Crossroads Garage can use this
strategy and introduce wide range of cars in the different market. For example: develop products
and sell in the outside of the UK.
From the strategy, Crossroads Garage use the cost leadership strategy where they focus
on their product cost and capture the broader market in order to increase their demand. Manager
or Crossroads Garage have to develop strategy to expand their business only focusing cost of
product3. Lower the cost will increase the demand, productivity and profit margin which help the
business to achieve their goals & objectives. It will also gain the competitive advantage and
provide opportunity for the growth. By using porter's generic model can provide competitive
advantages to the organization and it will helps in optimum utilization of resources. Crossroads
Garage can use cost leadership strategy which helps in minimising cost and maximise the profit
margin through increasing demand of product.
3.2 PESTEL Analysis
It is the framework which is used by the organization in order to identify the various
factors which affect the business in terms of opportunity. It can be in positive as well as in
negative way which impact the productivity or profit margin and it will discussed below:
Political: This factor include the governments rules & regulation such as buying power
of the customer to the tax obligation and inflation rate. It is important to analyse these factors
other increase in the tax rate will reduce the profit. With the help of this, manager of Crossroads
Garage learn competitive advantage and able to gain the various opportunities.
3 Bridge, J. and Dodds, J. C., 2018.

Economic: It includes the economic performance which directly affect the organization.
It include interest rate, competitors price of product, inflation rate, exchange rate etc. It further
affect the purchasing power of the customer and provide the competitive advantage4. Manager of
Crossroads Garage has to analyse all the factors and then develop strategy to grab the
opportunity for the competitive advantage.
Social: It refer to the scrutinization of social environment of the market and it include the
different culture, trend etc. Manager have to research about latest trends and demand of society
in the market. For example: in the US, customer use the electronic cars to Crossroads Garage
have to change their services according to their requirement.
Technological: This factor includes the change in technology which affect the
organization in terms of operational activities. In the automation industry, manager of Crossroads
Garage have to done intense research in order to analyse the new opportunity which further helps
in providing competitive advantage5.
Environmental: It impact the business through its surroundings and it include the change
in climate, Walther, location etc. It is essentially required for the manager of Crossroads Garage
to analyse all the factor because it will provide the opportunity and it further provide the
competitive advantage.
Legal: This factors include the laws and regulation which is important for all the
organization in order to maintain their internal structure which helps in functioning effectively.
In the Crossroads Garage, manager have to ensure that business follow all the legislation because
it is mandatory. It further provide the competitive advantage and support to grab the opportunity.
By using PESTEL analysis of the company, manager can identify those factors which
affect the productivity as well as profitability. After analysing external factors manager build
various strategy which is beneficial for the company to increase efficiency or effectiveness or
provide competitive advantage in order to achieve business goals & objectives.
PESTEL analysis is more suitable for the Crossroads Garage because after the analysis it
help the manager to measure every aspect of the organization which can affect the operation. It
can be in positive as well as negative way. It will provide competitive advantage or optimum use
of resources which increase efficiency as well as effectiveness.
4 Canning, D. and Schultz, T. P., 2012.
5 Gleeson, B., Dodson, J. and Spiller, M., 2012.

3.3 Evaluate the growth opportunity by applying Ansoff's model
Ansoff matrix is a marketing tool that provides the fundamental structure to businesses in order
to deepen their cognition over particular growth strategies. This matrix suggests to researcher
that firm seeks to grow depends on their product and services in current marketplace or in new
market. These marketing strategies proposed to entity in order to set the direction for the growth
strategy. The matrix include four growth strategies which is market penetration, market
development, product development and diversification that are normally used by business to
grow its business in certain manner6. In reference of Crossroads Garage, management wants to
grow the business at various location of the nation by applying this particular matrix. All of the
strategy of the matrix is represented as below in context of Crossroads Garage:
Market Penetration: This strategy represent that a firm is seek to attain growth with
their current product and services in existing marketplace targeting to enhance the current market
share ratio. If business want to grow with minimum risk they required to sell their products and
services in the existing spot. In context to Crossroads Garage, business firm is trading in the car
dealership and provide the car maintenance services to its customers. Consequently, in order to
grow in efficient manner, it is primary object to find out fresh customers in the existing areas of
the marketplace so their profitability can be improved.
Product Development: In this strategy, firms are intimate the establish to new product as
well as services within existing market segments. In Crossroads Garage, it can be said that
company seeks to grow its business they are needful to increase its product and service portfolio
at widen reach7. In addition to, the firm also needs to add on specific value added services with
its products.
Market Development: Market development strategy tells that business organisations can
grow quicker by offering its existing product and services at new geographical region. company
expands their business in new segments and have huge chance to attracting customers that
belongs to new areas. Thus, chances of growth are much broader. In Crossroads Garage, it has
been evaluated by the management to adopt this strategy by expanding their business outside of
the nation so that they can attract new customers easily.
Diversification: The firm may grow by diversifying the business at new products and
services at new market region. It is evaluated that this concepts is non suitable for the Crossroads
6 Haaland, C. and van den Bosch, C. K., 2015.
7 Hess, P. M. and Sorensen, A., 2015.

Garage as it can't focuses on innovating new product and services in new area of market8.
Crossroads Garage is successful services providing firm but still it belongs to small enterprises
Hence, it would not be feasible for this firm to go with Diversification strategy.
Above mention points, Crossroads Garage use the Market development strategy to
promote their product in the new market. It is difficult for the business but they have to develop
strategy and implement in effective manner.
4. Source of funding which available for the business along with its advantage
or disadvantage
Different ways of providing funding to their organization in order to complete their short
term or long term requirement of finances. As organization can arrange funds from various
sources and it can be internal as well as external which is disused below:
4.1 Internal source of finance
When business fulfil their financial requirement without arranging funds from the outside
source. It include the various ways such as personal saving, assets of the organization, sale of
goods etc. Some of internal sources discussed below:
Sale of business assets: It is the easy source of funding if organization have old assets
which currently not beneficial and not in use for the longer time. So business can sell those assets
and fulfil the requirement of finance in the organization. With the help of this, organization
complete their financial requirement and perform well in order to achieve their business goals &
objectives9. There are some merits & demerits of this source of funding which is discussed
below:
 Advantage: Business get the quick money and able to perform their task without any
financial issues. Organization can use this source for the short term as well as long term
completion of task.
 Disadvantage: After selling their business assets, value of firm automatically reduce
because it will included in the balance sheet of the company. It is not possible to
complete their all the financial requirement with the help of selling old assets of the
business.
8 Pothukuchi, K., 2015.
9 Ruming, K. and Gurran, N., 2014.

Personal saving: At the time of starting new business, owner use their personal savings
to expand or fulfil the requirement of finance. It is the best source of funding for the small size
organization in order to completer their goals & objectives. It includes the cash in hand which
collected by the owner for the several years.
 Advantage: It is the simplest and easy way to fulfil the requirement of finance in their
business in order to complete their task and achieve competitive advantage10. Owner use
this source to avoid the extra cost of funding.
 Disadvantage: By using their personal savings, owner increase the risk for themselves
and decrease the liquidity and it can further helps in facing any situation. In result, owner
face the situation of bankruptcy if they face the lose in the businesses.
4.2 External source of finance
Different way of collecting money for the requirement of the organization in order to
complete their task which helps in increasing productivity or profitability. It include the various
methods of funding such as issue equity, bonds, bank loan etc.
Bank loan: It is the common source of funding which provided by the commercial bank
and other institute. Mostly, small or medium size organization use this method to fulfil their
financial requirements.
 Advantage: It is beneficial for the organization because of their flexible nature. Business
easily get the loan from bank after completing few documentation. Bank provide the loan
on low rate of interest. In case of overdraft or need of the money in the emergency case
will be fulfil by the banks.
 Disadvantage: It is the cheap source of financing which is used by the organization in
order to complete their regular activities11. Use of this source for the long term will
reduce or imposition the growth of the company.
Venture capital: It is the another external source of funding which help the business in
order to complete their financial requirement. It is a kind of private equity which include the
investment of various investors. In return they aspect the high return which satisfy them and
motivate further to invest more.
 Advantage: This external source of funding will help the organization to get the expert
advice which further increase the performance of individual as well as organization.
10 Stanilov, K. and Sykora, L., 2012.
11 Thapa, R. B. and Murayama, Y., 2012.

Along with this, it helps in decision making process because invested money is not
related to the own it is from the outside party12.
 Disadvantage: Under this source of funding, decision will be affected by the investors
because it includes the outside parties funds. There is a chances of failure but no one can
predict the future that's why people will think twice before investing in the venture
capital.
Retained profit: It is the profit which retain after deducting expenses of the company
and it will not distributed to the shareholders as a dividend. It is the source of finance for the long
term requirement which help the business to fulfil their requirement or further invest to generate
more profit. This source also have some advantage or disadvantage which is discussed below:
 Advantage: It is the most important source of finance because it is cheap and
opportunity cost for the shareholders. It is very flexible because management have
full control over it.
 Disadvantage: It is less attractive for the shareholders because it will represent that
company does not pay dividend to its shareholders. Along with this, it will criticised
by the external parties.
There are various source available for the funding and Crossroads Garage can choose any
source to complete their short term as well as long term requirement of finance. Business can use
any of them for the expansion as well as for future growth.
In context of Crossroads Garage, management arrange funding from the external sources
such as bank loan. Company meet with their long term as well as short term requirement through
loan and pay after some time as per the terms & condition. Along with this, organization follow
the retained profit as a source of finance because it is very cheap.
5. Develop a business plan which include the financial as well as strategic
information
Business plan is the document which prepared by the organization and it include the
financial or strategic information which help the business in order to achieve their goals &
objectives. Main motive is to prepare this plan is to increase their efficiency or effectiveness.
Along with this, it provide clear instruction or guidelines regarding each activity which helpful in
completing each task. In the Crossroads Garage, currently they are working not well so they have
12 Van den Berg, H., 2016.

to work hard & analyse business performance and evaluate the position. So manager of the
company develop the business plan which include the instruction which required to follow by the
each employees of the company for competitive advantage and further provide the opportunity.
With the help of business plan, organization run their operational or marketing functions in
effective way13. Below mention business plan for the Crossroads Garage is describe below:
5.1 Executive summary
Crossroads Garage is the UK based car dealership company which situated in Abingdon.
Company has 34 employees in total or sale of business in the 2011 is 7.47 Cr. And in the 2010
was 6.3 Cr. Crossroads Garage wanted to expand their business in order to achieve high growth
in the market along with various opportunity. So manager of the company develop a business
plan to increase their efficiency as well as performance of employees. It will further helps in
increasing productivity or profitability and make the organization capable to achieve business
gaols & objectives. Main purpose of this company is to develop huge customer base across the
world and provide best services which provide the competitive advantage as well as opportunity
for the future growth.
5.2 STP Analysis
With the help of STP analysis, business find the way to target their customers and market
in order to increase their productivity or profit margin. Along with this, it increase the efficiency,
effectiveness or performance of individual.
 Segmentation: Crossroads Garage segment their customer on the basis of geographical
area which include the region, country, state or specific city.
 Targeting: Under this analysis, Crossroads Garage target the city segment because here
business the potential customer who used their services.
 Positioning: Crossroads Garage use the market penetration strategy where they introduce
new feature in their existing products and promote in the existing market.
5.3 Financial information
For the expansion of business, Crossroads Garage required the resources to complete the
operational function. For this manager required funding to perform their business activities or
expand outside of the nation. Firstly owner have their own saving of £1,20,000. Currently
Crossroads Garage required approx £2,50,000 so remaining amount will be collect through bank
13 Wey, W. M., 2015.

loan. It is the easy source of funding which help the organization to expand their business outside
the nation.
Business plan is the document which include each and every detail of the business
operations. It help the manager as well as staff member in order to complete their task in
effective manner. It will include organizational goals, objectives, vision, mission etc. With the
help of this, manager identify the potential problems and it will resolve through alternative
solution.
Vision: To become most popular company in the car dealership sector and provide
quality services to their users.
Mission: Is to increase customer loyalty through delivering quality service which
enhance the customer experience. Company focus on ethical consideration for the competitive
advantage.
Objectives: Main objective is to increase profit margin up to 10% and provide quality
service to satisfy their customer. Hire skilled people to form better relation with customer with
the help of unique services14
Cash flow budget:
Particulars 2019 2020 2021 2022 2023 2024
Cash inflows
Opening cash inflow 20000 16760 21248 25248 28723 31636
Sales revenue 50000 51000 52020 53060 54122 55204
Other income 20000 20000 20000 20000 20000 20000
Total cash inflows 90000 87760 93268 98308 102845 106840
Cash outflows
Material 15680 7650 7803 7959 8118 8281
Labour 10000 10000 10000 10000 10000 10000
Other expenses 32560 33862.4 35217 36626 38091 39614
Administration expenses 15000 15000 15000 15000 15000 15000
14 Whelpton, P. K., Campbell, A. A. and Patterson, J. E., 2015.

Total cash outflows 73240 66512.4 68020 69585 71209 72895
Cash deficit / surplus or
closing cash balance 16760 21247.6 25248 28723 31636 33945
6. Evaluate the exit or succession option for the small size organization and
explain their benefits & drawback
Business environment plays very importance role because with the help of this, manager
formulate the various strategy in order to achieve their task & goals. It will further increase the
demand, productivity and automatically generate the profit. In the organization, business face the
various situation where it look like a threat for the organization. Some times it is beneficial or
sometimes it create situation where they have to leave the market15. There are two different types
of option available, first is succession and second one is leave the market means exist condition.
Here is three different methods which is used for the evaluation in the case of Crossroads Garage
and it is mentioned below:
6.1 Liquidation
It is the accounting process where owner set their mind to close their business. In this
case, organization decided to close their business operations in order to close all the activities.
Company sell all assets and pay their obligation in context of clearing all transaction.
 Merits: It help the management to pay their obligation by using their business assets
which reduce the burden of the company owner. With the help of liquidation, business
not face any legal restriction and further actions.
 Demerits: After closing their business operations, organization loose their highly skilled
employees which were very essential for the company.
6.2 Sale of Business
In this case, owner of the company sell their business to the third party and include the
various individuals such as manger, stakeholders etc. Those people who show their interest to
buy and run the business to make profit.
15 Zhang, J. and et.al., 2013.

 Merits: It will encourage the internal as well as external people to buy the business and
then run according to their strategy. Along with this, it provide the motivation to the staff
members.
 Demerits: In this case, employees are not able to take over the business due to lack of
experience or capital requirement.
6.3 Merger & acquisition
In this case, two or more business merge into single organization and along with this, one
company can acquire another company to increase their market share as well as profit margin.
 Merits: After M&A, it will increase the efficiency as well as effectiveness of the
organization. It will further helps in increasing profit margin or merging company.
 Demerits: After M&A, company face the lots of difficulties such as loss of experienced
workers and highly skilled also.
CONCLUSION
As per the above described development strategies, it has been evaluated that market
penetration is best growth strategy for Crossroads Garage as it is car dealership and maintenance
firm. They can provide better services in the current market region with existing goods and
services. But Crossroads Garage needs to influence the area of interest to its customers by
focusing on delivering the quality services with minimal value in order to being loyal with them.
With this effort they will get opportunity to approach new clients. This approach definitely help
to the management in order to increase their sales volume and profitability as well as overall
performance of the organisation in speedy manner.
RECOMMENDATION
 Crossroads Garage has to implement strategy quicker than their competitors otherwise
they capture the market.
 Company have to use their core competencies to achieve goals & overcome from the
difficult situations.
 Organization has to follow total quality of management approach in order to enhance
their product quality.

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