Planning for Business Growth and Expansion

This assignment provides a comprehensive guide on planning for business growth and expansion. It covers the use of Porter's five force model and PESTLE analysis to identify key considerations for growth. The assignment also discusses Ansoff's growth matrix as a tool for analyzing best strategies to expand a business in various markets. Additionally, it highlights the importance of preparing a business plan with actual information on the business before expansion. The document is suitable for students studying business and planning courses.

PLANNING FOR
GROWTH

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Key considerations for evaluating growth opportunities.......................................................1
P2 Opportunities for growth using Ansoff's growth vector matrix.............................................3
TASK 2............................................................................................................................................5
P3 Sources of funds with advantages and disadvantages............................................................5
TASK 3............................................................................................................................................7
P4 Business plan for growth of business.....................................................................................7
TASK 4............................................................................................................................................8
P5 Succession and exit plan for small business..........................................................................8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Planning refers to the process of estimating future growth opportunities for a business.
Managers of a company can identify various factors that can help a company to grow faster. It
helps the management to evaluate operational and execution activities to lead the organisation
towards growth. Planning is a tool that is required for every company to deal future uncertainties.
It is mainly based on current trends and past data (Dimitriou, 2013). Hardver UK is a
manufacturing company of network hardware, which is mainly based in UK and it is a small
sized business. Now it is willing to expand its business in England. It enters to a contract which
is “L18016-T-MC Network Hardware - Supply, configuration, installation & supply”, to raise
fund. This project report consists various topics such as key considerations for growth like
Porter's five force model and PESTLE analysis, Ansoff's growth vector matrix, sources to raise
funds, a business plan that carry a detailed information of business and options for succession
and exiting from market.
TASK 1
P1 Key considerations for evaluating growth opportunities
Planning is a process of identifying various factors that can contribute in organisation's
growth. Managers set objectives for the company and planning helps to reach those objectives. It
also fills the gap between current and future performance. Hardver UK is a small sized business,
which is a manufacturing company of network hardware and now it is willing to expand its
business in England. It requires a lot of planning to expand and need to identify various key
considerations for growth. Two key considerations are described below:
Porter's generic strategy: This strategy is used by organisations to gain competitive
advantage in various markets. Michael Porter describes that it can be used by companies of all
sizes whether it is small, medium or large to achieve a particular level of growth that helps to
increase profits for the company (Allmendinger, and Haughton, 2014). It includes four strategies,
that are as follows:
 Cost leadership: It refers to the sale of products in the market at a lower price to attract
huge number of customers. Hardver UK can use this strategy while launching new
products in England's market. The marketers should set a lower price for the products, so
that it can attract customers.
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 Differentiation: This strategy refers to the launch of such products that are unique as
compare to others. Hardver UK can use this strategy while launching its product in
England's market which is not price sensitive. This can only result when customers are
willing to buy quality products and not focusing on the price of the products (Fainstein
and DeFilippis, 2015).
 Cost focus: In this strategy company launch its product in niche market at lowest
possible price. This can be adopted by Hardver UK if the marketers have good
knowledge of market and customer's preferences. This can help to cover larger
marketplace by providing them pocket friendly priced products.
 Differentiation focus: In this strategy company focus on niche market and provide
products to the customers with different features or element of uniqueness. It can be
adopted by Hardver UK by introducing unique products as compare to competitors and
attract more customers because of the quality of the products. It can help the company to
generate maximum profits for long term.
Above mentioned strategies can be used by Hardver UK to increase the market share and
acquire more and more customers. Differentiation focus strategy should be adopted by Hardver
UK because there are end number of competitors in the market that provide substitute products.
This strategy can help the company to provide unique products to the customers who are brand
loyal and also attract prospect customers for the company.
PESTLE analysis: It helps the managers to take an overview of the current market and
the targeted market where the company is willing to launch its products. Hardver UK should
conduct this analysis to get the exact idea of the environment of England's market. It includes
various factors, that are explained below:
 Political: These factors are mainly related to government. As Hardver UK is willing to
expand its business in England by launching new products there, it should gather the
information of government tax policies, labour rate and regulation of the country to run
the business there. Government of England is providing various opportunities to the IT
companies to facilitate the work within the country, it will help Hardver UK to launch its
products there.
 Economical: These factors direct leave an impact on the economy of a country that will
also affect the business running in the country (Faludi and van der Valk, 2013). It
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includes interest rates, copper as a commodity etc. If Hardver UK want to expand its
business in UK then it should have the proper information of economical factors that can
affect performance and profitability of the company. As the economy of England is very
stable so it will create more opportunities for the company to grow its business.
 Social: These factors affect the sale of the products by making changes in the demand of
the products. It includes customer's preferences, population growth, social values etc. As
the customers of England are very much quality concerned and Hardver UK assures the
quality of the products, hence it is a good opportunity to expand its business there.
 Technological: It includes innovation, automation, research etc. Hardver UK should get
the idea of these factors to launch its product in England. Common people of England are
very much aware of new technology and and they are very friendly with the technology
so it is a great opportunity for Hardver UK to expand its business there and reach to the
higher level of growth.
 Legal: It refers to the rules and regulation of a country, that are implied by the legal
authority of the country (Honig and Samuelsson, 2012). After Brexit UK has reduced the
legal compliances on the companies there to run the operations smoothly, thus this will
generate opportunities for Hardver UK because in England it can run its business with
low interferences of legal authority.
 Environmental: These factors are related to the environmental protection laws, changes
in climate etc. England has very strict rules for environmental protection, that can affect
the functioning of the company. As Hardver UK is very much environment friendly and
part of various NGOs, so it is a good opportunity for the company to expand its business
smoothly with the approval of the government.
P2 Opportunities for growth using Ansoff's growth vector matrix
It is a tool that is used in strategic planning to find opportunities for organisational
growth. This concept is created by Russian American Igor Ansoff. It helps the managers to
launch their product in various markets and offer products to different kind of customers (The
Ansoff Model, 2018). This model includes following strategies that can be used by the marketers
of Hardver UK to launch their products in London's market.
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(Source: Ansoff Growth vector matrix, 2018)
 Market penetration: This strategy is used by organisations when they are willing to
offer existing products in existing market. It helps to attract customers and increase
market share within current market segment. It will also help the company to generate
profits by acquiring more customers.
 Market development: In this strategy the company target new market by selling existing
products. It will attract customers from various segments. It requires research of the
market in which the company is willing to sale its products. To attract the customers
company should gather information of their perception and figure out that the product is
relevant to them or not.
 Product development: It refers to the introduction of a new products in existing market.
If the company has a positive market image then it will help to raise profits fro the
company. It will cost less to the company because the company is already aware of the
needs of the customers, so it can save the cost of deep market research.
 Diversification: This strategy refers to the launch of a new product in a new market. This
strategy contains a lot of risk, but if the company succeeds to attract customers it will
result in long term profits. It is mainly used by those companies who are willing to
expand their business in a new marketplace.
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Illustration 1: Ansoff growth vector matrix

From the above mentioned four strategies, the most relevant strategy for Hardver UK is
Diversification because it is willing to expand its business in England with new products. This
help the company to grow its business globally. It contains higher risk as well as higher profits. It
is a great opportunity for the company to achieve growth. It will also help the company to
acquire a new market by introducing new and unique products as compare to competitors.
TASK 2
P3 Sources of funds with advantages and disadvantages
Funding refers to the monetary resources that are required to run a business smoothly.
Funds are very important for a company to execute its operations and to achieve success and
growth. Hardver UK requires £300000 but it only has £20000, and the rest amount of £280000
will be collected from various sources. To complete the project company enters to a contract
which is “L18016-T-MC Network Hardware - Supply, configuration, installation & supply”. The
identified sources are explained below:
Internal sources: It refers to the collection of money from insider options of the
company. It includes share capital, sale of assets, retained earning and reduction of working
capital. Hardver UK can collect funds from these factors.
External sources: It refers to the external factors that can help to raise funds for the
operations of the company. The managers can plan to increase funds from external factors such
as bank loan, overdraft, angel financing and crowd funding (Kapur, and et. al., 2012). These
sources are explained below:
Bank loan: It is a quick and fast resource to secure funds for a business. Bank loans are
commonly used to raise finance for a specific purpose such as start up, expansion, purchase a
business premises etc. (Van Oort, 2017). Hardver UK can arrange funds for the expansion of
the business in England by applying for a bank loan. It is provided by the bank for a fixed
period and after that period the borrower has to repay the amount to the bank.
Advantages Disadvantages
 It is a fast and quick way to raise
finance.
 Interest rates are fixed so the company
will have the information of repayment
 Bank requires a collateral for the loan.
 If the borrower fails to repay the
amount bank can seize the security.
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throughout the life of the loan.
Overdraft: This facility is provided to the premium customers of a bank. It is rendered when
enterprises make payments from their business accounts exceeding the existing cash balance
(Mehmet, 2014). Hardver UK can use this option to fulfil urgent and short term requirement
of money. The overdraft amount is repayable in a short period or on demand of the bank.
 Advantages  Disadvantages
 It requires less paperwork and saves the
time.
 It fulfils the emergent requirement of
the money.
 High rate of interest on the amount
withdrawn.
 It may be secured against business
assets.
Crowd funding: It refers to the collection of small amounts from large number of people. It
can be achieved through the media of internet for example sending invites through mails, via
websites etc. Hardver UK can raise funds with the help of this source by targeting various
people to invest small money in the business.
 Advantages  Disadvantages
 It is a good option to analyse public
reaction toward the business plan and
products.
 Investors can provide end number of
ideas to improve productivity.
 It is not easy to attract large number of
people to invest in a business.
 If the targeted amount is not collected
then the collected amount will be
returned to the investors.
Angel financing: In this option the fund is collected from business angels who are willing to
invest in higher growth potential business. Hardver UK should target business angels by
discussing its business expansion plan with selected investors, it will help to raise high
amount.
 Advantages  Disadvantages
 When a company is having angel
financing, it does not require a debt
financing, where it has to pay interest.
 The owner have to distribute the shares
of the company to the business angle.
 Some business angels may demand for
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 No need to pay the amount back to the
investor.
power and control.
TASK 3
P4 Business plan for growth of business
Business plan is a document that carry various information of a company such as goals,
vision, mission, objective and the actions that are going to be taken by the company to achieve
those. It also the information of operations of the company (Olesen, 2014). It is very important
for the executives of Hardver UK to prepare a business plan that include the accurate information
of vision, mission, objectives etc. It will help to form policies and strategies to achieve a
particular level of growth. The main objective behind formation of a business plan is to attract a
large number of investors to raise funding.
Executive summary: Hardver UK is a manufacturing company of network hardware
which is mainly based in UK and now it is willing to expand its business in England by
introducing a new networking product there. Hence, the managers of the company have to
prepare a business plan before running this expansion, the plan is as follows:
Vision: The vision of Hardver UK is to offer different variations of the products to
various market places and to be on the top of the manufacturing industry.
Mission: The mission of the company is to determine exact need of the customers and
then produce the products accordingly, it will help to satisfy them and to set a positive market
image.
Strategic objectives:
 The main objective of Hardver UK is to successfully launch their business in England.
 It is planning to increase its profits from 15% to 20%.
 To attain growth in upcoming two years.
 To acquire more market share by achieving success in fulfilling demands of the
customers on time.
 It can be achieved by proper organisation of the activities and control over the execution
of the operations.
Situational analysis: Hardver UK has planned to expand the business in location for this
purpose appropriate market research is conducted which can help it to analyse taste and
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preferences of clients and fulfil their needs. It is their strength which will help the organisation to
attain its strategic objectives. Main weakness for the company is that it has no accurate
information regarding new market where it is planning to launch it business which may result
negatively for the company. There are various network providers in the market of England
which can affect its market share. In order to establish business in England successfully it is very
important for Hardver to take all the external factors in to consideration. These are political,
economic, social, technological, legal and environmental. It can help to meet expectations of
clients, society and legal bodies which will be beneficial for effective execution and launching of
business.
STP analysis: In order to launch the business in the market it is very important for
Hardver UK to conduct STP analysis. All the elements of it for the company are as follows:
 Segmentation: Hardver UK have selected geographic segment for the business
expansion as it is planning to expand the business in a new location. The market segment
of the company is England.
 Targetting: Targeted segment of Hardver UK is companies that are using networking
software for business purpose.
 Positioning: In order to position the products in the mind of customers organisation have
planned to use innovative marketing techniques such as online marketing.
Product and service: Hardver UK is planning to launch new networking software in
England in order to expand its business there. With the help of it larger profits could be
generated by the company in future.
Financial information: The success of a business depend upon proper planning, control,
of execution activities and to perform these activities smoothly company requires funds which
can be raise through internal and external sources (Stein, 2018). Finance is very important to run
the business and its functions. If there is proper finance in the company, then it can facilitate to
attain organisational goals.
Before expanding the business, the management of Hardver UK has to prepare a budget
plan that show the fields where fund is required and how the funds are going to be utilised. This
statement can show the expenses that may incur while expansion such as advertisement, training,
promotions, technology installation, transportation etc.
Particulars 2018 2019 2020 2021 2022 2023
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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
Total cash outflows 73240 66512.4 68020 69585 71209 72895
Cash deficit / surplus or
closing cash balance 16760 21247.6 25248 28723 31636 33945
From the above budget managers can get the idea of those expenses that can occur in
future, while the expansion of the business in England.
TASK 4
P5 Succession and exit plan for small business
As Hardver UK is a manufacturing company and now it is willing to expand its business
in England by introducing new products there, it is essential for the company to prepare
succession and exit plan to deal with uncertainties that may arise in future and can affect the
operations of the company (Pierce and Aguinis, 2013). It helps the organisation to be prepare and
deal with the risks in future. Following are the types of exit and succession plans for the
company:
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Exit plan: It refers to the exit strategy that is adopted by an entrepreneur to sell his or her
ownership to another person. If a business is facing losses for a long period, this helps the owner
to limit losses. If Hardver UK wont get success in the expansion business then company can use
following exit plans:
 Winding up: It is an activity to sale all the assets of the company to pay the debts and
liabilities. When the debts are paid the remaining amount is distributed among the
shareholders.
Advantages: The main advantage of this exit option is that the owner and the directors of
the company get free from all the liabilities.
Disadvantage: The main drawback of this option is that, this is a time consuming
process and required a lot of legal activities and another disadvantage is that the company will
loose the efficient workers of the company.
 Selling in open market: It means to sell the business in open market and it will be
purchased by the third party. In this option the buyer buys a running business. The
activities of the business are the same but the owner of the business get changed (Rakodi,
2014).
Advantages: The major advantage of this option is that the sale of business will not harm
the goodwill of the business because the buyer purchases a running business.
Disadvantages: While adopting this option the owners of the company loose its skilled
and trained employees, it may affect the efficiency and effectiveness of business operations.
Succession plan: It refers to the process of transferring the powers of the company to
another person who is more eligible for this. Hardver UK should prepare a succession plan to
deal with future consequences and risks and to overcome the same. The management of the
company may use merger and acquisition for this plan:
 Merger and acquisition: Merger is related to the process of combining two companies
of same industries and size to achieve a higher level of growth. Acquisition refers to the
condition when an owner of a small size company sells its business to a large sized
company (Sager, 2017).
Advantages: When two companies work together by merger or acquisition it helps to
reduce costs and overheads for them.
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Disadvantage: If both the company who are involved in merger or acquisition are facing
a lot of debts, than it may increase the debts for the company.
From the above mentioned options the executives of Hardver UK should plan for merger
and acquisition option it will help to remain competitive in the market and also help to achieve
higher level of growth by providing unique products.
CONCLUSION
From the above project report it have been concluded that, planning is a process of
determining future conditions in which a company may identify growth opportunities. A
company may use Porter's five force model and PESTLE analysis to identify key considerations
of growth. An organisation may also use Ansoff's growth matrix to analyse best strategy to
expand its business in various markets. If a firm is willing to expand its business, it requires
funding for the business funds may be raise from internal as well as external sources. Before
expansion the management of the company should prepare a business plan that carry actual
information of the business.
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REFERENCES
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Olesen, K., 2014. The neoliberalisation of strategic spatial planning. Planning Theory. 13(3).
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Rakodi, C., 2014. Urban livelihoods: A people-centred approach to reducing poverty. Routledge.
Sager, T., 2017. Communicative Planning. In The Routledge Handbook of Planning Theory (pp.
105-116). Routledge.
Stein, J., 2018. Classic readings in urban planning. Routledge.
Van Oort, F. G., 2017. Urban growth and innovation: Spatially bounded externalities in the
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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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