Strategic Planning for Business Growth

This document is a comprehensive guide to strategic planning for business growth, covering various aspects such as mergers, acquisitions, and winding up. It emphasizes the importance of formulating appropriate objectives and planning to achieve timely results. The assignment provides an overview of different ways businesses can succeed or exit in a proper manner, managing uncertainties desirably.

PLANNING
FOR GROWTH

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Define key considerations to evaluate growth opportunities and justify them in
organizational context.................................................................................................................1
P2 Evaluate growth opportunities with the help of Ansoff's growth vector matrix....................4
TASK 2............................................................................................................................................5
P3 Analyse potential source of funding available for businesses along with their advantages
and disadvantages........................................................................................................................5
TASK 3............................................................................................................................................6
P4 Prepare a business plan which involves financial statements and strategic objectives for
business scale-up.........................................................................................................................6
TASK 4 ...........................................................................................................................................9
P5 Define succession or exit options for small business by explaining benefits and drawbacks
.....................................................................................................................................................9
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Planning for growth is referred to the strategic business operation and activities which
allows a businessman to plan growth in profits and revenues. With the help of planning, a
company can optimally use their existing resources so that maximum output can be attained.
Tactics and strategies involving a growth plan has main emphasis on high revenue generation
(Alsos, Carter and Ljunggren, 2011). This assignment is based upon Rebellion Development
limited which is a Britain based video game developer, situated in Oxford, England. Company is
a SME and founded in 1992 by Chris Kingsley and Jason. At present, organization is employing
around 300 employees. This assignment will cover about key considerations for evaluation of
growth opportunities along with mentioning of Ansoff's growth matrix. Also, potential funding
source for company and appropriate business plan that include strategic objectives is formulated.
At last, succession and exit option for small business along with merits and demerits are
discussed.
TASK 1
P1 Define key considerations to evaluate growth opportunities and justify them in organizational
context
There are different framework and tools to evaluate the growth opportunities in a proper
manner. With the help of these tools, market condition and external business environment can be
acknowledged in a proper manner so that appropriate planning can be carried out to attain high
revenues and profits. In this context, manager in Rebellion Developments can use Porter's
generic strategy to identify best growth strategy in context with company. Aspects related with
Porter's generic strategy are mentioned below:
Porter's generic strategy
Porter's generic framework defines different growth strategies which will benefits an
organisation in gaining competitive advantage over rival companies in a strategic manner.
Relative position of a company in marketplace defines if a company is attaining profitability or
not (Angotti, 2018). There are two kind of competitive advantage which can be enjoyed by a
company i.e. differentiation and cost leadership. In this context, there are three generic strategies
available for Rebellion Development that will benefits them in achieving desired growth. These
strategies are discussed below:
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 Cost leadership: In this porter's generic strategy, an organisation became low cost
producer within the entire industry. Sources associated with this strategy varies and
highly depends on the structure of concerned industry. With the help of this strategy,
Rebellion Developments can win high market shares by appealing price sensitive and
cost conscious consumers in a proper manner. It is attained by lowering prices of services
or products in target market. Due to this, sales of the concerned company will enhance
and high returns on investment can be attained. This will results in enhanced market
shares and sales for company.
 Differentiation: This is another strategy which can be used by a business organisation to
achieve expected profits and market shares. In this strategy, an organisation differentiate
its services or products from rivals so that high advantage in marketplace can be
achieved. By using this strategy, Rebellion developments can provide unique video
games and comics to customers so that advantage and high market shares can be achieved
against rivals (Birkin, Clarke and Clarke, 2017).
 Focus: Organisations which use this business growth strategy focuses on a particular
niche market. By acknowledging the dynamic of marketplace and innovative needs of
customers, a unique well specified and low cost product is formulated. This product gains
competitive advantage over rivals due to which high profits and market shares are earned
by concerned companies. This strategy has two variants which are cost focus and
differentiation focus. Either Rebellion developments can use differentiation focus or cost
focus but to achieve success, company must have to serve niche market so that high
return can be attained.
In context with Rebellion development, company can choose differentiation strategy to
achieve high returns and profits. In this strategy, firm is required to offer some unique product
like interactive video games to their customers (Denton, Forsyth and MacLennan, 2017). As
these video games will not be already available in market, customers will readily buy them due
to which revenues and sales of company will increase and organisation will be able to gain
desired success and growth. This kind of strategy is appropriate in those situations where
customers are not very sensitive about price and their main preference is towards unique and
innovative products. Hence, it is recommended to the owner of Rebellion developments to chose
this option as their growth srtaregy.
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PESTLE Analysis
It is a strategic tool which will benefits business organisation in identifying the external
business environment in an appropriate way. This will helps the manager in taking right decision
which will benefits the concerned company in achieving high growth and success as per the
expectations. This analysis will allow Rebellion developments in acknowledging different
aspects such as political factor, social factors, technological aspects etc. in a detailed manner. In
this context, PESTLE analysis is mentioned below:
 Political factor: This element of external business environment is concerned with the
trade tariffs, tax rate and political stability of government. As UK is one of the most
powerful and stable country in global context, it is beneficial for business firms to operate
there. At present, Tax rate for organisation profits is 19% and corporate tax is low due to
which expanding business in UK will be beneficial for company. But due to Brexit, UK
has faced some uncertainties that can impacts Rebellion developments in negative
manner (Dixit and Kumar Pandey, 2011).
 Economic factor: This aspect is related with inflation rate, interest rate, growth rate,
purchasing power and GDP of a nation. UK is economically stable nation where people
have disposable income due to which their purchasing power is high. Due to this, it will
be advantageous for business firms like Rebellion development to operate in UK as they
can earn high sales and revenue there. But inflation rate in UK is rising which can impact
the business activities of company negatively.
 Social factor: These factors depends upon the attitude, belief, behaviour and preference
of people in a region. As people in UK are educated and open minded, they prefer unique
services for entertainment purpose, due to which video game manufacturer companies
like Rebellion development have high scope in getting appreciable success.
 Technological factor: UK is considered as one of the most technologically advanced
nation where business organisations creates new technology on daily basis to attract the
attention of customers in a proper manner. By updating their technology, Rebellion
Developments can gain consumer attention in a proper manner through promotions,
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advertisements etc. due to which they can achieve high business growth and profits
(Kumar, 2016).
 Legal factor: These factors are linked with legal procedures, laws and rules which are
formulated by government of a nation. Manager in Rebellion Developments is needed to
follow different laws related with customers and employees so that legal norms can be
followed properly. Avoiding these legal norms can results in paying high penalties and
fines which can impact revenues negatively.
 Environmental factors: These factors are concerned with preventing nature and ecology
from harmful business practices. Rebellion Development is required to follow all legal
laws so that they can sustain a positive image in market. This will increase their sales and
revenues in market. Not following these factors will result in payment of high taxes and
reduced brand image of company.
P2 Evaluate growth opportunities with the help of Ansoff's growth vector matrix
Ansoff Matrix is a defined as a strategic planning tool which offers a growth framework
to business organisations so that high revenues and profits can be earned. It include four different
strategies which can helps an organisation in achieving desired growth. In context with Rebellion
Developments, these strategies are mentioned below:
 Market penetration: In market penetration strategy, a firm plans to grow its revenues
and sales by providing their existing offerings in those markets where company is already
operating. Rebellion development can use this strategy to increase their market shares by
decreasing the price of products, enhancing distribution and promotional activities,
product refinements etc.
 Market development: Here, an organisation tries to expand business in new region by
offering existing products in market. By expanding business in new region, Rebellion
Development can gain high revenues and profits due to increased customer base (Lewis,
2013).
 Product development: In this growth strategy, an organisation increase their product
line and offers new products in existing marketplace. Due to new products, interest of
customers increases and they prefer to buy more products from same company. Offering
new products to customers will increases sales of Rebellion developments due to which
business growth will takes place.
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 Diversification: It is the most challenging and risky growth strategy in which new
products are offered to new customers. This strategy involves both product and market
development but if company will adopt this strategy appropriately, high returns and
profits are earned. Rebellion development can use this strategy to to increase their market
share.
In context with Rebellion Developments, Owner of the company is recommended to use
market development strategy in which a existing products are offered to potential customers in
new market so that high sales and revenues can be earned. It can be attained by targeting
different customer segments and foreign markets. This will helps the company in serving more
customers due to which high chances of sales and profits will be achieved. Due to launch of
products in new areas, attention of customers will be gained and market shares of company will
rise due to enhanced customer base (Liang and et. al., 2018). This will benefits the company in in
achieving desired outcomes.
TASK 2
P3 Analyse potential source of funding available for businesses along with their advantages and
disadvantages
As Rebellion Developments have good credit ratings and they pay their loans on time,
lenders outside and within UK are happy to help them at the time of funding needs. As company
wants to expand in United States, they require heavy investment which is around 5 million
pounds. At present, company can arrange 2 million pounds and they has an overdraft from bank
of 2 million pounds which is not used by now. To collect remaining funds, company needs funds
from other sources. There are different internal and external sources from which company can
arrange required funds. These sources are mentioned below:
 Internal sources: In this method, funds are collected within organisation like reducing
workforce, selling assets of company etc. This method is suitable when less amount of
funds are needed by company.
 External sources: These sources includes those options which are present outside the
company and provide required funds to Rebellion development. These options are
mentioned below:
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Bank Loan: This is one of the simplest way to collect required funds so that business
operations can be performed desirably. Bank gives loan for specific time period and charges
certain amount of interest. Rebellion Developments can use this option to collect remaining
amount of funds (Love and Roper, 2015)).
Advantage:
 Banks do not charge high interest rate and have clear terms and conditions. This is the fast way to raise fund with no high expenditure.
Disadvantage:
 Company is required to give some asset or collateral as a security. In case loan is not paid
on time, bank can sold that security deposit to collect given amount.
Crowd funding: This is a tool which is used for arranging a fund for the project through
raising a small amount from large number of people mainly with the use of internet. This is used
as a alternative source of finance. The company can use this method to arrange the fund as it is
simple and easy method. This can be used to fund a profit making company or for
entrepreneurial ventures.
Advantage:
 This can be a valuable use of online platform for marketing as funds are gathered online
which result in branding of the company. This is an considerable option in comparison of bank loan and other funding methods as
it is a simple method of funding.
Disadvantage:
 This type of funding might require extra resources to be use as it require more attention in
building up the attractive project (Mahmoudi and et. al., 2013).
 The protection of idea is necessary before making it public.
It is recommended to the owner of rebellion developments that they can arrange
remaining amount of funds by taking loan through crowd funding. With the help of this method,
they were not required to take big loan from a single institution or person. Due to this, their stress
level of paying back loan will be less. This kind of business loan will helps Rebellion
development in getting the views of public reaction towards the product of the company and if it
will be positive then it will reflects the achievement of objective.
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TASK 3
P4 Prepare a business plan which involves financial statements and strategic objectives for
business scale-up
Business plan is a document expressed in a written form which includes objective of the
company and the manner is specified which states how to achieve the objective and limit are also
specified. This plan includes all the information related to the financial requirement to execute
the plan. The main objective to form this plan so that functions can be performed efficiently and
without any confusion as it serve as guide for the people of company. This work as a guide for
the company
 Vision- The vision of Rebellion development is to increase their sale of video games by
expanding their business in U.S and acquiring more market share over the world.
 Mission- The mission of Rebellion development is to provide advanced video games to
the youth of U.S and develop their brand image and win the trust of customer.
 Strategic objective – The objectives of Rebellion Development company can be
described through using SMART approach. The explanation of this approach is as
follows-
Specific- The specific objective of Rebellion development is to acquire attention of customer and
increase their sale of video game.
Measurable- The Rebellion development want to achieve 20% increase in the sale of video
game through expansion in U.S.
Achievable- The Rebellion development is undertaking various activities such as providing
training to their employees who can help in achieving the sales target.
Relevancy- This is important for the company to grow and acquire market share in the video
game sector.
Time-bound- The Rebellion development company has specified limit of one year to achieve
the target.
 Financial information- The company require adequate amount of fund to achieve its
objective so it is necessary to maintain a financial plan for the objective of Rebellion
development that is to expand their business in U.S. The fund is require for effective
functioning of business and the company require $ 5 million for this expansion. The
company posses $ 1 million and remaining $ 2 million is generated from taking liability
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of bank overdraft and the company has decided to take loan of remaining fund so that
they can expand their business effectively (Mason, 2015).
The total fund is required to be allocated in all the expenses by the Rebellion development
through forming proper budget for future. The statement shows that how fund is allocated
between various expenses.
Total budget-
Particular 31/12/19 ($) 31/12/20 ($) 31/12/21 ($)
Implementing
technology cost
16000 - -
Promotional expense 8000 8000 9000
Advertisement
expense
9000 3600 5800
Catalogues 4000 8000 4000
Training charges 8500 8000 8500
Total Cost 45500 27600 27300
From the above statement, it can be interpreted that the cost is decreasing with the
succeeding years as advertisement expense is less as company will be require less publicity in
the third year.
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CASH FLOW STATEMENT
The above cash flow shows that the company has enough capital in form of cash to pay
his expenses for future period but the liabilities has increased as they have acquired funds from
the outside source.
TASK 4
P5 Define succession or exit options for small business by explaining benefits and drawbacks
There are various strategies that can be used by the business as a option for their exit
from the market or making succession of business. These strategies are used to considered so that
effective decision can be taken regarding exit of a small business. Small business like Rebellion
development which develops video games are considering the strategies involved in exit or
succession (Moseley, 2013).
Exit planning
Business exit planning refers to the process involving various strategies related to
defining objective of business for exit through designing a proper strategy and a roadmap which
will take consideration of financial, legal and all other factors to achieve the exit-objective. The
Rebellion development is looking after various option to decide how to take an exit. The
strategies are as follows-
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Liquidation- This involves selling of all assets mainly in cases where the business is
dependent upon the single individual. This is the last option for the company and the most of the
time is spent on retooling of the business which makes other buyers interested in that business.
 Advantage- This is the simple process. The business can be easily wind up without any
complex procedure.
 Disadvantages- This result in lowest return and only fund the owner get is through
disposal of assets. The second-hand business represent asset value which is at low price.
Liquidation over time- In this, the owner extract its most of the profit from the business
instead of investing it again in the company. This includes taking out of large share of salary
from the business before winding up. Rebellion development can use this strategy and take all
the profit with themselves (Perveen and et. al., 2017).
 Advantage- This strategy helps in maximising the lifestyle of the owner.
 Disadvantage- This reduces the chances of growth of the company. The other
shareholder will object and this will create a conflict.
Keep your business in family- This involves keeping the business in the family which
will assure the life of business is still continuing the legacy which will be the source of living for
the owner's heirs. The owner of Rebellion development can consider this option as it allow to
keep a look on the business.
 Advantage- This allow smooth transition for the company by making capable a family
successor. This will allow owner to take continue view of the business. This will not
create any dispute between workers.
 Disadvantage- This can be a bit difficult which will lead to fight among family member
for ownership. The main problem can occur when family member is incapable for the
business.
Floating share: In this exit strategy, stocks of a business organisation are required to be
sold in market so that pending debts and liabilities can be paid within time limit and the
remaining capital can be shared among shareholders.
 Advantage: Director in Rebellion developments will be able to free from different legal
compliance & debts in a simple manner.
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 Disadvantage: This is a tangled and time consuming procedure due to which stress level
for business owner can increase considerably.
The best exit strategy is the one which will fulfil the need of the owner of small business.
The first need is to identify what you finally want from your business as if the factor is money
then selling in market would be a best option and the owner want to continue the legacy than the
succession toward family will be a better option for the company (Vargo and Seville, 2011).
Business Succession
There are various strategies can be used by the business for the succession planning
process and then looking out over the options and taking decisions which will suit the rebellion
development. The strategies are as follows-
Passing the business to a successor- This involves the transfer of ownership to a family
member or manager in the company. The partner of the Rebellion development company can
pass its rights to the member of family which will have following-
 Advantage- This reduces the involvement of third party in company. This gives the
current owner power to influence the business again.
 Disadvantages- This will make difficult the identification of the right successor. This can
result in conflicts at work.
Transferring ownership through a management or employee- This includes
transferring of right to any potential employee or manager and this is the best option for a
business when owners do not trust any other candidate and want to continue their corporate
culture.
 Advantage- This includes rewards management to get long term support. This protect the
current culture and legacy of business.
 Disadvantages-This involves limited access towards capital and will have long term
effect. This will result in less employee morale and their performance (Wu, 2015).
The best succession strategy depends upon the stability of business as almost every buyer
want to buy stable business rather than a new business so before considering any strategy make
sure that the business is stable and profitable. The Rebellion development should hire a team
which will include selected member who will help the business by navigating with the process of
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succession planning and communicate with other stakeholders so that effective strategy can be
applied.
CONCLUSION
From above mentioned report, it has been concluded that it is not possible to achieve
business growth and success with an appropriate plan. With the help of frameworks such as
Ansoff's matrix, PESTLE and Porter's generic force, growth opportunities can be acknowledged
in a proper way so that maximum profits and revenues can be earned. There are different sources
of funds such as Angel investing, crowd funding, bank loans etc. With the help of these sources,
an organization can raise required funds. Business plans benefits an organization in formulating
appropriate objectives and planning so that expected results can be achieved in a timely manner.
There are different ways like merger, acquisition, Winding up etc. through which an organization
can succeed or exit business in a proper way so that uncertainties can be managed desirably.
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REFERENCES
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