Planning for Growth

This document discusses the planning process for growth in a strategic business, including evaluating growth opportunities, applying Porter's generic and PESTLE framework, and using Ansoff's growth matrix. It also analyzes different sources of funding and their advantages and disadvantages. The document is relevant for students studying business management or entrepreneurship.

Planning for Growth

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Evaluation of growth opportunities by applying Porter's generic and PESTLE framework. 3
P2 Applying Ansoff's growth matrix in Knights and Duke Homes............................................6
TASK 2............................................................................................................................................8
P3 Analysis of different sources of funding with their advantages and disadvantage................8
TASK 3..........................................................................................................................................10
P4 Preparation of Business plan for growth..............................................................................10
TASK 4 .........................................................................................................................................12
P5 Evaluation of exit or success options for SME's along with their advantage and
disadvantages............................................................................................................................12
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Planning for growth is a strategic business action which assist owners while making plans
for expansion and allocating available resources accordingly for earnings higher profits. Planning
is foremost step which every organisations undertakes before performing any actions. Planning
brings changes in business environment along with effectiveness which enables company to
grow and earn better profits. Planning process helps in defining the objectives and enables
managers to develop courses of action. Growth is one of the perspective for which companies
make plans, with the motive of enhancing their operational size and performances. In this
assignment, growth opportunity is explore and plan for expansions are made for Knights and
Dukes Homes(Biddle and Taylor, 2018). This is an estate agency in London from last twelve
months. Managers of company are planning for opening two new branches in London for which
various aspects are looked into and explored. At first growth opportunities are investigated and
market study is conducted with the help of Porter's Generic model. External factors are analysed
to seek knowledge about the effects they have on organisation, for which PESTLE analysis is
conducted. Then thorough evaluation is performed in relation wit the growth possibilities for
attaining competitive edge by applying Ansoff's growth matrix. After making plans and
exploitation of growth options a business plan is served with all strategies which are require by
Knights and Duke Homes for opening new branches. Also, several funding options are looked
upon from which company can raise money for performing their growth activities.
TASK 1
P1 Evaluation of growth opportunities by applying Porter's generic and PESTLE framework
Strategic plans are made by organisations in order to attain predetermined goals and
growth. These plans are made and documented in order to remove any conflicts and
misunderstandings and conveying aims to employees in an effective manner. Knights and Dukes
Homes is an estate agency situated in London and with growth prospective company is planning
to open new branches in London (Mobin, Li and Komaki, 2017). For attaining competitive
advantage the company needs to identify and consider various strategic models which will assist
Knights and Dukes Homes achieving profitability and sustain in dynamic environment. Two
frameworks are used for and applied on Knights and Dukes Homes which are Porter's Generic
model and PESTLE analysis.

Porter's Generic model
This model is introduced by Michael Porter's, stating that a firm which needs to obtain
competitive advantage over its competitors and rivals can explore two ways. One is by achieving
and using lower cost strategy and another is by standing out from other by delivering something
entirely new to customers (Wynn, 2017). Another element which companies needs to consider is
the scope, it relates with the area in which they are planning to or wishes to obtain competitive
edge. Three strategies are involved in this model which are known as generic strategies, out of
these Knights and Dukes Homes consider any one or two for their growth perspective.
(Source:The strategic planning process, 2018)
Cost leadership- This strategy is based on setting out lowest cost producer or service
provider in chosen industry. Being the lowest cost producer will help the organisation in
competing with others on the basis of price and earning highest units of profits. Knights and
Dukes Homes can use this strategy and for seeking lowest cost company can minimise its
overheads to the lowest by exploring bargaining power of customers (de Roo, 2017). Managers
can open their branches and offices in those locations of London where very less competitors are
available.
Differentiation- This strategy works when a firm produces or serves something unique
from its competitors that is valuable for customers and satisfy their needs. Differentiation can be
in done in two form either by offering a fresh and unique good to public which adds value to
Illustration 1: The strategic planning process, 2018

them or by offering them the same product but with differentiated price. Knights and Dukes
Homes can differentiate from its competitors by serving quality services to their customers. They
can provide after sales support services to consumers providing them ease and all assistance they
need.
Focus- This strategy is based on a specific niche in market and concentrating on
producing goods or services in market for that niche. In other words, company needs to focus on
limited range of goods and services serving in limited geographical area by which they can
become cost leaders or even differentiate itself from others. Knights and Dukes Homes can also
use this strategy for growth by which they can only concentrate on particular segment, in order to
just serve them which are small in number (Kouba, 2017).
All three strategies of Porter's generic are suitable for Knights and Dukes Homes. In order to
expand and earn better profits company can either provide their services in lowest cost for
competing with competition or differentiate or focus on particular niche. The best suitable
strategy which is suggested to Knights and Dukes Homes is Focus by which they can
differentiate themselves by targeting particular customers and even become lowest cost service
provider as they are serving to concentrated group which will include low overhead and
operational costs.
PESTLE analysis
Analysis of external environment is compulsory for organisations while they are planning
to expansion and growth. PESTLE analysis is a framework which enables entity to identify and
determine the effects of external factors on their operations and profits. This analysis is
conducted by organisations to known and understand their market conditions and seek
knowledge about their positive and negative impacts on company. PESTLE analysis is
conducted in case of Knights and Duke Homes as they are considering expansions of their
business in location with same products and service but in different location (Kemp, 2018).
Therefore, it is compulsory for entity to evaluate market and than move further:
Political- Impacts which are imposed by government and there policies on the whole
industry are identified by this factor. Knights and Duke Homes is having their operations in
London therefore, they are well known by all the policies of government. This works as an
advantage for the company and enabling its knowledge to use in their growth plans and making
effective strategies.

Economical- Here, economical factors are analysed and their impacts are studies which
impacts the performance and profitability of company. Knights and Duke Homes is familiar with
the economy of London and performing good in it with stability. They are earning profits which
is why company is planning to grow and open more branches.
Social- The organisations and their operations are also impacted by the changes in nature,
attitudes and habits of society. So, social factor is considered while planning and making
strategic decisions. Knights and Duke Homes, managers will also look for those location to set
up their business in which they can attract more and more customers (Denton, Forsyth and
MacLennan, 2017). For doing so they will conduct market research in which they analyse
current trends and behaviour of public.
Technological- This is another area where changes takes place rapidly and companies
needs to keep their knowledge updated and fresh. Knights and Duke Homes can make use of
digital technology in their operations, they can conduct promotional activities by using digital
technology. Also, they can provide support services by using technology, providing ease and
comfort to customers and attracting more and more people towards it.
Legal- This element is about specific laws and regulation by which their industry is
flourishing and which have huge impacts on business activities. This factor is concerned about
what is legally allowed to company in their operating territory. This factor again imposes
positive impact on Knights and Duke Homes as they are well experienced and practising their
functions according to the laws of London. Therefore, they do not need to put extra efforts while
planning growth and making decisions.
Environmental- This concerns issues regarding components which are impacting the
ecological balance of the environment in which company is situated. Knights and Duke Homes is
a serviced provider and serves public by renting and selling houses to them (Tian, Ge and Li,
2017). Therefore, they do not have much impact on environment of their actions, but company
can undertakes CSR activities for creating positive impact on public and gaining good reputation
in marketplace.
P2 Applying Ansoff's growth matrix in Knights and Duke Homes
In ever changing environment it is important for organisations management to identify
path for strategic development. This requires thorough knowledge and understanding of
environment in which company is existing. Ansoff growth matrix is used for making strategic

decisions for expansion and growth. This matrix assist managers to assess market information
and develop effective business plans and strategies in order to grow and diversify their
operations. This matrix is most commonly used tool by companies planning for growth,
providing best strategies and plans to organisations. This matrix render four strategic choices to
company for achieving aims and objectives. Those four strategies are as follows:
(Source: The Ansoff Matrix, 2019)
Market Penetration- This strategy is adopted by company when organisation is planning
to grow in their existing marketplace and with old products. Adopting market penetration
strategy involves low-risk as company is familiar with the environment, management just make
plans for promoting products and services in better manner and utilising better positioning plans.
This strategy is not suitable for Knights and Duke Homes as they are moving to new location
which includes new market (Sarin, 2019). The risk associated with this strategy this is an old
market and people know the company and its products, therefore, sometimes they feel to move to
new form and try them for just getting better experience which can cause failure of the
operations and innovation in the same marketplace. The company can make use of effective
marketing techniques for attracting more people and changing their position in marketplace.
Market Development- In pursuing strategy of market development, management plans to
develop new market for existing goods. They attempt to sell their goods or services which exist
in market to new segment and to new customers. This strategy can be adopted by Knights and
Duke Homes as they are planning growth and expansions in new market but with same services
which they offer in their existing market. Risk with this strategy is the market is entirely new and
Illustration 2: The Ansoff Matrix,
2019

entity do not have any idea about the marketplace and population. This can cause problems for
them to develop effective product for new market in order to satisfy peoples needs. For
mitigating this threat company has to conduct thorough market research for developing best and
potential strategies for entering new market.
Product Development- This strategy is developing entirely new product for existing
marketplace. Here, management explore new opportunities and ways to develop brand new
product or service for their existing customers or buyers. Knights and Duke Homes can use this
strategy for their existing operations but not while they are planning growth as they know
profitability of their services already they are rending to people. A new product is does not give
assurance that it will be effective and bring profits to company which is a risky situation and can
bring negative results to company. For mitigating this risk organisation have to conduct thorough
market research in order to develop effective products and adopt best marketing strategy to
position themselves in a effective manner.
Diversification- This strategy works when management of company are planning to
develop a new product for an entirely new marketplace. Diversification is of two type related
and unrelated, when company is moving to new market with new product but within the same
industry. On the other hand, unrelated diversification is when company is diversifying into
entirely new industry.
All these four strategies of Ansoff matrix are growth strategies but the most suitable and
beneficial strategy for Knights and Duke Homes is market development (Medeiros, 2017).
Company is moving in new marketplace which their existing services therefore, they have to
adopt market development strategies. Considering their growth Knights and Duke Homes will
make promotional plans to move into environment. These plans includes their positioning
techniques and attracting new consumers towards their organisation.
TASK 2
P3 Analysis of different sources of funding with their advantages and disadvantage
Money is one key resource which is basic for very organisation to operate irrespective of
size of their operations. Every company needs funds to function and perform their business
activities effectively and obtaining predetermined goals and aims. There are several methods

and ways by which companies can acquire funds for their business activities, these sources can
be internal or external to organisation.
Internal sources- This refers to acquisition of funds within the company, internal funds
are those which are gathered and invested by the owners themselves in business. Initially when
business is just introduced in market and funds invested and used by owners are generally
internal which they bring in by their personal connections (Angotti, 2018). Different methods of
generating internal funds are personal capital, reserves or retained earnings and sale of capital
assets.
External sources- These are those sources of finances which come from outside the
organisation. These sources are used by company when they require funds for longer duration
and huge amount is needed. External sources of finance are preferred by company when they
require money for almost permanent period, offering them large amount of funds in just one go.
For acquiring finances externally company needs to perform some actions which help them to
chose the best option or source of raising money. Organisations will undertake research or
investigation of third party, they analyse the risk associated with it in relation with the benefits
they provide the company and several other activities are performed.
Knights and Duke Homes is a estate agency and now for expansion purpose external
sources of finance are best suited for the organisation. Some potential external sources of finance
by which company can raise funds are discussed below along with benefits they provide and
drawbacks associated with them. Equity shares are basically raising funds by selling companies shares and transferring
ownership to others interested public. It is one of the most common source of external
finance which is used by companies. Many legal laws and regulations are involved in this
process of raising funds as general public is involved in it.
1. Benefit- As laws and regulations are imposed and government is involved in this
process therefore, it is very safe for both the company and shareholders.
2. Drawback- This practice of raising funds for business operations is very costly
and time consuming process (Zhou and et. al., 2017). This procedure includes
many steps which are lengthy and expensive. Bank loans are available for long and short term both, generally when company needs
money for longer duration they visit banks and avail their services. Bank loans are not

easily available, bankers perform rigorous evaluation of companies finances and their
position and collect all information they require before granting loan amount.
1. Benefit- One advantage of this source, it is the safest way of raising capital.
Company have to just provide all documents which are required by banks and for
completing their procedure and formalities.
2. Drawback- This is a very secured method of funding but sometimes banks takes
very long to complete their formalities and assigning loans causing delays in
operations and activities of company. Because of this reason organisations ignore
taking bank loans.
The suggested source of finance to Knights and Duke Homes is externals sources and out of
those discussed above bank loan is best suited. As Knights and Duke Homes is a small enterprise
and raising funds from bank is safe and less costly.
TASK 3
P4 Preparation of Business plan for growth
Company overview- Knights and Duke Homes is a private small business entity, which
recently started operating in London, 12 months back. The company deals in real estate industry
rending services such as renting and selling different houses, flats and unoccupied lands, stores,
shops or houses. Knights and Duke Homes is an SME's which was established with aim of
serving people and initially surviving in marketplace (Perveen and et. al., 2017). But regular
growth leads to good revenue and better earning, now company is planning to expand and launch
two new branches in diverse locations of London.
Vision- Knights and Duke Homes, vision is to render best quality services related to real
estate to public of London. They believe in growth with people they are working for and working
with. Knights and Duke Homes value their employees the most keeping them happy and
satisfied.
Mission- Knights and Duke Homes mission is to identify the needs and requirements of
customers of people effectively so that accordingly they can serve them. Understanding the
needs of people is the most important task for the company and do so they have appointed best
professionals. They believe in keeping employees and customers first therefore, company always
keeps themselves updated to known the current trends and preferences of people.

Objectives- Main objective of Knights and Duke Homes initially is to enter real estate
business and earning enough profits to survive in marketplace. Now, after one year company has
earned enough profits and aims towards growth. Knights and Duke Homes managers are
planning to open two new branches in London expanding its operations in new locations. The
company aims towards rendering best real estate services to people and becoming more
approachable to potential customers.
STP
Segmentation- This is a process of splitting the market into small groups having similar
needs and characteristics. This is done with the purpose of choosing best and most suitable
targets for the organisation. Knights and Duke Homes segmented their marketplace by classes
they belong to such as lower class, middle class, upper middle class and higher class.
Targeting- After segmentation, companies will set their targets according to their actions
and services they are rendering to public. Knights and Duke Homes is a small enterprise
operating on a very small scale. They target all classes of society but their potential customers
are middle class families and individuals. Company make their plans according to them and
make promotional strategies accordingly.
Positioning- Once, segmentation is done target market is set the Knights and Duke
Homes will place itself in marketplace (Albert, 2017). That process of placing is known as
positioning. They target middle and upper middle class families and individual therefore,
promotional strategies are also made in relation with them. Acquiring attention of huge customer
base and other population.
Financial information- Success and growth of business and organisation totally depends
on the plans and strategies made and implemented by management. Finance is one of the key and
very basic resource which is required by every company irrespective of their size and nature.
Their funding requirements depends upon their size and operations they undergo, also on the
complexity of operations. Knights and Duke Homes also need money in order to expand and set
up branches in two areas together. A budget is prepared by management of company in which
they specified the usage and needs of every department in which funds are required.
Particular 31/12/19 31/12/20 31/12/21

Implementing technology
cost
15000 - 3000
Promotional expense 11000 10500 7500
Advertisement expense 8000 7500 6000
Catalogues 1500 2500 3500
Training charges 9000 7000 6500
Total Cost 46500 27500 26500
Cash Flow Statement is a document carrying financial data of company from the very
beginning to ending of the year (Baschat, 2018). It a detailed tool containing numerical data in
which cash inflows and outflows are mentioned.
TASK 4
P5 Evaluation of exit or success options for SME's along with their advantage and disadvantages
Exit Plan is a kind of option in the business plan which allows the company to dissolve
or discontinue their plan when the financial crises triggers. Here, the company close or give
whole the authorities to other person as this option is useful when the owner of business wants to

exit their business (Stein, 2018). This option is useful when organisation face loss since long
term and for this, it is recommended that company need to wind up or close its organisation. Its
various options are mentioned as under:
Winding up: It is a procedure which defines the closing or dissolving an organisation as
at the time of winding up the company discontinues it business. Here, they also sold out their
assets, pay all the amount to their creditors and also dispense remaining amounts to the
shareholders and investors. If Knights and Duke Homes does not achieve success in their
expansion then they can use this option. Advantages: At the time of winding up, the various debts and liabilities if company has
then it gets paid off and if they face any sort of legal actions then it gets stop at the time
of winding up. Hence, the owner of company gets free from the other debts and does not
face more losses.
 Disadvantages: The owner of business will lose its control from the assets as the new
purchaser will take over or see the whole winding up process. Moreover, when the assets
of company gets sold then after this company lose its efficient manpower.
Selling in open market: This process include the selling in open market or at the global
level as in this option third party is involved in order to purchase things (Mazza, 2017). Here, the
business and its concerned activities remain same only the thing which gets change is the owner
of business. It is a kind of economic system who does not have barriers and include free market
activities. Advantages: This option does not damage the reputation and actions of business as the
purchaser bought the running business which does not influence the operations.
 Disadvantages: Here, the owner of the company lose its whole power and authority from
the business. Moreover, this will impact the morale of employees and can demotivate
them.
CONCLUSION
Thus, it is concluded that planning is a procedure which is used in order to analyse the
various goals and targets and arising risk of company which analyse the various opportunities as
it helps in achieving the goals and objectives. For this, if company wants to launch their business
or introduce new product in the market, then they conduct PESTLE and Porter's analysis in order
to determine the market conditions and various factors which influences the business. Moreover,

Ansoff's matrix is useful in order to define the strategies which can use in market and also adopt
best one to achieve success. To expand the business, owner need to make proper plans and
policies which describes the each and every detail about the company and also include financial
information. Moreover, exit option is provided as it helps in dealing with the uncertainties which
might impact the business.

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