Planning for Growth

This report discusses the key considerations for analyzing growth opportunities, Ansoff's Growth vector Matrix, sources of funding, and developing a business plan for growth. It focuses on Oak Cash and Carry, a grocery retailer in the UK, and provides insights into different growth strategies and funding options. The report also includes a business plan for the launch of a new product, Sparkling Lemon Water.

PLANNING FOR GROWTH

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Key considerations for analysing growth opportunity.................................................................3
Ansoff’s Growth vector Matrix...................................................................................................5
Sources of funding available.......................................................................................................7
Developing a business plan.........................................................................................................9
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Planning for growth is a continuous and essential activity in every business where newer
strategies are regularly evaluated and analysed by firms so that they can grab a new opportunity
as soon as it arises (Cerqueiro, Ongena and Roszbach, 2016). In the current report, Oak Cash and
Carry, which is a grocery retailer of UK has been taken and various growth options will be
evaluated for company by application of different internal and external market analysis tools
along with a business plan in the last.
MAIN BODY
Key considerations for analysing growth opportunity
It is necessary to regularly e3vlaute the growth options that are available to the company so
that necessary expansions strategies can be developed in a relevant and timely manner. This can
be done using two most prominent frameworks for evaluating growth opportunities available in
the business:
McKinsey Matrix: This helps in analysing the current business units that are operating and then
on the basis of industry attractiveness decisions regarding investments are taken (Enduring
Ideas: The GE–McKinsey nine-box matrix, 2020). Market attractiveness along with the strengths
are considered as determining agents that whether there should be further growth or not.
Figure 1: GE McKinsey Matrix
Source: Enduring Ideas: The GE–McKinsey nine-box matrix, 2020
For Oak Cash & Carry, the factors impacting industry attractiveness can be identified as the size
of the retail industry, its profitability, its structure, season ability, availability of labour etc, and
in the business strength aspects like total market share of the product, loyalty of customer,
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company’s profitability etc. are evaluated. Their evaluation collectively helps in identifying
whether a business should be sold, held or invested in. For Oak Cash & Carry, the market
attractiveness is high because they have only just ventured in the grocery retail market and there
are many growth opportunities and strategies that are available to them (Birkin, Clarke and
Clarke, 2017). The strength of their business unit is also very high because they have till now
only adopted the grocery market segment which is going really well for the company and the
retail sector today is very wide thus providing higher expansion and growth options. Therefore
since both the major factors of GE matrix are at a high for the company, then it can be
recommended that the company should further grow their market more extensively.
BCG Matrix: This is the second tool that can be used to evaluate the growth options available to
the company in following manner:
Figure 2: BCG Matrix
Source: BCG growth-share matrix, 2018
Using Market Growth Rate of the business and the relative market share, different product lines
of the business are evaluated so that they can be segregated into different categories:
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Cash cows denote those products that have a large market share but are low on the industry
growth rate. Star on the other hand signifies those products or business units that have higher
market share and are also growing quickly in the market. Question Mark here depicts the
business units or products that have lower market share but the growth rate of such products is
high and lastly the dog signifies those redundant products that have lower market share and the
growth rate is also slow. For Oaks Cash and Carry, the products are in the question mark phase
where the market share is lower but the growth in the retail industry is very high and can be
further increased if proper growth plans are developed for the company (Sadun, 2015).
Therefore, the company should allocate more resources for further expansion of such business
unit.
Collectively, analysis of both the frameworks shows that company should go for the
growth strategy where they need to evaluate different options such as joint venture, mergers and
Acquisitions etc. so that they can ensure availability of adequate resources for expansion.
Ansoff’s Growth vector Matrix
The growth matrix given by Ansoff’s helps in the evaluation of the strategies that are
available to the company in order to promote growth using the current and new products and
services that the company can launch in new and existing market.
Figure 3: Ansoff's Vector Matrix
Source: Ansoff Matrix, 2019
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Market Penetration: This strategy signifies that strategy where the company uses existing
products and services offered by them in the existing markets in which they are currently
operating s that they can target the market in a better manner (Hood, Clarke. and Clarke, 2016).
Oak Cash and Carry can use this strategy if they intend to expand themselves more intricately in
the existing market. The use of technology is one of the best opportunity that is available to the
company because the continuously increasing involvement of technology can lead to the greater
opportunities for the company that can be used to establish the company more firmly and
generate higher profits.
Market Development: This strategy is used when the existing products are targeted towards a
new market that can help the company in generating wider customer base. Establishing the
company and its products in a new market can open up ways for earning huge profits (Ansoff
Matrix, 2019). Since post Brexit, the market of UK is declining and is expected to decline further
this is the most appropriate opportunity for Oak Cash and Carry to expand their markets further
into new areas so that adequate backup plans can be made for the company keeping in mind the
current scenario. Therefore, this can prove to be a profitable growth opportunity for the
company.
Product Development: Under this kind of growth strategy, the company tries to present newer
and differentiated products and services in the existing market amongst the existing customers of
the company. In comparison to the market penetration strategy, this strategy is comparatively
more better because the company presents newer products to the customers and they are always
attracted to the newer products. Due to the movement of the customers of UK towards a healthier
lifestyle and better lifestyle options, Oak cash and Carry can venture further into that direction.
This can be a very lucrative market for the company because there has not been much
development for the company and they will be able to target a lot more customers through this
strategy of expansion.
Diversification: This is the riskiest growth strategy where the company launches entirely new
products and services in completely new markets. In comparison to the product development
strategy, under this the products are being presented to an entirely new customer segment and
this should be done by the company only when they are completely sure of the success of the
strategies that they have adopted (Pan, Chen and Zhan, 2018). Often it has been a trend in the
retail industry to enter into mergers and acquisitions before implementing such strategies so as to
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develop a proper back up plan in case the risk increases beyond the bearing capacity. Oak cash
and carry can also venture into a new market with an entirely new product line apart from
grocery sector.
However, on the evaluation of all the four strategies above, it can be recommended that
the best strategy for company would be to develop the product development strategy because
there are many more new products that can be developed and presented before the customer
segment of UK.
Sources of funding available
In order to implement a new growth plan, a firm needs to ensure that they have adequate
funds available with them or safe options to raise funds in case the need arises. Different sources
of funds available to Oak Cash and Carry Company can be evaluated in following manner:
Retained Earnings of business: These signify the personal finances of the owners of the
company, and the profits that have been retained form the past earnings. These are readily
available and have zero additional costs attached to them along with being the safest investing
option that can be possible (Yin, 2016). The owners of Oak Cash and carry can utilise this
method to collect funds but however, there are certain advantages and disadvantages that are
associated with the investment method:
Advantages Disadvantages
 One of the major advantages
that this option presents is the
zero liability and risk factor
that is attached with it.
 There are no additional costs
involved in raising funds such
as interest payments, loans,
mortgages etc.
 The ownership of the business
remains with the owners of the
company only (Mathooko and
Ogutu, 2015).
 The prominent disadvantages of
this method are that company
might not have adequate finds in
the future during the time of the
crisis.
 This method can create long
term loss for the company and
even bankruptcy for the owners
if situation worsens.
 Using all the personal savings in
the business at a one go is not
wise act because the future
remains unpredictable and
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uncertain.
Venture Capitalists: Venture Capitalists are those who are interested in investing their funds in
those companies who have strong entrepreneurial ideas and the chances of success are very high.
These investors provide their funds for long time periods in return of the equity shareholding in
the company. they can be later paid off after the company has established themselves firmly or in
the event of wingding up of the company ultimately (Sturley, Newing and Heppenstall, 2018).
Different positive and negative aspects associated with the investment technique can be
evaluated as follows:
Advantages Disadvantages
 It presents an opportunity for
the expansion of the company
and since Oak cash and carry
is in the growing phase, this
can be best source of fund for
them.
 Venture capitalists can help in
developing necessary
connections in the market thus
helping in establishing the
business.
 The most impactful disadvantage
is that the ownership no longer
remains in the hands of the
owners only and gets distributed.
 The entire process of getting a
venture capitalist is very long
and tedious where the entire
document work is too elaborate.
 Venture capitalist might demand
more funds from the business
later as compared to the amount
that was invested by them.
Bank Loans: This is the easiest option that is available to the owners of Oak Cash and carry
where a particular amount in the form of loan can be borrowed from the bank for a fixed time
period (Prasad and et.al., 2017). The interest rate charged by banks against the funds given is
also pre determined and fixed throughout the tenure.
Advantages Disadvantages
 The ownership is still retained
by the owners only and no one
else has a claim on the
 Banks have the right to seize the
property in case the loan
repayment is not made in a
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business.
 The interest rate is fixed thus
fixing the cost that will be
incurred for the business so
that no fluctuation arises in the
cost over time.
timely manner.
 This can be a major loss making
situation if any defaults in the
payment of instalment arises
thus increasing the risk for the
business (Sadun, 2015).
On the basis of evaluation done above it can be stated that the best option available to the
company is through venture capitalists because ownership can be regained any time in the
business and flexibility is higher.
Developing a business plan
Oak Cash and Carry has decided to present Sparkling lemon water as their new product
and therefore, business plan can be designed for company in following manner:
Executive Summary: The business plan document helps in presenting a detailed description of
the entire process of launching the strategy that has been developed by the company . Here a
business plan has been presented for Oak Cash and Carry’s latest launch, i.e., Sparkling Lemon
Water. Different aspects related to market will be covered in the forthcoming document.
Objectives:
 To introduce a new energy drink called Sparkling Lemon water in the market segment of
UK perfect for both summers and winters.
 The sales and market share of the company are expected to increase by 30% which will
be compared to the performance of the company itself in the past and its competitor who
are selling similar products.
 There are adequate resources available in the company that can assist in achieving the
desired objectives.
 The launching of this new product will widen the prospects of company’s growth in the
future.
 The set targets are expected to be achieved by the end of one year.
STP Analysis: This involves segmentation, targeting and positioning where the company
positions itself in the correct market segment so that maximum returns can be gained.
 Segmentation: There are four major segments of consumer group i.e. Geographical,
demographic, psychographic and behavioural. Amongst this, Oak cash and carry can use
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Psychographic and behavioural segments in order to target the customers with their new
product range where people choosing healthy lifestyle and are convicted towards staying
fit can be segmented.
 Targeting: The targeted segments are those that have been chosen by the company in
order to market their product (Birkin, Clarke and Clarke, 2017). Currently, Oak cash and
carry will target all those cusoters that intend to maintain a healthier lifestyle and are
extremely health conscious through appropriate pricing strategy.
 Positioning: The Company will present high quality products within an affordable price
range thus improving the positioning of the company.
Pestle analysis: The application of this framework will assist in analysing the external
environment surrounding business:
Factor Impact
Political Since the product is aimed towards improvement in the
health of consumers, the political regulations will not
be imposed. Additionally, the stable political
conditions in UK even after Brexit shows that company
will be able to venture into the market successfully.
Economic The disposable income of the consumers of UK is high
along with a stable inflation and taxation rate (Kirby-
Hawkins, Birkin and Clarke, 2019). Collectively, this
presents an ideal situation for Oak Cash and Carry to
expand them self.
Social The product will easily gain approval from society
because of the health concern that it addresses thus
turning the environment favourable for Oak Cash and
Carry.
Technology Since the new product is yet t be marketed, assistance
of technology is critical in the process and the product
can also be sold on the online website of the company
thus increasing the overall business.
Legal The product is being launched and manufactured in
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compliance with all the legal rules and regulations that
have been developed.
Environment Since only water is being sold, it will be sold in
recyclable bottles thus ensuring sustainability is not
compromised with by the company (Pan, Chen and
Zhan, 2018).
Swot Analysis: This analytical framework will help in analysing the internal environment of the
company:
Strengths
 Company has developed a strong and
comprehensive supply chain.
 From the availability of the raw
materials to the distribution network, all
have been well integrated.
 The technological innovation and
application in the company is very high.
 Customers are loyal to the brand and
company is able to retain them easily
through the good quality products.
Weaknesses
 The idea is vulnerable to being easily
copied despite patents because
variants can be easily presented by
competitors’ company.
 The perish ability of the product is
very fast and if not consumed on time,
it can become stale thus creating a loss
making situation for the company.
Opportunities
 Because this market is not yet
developed, company has the opportunity
to exercise monopolistic strategies in the
market thus capturing it.
 The chances of the success of the
product are very high and higher profits
can be earned.
 Subsidies can be obtained from the
government thus contributing
Threats
 Competition in the industry can rise
very quickly and intensely in the
market (Lash, Kaufman and Hernán,
2018).
 Competitors can launch even better
version of product.
 If the taste is not favourable, then it
might lead to failure of the product.
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immensely.
Marketing Mix: This helps in evaluating the different aspects related to market or industry in
which they are planning to operate:
7 P's of Marketing Analysis
Product Sparkling Lemon water is being launched by Oak Cash and Carry with
tagline as Healthy lemon shots. There will be three bottle size of 250ml,
500ml and 1litre.
Price Penetration pricing strategy will be adopted where 250ml bottle is priced
at £15, 500ml for £30 and 1 litre for £60.
Place Product will be easily made available in all those stores that are owned
by Oak Cash and Carry themselves, the local shops, malls and at medical
stores as well.
Promotion In the initial launching phase products will be sold through bundle
pricing along with a bottle of Sparkling coconut water as free on
purchase of sparkling lemon water (Hood, Clarke. and Clarke, 2016).
People Salesmen and staff have complete knowledge regarding the products
location and availability.
Process The distribution process is already strong and this will be further
strengthened so that no shortage in the supply of water occurs and
additionally, the risk of perish ability will also be minimised.
Physical Evidence Packaging of bottle will be done in attractive yellow and blue colours
along with tagline clearly distinguishable thus making product easily
recognizable.
Investing Mechanism: As identified from the analysis of various sources of funds available to
the company, the best method that can be suggested for company to raise funds, is through
Venture Capitalists.
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Budget: In order to launch the product, the budget allotted to company is £1500 which is
segregated in following heads:
Particulars Amount
Labour £110
Overheads £190
Marketing Expenditure £500
Specialists Appointed £350
Raw Material £100
Training Cost £250
Total £1500
Monitoring and evaluation: After a plan has been successfully implemented by the company, it
is necessary to constantly evaluate and monitor its progress and performance in the market and
this can be done in following manner by Oak Cash and Carry:
 Benchmarking technique can be used where the sales figure can be regularly evaluated so
that the actual performance can be compared with the standards set and further strategies can
be developed (Cerqueiro, Ongena and Roszbach, 2016).
 Quality aspect also needs to be regularly monitored so that company can ensure delivery of
safe drinking water and chances of any contamination can be minimised or removed.
CONCLUSION
The research conducted in the report above concludes that the market is favourable for Oak
cash and carry and the business plan that was developed was very sound and effective. The
different application of models such as McKinsey matrix, BCG matrix, Ansoff’s Growth matrix,
analysing sources of funds available, and then presenting a business plan depicted the criticalness
of these models in evaluating and selecting business growth strategies.
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REFERENCES
Books and Journals
Birkin, M., Clarke, G. and Clarke, M., 2017. Retail location planning in an era of multi-channel
growth. Routledge.
Cerqueiro, G., Ongena, S. and Roszbach, K., 2016. Collateralization, bank loan rates, and
monitoring. The Journal of Finance, 71(3). pp.1295-1322.
Hood, N., Clarke, G. and Clarke, M., 2016. Segmenting the growing UK convenience store
market for retail location planning. The International Review of Retail, Distribution and
Consumer Research. 26(2). pp.113-136.
Kirby-Hawkins, E., Birkin, M. and Clarke, G., 2019. An investigation into the geography of
corporate e-commerce sales in the UK grocery market. Environment and Planning B:
Urban Analytics and City Science. 46(6). pp.1148-1164.
Lash, T.L., Kaufman, J.S. and Hernán, M.A., 2018. Correspondence Between Results and Aims
of Funding Support in EPIDEMIOLOGY Articles.
Mathooko, F.M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other
factors that influence the choice of response strategies adopted by public universities in
Kenya. International Journal of Educational Management, 29(3). pp.334-354.
Pan, W., Chen, L. and Zhan, W., 2018. PESTEL analysis of construction productivity
enhancement strategies: A case study of three economies. Journal of Management in
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Prasad, M. and et.al., 2017. Mobile phone use and risk of brain tumours: a systematic review of
association between study quality, source of funding, and research
outcomes. Neurological Sciences, 38(5). pp.797-810.
Sadun, R., 2015. Does planning regulation protect independent retailers?. Review of Economics
and Statistics. 97(5). pp.983-1001.
Sturley, C., Newing, A. and Heppenstall, A., 2018. Evaluating the potential of agent-based
modelling to capture consumer grocery retail store choice behaviours. The International
Review of Retail, Distribution and Consumer Research. 28(1). pp.27-46.
Yin, N., 2016. Application of AHP-Ansoff matrix analysis in business diversification: The case
of Evergrande Group. In MATEC Web of Conferences (Vol. 44, p. 01006). EDP
Sciences.
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Online
Ansoff Matrix. 2019. [Online] Available through: <https://www.smartdraw.com/ansoff-matrix/>
BCG growth-share matrix. 2018. [Online] Available through:<
https://strategicmanagementinsight.com/tools/bcg-matrix-growth-share.html>
Enduring Ideas: The GE–McKinsey nine-box matrix. 2020. [Online] Available through:<
https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-
insights/enduring-ideas-the-ge-and-mckinsey-nine-box-matrix>
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