Planning for Growth - Assignment Sample

Planning for growth

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
P1 Key Considerations for Evaluation of Growth Opportunities...............................................1
P2 Evaluating Opportunities through Ansoff's Growth Vector Matrix......................................3
P3 Assessing the Potential sources of funding that are available for business...........................4
P4 Business Plan for Growth......................................................................................................6
P5 Assessment of different Exit Options..................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Today in changing scenario success of any organisation is totally dependent on good
strategic planning. Competent business plan is needed for gaining competitive advantage over
competitors. As digital technology is increasing day by day there is need for using it in business
by selling online. Advertisement through social networking site is must for attracting younger
generation and increasing customer base of organisation. E-commerce had captured market share
very fast, so to be in competition there is need to provide a portal for selling online. For
achieving organisational goals and generating more revenue digital technology is playing an
important role. This project report contains a small and medium-sized (SME's) organisation
named as Nisa Retail Limited had been taken which is working in field of selling grocery and
fast moving consumer goods to end consumers. Hence, referring in mind governmental support
in financial terms business entity of NISA is planning to offer products or services through
online stores. This report will also provide different tools and manner for evaluation of Growth
opportunities, and will focus that how Nisa Retail Limited can raise funds and execute their new
business plan.
P1 Key Considerations for Evaluation of Growth Opportunities
To achieve success and to stand in competitive market there is need for increasing
market share. As today in digital world, to grow business there should be taken some steps for it
and working on that can be profitable for Nisa Retail Limited. So, for increasing revenue and to
stable in market they are planning to do online business through creating a e commerce website.
Porter's Generic Strategies
It describes how Nisa Retail Limited will pursue their competitive advantages across it chosen
market I.e European countries. As they are planning to do online business which will create
competitive advantages to Nisa Retail Limited as other competitors in same business had not
planned any of these things. So these Strategies will help in knowing how they will perform and
develop there market and provide growth opportunities. There are different strategies which are
provided by Porter they are and there applicability for NISA Retail limited-:
Cost Leadership-: The objective of this to become the lowest cost provider or producer in
industry (Esteban-Guitart and Moll, 2014). As Nisa Retail limited is already in market for many
years so they know how to sell their product at different costs. It is already aware of competitors
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pricing strategy therefore through online business also they can provide lower costs to
consumers.
Cost Focus-: The products that are common for market must be always sold at lower cost
as because customer will always be aware of competitive rates of that product. So Nisa Retail
can sale products at lower cost which are common.
Differentiation Focus-: This strategy aims with small number of customers. There are
different opportunities for providing products that are not available with competitors. As Nisa
Retail Limited provides monopoly products which will also be sold online will be help in
growing there business.
Differentiation Leadership-: Through this strategy business targets for achieving
competitive advantages across whole industry (Burns and Dewhurst, 2016). The company should
provide unique products for larger segments of customers. As, Nisa Retail Limited is selling their
products in their brand so they are selling some of unique products that are not available with
their competitors.
Selling through e-commerce that can provide growth to Nisa Retail Limited as that will
help to increase there revenue and can earn higher profits.
Pestle Analysis for Retail Sector in UK
Political Factors-: As the decision taken by
UK to leave European Commission the pound
had become weaker so profit margins of Nisa
Retail Limited will be affected with this move
of government.
Economic Factors-: As consumer habit of
spending changes it will lead to put pressure on
certain goods. So there are chances for
declining in profit.
Social Factors-: Different Cultural
Diversification and preferences of country
affects business. As Nisa Retail Limited is
selling diversified products so this factor may
not affect them.
Technological Factors-:As through
technological developments social media
marketing had increased which is also done by
Nisa Retail Limited will help in earning some
extra revenue
Legal Factors-: All rules and regulations that
are applicable to Nisa Retail are fulfilled by
them so these factors may not affect them.
Environmental Factors-: As there is rise in
ethical and environment friendly shoppers so
there is need to be focus on sustainable
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development by Nisa Retail.
The technological advancement in UK had helped in creating opportunity for this online business
as most of population of UK are using internet and doing online transactions.
P2 Evaluating Opportunities through Ansoff's Growth Vector Matrix
Ansoff’s Matrix is a tool for strategic planning that helps in providing framework to
senior managements of Nisa Reatil (Ansoff's Matrix, 2018). There are four types of strategies that
are provided by Ansoff they are-:
Market Penetration-: This strategy is taken when Nisa Reatil has existing product in
market and needs a growth in current market. This strategy can be achieved by sale of more
products to existing customers and find new customers in existing market. This strategy can be
achieved through
 Decrease in prices
 Purchase of rivalry company in same market Increase in promotion activities etc.
Market Development-: This strategy is applied when Nisa Retail can target any new
market with existing products (Ansoff's Matrix, 2018). This strategy can be achieved through-
 Increasing in different segments of customers Exporting goods out of country etc.
Product Development-: This is done when there is good market share in existing market
and for expansion purposes new product is needed to be launched by Nisa Retail Limited.
This can be done through
 Buying product from outside and selling in existing market in own brand name. Research and developments of new products.
Diversification-: This strategy is applied when market is totally new and product that is to be
sold is also new for Nisa Retail (Ansoff's Matrix, 2018). Diversification is most risky as because
product development and market development both are required.
The Following is Ansoff's Matrix
Existing Products New Products
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Markets
Produc
ts

Existing Markets Market Penetration Product Development
New Markets Market Development Diversification
The Strategy that should be adopted by Nisa Retail Limited is to develop new market, as
they are having good market in their existing area. Their product range is also very high; they are
also selling some products in their own brand. They need to extend their market and sale there
product to different customer base. So the strategy that should be adopted by Nisa Retail limited
is market development and this can be achieved by selling their product online. This could be the
smartest way to sale their products, as today in digital world e-commerce had become essential
part of individual’s life. This is cost effective and could be easily manageable. This will help in
increase in market share of Nisa Retail Limited. As they are different stores in different places so
delivery cost of Nisa would also be very cost effective. The products that are sold in their brand
will also be advertised and efforts for selling their brand also becomes low. The Following will
be advantages of Selling online-:
 Increase in market share which is required to Nisa Retail as they are well established in
their existing market.
 Entrants in new markets can be easy which will directly lead to develop new markets.
 Can create different customer base which in turns increase revenue for them
 Overheads of company will also decrease that includes expensive retail premises, staff
for every store etc.
With the help of selling online, profits of Nisa can be increased and can easily attain there
objective of market development.
P3 Assessing the Potential sources of funding that are available for business
Here the finance that had been needed for starting an e-commerce website so there are some
options from where Nisa Retail can raise funds.
Bank Loan-: This is major source of finance which is borrowed from bank for a set period
and it has an agreed repayment schedule (Blain, 2017). For taking this loan lender require a solid
business plan and plenty of collateral security. The repayment is depended upon duration and
size of loan and its rate of interest. This loans are mostly suitable for purchasing an asset,
working capital, start-up capital etc. Banks provide loans to any of business on basis of adequate
returns for investment they had done. The Following are merits and demerits of Bank Loan-:
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Advantages
 Bank Loan is not repayable on demand but it is for a fixed term that is decided when at
the time of taking loan.
 As Banks are taking interest on loan provided by them, so there is no need to pay
percentage of profits of your company.
 Level of repayments are known as interest rates are mostly fixed.
Disadvantages
 There may be trouble in repayments if there is shortage of working capital with company Banks loans are provided on basis of collateral security and it is difficult for start-ups or
SME's to provide that.
Issue of shares-: From this source of finance any organisation can provide a portion of
ownership stake in any company (Reader, 2017). In issue of shares business sell their shares
directly to public and can raise amount of funds that are required by them. The Following are
advantages and disadvantages of issuing of shares-:
Advantages
 The risk in equity financing is less as there is no burden of monthly repayments like in
bank loan. As this gives freedom to invest in business and helps in generating more
profits.
 Cash flow of any company of any business will not affect there is no need of working
capital for repayments of interest and instalments of any loan.
 Long term investments can be done with these funds which in turns helps in growth of
business.
Disadvantages
 The foremost disadvantage of equity financing is for sharing profits to shareholders. There is loss of control as shareholders will interfere in managing business of
organisation.
Venture Capital Financing-: In this method of financing wherein equity stake is given to in
exchange of finance provided by them(Zalengera and et. al, 2014). As venture capitalist is
treated as shareholder their return is dependent upon profitability and growth of business. The
investments risk and potential for future pay out both of them are very high. The following are
pros and cons of venture capital financing-:
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Advantages-:
 As venture capitalists are very well connected to different business community, so they
can help in providing goods benefits to organisation.
 In different areas like taxation, management they can provide an active support as they
are very much experienced that will help in faster growth of any organisation.
Disadvantages-:
 The Loss of control of the owners is the biggest demerit as investors will regularly
interfere in business of any organisation. If stake of venture capitalist is more than 50% then there can loss of management control
in any organisation.
Personal Savings-: This source of financing is very cost effective and easiest way to finance
any business (Scarborough, 2016). But this type of financing is very much risky as you may not
have enough funds that are required to manage business.
Advantages
 Full ownership is retained by owner and will receive 100% of future profits
 Self-financing provides full control in business nobody will be there to interfere in your
business.
Disadvantages
 There will always be shortage of funds as to manage their business.
 It there are losses in business you could lose your personal belongings.
By taking into consideration all the above mentioned aspects it can be stated that Nisa
Retail limited can finance their funds from personal savings and bank loan source. This in turn
proves to be more fruitful for the firm as it helps in exploring business operations at suitable rate.
Thus, business entity will use own savings such as £20000 respectively. Further, as per the
requirements remaining £280000 will be raised by the business entity of NISA through taking
loan from financial institution.
P4 Business Plan for Growth
Overview of business idea
Nisa Retail Ltd is planning to expand their market through selling their products online as
in today's world which is digitized so for convenience of customers they need to provide these
type of services. By this they can sale large variety of products as per requirements of customers
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by sitting under a single roof. They can easily increase their customer base and market
development strategy. For purpose of growth and revenue maximization the company must go
for providing e-commerce website. For achieving objective company must go for plan that is
developed below.
SWOT Analysis of Nisa Retail Limited
Strengths
 Nisa retail is having highly talented and competent workforce
 There distribution and supply channel are very strong
 The estimated and current growth rate is very high.
 They are provided with monetary assistance whenever required.
Weaknesses
 Research and development part is lacking in Nisa Retail Limited.
 There is lack of training and development to employees
 Managing working capital may be an issue.
Opportunities
 By merger and acquisitions they can acquire a new organisation and can be more
successful.
 Entering in e-commerce industry is the biggest opportunity as there are no other
competitors for there business in UK.
 Developing markets of their own products in there brand name as Nisa Retail has became
an brand.
Threats
 Government regulations and food security are increasing day by day on packaged foods
 The problems of technological advancements and regulation is creating threat to Nisa
Retail Limited.
 Increasing competition level had lowered profits margin for Nisa Retail and increased
challenges for survival.
PESTLE Analysis
Political Factors-: This factor may not be same to every e retailers but there are several
political problems before them (Reed and Luffman, 2017). This factors are depended upon which
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country they are selling as each country have their own political aims. As tax policies in UK are
maintained well as now there in now higher tax nor lower on selling online.
Economic Factors-: These are very important in every business as it is directly related
and affects business revenue and profits (Harrison and Lock, 2017). Economic conditions of UK
has improved so there are chances the online business can grow.
Social Factors-: It also create deep impact on e-commerce industry as where there are
more users of internet and can easily be accessible.
Technological Factors-: It is very important context when said in terms of e-commerce
industry as it is totally depended upon technology (Retail industry PESTLE analysis, 2018). UK
had provided good access of internet to general public.
Legal Factors-: This is very important for global business as any change in law can be
costly and it is difficult to comply different compliances that are provided.
Environmental Factors-: As such there are nothing about environmental factors in e-
commerce business but there are several areas where investment in sustainable development can
be productive like packaging, waste reduction etc.
Marketing Mix Product-: Online unit can provide customers variety of products and services which are
easily accessible to them. Price-: The Price strategy that should be followed by Nisa Retail Limited should be
market penetration as they need to widen their market and can influence purchase
decision of customers Kaushik, A. 2018). Place-: As through developing a website that attracts customers will help in increasing
their customer base. Promotions-: The promotion of website must be done through modern and traditional
modes which can be by posting advertisement in newspaper or by television and through
social networking websites People-: For providing better services to customers Nisa Retail Limited must hire
talented and trained people. Process-: Any standard process must be assigned by Nisa Retail Limited for selling and
distribution to customers.
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 Physical evidence-: The website for e-commerce should be made attractive and in
innovative manner.
Competitor Analysis
Basis of Difference Nisa Retail Limited Unicorn Grocery Bacovia Super Store
Product This offers and sales
grocery and FMCG
products
They only deals with
grocery and not
interested in FMCG
They sale both FMCG
and Grocery
Pricing Pricing strategy
adopted by them is
Market Penetration as
they need to increase
their customer base
They uses Market
Skimming price
strategy
They apply
competitive pricing
strategy
Promotion They use both modern
and traditional modes
of promotion
They promote only
through traditional
modes
They use modern
mode of promotion by
promoting through
social networking
websites
Place of Sale Stores that had been
opened in different
cities and planning to
sale online in near
future
Unicorn is selling only
through physical stores
They are also selling
only through their
physical stores.
Financial Plan for Online Business-:
For assessing financial viability of project the income statement had been prepared. This
will show how much profit will increase if new business is taken out. It will show how resources
are utilized in monetary terms. This will help in understanding from where finance should be
raised to achieve greater profitability.
The Funds from where finance should be sourced are-:
Bank loan £280000 @3% APR
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Personal Savings £20000
Projected Income Statements from new business
Particulars Year 1 Amounts in £ Year 2 Amounts in £
Sales Revenue 300000 330000
Less Cost of Goods Sold 90000 105000
Gross Profit 210000 225000
Less Operating Costs
Salaries of employees 19000 21000
Promotional Expenses 1800 2150
Interest Expense 8400 8400
Administrative Expense 2800 3500
Depreciation on Assets 1600 1600
Rent 8000 9400
Total Operating Costs 41600 46050
Net Profit 168400 178950
Tax @ 20% 33680 35790
Net Profit after Tax 134720 143160
P5 Assessment of different Exit Options
Any exit strategy is a plan for leaving any business. This does not mean that there is any
disaster or failure but there may be any other purpose of exit (Esteban-Guitart and Moll, 2014).
The different option that are available for exit are-:
Liquidation-: This is any process why which Nisa Retail can bring their business to end.
This is done only when they had become insolvent and can't pay their obligations that are due.
As the operations of Nisa Retail comes to end all assets and liabilities are sold to pay off
obligations. The following are advantages and disadvantage of Liquidation-:
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Advantages-:
 The debts that are outstanding will be written off in books of accounts and allows
directors for new ventures
 Liquidator that is appointed will take over responsibility for dealing with creditors and
settling their claims.
Disadvantages
 All of company's assets will be sold by liquidator and after that no existence of company
will be there. There is possibility where owner and directors of company will be liable to pay off debts
through their personal assets.
Merger and Acquisitions-: These are transactions in which ownership is transferred or
consolidated with other entities. This can be done by different transaction-:
 Mergers-: Here the directors of two companies approve any combination and take
approval from shareholder’s (Scarborough, 2016). After merger happened, company that
had been acquired stops and becomes totally a part of acquired company.
 Acquisitions-: Here acquiring company purchases majority stake in firm that is acquired
but acquired concern continue to work
 Consolidation-: It creates a new organisation, shareholders of both company agrees to
receive common shares in new firm.
The following are pros and cons of Merger and Acquisitions-:
Advantages-:
 The M&A can add more value to entity that is combined rather than they can produce
individually.
 It can be cost effective for expansion, as through this they can upgrade their internal
process like obtaining new technology, deficiency of working capital etc.
 Can reduce the cost of overheads of both companies as their budgets are shared.
Disadvantages-:
 M&A can create distress among employee of both organisations, as there may be
different policies of employees, so when merged it is difficult to adopt. By this process there may be chances of increase in amount of debt that is owed by both
of them.
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Transfer of business to successor-: By this exit can be done by transferring business to
successor or manager of company (Blain, 2017). As Nisa Retail can provide successor to their
managers whom they believe are capable. The following are merits and demerits of this type of
succession-:
Advantages
 It provides possibility for maintaining influence and involvement in any business. Business can reduce involvement of third party
Disadvantage: Very difficult to assign or identify right successor for business.
So these may be the options for exit or succession. In the context of Nisa Reatil Limited,
they should go for merger and acquisitions as they are in a phase of expansion where they need
some capital and different resources to expand their business. This will help in development and
growth of business which will generate more revenue to them. The following can be advantages
for adopting merger and acquisitions-:
 By M&A Nisa Retail Limited can enter into new market easily and can increase their
market share geographically.
 As new product development is risky and expensive so big companies that are having
bigger markets and funds can easily develop new product and can sell it.
 Through M&A Nisa Retail Limited can train their employees and can get benefit of
experienced leaders and executive members of big companies are having.
 Nisa Retail Limited can increase their financial power as acquiring company will provide
assistance in arranging funds.
 Nisa Retail Limited can increase their stores and can provide different facilities to
customer which they are not providing because of deficiency in working capital.
CONCLUSION
This reports sums up that how Nisa Retail Limited can grow their business through
digitalization. There are different opportunities for growth by Merger and acquisitions, taking
finance form different sources. This reports states that which policy should be adopted by them
for pricing to be in competition. As they are already in expansion phase so there key for success
is to develop new market. The different analysis had been done to know how organisational
goals will be achieved. As they are going for e-commerce website which will help them in
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increasing their revenue as it is required to be in competition. At last different ways to exit and
succession had been discussed through which Nisa Retail Limited can exit from business.
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REFERENCES
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Blain, A. N. J., 2017. Pilots and management: Industrial relations in the UK . Routledge.
Burns, P. and Dewhurst, J. eds. 2016. Small business and entrepreneurship. Macmillan
International Higher Education.
Esteban-Guitart, M. and Moll, L. C., 2014. Funds of identity: A new concept based on the funds
of knowledge approach. Culture & Psychology. 20(1). pp.31-48.
Esteban-Guitart, M. and Moll, L. C., 2014. Funds of identity: A new concept based on the funds
of knowledge approach. Culture & Psychology. 20(1). pp.31-48.
Harrison, F. and Lock, D., 2017. Advanced project management: a structured approach.
Routledge.
Kaushik, A., 2018. 7P’s of marketing mix in MOOCs environment. International Journal of
Information Dissemination and Technology. 8(2). pp.57-61.
Reader, D., 2017. Review of UK Merger Control: Law and Practice by Nigel Parr, Roger Finbow
and Matthew Hughes. European Competition Law Review. 38(11). pp.530-531
Reed, R. and Luffman, G. A., 2017. Diversification: The growing confusion. Strategic
management journal. 7(1). pp.29-35.
Scarborough, N. M., 2016. Essentials of entrepreneurship and small business management.
Pearson.
Zalengera, C. and et. al. 2014. Overview of the Malawi energy situation and A PESTLE analysis
for sustainable development of renewable energy. Renewable and Sustainable Energy
Reviews. 38. pp.335-347.
ONLINE
Ansoff's Matrix. 2018. [Online]. Available Through:
<https://blog.oxfordcollegeofmarketing.com/2016/08/01/using-ansoff-matrix-develop-
marketing-strategy/>
Retail industry PESTLE analysis. 2018. [Online]. Available Through: <
https://www.cheshnotes.com/retail-industry-pestel-analysis/>
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