Ansoff's Vector Matrix for Examining Growth Opportunities

Planning for
Growth

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1) Examine key considerations for growth opportunities and justify them in organizational
context. .......................................................................................................................................1
P2) Throw-light on the Ansoff's growth vector matrix for evaluating growth opportunities. . .6
LO 2.................................................................................................................................................1
P3) Assess the various sources of funding and state their advantages and dis-advantages. ......1
LO 3.................................................................................................................................................1
P4) Formulate a business plan by covering strategic objectives and financial information.......1
LO 4.................................................................................................................................................2
P5) Design Exit and succession plan as well as their advantages and dis-advantages for each
strategy. ......................................................................................................................................2
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
In today's era business need to plan effective tactics or plan in order to survive for longer
time period. Organization plan out growth strategies by examining the current market scenario.
By doing so growth and development of the business can be done smoothly in the competitive
world. Small or big business associates plan growth tactics accordingly so that set standards can
be achieved respectively. This report is based on Bakers Oven which is a British bakery and is
expanding it's business in UK market (Albert, 2017). This firm came into existence in the year
1976 by Allied Bakeries. This report covers Ansoff's vector matrix for examining growth
opportunities in the market. Also, throw-light on advantages and dis-advantages of sources of
funding available for business. Also, frame a business plan covering strategic objectives,
financial information etc. Additionally, assess exit and succession plan benefits and drawbacks
for each option is discussed.
LO1
P1) Examine key considerations for growth opportunities and justify them in organizational
context.
In order to grow the business in global market Bakers Oven design strategies by
investigating in the current market scenario . In order to attain better results PESTEL (political,
economical, social, technological, environmental and legal) analysis and Porter's five force
model is followed by the enterprise in the market place. This models assist the administration to
evaluate growth opportunities in the open market. PESTEL analysis is a external factor which is
uncontrollable variables and firm design growth plan accordingly. By doing business can
flourish across the boundaries and brand recognization can be done at a large scale (Angotti,
2018). The PESTEL analysis of Bakers Oven are discussed as follows:
Political factor: This are external factor which are uncontrollable variables by
organization. Political forces involves political stability, tax policy, trade restrictions, foreign
trade policies, consumer protection laws etc. All this macro factors affect Bakers Oven growth
and development process directly or indirectly. Before entering into United Kingdom enterprise
examine political factors so that without government intervention business can grow smoothly.
The political condition of UK is stable so there is huge growth opportunities in the cut throat
competitive world. Expansion of business in UK aid Bakers Oven to raise their more customer
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base for the food products. Due to which set goals can be achieved accordingly (Daniels and
Lapping, 2016).
Illustration 1: Pestle analysis
Source: Pestle analysis, 2018
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Economical factor: This includes interest rate, governmental activity, policies, tax rates,
wages etc. all this macro factors directly affect the growth opportunities of Bakers Oven in the
competitive world (Pestle analysis, 2018). In order to survive in the global market organization
need to evaluate economical factor. By doing so set standard can be achieved on set time frame
as well as emerging needs of the customers can be fulfilled. United Kingdom economical factor
is stable in the international market so the idea of expanding the business in this sector will turn
out to be positive. Stability of economical forces provides huge growth opportunities in the UK
market which will benefit the company.
Social factor: The examples of social factor are, society taboos, norms, traditions,
beliefs, culture, language etc. Bakers Oven in order to bind customers for longer time duration
social forces need to to be followed on priority level. By doing goodwill can be raised in the eyes
of the customers which directly leads to huge profits in the competitive world (Güneralp and
Seto, 2015.). This external factors plays a vital role in the growth and expansion of the business
in the market place. This forces helps Bakers Oven to figure out growth opportunities prevailing
in the UK market. By doing so set objectives can be achieved timely and tough standards can be
set for competitors.
Technological factor: In today's era in order to meet the taste and demand of the
consumers firm need to upgrade their technology. Advancement in tools and techniques assist
the firm to grow their business globally. UK is a stable country and adopts modern plant and
machines to meet the set objectives and also to build goodwill in the market. All this provides
huge growth opportunities to Bakers Oven so that huge profits can be maximized.
Environmental factor: This uncontrollable forces includes, pH level of water,
temperature, pollution, pH level of soil etc. all this environmental factor affect the business
growth and development in UK market. Organization design strategies accordingly so that
environment does not deplete and can survive for longer time duration. Bakers Oven examine
environmental factor before expanding the bakery store in UK market so that business can grow
smoothly without government interventions.
Legal factor: Employment act, consumer protection act, securities act, industry specific
laws etc. are legal factor which need to be adopted by organization in the UK market. Bakers
Oven follows legal factor so that business can grow and flourish in the global market
accordingly. Violation of legal laws decreases the market value of the company which directly
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leads to reduction of profits. UK market is stable and has amended growth opportunities for
business.
Porter's five force model
Porter's five force model is a frame work which assist in evaluating the level of
competition prevailing within industry. This model was developed by Michael porter in the year
1980. Bakers Oven adopts this model so that degree of power can be examined accordingly and
strategies can be formulated respectively (Horowitz, 2017). The Porter's five force model is
adopted by Bakers Oven are discussed as follows:
Competitive rivalry: The degree of power is high for rivalry competition when there is
few or less business equally selling a product or services. Here, customers can easily switch to
other brands in order to satisfy their preferences. Organization offering distinguished product and
services will decrease the market attractiveness. For Bakers Oven competitive rivalry is existing
businesses who has captured huge market ratio. In UK rivalry competitors is intense when:
 Huge competition
 Low consumer loyalty
 Similar products
 More exist barriers
Bargaining power of suppliers: The degree of power is high when there is few suppliers
in the market . They can influence the prices of the product and services according to their need.
Here, they exploit the customers at a large scale and generate huge profits. Bakers Oven
bargaining power is high when:
 Few suppliers prevailing in the market
 Less substitutes available for the product
 Switching cost is high from one supplier to another (Porter's five force model, 2019).
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Illustration 2: Porter's five force model
Source: Porter's five force model, 2019
Bargaining power of customers: The power of degree is low when customers
purchasing power for product is in small quantity and sellers product is unique from its
competitors (Keough, 2015). The factors affecting the buying power of Bakers Oven are, overall
bargaining leverage, readily available purchasing information, the degree of dependency on the
product etc. The customers power of degree is high when:
 large amount is purchased by customers.
 Supply industry involve huge fix cost
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 Switching cost incur huge cost.
Threat of new entrants: The degree of new entrant is low new business take advantages
of the economies of scale. When the barriers to entry into an industry are high new or fresh
business can not enter in the market as it incur huge funds to bit the existing competition. The
various barriers faced by Bakers Oven to entry into the market are:
 Brand loyalty
 High initial investment cost
 Distribution means are controlled by third party.
Threat of substitute product or services: This is the biggest threat which Bakers Oven
come across in the competitive world. The availability of substitute in the market decreases the
profit and customer base at a large scale. Slight raise in prices leads to increase in switching cost
of customers. The threat is determined by following ways:
 Secure customers relationships
 Brand dependability of customers.
 Switching cost for customers.
P2) Throw-light on the Ansoff's growth vector matrix for evaluating growth opportunities.
Ansoff's Matrix or Ansoff's Growth Matrix is a communication tool used by business
associates to examine and plan their growth strategies in the competitive market place. The neck
to neck competition Bakers Oven uses this matrix as this matrix helps show four strategies which
can be used by firm to evaluate risk associated with each strategy. The Ansoff's matrix is
explained as follows:
Market penetration: In this case, organization enter into the existing market with
existing product. Here, the focus is not on new product or market but aims at raising sales ratio
with old product in the existing market. Bakers Oven can formulate market penetration by
various ways such as :
 In order to increase the number of customer base firm decreases prices of product.
 In the existing marketplace they acquire competitors (Kumar, 2016).
 Uplift the distribution channels and ways of promotional tools.
 Come up with loyalty scheme.
 Enter into the existing market with new or creative marketing strategy.
 Raise the sales force's activities in the market place.
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By doing so organization can the chances of growth opportunities increases in the UK market
and firm is able to earn huge profits.
Product development: Here, in the same market place business associates come up with
innovative product in order to capture huge market ratio. By doing huge growth opportunities are
emerged for Bakers Oven to expand their business globally. Product development helps Bakers
Oven by:
 Upgrades customer services in short time duration.
 Extend product by producing distinguished variants
Illustration 3: Ansoff's Matrix
Source: Ansoff's Matrix, 2017
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Market development: In Ansoff's Matrix at this particular stage new market is chosen
for old products in order to raise the ratio of sales. Bakers Oven is benefited by market
development as it creates huge growth opportunities in the UK market. Market development
involves certain criteria which are discussed as follows:
 Company conduct Pestle analysis to better understand the market scenario.
 Adopt various sales channels to reach out to potential customers like, through online,
direct sales, door top door selling etc.
 Use marketing mix to better understand the concept of repositioning product (Levy,
2016).
Diversification: In this particular case, new product is sold to fresh customer in the
market. By doing so only single organization is affected in the cut throat competitive world and
rest other does not get affected by the circumstances. It generate huge growth opportunities in the
UK market for businesses. There is two type of diversification such as , related and un-realted
diversification.
LO 2
P3) Assess the various sources of funding and state their advantages and dis-advantages.
To grow the business at global level sufficient amount of fund is required. In order to run
the business smoothly in the competitive world business associates gather funds from various
sources available in the market. Bakers Oven is a small baker store expanding it's business in the
UK market (Li, and Keyser, 2015). So the organization requires funds to run the business
functions smoothly and to gain competitive advantages against rivalry. The areas from which
funds can be collected are explained as follows:
Capital Investors: Organization can allocate funds from capital investors in the market.
In this case business associates can influence the investors to invest funds in their business so
that inefficiency of monetary funds does not occur. By doing so Bakers Oven will not face
money insufficiency and set objectives can be achieved on time. As well as emerging needs of
the customers can be full-filled.
Advantage: Funds can be easily collected in it form the market.
Disadvantage: It is one of the lengthy process.
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Banks: Banks provide funds to the administration by keeping amount of security with
them. Banks are the best source of funds in the global village and Baker Oven choose this
sources more to accumulate funds when ever needed. Administration pay high rate of interest in
exchange of money.
Advantage: The rate of interest do remain same.
Disadvantage: Here, payment must be done on time else penalties can be imposed.
Friends/ family/ relatives: Close friends and family members are the another source of
funds from where funds can be gathered respectively. Here, the rate of interest is less or there is
no interest rate charged from the owner of the company. As will as there is no time boundation
to repay money . Bakers Oven can run smoothly the business operations by collecting funds from
this sources. Also. Business can be expanded and developed in appropriate manner in the cut
throat competitive world (Mason, 2015).
Advantage: The chances of keeping rate of interest is low.
Disadvantage: At any period time, dispute can be created among the member which can
force company to do payment before the time.
LO 3
P4) Formulate a business plan by covering strategic objectives and financial information.
Business plan is a written document where all the tactics, new product, marketing
strategies, promotional tools,budgets, set objectives etc. are discussed in details. It is necessary
because it will tell that how Bakers Oven has been working past period and even future plans are
also prepared that how company will work in future to achieve their targets and goals. Here,
mainly mission, vision, financial data and objectives are focused. Bakers Oven's plans can is
explained below:
 Vision: The vision of the Bakers Oven is to expand its business at greater platform within
the premisses of UK.
 Mission: The main mission of the company is deliver the best bakery products within the
UK.
 Strategical Objectives: They have planned to enhance their profit in upcoming period of
time by additional 25% and for that they are going to take the help of SMART objective.
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 Financial Information: Planning can be done easily but before that it is necessary for
any of the company that they must try to find the way that how they will manage fund for
meeting their targets and goals. Bakers Oven have the option to raise the fund through
internal and external source. In order to meet its business objective and target, Bakers
Oven has to prepare a budget plan which show the fund which is required by a company
to perform its operations as well as for determining the finance which is required to be
raise.
Total forecasted budget
Particular 31/12/15 ($) 31/12/16 ($) 31/12/17 ($)
Implementing
technology cost
15000 - -
Promotional expense 9000 8000 6000
Advertisement
expense
6000 5600 5800
Catalogues 2000 4000 3000
Training charges 6500 8000 8500
Total Cost 38500 25600 23300
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This budget will give the idea that in which area company have to invest their money for
improving their performance within the market.
LO 4
P5) Design Exit and succession plan as well as their advantages and dis-advantages for each
strategy.
Exit Plan:
Liquidation: This refers to as selling out the assets of the company in order to generate
huge cash (Whelpton and Patterson, 2015). So that payment of creditors can be done in the
market place. In exit plan Marriott decide to wind up the business by selling all the assets and
repaying the debts of the business.
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Advantage: Company has the option to sell its assets at reasonable price.
Disadvantage: This is the last stage of a company form where it is not possilbe to reopen
the business.
Selling business in open market: Here, the ownership of the business is sold to other
party and all assets and goodwill is handed over to the buyer. Selling business in open market is
done when business loss is no longer managed in the market. It is also a part of exit plan.
Advantages: Process of winding up is not needed to be follows as it very lengthy.
Disadvantage: New team requires to time to manage every work in systematic manner.
Succession plan:
Merger: This can be defined as absorbing the other firm. Here two business join hands to
work together by closing the old entities into one new entity. Here, goals , product etc. are set
freshly for the business and accordingly new terms and conditions are designed respectively.
Merger can be done between small business and huge multinational business in the cut throat
competitive world.
Advantages: Company has the opportunities to earn higher amount of profit in it.
Disadvantage: The decision making process becomes much expensive and time
consuming.
Acquisition: The concept of acquisition is different from merger. Here, the large share of
the company is attained by the other organization as well as gain control of that company in their
hand. In acquisition more than fifty percent shares are captured by the other firm. It is a part of
succession plan in the competitive world (.Sarver, 2015).
Advantages: The position of company starts to recover once process of acquisition is
completed.
Disadvantage: Holding company has the right to take all of the decisions.
CONCLUSION
From the above it can be summarized that pestle analysis helps the organization to
examine growth opportunities prevailing in the market. By doing small business can flourish at
the global level. And Porters five forces model aid the firm to better understand the power of
degree which is high in which circumstances in the market. Ansoff's Matrix helps firm to frame
tactics accordingly so that huge market ratio can be captured. For smooth functioning of the
company various sources of funding are figured out so that insufficiency of funds does not occur.
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Also, business, exist and succession plan is designed and their advantages and disadvantages are
mentioned so that accordingly it can be implemented.
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REFERENCES
Books and Journals
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Daniels, T. and Lapping, M., 2016. Land preservation: An essential ingredient in smart growth.
In Growth Management and Public Land Acquisition (pp. 23-48). Routledge.
Güneralp, B., Perlstein, A.S. and Seto, K.C., 2015. Balancing urban growth and ecological
conservation: A challenge for planning and governance in China. Ambio. 44(6). pp.532-
543.
Horowitz, I., 2017. City politics and planning. Routledge.
Keough, S. B., 2015. Planning for growth in a natural resource boomtown: Challenges for urban
planners in Fort McMurray, Alberta. Urban Geography. 36(8). pp.1169-1196.
Kumar, D., 2016. Enterprise growth strategy: vision, planning and execution. Routledge.
Levy, J. M., 2016. Contemporary urban planning. Taylor & Francis.
Li, Z., Mobin, M. and Keyser, T., 2015. Multi-objective and multi-stage reliability growth
planning in early product-development stage. IEEE Transactions on Reliability. 65(2).
pp.769-781.
Mason, P., 2015. Tourism impacts, planning and management. Routledge.
Mazza, L., 2017. Explorations in planning theory. Routledge.
Sarin, M., 2019. Urban planning in the Third World: the Chandigarh experience. Routledge.
Sarver, D. M., 2015. Interactions of hard tissues, soft tissues, and growth over time, and their
impact on orthodontic diagnosis and treatment planning. American Journal of
Orthodontics and Dentofacial Orthopedics. 148(3). pp.380-386.
Whelpton, P. K., Campbell, A. A. and Patterson, J. E., 2015. Fertility and family planning in the
United States (Vol. 2200). Princeton University Press.
Wu, F., 2015. Planning for growth: Urban and regional planning in China. Routledge.
Online:
Pestle analysis, 2018. <https://www.50minutes.com/title/pestle-analysis/>
Porter's five force model, 2019. <https://www.callummcadam.com/blog/porters-five-forces-in-
the-digital-age//>
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