Techniques for Evaluating Growth Opportunities Assignment

PLANNING FOR
GROWTH
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Table of Contents
INTRODUCTION...........................................................................................................................3
L O 1................................................................................................................................................3
P 1 Techniques for evaluating growth opportunities..................................................................3
P2 Applying Ansoff's growth matrix for the evaluation of opportunities for growth.................5
LO2..................................................................................................................................................7
P3 ESSSENTIAL SOURCES OF FUNDING AVAILABLE TO BUSINESS AND THEIR
BENEFITS AND DRAWBACKS..............................................................................................7
LO3................................................................................................................................................10
P4 Business Plan for growth including financial information and strategic objectives for
scaling the business. .................................................................................................................10
LO4................................................................................................................................................12
P5 Assessing the exit and succession options for a small business explaining the benefits and
Drawbacks of each option.........................................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
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INTRODUCTION
Planning for growth means analysing how an organization can be different from another.
The basis of differentiation that will set the organization apart from competitors. Then identify
your target customers and ways to maintain them. Identify factors that will affect the growth and
development of business. Look for the strategies that your competitors are following. There
would be some part where your organization will be struggling and your competitors would be
excelling. Company must be focusing on their strengths rather than working on their weaknesses.
Organization should invest in such talent that are motivated and inspired, as the best employees
will always tick if you pay them well and they get proper recognition. Giacom was founded in
1999. It is U.K largest reseller of cloud service provider, deliver world class services and is
partnered with the world's best technology like Microsoft, Bitdefender, Acronis etc. The study
includes the key factors that help evaluate growth opportunities and are linked with Giacom. For
evaluating the growth opportunities Ansoff Matrix is applied (Bagheri and et.al., 2018). Adding
to it the study focuses on the sources for fund raising for Giacom and their pros and cons. Then a
business plan is developed for growth of the company that includes financial analysis and
objectives. Ways for dissolution of a firm with benefits and drawbacks.
L O 1
P 1 Techniques for evaluating growth opportunities
The foremost priority of every organization is earning maximum profits. An organization can
attain growth through proper planning and controlling growth.
Porter's competitive strategies-
 Cost leadership- The strategy kingpin price-sensitive customers and by focusing on
capturing their market. The company will reduce the cost of their products in the selected
market. To get a desired return on investment and able to offer a low price for their
products, the firm should be able to have low operations cost for their product as
compared to their challengers. To get an upper hand over your competitor, a medium
scale firm should apply this theory and try minimize its production cost and it can be
achieved by investing in the latest technological up-gradation, purchasing in large
quantity, economies of scale and by identifying every way for having cost advantage.
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Giacom has implemented this strategy to grab a larger market, to attain growth and
maximize profits and thus growing and developing into a large scale business. This
strategy is most effective one for a medium size enterprise to take a support and grow in
this competing firm. This will help the company to achieve the competitive advantage as
it is offering the lowest price of the product and the services which others are not
providing. (Denton, G., Forsyth and MacLennan, 2017).
 Differentiation Strategy – This technique try to focus on seizing the target market by
proposing such product that is different and unique in every way. It is beneficial for the
organization when the chosen market by them is not price sensitive, people have specific
desires, and high competition prevails in the market and the firm offers something special
and different that no one else is offering, as the company has competitive resources and
ability to accomplish those demands. The product provided will get the company to enjoy
a competitive advantage over rivalry firms. Giacom, to enjoy the bigger portion of market
applied this strategy in their organization. This help the company in achieving the
competitive advantage as it will it will be offering the products that are different from
others helping to attract more customers.
 Focus Strategy – This technique is not applicable to large scale organizations due to small
market situations. Focus strategy has two parts that is cost focus in which the company
focuses on capturing the market and have an cost advantage and differentiation focus
where the firm provide something different and unique product. The company can gain
competitive advantage by offering the new and different product to the market. (Eaton
and Alty, 2017.).
P.E.S.T.L.E. Analysis -
 Political factors- Political factors include government intervention like labour law,
environmental law, tariffs and political stability. Political factors consists of goods and
services which are given by government(merit goods) and some goods are that
government does not want to give to the customers. The political factors, adversely affect
the government policies and their influence on small and medium scale enterprises.
These government rules and policies can either affect directly or indirectly. Taxation
policy and import export duties are crucial factors that influence SME business adversely.
If the medium scale enterprise wants to grow and develop their business outside their
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local regions, they want the import-export duty suitable for them. Giacom being an
medium scale company analyses the political factors so that they can plan for growth
(Esmaeeli and et.al., 2015.).
 Economic factors- It consists inflation rate, economic growth and exchange rates. These
economic factors impact the working of business and the company's decision making
power. Analysing these factors and overcoming them can help the company in achieving
an competitive advantage. Giacom wants an upper hand over their rivalry firms by having
low unemployment rate, inflation rate and tariff rates The growth of Giacom depends on
economic cycle, if the economy is facing boom period the firm will grow and if there the
economy is facing depression period it will hold the ways for the growth of company.
 Social factors- These factors consist of population growth rate, health & safety and social
responsibilities. These factors can have influence over Giacom operations and demand of
their products. The style of people living their life, sizes of family, spending power of
customers will affect Giacom (Kemp, 2018).
 Legal factors- Every organization has to adhere to, with legal policies to prevent the
company from any kind of issue. If the firm fails to follow legal rules and regulations ,
then the firm have to suffer legal charges or penalties. Through these charges
company(Giacom) image will suffer. Legal laws consists of employment law, consumer
protection act and health and safety laws should be followed strictly by all organisation
whether it is an small, medium and large enterprise to successfully stay in the market.
 Technological factors- As Giacom is an medium scale enterprise, technological
advancement influence company's operations. Advancement in technology have it's
impact on cost & quality of the product, efficiency and innovation of product. By
investing in latest technology, a firm can minimize operations cost and that provides them
with a competitive advantage. Giacom will be benefited by the new advanced technology
they used in their working (Lambert and Oatley, 2017).
 Environmental factors- This factor includes environmental aspect like climate, and
weather change. This factors impact how organizations produce the products.
Geographical location, weather are the factors that influence the firm. Giacom has to
analyse the environmental factors that can affect their business so that they can make
plans accordingly.
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P2 Applying Ansoff's growth matrix for the evaluation of opportunities for growth
This model was given by Igor Ansoff back in 1957. It is a tool that helps by providing a
framework to managers, executives to develop techniques for future growth and development.
Ansoff's matrix has four different growth strategies:
 Market penetration: This strategy is used to expand the existing resources and
capabilities. This strategy is the least risky one. Through this technique the company try
to maximize their market share by using existing products. This happens when the rivalry
firm reached their highest capacity. The growth can be attain by maximising the sales of
the products and services to the already existing consumers within the existing market.
The firm can boost its sales by promoting the product at a higher level so that can reach
the customers widely and easily (Levesque, Bell and Calhoun, 2017). This strategy can
be adopted by the organization by minimizing the cost of the product, rigorous promotion
and providing satisfactory services to customers and even after sale services (Pestle
analysis, 2015). Giacom is trying capturing the market by applying penetration strategy
and providing their services in local markets and in various other countries like USA,
Singapore etc.
 Market development: This strategy is adopted by firms when they try to enter a new
market such as different country or area by using the limited resources they have with
nominal change in product. It can achieved through Differentiating the customers that is
when the organisation has people scattered widely in different areas, the product need to
be available at all the places so that it become easy for the firm to supply goods. Giacom
has its parts in different places globally so it helps in having proper control at all the
places where the organisation has its office. And by penetrating the foreign market as the
competition is high now a days. If the company wants to capture and develop then it
should work on different places so that customers can enjoy good services provided by
the firm (Levy, 2016).
 Product Development: This strategy includes generating a new product and targeting its
existing market. It is developed to retain the existing customers and have their interest in
the company. It can be achieved by Investing in R&D of the company to bring the
additional product, company arrange the funds new products are developed to attract
towards the new product of the company. Innovation to be brought for increasing sales.
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Acquiring rights to produce different products: there are many types of products which
are made by combining more than two products to create a single item. Generally
different types of products are avail from various locations (Pestle analysis, 2015). If the
company wants to manufacture all its products at one place than it has to take rights from
the company. Buying product and giving your own name. The company many time has a
excellent reputation in the market and company wants to use it for profits, then it
purchases goods from other firms at lower price and sells it on the brand name. This
maximize the profits of the company as additional sales are made. Jointly doing business
and making use of each others strength: Many time organizations come in joint venture to
use the strong points of other company like if one business strong point is good client
network and other person's strong point is efficient machinery then they can come
together and manufacture products which will benefit them both (MacLachlan and et.al.,
2017).
 Diversification: In Diversification, the company tries to grow its market share by
introducing new product in the new market. Diversification is one of most risky growth
strategy because the company focuses on developing both new product and new
market .It is only applicable when the company can bear high risk but will enjoy higher
profits. Opting Diversification can result in a good choice if the company is getting high
profit for high risk. Diversification gives a good space to the company in the competitive
market where there are various other attractive industries which are competing, this gives
your company to be more competitive to grow in the market(Piro, 2016.).
LO2
P3 ESSSENTIAL SOURCES OF FUNDING AVAILABLE TO BUSINESS AND THEIR
BENEFITS AND DRAWBACKS
Bank Loan
There are various Banks and Financial institutions that provide finance to the small
businesses. Giacom can avail loans from banks and financial institution where it is going to have
an access over specific amount of fund granted by the bank. The company has to comply with
various obligations regarding the terms of repayment and the interests rates. There are various
schemes under which company can avail loan like working capital loan, factoring loans, short
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term , long term, fixed rates loans, floating rate loans. For a bank loan Giacom will have to show
the business growth plans and how the company is going to achieve them.
Advantages
 Giacom will not be required to pay the share of profits or share in the company as it will
be fixed amount of interest on the loan amount.
 Interest rates are fixed at the starting of the loan which will help the company in
recognising the exact liability amount and can plan its repayment accordingly.
 If the loan is a fixed term loan the company will not be required to pay loan on demand
which will not cause interruption in between the working of the business.
 The company can be granted repayment holiday for its initial periods where it has pay
only interest to help the business to stabilise (Rodríguez-Rodríguez and et.al., 2016).
Disadvantages
 Bank loans are not flexible, they are not adjustable as per the requirement of the
business.
 Loans come with various obligations which the company has to follow such as
submissions of business reports work structure.
 Company has to mortgage it assets for having lower interest loans.
Business Angels
Angel investors are the rich individuals or the group of wealthy individuals which help
the company in growing by making investment in the company. Giacom can attract angel
investors due to its continuous growth and high performance as Angel investors are in search of
such small business which are profitable and growing and require funds for their continuous
growth. There are different kind of angel investors available in the market, some want
involvement in the working operations of the company while some just want fixed returns for
their investments.
Advantages
 Business angels are not dependent on any external authorities because of which they take
the investment decisions very quickly thereby saving time and money of the Giacom.
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 Angel investors do not demand for collateral security for the investment made by them
which do not create any liability over the assets of the company (Rudolf, Kienast and
Hersperger, 2018).
 Business angels are generally the retired business executives, hence they provide the
company can provide the company with their expertise knowledge and experience for its
growth.
 The company do not have to pay fixed interests or principal amount like in loans which
sometimes become difficult foe the company.
Disadvantage
 Finding the right Angel Investor for the company is a time consuming process.
 Business Angels are not advisable below GBP 10000 or over GBP 500000
 Angel Investors have the business shares of the company, because of which they control
the business of the company and its operations.
Venture Capital
Venture Capital is a commonly used equity financing fund helping the small businesses
and entrepreneurs to grow. They are investment vehicles investing in firms with high growth
potentials and having high risk-return profiles. Venture capital are different from hedge and
mutual funds. Venture capitalists take active participation in the business operations of the
company they are investing in. Venture capital provide guidance to the company to plan or
modify their growth strategies to be more effective.
Advantages
 VC's have good knowledge and experience as they are working with companies having
diverse backgrounds which can be very helpful for the Giacom.
 VC's have large network connections which can help the Giacom in getting access to
much reliable resources and with more business opportunities.
 VC's actively support the company to achieve its goals and objectives by guiding them
at various levels to reduce its costs to be more effective (Sarin, 2019).
Disadvantages
 It generally asks companies to restate their articles Of association and by-laws which
allow VC's to issue preferred stocks.
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 VC's significantly control the business of the company. Companies lose their sole control
and ownership of the company.
Owners Fund
Owner's funds means the fund which the owners bring for their business on their own
risks. Personal investments could be from taking loans on the personal assets of the proprietor or
borrowing money from friends and relatives. Personal sources of finance project an image of
long term commitment and dedication to the business.
Advantages
 Self financing business gives greater control to the owners. Business owners will work
with more concentration and will try to cut out excessive spendings.
Disadvantages
 Owners may lose their personal holdings in the event of business failures. Owners have
to develop their own contacts and networks.
LO3
P4 Business Plan for growth including financial information and strategic objectives for scaling
the business.
Executive Summary
Growth plan for the business inclusive of financial information projecting the overview
of developing strategies for the business. It is the process showing stepwise analysis of the means
and techniques that will help in deciding the strategies for the business. The ways of
implementation and execution of the planned strategies (Tian, 2016). Giacom is a emerging
and reliable cloud service provider coming with new innovations and technologies for its
growth. It is 8th fastest growing company as per Northern Tech Awards. For coming with the
above growth plan company has drafted a business plan. Keeping in mind the mission and vision
of the company of delivering excellence in the field of cloud servicing. The company has
performed SWOT analysis for analysing the opportunities that are available and what are the
treats that are to be kept in mind for laying down the above business plan
Company Information
Priory Tec Park, Bridge Haven One, Saxon Way, Hessle HU13 9PG, United Kingdom
Established : 1999
Headquarters : Hessle England
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Industry Sector : Business Support Services
Vision
To deliver sustainable Growth through intelligence in cloud based Platforms and
becoming the world's leading Cloud Service Provider.
Mission
 Mission is of integrating the powerful tools with the technical and intellectual
professional service teams for improvising the business processes of the client.
 Fostering a culture of teamwork, integrity and partnership for developing a world class
business processing service company.
 Providing the clients with the competent, objective and quality solution to the clients for
accomplishing their IT related business objectives.
 Helping the clients to get the maximum from the available technologies to fulfil their
business needs.
SWOT Analysis
STRENGTHS
 High Reliability of the business people leading it to become 8th largest business service
provider of the world
 high Awareness in the market of the IT industries and service providers about the
company.
 Having the advanced softwares and technologies to meet the business needs of every
customer.
 Maximum number of satisfied customers which is creating a brand efficiency status in
the market.
WEAKNESSES
 Giacom is lacking in financial planning because of which it is not able to make efficient
use of its cash and resources.
 The company is not having proper feedback process which is resulting negative client
response and dissatisfaction (Wu, 2015.).
OPPORTUNITIES
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 Mentoring programs held by the top institutes will help the Giacom to send its top
employees for improving the performance of the organisation and promoting the
company.
 Giacom is having the opportunities to spread its business worldwide through new
networking channels and to increase its brand awareness.
 Company is having opportunities to increase its business with new government plans and
schemes brought specifically for the IT sector of the company.
 Investors are moving their flow towards the IT sector which could prove to be the
opportunity for the company for its expansion plan.
THREATS
 Giacom is facing strong competition from various IT companies which can divide the
business of the company thus declining its sales.
 IT professional demands are raising worldwide which are capable of paying more than
the Giacom which can lead the top professionals to shift from the company.
 Increasing the prices of the services can lead to loss of clients as companies are there
which are providing services at cheaper rates even by sacrificing the quality (Wu, 2018).
Financial Planning
Month Jan Feb March April May June
sales 15000 16000 17000 18000 15000 20000
total cash inflow 15000 16000 17000 18000 15000 20000
cash outflow
rent 2000 2000 2000 2000 2000 2000
salaries 5000 5000 5500 5500 5500 5500
administration cost 1500 1500 1000 1000 1200 2000
total cost 8500 8500 8500 8500 8700 9500
Net profit 6500 7500 8500 9500 6300 10500
Monitoring And Controlling
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Mangers can check the above given annual report of the Giacom company. They can check the
performance by carrying out the evaluation and analysis of the report and give measures for
carrying out corrective actions and finding out deviations.
LO4
P5 Assessing the exit and succession options for a small business explaining the benefits and
Drawbacks of each option.
Ways in which entrepreneur can exit from the company.
Mergers and Acquisition
Incapability of the company to earn adequate profits results or maintain a profitable status
than the company can opt for merger or acquisition with the other big companies. Acquisition
means the company will be bought by other big or better performing company losing its own
existence. Merger means to merge with other company having the similar goals coming with a
new emerged entity. The flexibility of the Giacom is very much dependent on the company with
which it is merging or being acquired. Benefit of this method is that the Giacom will be allowed
to decide and fix the price of its own company unlike the IPO where the valuation is done by
industry. Company do not get the acquiring and merging firms when required.
Legacy
Every owner of the business wants its company to be a going concern but ther are
circumstances because of which the companies are required to shut the business. There is an
option to the owners to transfer their business to their relatives who will run the business on their
behalf at the time of exit. It is important to find out whether the person or relative to which the
business is proposed to be transferred are capable of running the business or not. Benefits of the
legacy are that the company will be retaining the loyal customers, the technical know how of the
company which is helping the company to grow. The company will remain in existence with its
original name. Major drawbacks of the legacy are the family members may not be capable of
running the business efficiently which can lead to its shut down. The new owners may not like
to continue their forefathers business (Sarin, 2019).
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Acquihire
It is a different kind of acquisition in which the motive behind the acquisition of the
company is to acquire professional intelligence as well skilled employees. The acquiring
company is not interested in the output product or services of the company. Acquihire is
becoming common in competitive technology sector for acquiring software engineers. Benefit
of this option is that on dissolution the employees will not have to sacrifice their jobs as they will
be hired by acquiring company. Drawback is that the company might be dissolved after
acquiring its professional employees or the company may face resistance by the employees as
they might not like to work in a different environment or organisation.
Liquidation
Businesses generally goes for liquidation when they are failing to continue as business or
going for reconstruction of the company. The company can go into liquidtion for various reasons
like a company going for liquidation which is formed for performing a specific project. Before
liquidating the company has to repay its creditors by selling its assets and distribution of
remaining among the shareholders of the company. Benefit of liquidation is that the owners do
not have further liability after selling their assets for the repayment. Drawback is the company
has to comply with various legal procedures.
Bankruptcy
The company faces the bankruptcy when it fails to repay its debts. In bankruptcy the
control of the business and its resources is taken over by the court for selling them through
auction for paying off its liabilities. All the assets are valued by the expert valuer which helps in
getting better prices for its assets. Drawback is that the company will lose it reputation.
CONCLUSION
Planing of growth is known as the strategy which make for the business to improve the
growth. Form the above report it has been summarized that the key consideration for the growth
opportunities which include the cost factor, difference factor etc. and then also justify that the
opportunities in the Context of the organisation and includes the PESTLE analysis of the
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company. It has been also summarized that the opportunities of the growth applying on the
Ansoff's growth vector matrix which includes the Market Penetration. Product development,
Market development, Diversification and describe the all factor in respect of the organisation
growth. This report also include the Potential sources of funding available for the business which
includes bank funds, angle inverters, venture capital, self financing and benefits of the all points
and drawback with advantage and disadvantage of all investor options. It also summarized the
business plan of growth of the business which include the financial information and strategic
objective of the business and includes the Swot Analysis of the company. Report also
summarized that the succession option for a small business which includes the Legacy, Mergers
and Acquisition with benefits and drawback of each options.
REFERENCES
Books and Journals
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Kemp, R.L., 2018. Strategic Planning in Local Government. Routledge.
Lambert, C. and Oatley, N., 2017. Governance, institutional capacity and planning for growth. In
Urban Governance, Institutional Capacity and Social Milieux (pp. 125-141). Routledge.
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Levesque, V.R., Bell, K.P. and Calhoun, A.J., 2017. Planning for sustainability in small
municipalities: The influence of interest groups, growth patterns, and institutional
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Levy, J.M., 2016. Contemporary urban planning. Taylor & Francis.
MacLachlan, A. and et.al., 2017. Urban growth dynamics in Perth, Western Australia: Using
applied remote sensing for sustainable future planning. Land.6(1). p.9.
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sustainable development of city regions and rural areas. Routledge.
Rodríguez-Rodríguez, D. and et.al., 2016. Achieving Blue Growth through maritime spatial
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Wu, F., 2015. Planning for growth: Urban and regional planning in China. Routledge.
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