Unit 42. Planning for Growth. Contents. INTRODUCTION...

Unit 42
Planning for Growth

Contents
INTRODUCTION...........................................................................................................................1
P1 Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organisational context..........................................................................1
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix...................5
P3 Assess the potential sources of funding available to businesses and discuss the benefits and
drawbacks of each source............................................................................................................7
P4 Business Plan for growth and scaling up a business............................................................10
P5 Assess exit and succession options for a small business explaining the benefits and
drawbacks of each option..........................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Growth planning can be defined as the
strategy adopted by a business organisation
in short-term as well as long-term to expand
the operations of the business and maximise
revenue and profits considering the market
opportunities and threats (Gandee, 2014). In
the following report, business growth
planning for The Furniture Practice is being
done. The Furniture Practice is a small and
medium sized organisation which was
established in the year 1997 and is one of
the largest independent furniture
consultancy company in London, United
Kingdom with 57 employees (The Furniture
Practice, 2020). In the report, an attempt has
been made to analyse key considerations for
evaluating business growth opportunities
and evaluate the various sources of finance
available for SMEs.
The report also includes an analysing
of the Ansoff’s Growth Matrix for strategic
growth directions. A business plan is being
prepared for the strategic future growth of
the company with objectives and financial
information. At last, various exit and
succession options are being evaluated for
the small and medium sized business
organisations.
Dynamic nature of business
environment and the increasing extent of
competition in every industry has forced the
managers of every firm to constantly
evaluate market opportunities for growth
and development of the business
organisation. Having a diversified growth
prospect helps the business organisation to
increase competitive position in the industry
and it is also essential for maximisation of
shareholder’s wealth.
One of the primary reasons why
business managers evaluate multiple growth
opportunities for the company is the
uncertainty which pertains to the current
position of the company in the industry. It
has been observed that organisations on the
rise today may lose their importance in the
transit. Hence, considering growth
opportunities makes sure that the
organisation doesn’t risk losing its
supportiveness and importance in the market
in long-run (Kumar, 2016). There are many
considerations which are to be made by
managers of SMEs before selecting any
growth opportunity. Significance of these
considerations increase particularly for these
organisations due to limited resources and
accessibility to market opportunities. Some
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of the things which needs to be evaluated
and considered by management of small and
medium-sized enterprises for growth
opportunities are:
Resources: Resources can be termed as
the building blocks which are essential for
making any business model work
successfully. Considering the growth
opportunities and desires of any business
organisation, it gets imperative for the
business managers to evaluate the current
resources of the company such as financial
resources, physical resources, human
resources etcetera in contrast to the resource
requirements for future business growth
alternative (Jordan, 2012). Resources are a
primary constraint in the case of small and
medium-sized organisations and the
management of SMEs needs to ensure that
various resources required for the growth
and expansion opportunity are accessible to
the organisation before considering the
opportunity. Hence, primary consideration
for evaluation of growth opportunity alludes
to determination of the technological
resources, financial resources, human
resources and the firm’s accessibility to
these resources.
Capabilities: It alludes to the skills,
knowledge and ability which is evident in
the organisation and which can be leveraged
by the managers to meet the demands and
needs of the customer. Hence, the managers
of SMEs have to evaluate the capability of
the company with respect to the growth
opportunity being considered by the
company. Ability of the management of firm
to integrate different resources and high-end
technology with high level of coordination
determines the customer satisfaction level in
the long-term operations of a business
organisation. Lack of capability restricts the
optimum utilisation of organisational
resources. For example, without the
knowledge of how to use the technological
resources held by the company, resources
held by the company will be of no use
considering the growth opportunity for
company. SMEs primarily rely on their
internal capability and strength which then
translates into various growth and
development opportunities for the
organsiation.
Core Competencies: It can be termed as
the proficiency of a firm which enables it to
deliver a high value proposition to the
customers. Every organisation whether
small, medium, or large scale has a set of
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core competencies which provides strength
to the company. For example, a high quality
of customer service can be the core
competency for an organisation, or a unique
value proposition might be another core
competency for a business organisation
(Wuim-Pam, 2014). Hence, the managers of
SMEs need to evaluate and determine the
core competency of the organisation and the
way these competencies enable the business
organisation to make the most out of growth
opportunity.
Porter’s Generic Strategies:
It is a tool or framework of strategic
management which provides guidance or
strategies which can be used by a business
organisation to derive competitive advantage
in the industrial environment. These
strategies are applicable to every product or
service which is being offered by the
organisation (Tanwar, 2013). It is crucial for
a firm to have a clear course in terms of
strategy for any growth opportunity. SMEs
can consider any of the below mentioned
strategy for evaluation of the growth
opportunity:
Illustration 1: Porter’s Generic Strategies
(Source:
https://thousandinsights.wordpress.com/artic
les/on-strategy-planning/porters-generic-
strategies/)
Cost leadership: Under the cost
leadership strategy for deriving competitive
advantage, firms try to minimise the cost of
production and offer the good at the lowest
prices in the industry to obtain a leadership
position in terms of cost (Kharub, Mor and
Sharma, 2019). It is an important strategy
which can help the management of SMEs to
improve competitive position since the
globalisation has led to large multinational
companies offering products at lower costs
as compared to SMEs which reduces the
market favourability of products and
services being offered by these small-scale
organisations.
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