Unit 42 Planning for growth

This document analyzes key considerations for evaluating growth opportunities and justifies these considerations within an organizational context. It also evaluates the opportunities for growth using Ansoff's growth vector matrix. Additionally, it assesses the potential sources of funding available to businesses and discusses the benefits and drawbacks of each source.

Unit 42 Planning for
growth

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................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....................3
LO2..................................................................................................................................................5
P3 Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source............................................................................................................5
LO3..................................................................................................................................................8
P4 Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business.............................................................................................8
LO4................................................................................................................................................11
P5 Assess exit or succession options for a small business explaining the benefits and
drawbacks of each option...........................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Planning is defined as strategic activity which is main complement of growth and running
a business effectively. If all activities and functions are properly managed then it will be an
opportunity for organization to increase the sale and profitability (Ward, 2016). To understand
about this KTA Group LTD has been selected that is small size organisation, located in United
Kingdom. This is the part of Automotive Repair & Maintenance service industry. The
organization is operating its business in changing environment and manages the activities
effectively. The management of organisation playing an important by understanding needs and
providing the kind of services. The report covers key considerations that considers by SMEs in
evaluating the growth opportunities, different methods through which company access the
funding, a business plan involving financial informations and various ways that uses by small
business where owner can exit the business and its implications of each options.
LO1
P1 Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organisational context.
To run a business effectively and managing the all activities there is need to have plan
which can be uses to operate a business and develop the productivity. The aim of every
organization is to set the goals and formulate different planning which can be uses to operate a
business and increase the profitability. The management should analysis the market that helps to
defined what is going on trend and how to run a business effectively (Thapa and Murayama,
2012). In context to KTA Group LTD, management is responsible to operate the business and
grow tit continuously. The PESTLE analysis in relation to business industry are as defined:
PESTLE analysis: This can be defined as framework and tool which uses by
organization to analyse factors like political, social, economic, technological, legal and
environmental that state how these are affecting organization from outside. This can be defined
as flexible analysis which can be use in range of different scenarios that can provide the growth
opportunities for organization that are given underneath:
Political: This factor is related to some factors that affect the extent and government
impacts on country. Like as political factor involves political stability of country, taxation
policies, regulatory practices and governing body and trade regulations. In context to KTA
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Group LTD, the trade policies of UK are effective and favourable that create the growth
opportunities for chosen organisation to establish their business effectively and develop the
business activities by expansion (Valler, Phelps and Wood, 2012).
Economical: This factor is related to economy that have huge effects on organization and
its success. This involves monetary policies, inflation rates, unemployment rates, current interest
rates and others that has effects on business operation. After Brexit, inflation rate of UK has been
reduced that has developed the growth opportunities for KTA Group LTD as it can operate its
business and all functions effectively. The management of organisation understand the needs and
wants then provide the products and services accordingly which can help to increase productivity
and profitability of business.
Social: This factor is related to society that states what is going on in society affects the
organization greatly. Various elements are covered in social factor such as religious and cultural
factor, demographics of market, buying behaviour of consumers and lifestyle trends that affected
the business. In UK, people are price consciousness and they wants better quality of products at
less price. This can be growth opportunity for KTA Group LTD to increase the sales by selling
Automotive Repair & Maintenance service parts by setting affordable prices which influences
the number of customers and develop the business effectively (Phelps, 2013).
Technological: This factor showing the relation in technological environment which can
help to operate the business and increase the organisational productivity. This involves new
technology, innovation, intellectual property and others which affected business. In context to
KTA Group LTD, new technology and innovation is introduced by management which can help
to distribute the products in other country which develop the growth opportunities for business
and increase the profitability.
Legal: For growing the business it is important to follow all regulations which are made
by government. For expanding business and taking the growth opportunities KTA Group LTD is
following business laws, health and safety guidelines, international trade agreement and local
laws that helps to operate a business effectively.
Environmental: This factor is showing the relation with environmental rules that need to
follow for operation and running a business effectively. KTA Group LTD is maintaining all
environmental regulations such as safe waste disposal, dealing with hazardous material and
environmental pollution which affected the business positively.
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BCG Matrix: This is a model which uses by organization for the purpose of analysing products
according to growth and market share that can help to increase the organizational productivity
and profitability. In context to KTA Group LTD, BCG matrix has been defined as:
Dogs products: This means products with low growth and market due to low quality of
products and services.
Question marks: This means products in high growth markets with low market share as
this influences number of customers.
Star products: This means products in high growth markets with high market share as
organisation provides better quality of products and services in changing environment.
Cash cow products: This means products in low growth market with high market share.
KTA Group LTD is selling Automotive repairing parts that covered in Star products as its
products and repairing services are well which influences number of customers and deliver
higher productivity.
Recommendation and Justification
From the above it has recommended to KTA Group LTD to analyse the external
environment and formulate plans which can help to grow the business and develop higher
profitability. These all factors provide the growth opportunity to chosen organisation as to
expand and develop their business in other areas effectively (Pothukuchi, 2015).
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.
Growth of business is required in organisation where management are responsible to
understand what people wants and how they can be satisfied. Every business seek towards
growth by accepting challenges and innovation. KTA Group LTD is small size organisation that
sales different types of Auto mobile parts and maintenance services in UK. The aim of
organization is to develop the market and grow their business effectively. For this Ansoff's
growth matrix has been used by management that supports to grow and manage the performance.
Ansoff's growth matrix: This can be defined as strategic management tool that helps
executives, senior management and marketers to device a strategic planning and run their
business effectively. KTA Group LTD is using such strategy for growing the business
opportunities that area as explained:
Market penetration: This strategy is related to organisation where management thinks
how their existing products and services can sale to existing customers. To adopt this strategy
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there is need to reduce the prices of products which can help to attracts the large number of
customers. In context to KTA Group LTD, management can use this strategy by reducing the
prices of auto mobile parts that increases sales and profitability (Todes, 2012).
Advantages:
This can help chosen organization to focus on fast growth by formulating business
activities and penetrating the market. Number of customers in UK can be increases by chosen
organisation as it is selling the better quality of products. To maintain good performance and
increasing sales KTA Group LTD sales their products at lower prices.
Disadvantages:
In this, organisation attain the low profits as it reduces the prices of their products and
services. All activities are functions are difficult to manage (Kerzner and Kerzner 2017). Due to
adopting market penetration strategy products of chosen organisation missed the opportunities.
Market development: This strategy is related to market development where an
organisation select the new location and area of selling the products and services This strategy
state how to enter in to new market (Schetke, Haase and Kötter, 2012).
Advantages:
By using this, KTA Group LTD can enter in to new market which is important for all
small business. This increases the number of customers and business activities by managing
them effectively. Gaining new customers, increases organisation revenues and growth.
Disadvantages:
To enter in to new market is not easy strategy as there is need to select as best location
and spending funds (Haughton, Allmendinger and Oosterlynck, 2013). This can affect business
negatively because customers demand vary time to time.
Product development: The relation of such strategy is product where organisation needs
to introduce new products and services which can help to fill the needs of customers and increase
the profitability (Pred, 2017).
Advantages:
By using product development strategy KTA Group LTD can create a good culture of
innovation and manage the business. This helps chosen business to drive higher value
proposition by introducing new products and services in existing market. This increases interest
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of customers by developing the new products and services which helps to attain the business
goals.
Disadvantages:
The product innovation and development can be fail unexpectedly due to developing the
product (Moseley, 2013). This might be create the risk as new products take time of reach the
new customers. The challenges are increases by developing the products as lack of customer
trust towards products.
Diversification: This strategy is related to product development and market development
where organisation introduces its new products in new market. This can be use by KTA Group
LTD for attaining the growth opportunities.
Advantages:
By using diversification strategy KTA Group LTD can increase the product range and
market range. This increases the number of customers by increasing their interest in new
products. This helps to maximize the potentiality of business by using all resources and capital.
Disadvantages:
This is highly risky and challenging strategy which can create the challenges for
organisation. There is need of high investment and capital which might be difficult for small
business to arrange. The organisation who adopts such strategy will not be able to respond
quickly to market change.
Justification
From the above Market Development strategy is adopted by chosen organisation that can
help to grow the business in new market. The management analysis the market and make
decision to establish their business which helps to add new customers and increase their selling
that helps to maintain the higher productivity and profitability (Gleeson, Dodson and Spiller,
2012).
LO2
P3 Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source.
Funds are the important for organisation which is required to be arrange in organisation
so all activities and task can be complete in effective time period. If a business is not having
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proper resources and funds it will be difficult to operate and arrange the organization. This can
help to increase the sales and profitability in challenging environment and attain the business
goals. Different sources of funds in context to KTA Group LTD are as defined:
Bank Loan: This can be defined as funding sources which provides the funds to
customers who has requirements. This is difficult for people to obtain the loan from banks as
needs to fill many legal requirements.
Loan from friends and relatives:
Advantages:
 This provides the funds for suitable time such as short, medium and long term.
 In taking the loan interest and arrangement fees are normally tax deductible
(Mitchelmore and Rowley 2013).
 This fill the customers requirement who needs funds and supports them to operate and
regulate their business effectively.
Disadvantages
 Loans are not flexible that create the burden on loan taker.
 There is need to mortgage the property and possession of personal property in getting the
bank loan.
 The bank loan charges high interest rate from their customers that affected their
profitability.
Venture capital: This can be defined as form of private equity that provided by investors
to its customers for start up a small business and believes that they have longer growth. This can
help KTA Group LTD to arrange the funds and resources from venture capital which is easy
method and ways to raising funds.
Advantages:
 Venture capital is providing the finance to start up and young business which can help to
operate the business and increase profitability (Dimitriou, 2013).
 KTA Group LTD can make right business decisions by arranging all activities and task.
 This also helps to maintain good relation and productivity of business by developing a
business and attaining the goals.
Disadvantages:
 There is loss of control and management of activities in obtaining the venture capital.
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 There is risk in arranging funds and changing the interest rates in business.
 Venture capital in context to KTA Group LTD can lead the under valuation.
Personal savings: This can be defined as another sources of fund which can be use by
organisation and small business to expand their business in challenging market. The management
of KTA Group LTD easily can source the funds in challenging market as by selling the personal
assets and property it can arrange the funds and regulate their business effectively. It can help to
grow and develop the business activities properly (Mason, 2015).
Advantages:
 This can help chosen organization to increase the business activities by arranging
funds from own resources that can help to operate and regulate the business
effectively.
 This supports management to invest their amount in their business and bring the
growth chances by developing activities.
 No needs to pay interest and other charges on personal saving as it is collected by
own resources.
Disadvantages:
 This can create the challenge for business concern loss of money.
 Fully loss is bearing by management of the organization that create the challenge
to continue the business activities.
 Improper management of cash and financial resources that affected the business
negatively.
Loan from friends and family: This is also a easiest way of arranging the funds which
can be used to operate and establish a business continuously. For KTA Group LTD, it is easy to
arrange the funds from their friends and family by maintaining good relations which can help to
increase the sales and profitability.
Advantages:
 There is not time barred as funds are raised from internal sources who knows each other.
 This is secure deal which can be uses by organization for running and managing the
business activities (Chapin, 2012).
 Loan from family and friends are more flexible that supports to increase all activities and
functions.
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Disadvantages:
 In family and friends loans there is risk of unclarity that when borrowed amounts will be
payable.
 This increases the tax related issues, by creating problems.
Justification
From the above mentioned financial resources it can be recommended to KTA Group
LTD use the Venture capital for arranging the funds and resources for the purpose of growing
business and maintaining the higher profitability. The management of chosen organisation
should be evaluate the funds and utilise them properly which can help to develop the business
and increase sales.
LO3
P4 Design a business plan for growth that includes financial information and strategic objectives
for scaling up a business.
Business plan is defined as written document which is prepared by organisation for the
purpose of running and increasing the activities. This plan covers strategic objectives and
planning that helps to scale up the business rapidly. If a company is able to formulate the
effective plan and strategy then it can be consider as growth opportunity by operating a business
continuously. In context to KTA Group LTD, management found that their business is running
good and planning to expand its business in Spain by formulating plans and managing all
strategies which are as defined:
Executive summary: KTA Group LTD is UK based organization that is operating
business by selling the parts of Automotive Repair & Maintenance service industry. The
employees of organization are working across of its location which helps to increase the sales
and profitability. The management of organisation analysis the needs in different market and
make efforts to provide the products.
Vision and mission: The vision and mission of KTA Group LTD is to become leading
organization in selling the Auto mobile parts by using better quality of products and services.
The mission is to expand business by entering in to new market and attracting large number of
customers.
Strategic objectives:
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 To develop the business activities in Auto mobile market and increase sales.
 To develop the business growth by using innovation and technology.
 To increase sales by 60% and profitability by 30%
 To attain the large number of customers by developing business market up to 2022.
STP analysis: This is a tool which uses by KTA Group LTD for focusing on
segmentation, targeting and positioning by attaining the business goals that are as explained:
 Segmentation: The management of KTA Group LTD focuses on geographic
level as by selecting the best country and location it can develop its business
effectively (Batty and Marshall, 2012).
 Targeting: The management of KTA Group LTD, targeting all ages of people
and people who are interested to get better quality of auto mobile parts.
 Positioning: By serving better quality of products chosen organization is
maintaining higher position that helps to operate a business effectively.
Situation analysis: This illustrates SWOT analysis of KTA Group LTD that are as
explained:
Strength Weakness
 The chosen organisation is selling the
better quality and design of auto mobile
parts in market.
 It has good distribution channel that
supports to increase sales.
 Having strong customer base and using
new technology.
 Lack of financial resources and
inventory turn over.
 Changes in government regulation in
running a business.
 The business is established at small
place which limits the number of
customers.
Opportunities Threats
 The KTA Group LTD having core
competencies where it offers better
parts.
 Skilled and experience employees who
helps to accept the challenges and
 Changes in trade regulation and
government policy changes.
 Low income group of people in UK
that limits the sales.
 Changes in currency.
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develop the activities.
 Better utilization of available resources
that can help to increase sales.
 Focus on developing the business
activities and expansion of areas.
 Risk in establishing business at other
location.
Financial information – This can be defined as important activity which uses by
organisation for managing and expanding the business in challenging market. If all financial
resources and information are properly managed then it will be easy to operate and manage a
business effectively. In context to KTA Group LTD, management is responsible to keep records
of all financial data and information that supports to regulate and expand the business effectively
so all activities can run and managed properly. To expand the business in Spain and other
geographical area financial resources are needed as:
Particulars Amount (£)
Operating expenses 180000
Innovation and distribution 10000
Cost of raw material and
services
100000
Other expenses 150000
Total 440000
The financial information of chosen organisation in past years are as shown:
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Monitoring and controlling – In business plan, this is the ending stage that should be
use by organisation for managing and controlling the activities in relation to business. The
management of KTA Group LTD manages all activities by expanding its business. In this,
management analysis the financial resources and optimise them properly which helps to maintain
the higher sales and productivity in challenging environment.
Therefore, it has been defined that by formulating strategic plan KTA Group LTD can
expand its business effectively as management are enough skilled and talented who performs all
functions and activities properly. The business plan can help organisation to grow their business
and develop the activities by running properly.
LO4
P5 Assess exit or succession options for a small business explaining the benefits and drawbacks
of each option.
In the challenging environment, it is important for management to have proper planning
in relation to exit and succession their business by evaluating plans that helps to make the right
business decisions.
The exist and succession options in relation to KTA Group LTD are as defined:
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Management Buy in: This can be defined as corporate activity where is an organization
is purchased by management team from the outside of company. This is easy for management of
KTA Group LTD to make the buying decision by selecting the small business.
Advantages:
 This can help to regulate and continue the business activities in case of owners of
company are not able to manage the organisational.
 The new management team of KTA Group LTD have good knowledge, experience and
contacts that can help the organisation to grow and increase the shareholder's wealth.
Disadvantages:
The existing employees may feel demotivated and lack of changing team which might be
affected business negatively.
Management Buy out: This is the activity in which purchase of business by existing
management team that have great experience of business which is being required to operate a
business successfully. For KTA Group LTD, it is easy to adopt as they have good knowledge to
handle all activities (Boserup, 2017).
Advantages:
 There is high chances of success as existing team have capability to manage the business
and develop it continuously.
 By selling the business to internal buyers all information can be maintained and develop
the confidence in business by increasing suppliers, clients and staff that supports to run a
business successfully.
Disadvantages:
 In management buy out it become difficult for management to raise the funds
because no external parties are involved.
 There is risk of insider trading due to all insider employees are working in
organization.
Closing the business: If a business is not running properly then owners make difficult
decision at all time such as to close and sell to another business. In this option, all business
activities are closed in case of activities are not running properly. For KTA Group LTD it is
difficult option because there is need to sale of assets and pay of liabilities.
Advantages:
12

 This can help to close the business if not running properly as management and
employees have limited liability.
 This stops to increase the financial losses.
Disadvantages:
 Small organisation can face the difficulties and tough competition in economic
market.
 In case of adopting this, KTA Group LTD needs economic resources for running
a business and managing the activities which is difficult for organisation.
CONCLUSION
From the above report it can be concluded that strategic plan of organisation should be
very clear that can help to operate a business and increase the brand image. The main purpose of
planning is to decide the goals and make efforts to attain them in certain period of time. Different
funding resources are bank loan, family and friends, venture capital and etc. that are uses to
arrange the funds. The exit and succession operation are management buy in, management buy
out and closing the business which can help to regulate a business effectively.
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REFERENCES
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