Growth Strategies: BCG, GE Matrix, Funding & Business Plan-Ades Ltd

This report assesses growth opportunities and funding sources for Ades Limited, a London-based grocery merchant. The first section analyzes the BCG and GE matrices, recommending strategies based on their evaluation and exploring funding options like banking, venture capital, and peer-to-peer lending. The Ansoff growth vector matrix is used to evaluate growth opportunities, suggesting product development as the most suitable strategy. The second section focuses on developing a business plan for growth, outlining effective marketing strategies, and discussing exit and succession options. It concludes with justified actions and recommendations for implementation by Ades Limited.

PLANNING FOR
GROWTH

CONTENTS
INTRODUCTION.................................................................................................................................1
PART – 1...............................................................................................................................................1
Brief history of Boston Consultancy Group Matrix and GE matrix...................................................1
Difference between BCG matrix and GE matrix...............................................................................2
Recommendations based on the evaluation of the two matrixes........................................................2
Ansoff growth vector matrix for evaluating the growth opportunities for the business.....................3
Benefits and drawbacks on the suggested sources of finance............................................................4
Justification for the sources of funding by Ades limited....................................................................5
Arguments related to source obtained by ADES limited...................................................................5
PART – 2...............................................................................................................................................5
Development of the business plan.....................................................................................................5
Exit and succession options for the business and their benefits & its implications..........................12
Comparing and contrasting the exit strategies.................................................................................13
Justified actions with recommendations to implement by Ades limited..........................................13
CONCLUSION...................................................................................................................................14
REFERENCES....................................................................................................................................15

INTRODUCTION
Small and business enterprises are those firms which are commencing their business.
These companies have less than 250 workers and the average revenue being earned is about
50 million pounds. However, these SMEs have high growth opportunities. Considering this,
the current project also deals with assessing the growth opportunities and sources of funding
for the business in the first section of the report. The SME Company chosen for this project is
ADES limited company, which is a grocery and related product merchant of London. The
second section of the report focus on the development of business plan for growth and
effective marketing strategies are also being designed for the proposed business. The report
concludes with different exits opportunities and procedures.
PART – 1
Brief history of Boston Consultancy Group Matrix and GE matrix
Talking about the BCG matrix model it is being referred as an important planning tool
that makes use of graphical representation of the product of the company with the main effort
to support the firm in making decision regarding what should be kept and in which they
should invest more. It encompasses four categories such as cash cows, dogs, question marks
and stars.
BCG matrix model includes stars, cash cows, dogs and question marks. Focusing on the stars,
these are being referred as the product which are currently making too much cash for the
business however managing the position in the market place (Badrinath and et.al., 2017).
Cash cows are the earlier stars and also make too much cash for Ades limited as there has
been reduction in the growth in the market along with the minimum pressure from the
competition. Furthermore, if the product has low share in the market and lower rate of growth
than it is being referred as the dogs. The final one is the question marks which signifies as the
products which have high rates of growth however the product of Ades limited company has
not maintained a larger share in the market.
GE matrix on the other hand also makes use of multiple variables for determining the
two most important dimensions that is industry attractiveness and competitive strength. It
makes use of nine grids for measuring the strengths of the business unit. In regards with the
industry attractiveness of the Ades limited company, there are different dimensions that can
be utilized such as bargaining power of the suppliers, bargaining power of the customers,
threats of new entry, competitive rivalry and threat of substitutes (Moore, 2014). If the small
and medium enterprises such as Ades makes products with rare inputs than the suppliers will
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have the power of bargaining. Further, the threat of new entrants is moderate because there
might be some obstacles being posed by this industry on entry of new entrants as the grocery
and retail market of UK is flooded with different retail companies. Further, Ades also has
high bargaining power of the buyers as there are many options available to the customers.
The competitive rivalry is also very high because of the presence of different retail giants in
the market which are competing with each other intensely. Finally, the threat related to the
substitute is also very high as the customers have the ability to choose the other alternative
available in the market because of the low switching costs (Halt and et.al, 2016). On the other
hand, competitive strength signifies the manner in which Ades can flare as compared to their
competitors in the market. There are some factors which can be considered here such as
market share. The market share of Ades in the UK market, brand awareness, profit margin,
growth potential, loyalty and satisfaction level of the customers and uniqueness of the
products and services being offered by the company.
Difference between BCG matrix and GE matrix
Talking in relation with Boston consulting matrix, it is being referred as the model
which takes into consideration the growth of the business and market share being enjoyed by
the firm, however, the GE matrix helps the company in making strategic choices for the
product lines on the basis of their position in the grid (Daron, 2003). In addition to this, in the
BCG matrix market share along with the market growth are being considered as the important
factor whereas the GE matrix takes into account industry attractiveness and business strength.
Seeking help from the BCG matrix Ades limited company has been able to deploy their
resources effectively among varied business units. On the other hand, the with the help of the
GE matrix the company was in a position to prioritize their business units.
Recommendations based on the evaluation of the two matrixes
Based on the analysis of the two matrixes, it can be said that cash cows are being
referred as quite profitable for the business, for example, the fresh meat and fruits and
vegetables section of Ades limited company are cash cows because these are the products
which are high in demand. Thus, it can be suggested that the company must make use of the
revenue being generated from this group for reinvesting into the market segments which are
growing faster. In addition to this, the finest range of Ades limited are being regarded as the
star and therefore, it is important that the firm should invest more in these businesses for
defending the current share in the market along with the profitability levels (Kotler,
Armstrong and Opresnik, 2018). Furthermore, for Ades, neighbourhood markets are being
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regarded as the question marks and thus, it is suggested to the company to divert their
resources from the question marks to stars as making investment in these businesses is not
feasible as per the resources at hand and thus, resources must be employed in star businesses.
Ansoff growth vector matrix for evaluating the growth opportunities for the business
Prior following and considering any strategy, it becomes necessary for the firm to
make sure that the present business is of the firm is running quite well. Ades limited company
is planning and looking for the growth and expansion opportunities in the market after
BREXIT, however, they will need to ensure that their core business is not affected by these
new growth prospects. Besides, it is also vital that the company must not ignore their current
base of clients as they will underpin the success and growth of the business of Ades
(Hawkey, 2017). Thus, for the purpose of evaluating the growth opportunities being available
for the business of Ades, it is crucial to take into account Ansoff’s growth vector matrix.
Explanation of this matrix is being done below:
 Market penetration – Talking in relation with the market penetration, it simply means
selling same product in the existing market. The firm is required to search for the
novel ways of attracting customers and augmenting the loyalty towards their products.
In this, Ades can make improvement in their process such as extending the business
hours, making the products available to the business clients without any difficulties
and so forth. market penetration is very less risky because the existing resources are
leveraged by the company (Burns, 2011).
 Market development – This is being referred as the strategy in which new are
approached for selling the existing product. There are several options available in
front of the Ades limited like extending their market reach in different geographies
and regions, targeting new base of customers through using different sales channels
etc. further, this is regarded as the most effective strategy for developing markets for
products but it becomes risky when business is expanded in the new markets.
 Product development – In relation with the product developmental strategy, it
signifies selling of new products and services to the existing base of customers or
market. Ades limited can make use of this strategy if they want to have differentiated
products for remaining stable in the competitive marketplace. There is a medium level
of risk being involved in this strategy, as new products are offered to the customers.
 Diversification – This strategy involves selling of new products and services in the
entirely new market (Ha-Joon, 2021). Thus, it signifies that both the market and the
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product are new. Such type of strategy if adopted by Ades limited then they will have
to face more risk. Nevertheless, the risk factor can be compensated with the chance of
huge return. In addition to this, diversification will prove effective for the firm if the
company have already established business in the market.
Thus, from the evaluation being conducted above, it can be said that there are many
options which can be adopted by Ades limited company for expanding and adopting growth
opportunities in the market after Brexit. Different strategies were being suggested such as
market development, product development, market penetration and diversification through
application of Ansoff growth vector matrix, however the best strategy which is suitable for
the company is product development strategy (Burns, 2014). Since, the firm is presently
operating a wholesale and retail grocery super market, they have an extensive base of
customers in the UK market. This can be utilized by developing new products which are
being preferred by most of the people in London. Most of the people these days are searching
for the quality food and drinks and are avoiding unhealthy and oily foods. Thus, this need of
the market can be trapped by the company through adopting new product development
strategy.
Benefits and drawbacks on the suggested sources of finance
There are many types of funding available to business through which business takes
all the investment decisions regarding the cost of production and the revenue earned (Clark,
2018). The ADES limited is a small manufacturing company of United Kingdom and is
involved in various sources of findings which are as follow:
 Banking
This is the most important sources of funding through small business can take loans at
low interest rate with minimum risk (Pushkareva, 2019).
Benefit: It is useful because it provide access to credit to company and with minimum
risk. Provides easy monitoring and easy transactions for the company.
Drawback: It has a disadvantage of operating expenses and having high commissions
and the process is also slow.
 Venture capital
This capital is easy to get in the market because investors are getting high returns due
to high rate of interest (Strese, 2018).
Benefits: This easy way to get small loans from the investors by businesses.
Drawback: Its rate of interest is high because it has more risk from the investor’s side.
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 Peer to peer lending
In this the company can take loan from other business owners and peers from an
organisation. The company owners with good relations with other business owner or
friends can lend funds due to good relations.
Benefits: This is useful in times of emergency in the companies due to direct
lendings.
Drawback: This involves high risk because there is no guarantee of return of the
funds.
Justification for the sources of funding by Ades limited
ADES limited is a small manufacturing company of United Kingdom which is funding
its activities and services through banking. Because it the safe way of acquiring loans for
short time periods and involved less risk. ADES is a small business which required small
capitals for day to day activities and for some small investments in products and raw
materials. By funding loans from banks it can check all its business activities and feel secure
about the amount because of low rate of interest. Banks also provide access credit facility for
obtaining more loans in future with same interest rates.
Arguments related to source obtained by ADES limited
The ADES limited using banking for sourcing finance for small loans for the
investment purposes. This company should use joint ventures and peer to peer lending also
for obtaining small funds for immediate need. It should not obtain all its funding through
banks because if the company will take loans from joint ventures then it will get loans more
easily and no procedure related to document verification which leads the loan process lengthy
task. It should get advantages from other source of funding too.
PART – 2
Development of the business plan
Description of the business idea
Ades limited company desires to expand their business and looking for the ways of
creating opportunities for growth and consequently, based on the evaluating and
considerations being undertaken in the above section, it has been suggested to the business to
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adopt product development strategy, in which the firm will going to offer new products into
the existing market. Considering this, the firm is being planning to offer quality and healthy
food as well as drinks in the existing market of the company by opening a new café known as
“Ades foods”. The quality and healthy food and drinks are now becoming the routine
necessity of the locals as each and everyone is having some or the other health issues because
of the increased level of stress and exertion (Barrow, Barrow and Brown, 2012).
Furthermore, in the current times, there has been rise in the demand of the healthy and quality
food and drinks in the UK market and thus, this new product of Ades limited will emphasize
on providing best food and drink products to their valuable clients. For this purpose, the
company will need a fund of around £150000 start-up funds which will encompass expenses
in relation with salary needed for extra staff needed for food and drink preparation, payroll,
advertising, marketing, resources and many other expenses will include £122000, £140,600
and £154,500 respectively
Mission
The main mission of Ades limited company is to continue to augment their product
range like top quality and healthy food and drinks which they aspire to sale at competitive
prices for holding the wider share in the market.
Vision
Additionally, the main vision of the company to make upgradation of their small and
medium size business into the worldwide business through offering of quality products at
reasonable prices to their target market.
Strategic Objectives for scaling up the business
There are several small objectives of Ades limited company which they want to
achieve for the accomplishment of the major aim of the company and these are as follows:
 Making improvement in the profit margin of the company by 10 percent by the end of
the year 2022
 Meeting the expectations of the clients by supplying top quality and healthy food and
drinks products
 Making 10 percent improvement in the base of the customers, retention and loyalty by
the end of the year 2022
Segmentation of the market for the proposed business
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As noted by the Economic Times (2017), segmentation is being referred as the
marketing strategy which helps in distributing the target customers in some groups through
paying attention on the requirements and wants. There are different types of market
segmentations strategies which can be adopted by the company such as demographic,
psychographic, geographical and behavioural segmentation. However, for the proposed
business of offering quality and healthy food and drink at “Ades Food”, the firm will make
use of demographic segmentation. This strategy is being referred as the strategy in which the
market is being segregated on the basis of people-based differences such gender.
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Figure 1: Target strategy
(Kotler and Keller, 2015).
Target market
Speaking in volume in relation with targeting, it means mentioning of particular
customer segment by recognizing their specified wants and requirements. There are mainly
three types of targeting strategy that is differentiated, undifferentiated and customize strategy.
For the proposed new business, Ades limited company will make use of differentiated
and multi-segment targeting strategies. The main target market of Ades will men, women and
children.
Positioning strategies
As per Kotler and Keller (2015), market positioning is defined as the strategy which
deliberates in regards with the positioning of the business in the competitive place of market.
This strategy is being recognized along with the prices, promotion, services and products.
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Figure 2: Positioning map
Start-up cost
Start-up Expense Amount
Lawful £$1,200
Advisors £3,100
Flyers £4,580
Rental £3,420
Coverage £1,400
Renovation £11,800
Writing materials £500
Total £26000
Start-up Asset Amount
Needed cash £67000
Start-up stock £22000
Long-term asset £35000
Other assets £0
Total £124000
Total obligation £150000
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