Analyzing Growth Opportunities for Aggregated Telekom (8el)

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Planning for Growth

TABLE OF CONTENTS
Introduction......................................................................................................................................1
LO1..................................................................................................................................................2
P1, D1 Analyze key considerations for evaluating growth opportunities and justify these
considerations within an organizational context..........................................................................2
P2, M1, D1 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix for
selected UK based organization...................................................................................................4
LO2..................................................................................................................................................7
P3, M2, D2 Assess the potential sources of funding available to businesses and discuss
benefits and drawbacks of each source........................................................................................7
LO3..................................................................................................................................................9
P4, M3, D3 Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business.............................................................................................9
Task 4.............................................................................................................................................13
P5, M4, D4 Assess exit or succession options for a small business explaining the benefits and
drawbacks of each option..........................................................................................................13
Conclusion.....................................................................................................................................15
References......................................................................................................................................16

LIST OF FIGURES
Figure 1: Porters Generic Strategies................................................................................................3
Figure 2: Ansoff’s Matrix................................................................................................................5

Introduction
Growth is the priority of the business in terms of its competitive advantage in the market. In this
context report consider the example of Aggregated Telekom (8el) that operates within
telecommunication sector and is a small business organization. The report will focus on key
considerations for identifying growth opportunities in the market. Various methods of funding
along with its advantages and disadvantages will also be discussed in the report. Business plan
will also be developed and various options for exit and succession will be assessed in the
following report.
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LO1
P1, D1 Analyze key considerations for evaluating growth opportunities and justify these
considerations within an organizational context.
As per the current scenario, Aggregated Telekom (8el) that operates as a telecom service
provider is planning for business expansion and therefore it is important to evaluate various
growth opportunities available in the market. Telecom sector is one of the fastest growing sectors
and therefore it is important for small business enterprises to develop new products and services
that are distinct from its competitors in the market. Such of type of growth opportunities will
definitely help Aggregated Telekom (8el) to expand its business in competitive manner. Growth
of the organization can be measured in terms of its turnover, profit, market share and sales.
Evaluation of growth opportunities
For the evaluation of business growth opportunities Aggregated Telekom (8el) can consider
strategies related to innovation, diversification as well as collaboration. Product life cycle can
also be utilized for gaining growth opportunities in the market (Stark, J., 2015). Life cycle
evaluate development of products and services with the help of 5 stages such as development,
introduction, growth, maturity and decline. Aggregated Telekom (8el) must invest on research
and development as well as on marketing. For better establishment of the product, the
organization must focus on reducing the cost of the product so that sales can be improved.
Maturity stage is the best time to invest in new product or service. However if the competition is
high, then there are chances of reducing sales and therefore it is important for business to
identify new markets.
Collaboration is another crucial ways by which Aggregated Telekom (8el) can access growth
opportunities for business expansion by combining it with various other businesses. For an
example, Aggregated Telekom (8el) can collaborate with mobile network organizations so that
existing services can be improved. This can be undertaken with the help of partnership, mergers
and acquisitions and joint ventures. Successful co operation will help the business to deliver
large number of resources as well as business contacts. It will further help the business to reduce
the commercial market risk. In addition to this, exploitation of technology along with digital
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technology will help the business to expand current network and will contribute towards its
growth (Cui et.al.2019). Adoption of digital technology will help the business to market its
products and services in new market in more effective manner.
Competitive advantage is the basis of overall growth and business expansion and in this context,
it will beneficial to make use of Porters Generic Strategies.
Figure 1: Porters Generic Strategies
Source: (Porters Generic Strategies, 2019)
Cost leadership strategy: This type of strategy is related to increasing overall profitability by
minimizing the cost while comparing the average prices offered by other business organizations.
This will help Aggregated Telekom (8el) to improve their market share as well as increasing
profitability. This can be attain by telecom sector organization by investing more in capital for
technology, and appropriate logistics
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Differentiation Strategy: The strategy focus on developing distinct and unique products as
compared to its competitors. This can be attained by conducting rigorous research so that high
quality of products can be delivered to the customers (Porters Generic Strategies, 2019).
Focus Strategy: Such type of strategies must focus on niche markets and delivering products as
per the market dynamic as well as needs of customers. Aggregated Telekom (8el) must focus on
providing distinct products and services so that strong brand loyalty can be build among
consumers.
Differentiation Focus Strategy: This includes target specific group of customers with unique and
different products. For an example, business can target higher income group of customers with
unique telecom plans with highest quality of network that cost more than other plans.
P2, M1, D1 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix for
selected UK based organization
Opportunities for growth can also be evaluated with the application of Ansoff’s growth vector
matrix for Aggregated Telekom (8el). Ansoff’s Matrix is considered as the decision making tool
that is used by the management for analyzing growth potential in the market (Gurcaylilar-
Yenidogan and Aksoy, 2018). The tool will support highlight various risk factors posed towards
specific growth strategies while expanding the business in new market with the help of
development of new products and services. Application of Ansoff’s growth vector matrix for
Aggregated Telekom (8el) for leveraging its telecom services into new market for business
expansion is as follows:
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Figure 2: Ansoff’s Matrix
(Source: Kim Moore, 2013)
Market Penetration: The strategy will support the business to sell already existing products to
existing customers. For gaining competitive advantage in the market, Aggregated Telekom (8el)
must identify new ways for improving customer value and loyalty. For an example, improvement
can be made in hours of serving customers that will further improve long term appeal among
customers.
Market Development: This is considered as one of the best approaches for seeking the attention
of new customers towards existing products. Identification of geographic location can be
considered for defining new customers (Kim Moore, 2013). For an example, if the internet plans
provided by the business are appealing to the business users, then business as per the strategy
must focus on new campaigns that uses distinct sales channels for targeting universities and
colleges.
Product development: The strategy support development of new products or bringing changes to
the existing product for serving present customers. New products can be developed on the basis
of past feedback by customers. For an example, Aggregated Telekom (8el) can improve the
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current data plan with additional facilities of downloading at similar prices. This will help to
retain consumers for longer.
Diversification: This is also known as risk strategy as it includes selling of new products into
new markets. In this context, business must hire strategic consultant so that overall idea of skills
and infrastructure can be gained while undertaking or implementing the strategy. The strategy
might be beneficial for Aggregated Telekom (8el) because of its strong value and foundation in
the market and therefore it can easily market its new internet or data plan to new geographic
location.
Therefore it can be said that main focus of Ansoff’s Matrix is market potential inspite of
resources which is an essential requirement for the business organization however this must be
considered before making commitment. Other benefits of using the strategy is related to
analyzing strategic positions, support setting of goals and objectives as well as assess the risk
related to all the four strategies (Chiang et.al.2016). As per the above discussion, it can be
concluded that market penetration strategy can be considered as best suited for business growth
because of involvement of less risk and other benefits such as increased revenue, brand
repositioning and customer loyalty.
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LO2
P3, M2, D2 Assess the potential sources of funding available to businesses and discuss benefits
and drawbacks of each source.
For business expansion, Aggregated Telekom (8el) must focus on appropriate or potential
sources of fund. Need of investment is crucial and therefore by assessing the benefits and
drawbacks of each and every source, business can choose the best source of funding from all the
available options.
Bank Loans: This is the process under which borrowers are liable to pay certain amount of
interest over the principal amount to the lender and this amount is known as compensation
amount for borrowing money. To gain the benefits of loan, small business organization or other
entities are required to fulfill certain criteria such as credit scores, earning capabilities as well as
annual turnover (Pesonen, 2017). Advantage of this facility is that there is no intervention of
external parties also amount is tax deductible. Along with its disadvantages are related to
addition burden of various costs, processing fees as well as increased compliances.
Crowd Funding: This is one of the most popular ways of raising fund that support growth of
startup business as well as for mature firms. The method makes use of small portion of capital
with the help of number of individuals for financing the new business venture. Advantages of
crowd funding are related to lower investment before initiating the campaign. In addition to this,
the method will support spreading the idea or support promoting the campaign. On the other
hand the method is less traditional and therefore there is need of investing more time. In addition
to this, business is liable to pay the fees for using a platform for launching crowd funding
campaign.
Peer to Peer Lending: It is also referred to as P2P lending practice under which lenders support
individuals or business by online services by matching borrowers with lenders. The practice does
not encourage involvement of financial institution (Wei and Lin, 2016). P2P lending
websites support connecting borrowers directly to the investors. It is advantageous in terms of
lower and fixed interest rates with no hidden costs as compared to traditional financial loans.
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Angel Finance: Angel investors aim at providing funds mostly for the startup business against
ownership stake within the business. Investors have higher focus over passion and commitment
of founders or owners who are running a business along with determined market opportunity.
Major benefit of using angel finance is that angel investor readily takes risk as they have an
experience of connecting with various investors for raising the fund. They have extensive
knowledge about business development and investment opportunities. On the other hand, along
with ownership stake, angel investors come up with number of risk factors. Business do not have
entire control over business activities and it also have to share its net earnings because of
ownership of angel investors depend upon their amount of investment.
Venture Capital: This is the type of financing under which investors provide finance to small
and start up businesses for long term growth in the market. It includes investment banks as well
as financial institutions (Manigart and Sapienza, 2017). Venture capital not only exists in
monetary form but also in the form of managerial or technical expertise. Its advantages are
related to its valuable guidance and consultation required for setting of new business. This will
support business decision making in terms of managing finances or human resources. VCs are
also well connected with business communities. On the other hand, increasing involvement of
investors will have loss of control over business.
From the above discussion related to sources of funding, the most appropriate sources for
Aggregated Telekom (8el) is identified to be bank loans. Inspite of many limitations, the
business can enjoy several benefits while raising fund in terms of bank loans. While raising
funds from banks, business only needs to make installments on time. As per the current scenario,
Aggregated Telekom (8el) exists with good credit rating and it fulfills one of the major criteria of
the gaining funds from banks. In addition to this, bank loans are considered as one of the
cheapest option especially while comparing it to credit cards and overdrafts facilities. Bank loans
are most suited because of several other advantages such as retained profits and tax benefits.
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LO3
P4, M3, D3 Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business.
Executive Summary
Aggregated Telekom (8el) operates a small business enterprise in Basingstoke, UK. The
organization currently owns 72 numbers of employees. The organization has good credit rating
and therefore lenders both within and outside the UK will look forward to fulfill their funding
needs. The organization is currently equipped with overdraft facility management through bank
of £2.0 million which is not being utilised yet. The head of strategic department has now decided
to gain business growth by massive expansion and for this there is greater need of strategic
planning. Main motive of the business organization is to expand business such that it establishes
itself as leader telecom provider in the market. For this the business will gain fund facility from
bank loans. It is estimated that cost for entering into the new market is estimated as £300,000 and
the required time is of 6 months for identifying the target market as well as demand of the product.
Business Objectives
 Overall growth of the business
 To become the established leader within the telecommunication sector in UK.
 To bring innovation in its existing products and services
 To acquire new markets and customer.
Financial Objectives
 TO increase revenue, profitability and market share.
Marketing Objectives
 To improve marketing efforts
 To expand market reach and area
 To improve brand recognition
 To improve telemarketing efforts
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