ASDA's Business Expansion Plan: Funding and Growth

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PLANNING FOR GROWTH

Table of Contents
INTRODUCTION........................................................................................................................2
LO1........................................................................................................................................... 3
P1 ANALYSE KEY CONSIDERATIONS FOR EVALUATING GROWTH OPPORTUNITIES AND
JUSTIFY THESE CONSIDERATIONS WITHIN AN ORGANISATIONAL CONTEXT........................3
P2 EVALUATE THE OPPORTUNITIES FOR GROWTH APPLYING ANSOFF’S GROWTH VECTOR
MATRIX.................................................................................................................................9
LO2......................................................................................................................................... 12
P3 ASSESS THE POTENTIAL SOURCES OF FUNDING AVAILABLE TO BUSINESSES AND
DISCUSS BENEFITS AND DRAWBACKS OF EACH SOURCE...................................................12
LO3......................................................................................................................................... 16
P4 DESIGN A BUSINESS PLAN FOR GROWTH THAT INCLUDES FINANCIAL INFORMATION
AND STRATEGIC OBJECTIVES FOR SCALING UP A BUSINESS...............................................16
LO4......................................................................................................................................... 20
P5 ASSESS EXIT OR SUCCESSION OPTIONS FOR A SMALL BUSINESS EXPLAINING THE
BENEFITS AND DRAWBACKS OF EACH OPTION..................................................................20
CONCLUSION.......................................................................................................................... 22
REFERENCES........................................................................................................................... 23
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INTRODUCTION
The expansion of the business is necessary for the growth and success of the business. The
business expansion will help the organisation in attracting the customers as well as in
earning a profit. Proper planning is necessary for business expansion as the development of
the business depends on the operation of the company. Planning may be defined as the
process of thinking before taking any action that includes future determination, objectives,
and the scheduling of the strategies that will help in making the operation effective and
successful. ASDA is a medium enterprise based in the UK. The company is a retail company
that provides several products to the citizens of the UK and other locations. The company
wants to invest the fund for the business expansion and for that the company needs proper
planning that will contribute to business expansion. In this assignment the learner comes to
know about the importance of planning in the business growth and the ways in the planning
is implemented.
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LO1
P1 ANALYSE KEY CONSIDERATIONS FOR EVALUATING GROWTH OPPORTUNITIES
AND JUSTIFY THESE CONSIDERATIONS WITHIN AN ORGANISATIONAL CONTEXT
In today’s world, the only setup of business is not enough for the profit and progress of the
organisation. The expansion of the business along with proper strategy and operations is
required for the business growth in business. The planning needs to be effective and
accurate that will help the business in earnings growth and profit. The proper planning for
growth enhances the chances of opportunities and also helps in maintaining a good
reputation in the industry. There are many advantages for the organisation in making a good
plan for business growth and expansion (Li et al., 2016).
ASDA is a medium size retailing company based in the UK and is responsible for providing
various products such as food, groceries, fashion, mobile and other products. The company
is established in 1949 by Peter and Fred Asquith. The company serves in around 600+
locations and wants to expand the business. The company has a very good credit rating and
thus wants to utilise the funding for business growth. The company has £2.0 million that is
never used by the company and so wants to utilise the money for the business expansion.
The company needs proper planning for the business growth that will help the company in
gaining profit. The planning needs to be done in a strategic manner that will help in avoiding
all the risks and challenges that occurs during the implementation of the plan and during
business expansion. There are many steps included in planning such as analysing
opportunities, setting objectives, developing premises, identifying alternatives, evaluating
alternatives, selecting alternatives, implementing the action plan and reviewing. The
adaptation of proper planning will help in the successful growth of the business. Asda
Company first needs to analyse the strength and weakness of the company that will help in
knowing the situation of the company in the market and after that, the company has to
analyse the market and customers that will provide details about the market situation and
customers demand of the product. There are many methods that will help the company in
analysing the market situation and customer demand for the success of the business (Asda,
2019).
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Figure 1: ASDA Company
Source: Asda, 2019
PORTER’S GENERIC MODEL
Porter’s generic model was described by Michael Porter in 1985. The model is used to
analyse and determine the strategies for the organisation that will contribute to business
progress. The model will help the organisation in developing an effective business plan that
helps in bringing better outcomes. The model contains 4 strategies that the organisation can
choose for business expansion. For the selection of the strategy the company first needs to
analyse the strength, weakness, opportunities and threats that will help the company in
choosing the right strategy for the business expansion. The strategies that the company can
adopt are as follows (Salavou, 2015).
Figure 2: Porter’s Generic Model
Source: TS, 2019
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Cost leadership
Cost leadership is the strategy that will help the organisation in expanding the business in
the large market either by reducing the prices of the product or by increasing the market
shares. Reducing the price of the product as much as possible will help the organisation in
more selling and increasing customer demands. The increased customer demand will help in
business expansion. The other way to expand the business is increasing the market share.
ASDA can use the £2.0 million in the share market that will help in earning profit from the
business. The company can invest the money in manufacturing more products and selling
them on low price in comparison to other companies also the company can invest the
money in increasing the market shares that will help in the progress of the company
(Salavou, 2015).
Differentiation
This strategy includes the expansion of the business with unique and different products that
are not available in the market. The company can invest the money development and
innovation of new products that will help in business expansion. The uniqueness of the
product and services will make the company different from other companies that play an
important role in increasing the demand and in maintaining the reputation in the market
(Salavou, 2015).
Cost focus
The strategy focuses on the expansion of the business in the small and existing market. In
this strategy, the company tries to increase the selling of the product with lower price in
small markets. The main benefit of the strategy is that the company does not need to brand
the position in the market and also the quality product at a lower price will help in
increasing the market demand that helps the company in earning a huge profit (Salavou,
2015).
Differentiation focus
This strategy is responsible for the expansion of the business with the help of unique
product and services. In this method, the company focuses on selling unique and new
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products in the small and existing market. For that, the company needs to analyse the
market demand that will help in the innovation of new products (Salavou, 2015).
For the expansion of business, the company needs to know the factors that will affect the
business. There are many ways in which the company can analyse and evaluate the factors
that will impact the business such as pestle analysis. The company also needs to know the
internal factors of the company that will impact the business expansion such as SWOT
analysis (Salavou, 2015).
PESTEL ANALYSIS
Pestel analysis is a tool used for analysing the impact of external factors on the business
such as politics, economy, socialism, technology, environment and legal factors. The
company needs to analyse external factors before making planning for growth (Lamas Leite
et al., 2017).
Political factors
The conflicts and instability in the political impact of the business due to the change in rules
and regulations. The changes in consumer rights, taxes and legislation will impact the
business and so the company needs to give an emphasis on the political factor (Lamas Leite
et al., 2017).
Environmental factor
The environmental factor includes green economy, waste management, pollution and
organic food which are important for ASDA Company. The company needs to give an
emphasis on these factors for business expansion (Lamas Leite et al., 2017).
Social factor
The company needs to analyse the culture, behaviour and demand of the people before the
expansion of the business. The social factors have a major impact on business success and
expansion (Lamas Leite et al., 2017).
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Technical factor
A technical factor includes factors such as the innovation of new technology that will impact
the business of the company. The company needs to be aware of the new technology and
innovation and needs to adopt the technology for business expansion and growth (Lamas
Leite et al., 2017).
Economic factor
The economic factors on which the ASDA Company needs to focus are pay level, competitive
pressure, cost of credit, labour supply and prices. The factor has a great impact on the
economy of the company as well as on the economy of the company (Lamas Leite et al.,
2017).
Legal factor
The legal factor includes the rules and regulation of the country for the business such as
business law, legislation and norms that will impact the business. The company needs to
analyse the legal factors before making a plan for business expansion (Lamas Leite et al.,
2017).
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P2 EVALUATE THE OPPORTUNITIES FOR GROWTH APPLYING ANSOFF’S GROWTH
VECTOR MATRIX
Taking challenges as an opportunity will help the company in expanding the business to an
effective level. There are many ways through which the business is expanded such as
effective use of opportunities that will help in gaining uniqueness and popularity in the
market. ASDA Company is a retailing company and has the opportunity to expand the
business at the international level with the help of various strategies and tools (Asda, 2019).
ANSOFF’S MATRIX
Ansoff’s matrix is a tool developed by Igor Ansoff and is used for expansion of the business
by taking the challenges as an opportunity. Ansoff matrix is a strategy that will help the
company in analysing the market form different point of views such as demands of
customer and market. The strategy is divided into four categories that will help the company
in using the opportunities for the growth of the organisation. The company needs to focus
on each of the steps properly for the expansion and to increase productivity (Dawes, 2018).
Market penetration
Market penetration is the best strategy for business expansion in the current market. In this
strategy, the present product is presented in the current market for attracting the customer
and maintaining a reputation in the business world. ASDA Company needs to sale the
present product in the present market keeping in mind the need and demand of the
customer as most of the customer in the market need the same product due to quality and
quantity factors. Existence of the product in the market will provide satisfaction to the
customer that is necessary for the expansion and growth of the business. The main focus of
the strategy is on the need for regular customer that contributes to the profit of the
company. The company needs to maintain the quality of the existing product that will help
in building trust among the customers (Dawes, 2018).
Market development
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Market development is the strategy in which the market expansion is done with the help of
the present product. In this strategy, the company introduced the current product in the
new market for business expansion and for earning a profit. The main aim of the strategy is
to attract new people towards the current product that will help the company in increasing
the customers. ASDA Company needs to introduce the present product in the new market
such as on the national and international market that will help in increasing the customers
and also aware the customers about the products of the company. The other advantage of
the expansion of business in the new market is gaining popularity and profit from the
market. The strategy will also help in gaining the trust and faith of the customer due to the
quality of the product (Dawes, 2018).
Product development
Product development is the strategy in which the company introduces innovation product in
the present market. The main aim of this strategy is increasing the variety of the product in
the market along with maintaining trust and loyalty. The innovation of new product
contributes to expanding the variety of products in the market and the existing market and
customer contributes to maintaining the loyalty, trust and reputation of the company. ASDA
is a retailing company and so needs to expand the variety of products with the help of
innovation and needs to introduce the product in the market but the company first need to
analyse the demand of the market and customer and then accordingly needs to do
innovation of the product (Dawes, 2018).
Diversification
Diversification is the strategy in which the company introduces an innovative product in the
new market. The main of this strategy is the expansion of the business in the new market
along with the expansion of the customers and the variety of products. The innovation of
product help in enhancing the variety of product and fetching the new market will help in
increasing the number of customers. ASDA Company needs to analyse the market and
customers need for the expansion of the business (Dawes, 2018).
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LO2
P3 ASSESS THE POTENTIAL SOURCES OF FUNDING AVAILABLE TO BUSINESSES AND
DISCUSS BENEFITS AND DRAWBACKS OF EACH SOURCE
DECISION MAKING
Every organisation needs an investment plan for the setup and growth of the business. The
investment plan will help them in utilizing the capital in an effective way that will help the
company in business expansion and in making a profit. The manager and the investor are
responsible for taking the investment decision for the company. The proper analysis of the
market needs to be done before making any decision regarding the investment. The
manager and the investor also need to conclude the benefits and demerits of the
investments that will help in taking the correct decision regarding the investment for
business expansion. ASDA is a medium size company and needs a proper analysis of the
strategy and market for the execution of the investment plan as the investment has both
advantages and disadvantages. The decision taken for the investment after the proper
analysis of the process will help the company in growing the business as well as in
expanding the number of customers in a market that will lead the business towards profit.
There are many factors on which the company needs to focus such as the impact of
investment on the financial condition of the company, impact on the employee, the
reputation of the company, the field in which investment is done and the profit of the
company in the investment (Romiszowski, 2016).
SOURCES OF FINANCE
The setup of business is not sufficient for the progress of the business. The company needs
to develop the business by investing the capital for development and growth. The
investment will help the organisation in utilising the money in an effective way that will take
the business towards success. The money is required by every organisation during the life of
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the business and so the company needs to find out the sources through which the company
can get money for the investment. There are many sources through which the company can
earn capital for business growth. All the sources depend on the long and short term equity
also there are many advantages and disadvantages of taking money from the source as
different sources have different policies and procedures. ASDA needs to select the best
source of funding that will help in earning a profit (Gadenne, 2016).
Bank loans
A bank loan is one of the best and simplest kinds of funding source. There are many banks
that will provide loans to small and medium-size business for development and growth.
There are many types of loans such as business loans and personal loan that the companies
can take. ASDA can also take loans for a suitable bank that will help the company business
expansion. As the rules and regulation of banks are different from each other and so there
are many disadvantages and advantages of taking loans from the banks. The main
advantage of taking a loan from the bank is that the company get a particular time period
and many options to return the money. The disadvantage is that the company needs to pay
more money as the interest to the bank that will many times leads the business towards loss
(Carbo Valverde et al., 2016).‐
Crowdfunding
Crowdfunding is the process of gaining fund from the public with the help of social media
and websites. This is the simplest way of earning fund for business expansion. For such type
of funding the company needs to use the social media and website that will tell the citizens
about the needs of funding and also about the business expansion plan for the customer’s
satisfaction. ASDA Company needs to use the social media and websites for earning fund for
the business development but there is any disadvantage of the crowdfunding such if the
company fails to develop the business than it will impact the reputation of the company in
the market. The advantage of the funding is that there are many options with the company
to utilise the money as the company not need to give an answer about the investment to
the public (Carbo Valverde et al., 2016).‐
Family and peers
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