Unit 42: Analyzing Growth Opportunities for Oscar Technology

This report provides a comprehensive analysis of Oscar Technology's growth strategies. It begins with an evaluation of growth opportunities, discussing Porter's theory and various competitive strategies like cost leadership and differentiation. The report then delves into external factors using PESTLE and McKinsey 7-S models. The report also examines the Ansoff Matrix for market penetration, development, product development and diversification strategies. The second section evaluates sources of funding, including retained earnings and debt capital, and discusses investment decision-making tools such as payback period and net present value. The report also covers the business plan and concludes with a brief overview of exit strategies. The report aims to provide a strategic overview of the growth and development of Oscar Technology, an IT services company.

Unit 42 Planning for growth

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Evaluation of Growth Opportunities............................................................................................3
Evaluation of Sources of Funding................................................................................................5
Business Plan...............................................................................................................................8
Exit strategy for business ............................................................................................................1
REFERENCES................................................................................................................................3

INTRODUCTION
The potential of an organization to lead it to its growth and in order to produce profit for
the investors is known as the growth opportunities of an organization. Growth is important to
every organization in every aspect of their business. For analysing the planning for growth in this
project, Oscar Technology company of UK is chosen. This company deals with all kind of
information technology services in every kind of digital sectors, it mainly works with other
business for fulfilling their needs to IT services in the country. This project will evaluate the
different paths taken for analysing the possible growth for this organization. The financial
sources of the company and also the potential sources of finance available with their benefits and
demerits. One of the main objective to this project is to evaluate a business plan which includes
all he aspects of required for a successful business.
MAIN BODY
TASK 1
Evaluation of Growth Opportunities
Growth of an organisation such as Oscar Technology depends on the capitalization of
opportunities presented to growth which lead to the development in its business resources and
capabilities. Every company should have a unique approach to their strategies in the market.
These strategies are best explained by Porter's theory for competitive strategies (O’Hare, Stewart
and McColl, 2018).
Cost Leadership Strategy : This way refers to reduction of cost while providing the
technological services to a company or an organisation. One way of doing this is by utilizing
minimum employees required for a particular job. Efficiency in their automatically results in
Cost reduction of the company ensuring the profitably. After achievement success in cost
leadership a firm starts performing better than any average company.

Differentiation Strategy : This strategy is the differentiation of the product of a
company from their competition. Oscar Technology can use this strategy for making themselves
different from other service providers so that they attract more customers. In this strategy a firm
selects one or more attributes which is perceived by many buyers in the market. Result of which
the company gains uniqueness in form of premium pricing of the product.
Cost Focus Strategy : This strategy means how this company can provide IT services of
the best quality at prices below that of the competitive market. With the help of this theory the
company targets the cost of production and looks for different ways of reducing the cost of the
product.
Differentiation Focus Strategy: In this strategy the company should analyse first before
making any changes in the product or services. The market may or may not welcome certain
differences. According to this strategy the company analyses its products or services which are
currently available in the market, and then the company evaluates its performance and
profitability. After all those process the company decides whether there is a need for change in
them.
Organisation like Oscar Technology require a framework for their management to
achieve growth in an organisation. This framework is best explained by some factors with help
of Pestle analysis.
Political : Oscar technology sees its potential in foreign markets as well. The tax policy
of foreign markets may differ making It important for the organisation to study. If the tax rates
are high, the company will not be able to make good profit out of the market. Resulting in their
exit from such market (Islam, Mamun, and Amanullah , 2017). Some political factors which
affect can the business of IT company's are change in government policies, regulation and de-
regulation of trends, internal political issues and foreign trade policies.
Economic : The economic factor means the demand of the services provided by the
company which can be different in other countries. The demand depends on the population and
in-case of IT company the level of technology required of IT sectors. That is why it is important
for Oscar Technology to analyse the economic factor. Other factors of the economy which affect
the company are costs of labour, disposable income of the customers, growth of unemployment
and other changes in economic enviornment.

Social : The society of country means its population, demographics and its behaviours.
This factor may affect the IT sector as the countries with high population and development
require IT services more. If a market doe not have the required number of clients for Oscar
Technology then the company will not have many clients to provide its services. Social factors
include the population of the country and the behvioural differences of the custmers.
Technological : This factor effects this industry directly as a market with the proper
access of basic technology will not be good for business for an IT company. Technology is
known to develop all the time if the company can understand the trends of technology over a
market it can safely take the decision of entering it.
Legal : IT sectors provides services which have different laws in different countries
which means the company should understand the legal details in the market before entering it
otherwise it can hamper its growth. Neglecting legal factor may result in exit from the market.
Other factors which are present in the legal aspect are consumer rights of the country and
advertising standards.
Environmental : Any company should not be practising any business which effect the
environment having said that there are different rules and regulations for different countries for
protection of environment which should be under consideration by Oscar technology before
entering new market for exploration of Growth opportunities. Economic factors also include the
ethical and sustainable ways of doing business.
Mckinsey 7-S Model is useful is wide variety of situations such as for improving the
performance of the organisation and determining the best strategy which can be implemented.
This model consists of seven elements which are divided into 2 categories. Hard elements which
are Strategy, Structure and Systems. Soft elements which are Shared values, Skills, style and
Staff.
Strategy : is the plan of building and maintaining advantages in competition
Structure : This is the way a company organizes structure in the team with the help of
team itself.
System : Activities and their procedure used by the employees for completing a
particular job.

Shared Values : These are goals of the core values of the organisation. This shows how
corporates work with each other ethically.
Style : This is the way of adopting the leadership.
Staff : Employees and their capabilities are known as staff.
Skills : Techniques which are implemented for competition in the organisation
employees.
The growth of the business revenue for Oscar Technology can be done by the
development of services or entering new markets. This way of growing the business is best
explained by the Ansoff's Matrix. This matrix answers to strategic questions for the organisation
such as,
Market Penetration : The steps for company for increasing its services provided to the existing
customers. These steps are advertisement for the products, providing marketing discount or
coupon. Providing new offers to existing customers which keeps them interested in the products
and services (Martins, 2020).
Market Development : When steps are taken to expand business in different markets with the
help of promotional and advertisement activities and introduction of new products according to
the market requirement. This expansion of business with entrance in a new market should be
analysed and evaluated so that necessary changes can be made in the strategies of the company.
Product Development : IT companies can use the upcoming new technologies for the
development of new services provided by them. This gives the need of a research team
functioning for development of new technology. Product development should be done according
to the needs of the market.
Diversification : It is the combination of new product with a new market. This occurs when a
particular market shows the requirement of a specific service. Grabbing such opportunities are
always beneficial for the company.
Advantages of Ansoff matrix are that it helps the owners in risk analysation of the path
chosen for the organisation. This matrix provides strategies which help in growth of the

organization. This matrix assesses the opportunity costs and their alternatives for the
organizational practises. This matrix proves the level of risk involved in the strategies of the
company. Construction of these theories has be proved to be easy to apply.
Disadvantages of Ansoff matrix are it is very simple to explain but when it comes to
implementation it has been proved as complex. Details of the competitors are missing in this
theory making it applicable to only competition less markets. Reward of using these theories are
not specified properly. These theories are not useful on their own they require help of other
theories for being applicable.
Collaboration at work place is very necessary some advantages of collaboration are
Reaching consequences can be very time-consuming but collaboration makes it possible
for the organization to reach a final decision.
Vision of a company is very are to compromise but with the help of collaboration a
company can successful fulfil its vision and goals.
A lot of ideas in a company confuses the right choice which should be made but with
collaboration the most efficient ideas can be applied.
Oscar Technology an IT company is helped by the ideas of marketing strategies
because it has helped it to decide the required actions taken for scenarios related to both market
and products. The strategy chosen by Oscars Technology is Market Development because IT
sectors have limited services to provide the limited amount of customer base they have therefore
the company wants to expand the business. Advantages to this strategy are Analysation of risk
involved in the market strategy is understood by Oscar Technology (Abuk and Rumbino, 2020).
TASK 2
Evaluation of Sources of Funding
Fund for an organization is the supply of money collected from investors to be invested
in the business for production or purchasing of assets. Investment is made on a particular idea or
thing hoping for its returns. The decision made for the requirement of funds for the investment
opportunities by the investors is called Investment Decision Making. For Oscar Technology its
investors are the share holder of the company.
Payback period is the terms of measurement of time in the value for money. Investor
defines these periods as the time taken by their investments to recover the invested funds. Simple

speaking if it takes 5 years for a company to give return as much as the invested amount that is
said to be the payback period (Asadujjaman and et.al.,, 2021).
Investing decisions of investors is also affected by Net Present Value (NPV). This is the
value which is derived from the difference between the inflow and outflow of cash in an
organization. This value has been proved very crucial before taking important decision such as
investment, capital budget or before analysing the future profits. When this value is positive this
means the investors are safe to invest money in the organisation whereas in case of negative
value it's risky to invest in such scenarios. Oscar Technology always try to keep their NPV
positive in order to make its shares attractive for the investors (Mason and Botelho, 2018).
There are three main Sources of funding,
Retained earnings :Oscar technology earns through providing its IT services to other
organisation and individuals, which can be said as their basic source of funds. In other words the
net income of Oscar Technology derived after spending all the expenses is called Retained
Earnings. Benefit of such earning is that it doe not require the company to pay additional interest,
as it is companies profit. The draw back of such income is that it takes time and effort to develop
whereas loans can be obtained very quickly (Mehrotra, 2017).
Debt Capital : The money which is borrowed by the company through bank loans,private
financial bodies or by issuing debt note such as corporate bonds is called Debt capital. Benefits
to this investment is easy and quick availability of funds. Drawbacks of such investments are that
the borrowed money has to be paid back with additional interests.
Equity Capital : Capital generated by selling the shares in the stock market to the investors
making them stockholder, a partial owner of the company. This way of generating funds is called
Equity funding. Benefits of this investment is that it can generate large sources of income to full
fill the needs with the company in a relatively small-time period. Drawback to this investment is
the partial transfer of ownership is also made to the shareholders, and they are to be paid with
dividend in case of profits made by the company.
Sources of funds are also classified on different basis
Basic of period :
On this basis there are three categories in which funds are differentiated according to
their terms
Long term sources-

Long term equity is the finance taken for the company is for more than five years.
These investments include shares, Long term borrowings, Loans from banks and other financial
institution. Usually these investments are made for the requirement of Fixed Assets, property in
new market.
Medium-term sources-
These funds are required a period of less than five years but more than one year. These
investments include medium term borrowing form public deposit, loans from commercial banks
and other financial institutions.
Short-term sources-
These funds are taken for a period of less than one year examples of this are short term
commercial loans from bank and other financial institution.
Basis of ownership : When the sources are classified on the basis of the funds received from the
ownership. Owners funds are also said as capital. Ownership funds are of two types,
Owner Funds-
Owners fund are the money that is invested in a company through equity shares, this
concept actually means sharing of ownership of a company through shares making the
shareholder partial owner of the property. Retained earnings meaning the profit generated by the
business over a time period. In retained earning the company does not have to pay anyone
interests or dividend, but in case of shares dividends are needed to be paid.
Borrowed Funds-
These funds are those funds which a company borrows from the market which need to be
paid back to the borrower with interest. This is not owned money but the liability to it is owned
by the company which makes it own fund while spending.
Basis of Generation : The classification of sources from where they are generated within or
outside the organisation.
Internal Sources-
The sources of funds generated within the company are called internal sources. For
example the profit, receivables and the income generated from the sale of any assets is called

internal sources. The drawbacks of internal sources are that it can only fulfil limited needs of an
organisation.
External Sources-
All the other sources which are generated outside of the company such as shares, loans,
borrowed money from financial institution. These funds have an advantage of fulfilling needs of
the organisation and also are available quickly within a time period. Their draw backs are that
they are needed to be paid back with interests or dividends.
Oscar Technology chooses these five sources of investment because'
Long Term Source, Internal sources, External Sources, Borrowed Funds, and Owner
Funds These investments is chosen because it provides the company to get a certain amount of
investment quickly. This is helpful because Oscar Technology is looking to expand its business
in other markets which as a result they are willing to borrow long term funds. Its disadvantages
are that it means the company will have to pay the borrowing for long time with interests (Safar
and et.al., , 2018)
TASK 3
Business Plan
Summary :
The business plan for Oscar Technology can be summarized by analysing the mission of
this organization. The Strategy which is followed by the company is Market Development which
means the vision of this company is to spread its business in multiple markets in order to grow as
an organization. This plan includes the key activities which are implemented by the company to
reach desired goals. The following plan will also explain how the resources and funds will be
managed using which source of Investments. At last this plan will evaluate few risks to itself and
its solution (McGuinness, 2017)
Details :
Oscar Technology an IT company relies on new upcoming technologies in order to find
new services for its customers. But to increase its sale of services it has decided to spread its
business across other markets to find itself new opportunities and customers. Since the
implementation of this strategy the company has seen 10% increase in its total revenue in 2021
which is the result of the entrance in new markets.

Strategic Objectives :
The objectives of all the businesses are to grow its number of customers. Oscar
Technologies have planned a strategy to complete this objective. Oscar Technologies have
decide to expand their business in new markets. With this expansion they will gain the
opportunities to potential customers of the new market. As planned if Oscar technology expands
its business it can see almost 30% increase in their total customers at the end of 2021.
Market Analysis :
The market analysis is important for IT companies, because different market have their
own requirement of services. In some case it has been seen that specific markets require special
kind of service which as a result was included in the company's services list. The trend to this
market is quite simple it does not change a lot only changes occur when there is change in a
technology and with every change there is one or more service of IT added in the market.
Proposition Values & Customers :
The targeted market segments of Oscar Technology is the geographic market
segmentation, geographic market segment differentiates the customer according to their location,
company's the reason for choosing this segment was that it wants grow its business in different
markets. IT companies have limited amount of services they can provide therefore expansion of
business in the various markets is the ideal way of development (Goryushkina and et.al., 2019).
Customer who require IT services have unique demands, this demand changes according
to their use of technology. This is the reason why companies analyse the customers and their
needs and plan accordingly to provide them better service. Companies provide their existing
users various discounts so that they can also get the services for low price and the customers do
not switch their service provider for cheaper services.
Market Strategy:
Market s Strategy for Oscar Technology summarized with the help of 4 P's of marketing
Product:
The product of Oscar Technology is the services provided to the customers these services
depend on the requirement of the customers, In general an IT company can only make changes to
its services when there is change in Technologies, used by its customers. This gives the company
a strategy to develop new technologies so that additional services can be provided.
Price:

The company needs to be very reasonable while fixating the price of the services, it
cannot exceed the price which is charged by its competitors and cannot decrease the price so low
that profit cannot be made. This is the way of planning your prices strategically.
Place:
The company focuses on new customers to increase its business because it has very less
scope for introducing new products. To gain new customers the best way of doing that is by
entering new market.
Promotion: The promotion of the services of Oscar Technology is done on websites, social
media and direct conversation with its customers. Service providing companies have great
competition in today's market therefore the need of promotion increases in every service
providing company.
Planning Operations :
For Oscar Technology the main source for operation activities are its employees and their
skills. The company have great plans for there employees and how they can improve their
productivity along with their quality. For performing these tasks company provides its
employees with all kinds of new training making them more product-able.
Company Structure :
The Company structure of Oscar Technology can be explained by the following diagram.
Source : (Point Park, 2018)
Illustration 1: Company Structure

Oscar Technology has a functional structure. In this structure the company has managers
for each department they work under the guidance of CEO. The advantages of this structure is
that it creates good connections between the employees and their leader.
Resources :
There are 3 types of resources in this company,
Physical Resources-
These are those resources which have a physical presence and value in an organization
for examples Equipments. Devices vehicles, Buildings, Machines and Storage Facilities.
Human Resources-
One of the most important sources for IT company are its human resources which are
staff, Talented Engineers and also the marketing experts.
Intellectual Resources-
The resources which do not have a physical presence but have great value for the
company, Goodwill, Partnerships with other companies, Data of the customers, and copy rights
of services or product (Yusra and et.al., 2019)
Financing:
Oscar Technology have different sources of funds as discussed in Task 2, the company
chooses certain sources of income over the others. While implement this is considered by the
Company. The company prefers long term sources and also owner investment.
The companies authorized total capital is evaluated at £20000 out of which 50% of it is
paid up capital generated by issuing of shares and the rest is Loan from a commercial bank.
Financial Projections :
Income projections of Oscar Technology for the coming five years
2020 2021 2022 2023 2024
£ £ £ £ £
Operational revenues 28000 30000 32000 35000 38000
Other income 100 110 120 130 140
Total Revenue 28100 30110 32120 35130 38140
Employee Benefit Expenses 120 120 120 120 120

Cost of Finance 10700 10800 10850 10900 10950
Salaries and wages 5000 5500 6000 6500 7000
Depreciation 50 50 50 50 50
Provisions for Litigation Claims 1500 1500 1500 1500 1500
Other expenses 200 200 200 200 200
Total Expenses 17570 18170 18720 19270 19820
Net Income before taxes 10530 11940 13400 15860 18320
Tax expenses 1055 1156 1295 1469 1735
Net income after taxes 9475 10784 12105 14391 16585
The above table projects the increase in income of the company over the five years, the
company has planned to increase its business in different markets which will increase the
services operations made by the IT company. This will result in gradual increase of Operational
revenues. To further increase the profit the company decides to minimalism of its expenses
which as a result increases its net income.
TASK 4
Exit strategy for business
The exit strategy for a business is defined as the planned approach for successful transition of
ownership of business to any other investor or organisation. There are several reasons and routes
for exit option. However, failure is considered as one of the important reason for planning exit so
that optimised return can be received. The most common reasons for organisational failure can
be rapid change in business environment, inability to meet changing needs and scenarios, lack of
skills or resources to continue with business and market challenges or change in vision. For exit
option organisations can use various routes. Some of the most common routes for Oscar
Technology's exit strategy are as follows:
Liquidation: In liquidation approach all assets are sold out so that losses can be recovered. Its
advantage is that it is very simple and quick. However, its disadvantage is that it has lowest
ROI among all exit options (Siddiqui and AIMT,2021)
Family succession: In order to maintain the legacy Oscar Technology owners can also make
transition to their children or to close family relatives. Its benefit is that family legacy is
maintained for generations and desired individual can be easily trained for years. Its limitation is

that it can create huge stress in terms of finance, emotions and management. Also other investors
or partners may not support this option.
Selling business to an employee: It is possible that when planning to exit business, existing
employees or manager desire to buy. This exit option allows an advantage to hand over business
to some experience holder and thus Oscar Technology can still remain indirectly involved in
business. However, its limitation is that it is very tough task to find an employee who can buy
the business. Also, such kind of management changes can have adverse impact on existing
clients or employees.
Declaring bankruptcy: In case of sudden failure this unplanned exit option can be used in which
organisation can file for bankruptcy. This method is preferred in which situations are extremely
hard for organisation. The benefit of this exit is that it helps officials to relieve off from all
responsibilities. However, its disadvantage is that sometimes even bankruptcy cannot allow
getting rid of the debts and even can make it impossible to take credits in the future. It also
affects professional relationships in market which is harmful in long run.
Initial public offering: This strategy does not fit well with small business as it involves selling
business to public so that optimum profits can be received. However, its limitation is that it is
very challenging strategy and need lot of efforts, money and time. Also, it involves lot of
security issues from stockholders and thus is very challenging for the small businesses.
For Oscar technology family succession or liquidation can be one of the best method for exit. As
it is SME so IPO may not be a good solution. Also, bankruptcy and liquidation may not provide
desired return so Oscar technology must choose succession or liquidation option in which it can
retain its legacy or can get return on its assets.
CONCLUSION
From the above report it can be concluded that the company Oscar Technology has
various methods to its growth. The company's management has plans for every decision they
make. Also, the company focuses one improving its resources of employee by providing them
training as they are their biggest and most efficient source for growth opportunities. The funds of
the company have been available form different sources, but the report concludes the choice
made by the company. These reports summarize the business plan for the company with
consideration of its finances and market trends. With a table of financial prediction shows how
successful the company will be over the coming years.

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