Business Growth and Expansion Planning for Oak Cash & Carry

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This report examines the growth and expansion strategies for Oak Cash and Carry Limited, a UK-based grocery wholesaler. It begins by identifying key considerations for evaluating growth opportunities, such as existing relationships, product enhancements, competitive advantages, and financial viability. The report then applies Ansoff's growth vector matrix, exploring market penetration, market development, product development, and diversification strategies. It assesses potential funding sources for business growth, considering their merits and demerits. Furthermore, the report outlines a business plan for the growth and expansion of Oak Cash and Carry Limited, incorporating Porter's generic strategies and PESTLE analysis. Finally, it addresses succession and exit options for small businesses, evaluating these options to provide a comprehensive analysis of growth planning.
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PLANING
FOR
GROWTH
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TABLE OF CONTENTS
INTRODUCTION................................................................................................................................2
TASK 1.................................................................................................................................................2
P1) Key considerations for evaluating growth opportunities...........................................................2
P2) Apply Ans off's growth vector matrix........................................................................................5
TASK 2.................................................................................................................................................7
P3)Assess the potential sources of funding available to businesses with their merits and demerits.
..........................................................................................................................................................7
TASK 3...............................................................................................................................................10
P4)Design a business plan for growth and expansion of Oak Cash and Carry Limited...............10
TASK 4...............................................................................................................................................24
P 5 Succession & exit options for small business with evaluation of these option........................24
CONCLUSION..................................................................................................................................27
REFERENCES.....................................................................................................................................1
..........................................................................................................................................................3
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INTRODUCTION
Every company plans to expand and grow their buisness. In order to achieve expansion plan
company needs to evaluate growth opportunities. This report discusses about various key
consideration for evaluating growth opportunities. It discusses about various sources of funds and
their merits and demerits of each sources. Oak Cash and Carry Limited is a UK based company
which is engaged in providing grocery wholesale.
TASK 1
P1) Key considerations for evaluating growth opportunities
The company needs to evaluate it current position and growth opportunities for this there are
various consideration used by SME. It is important to evaluate these considerations so that company
can initiate healthy growth opportunities. Oak Cash and Carry is a Grocery wholesalers . The proper
and effective growth opportunity is needed for expanding their business and gaining profits. Key
considerations are as follows:
Relationship: To expand ongoing business existing relationship plays a key role. Company having
existing relationship with required customers, partners, hires, investors, etc. can save a lot of time,
reduce costs and risk. Oak Cash and Carry Limited must evaluate all the roadblocks i.e. Company
must have proper knowledge of their target consumers, effective management team, considering
Key Performance Indicators, etc. within their path before growing or expanding their business.
Without an existing relationship with different stakeholders means company need to form one
which will is a time consuming process.
Enhancing products and services: Improving and maintaining, the quality of product will initiate
in expanding business. For enhancing it's service quality organisation must make use of advancing
technologies which will attract more consumers. Oak Cash and Carry Limited needs to improvised
their existing products. Oak Cash and Carry Limited must establish a strong and sound feedback
mechanism to know their quality of products (Chapin, 2012).
Competitive Advantage: Competition is often regarded as threat to business. Competencies are part
of business and it is needed that Oak Cash and Carry Limited must pave way through the existing
competition. Company must provide better quality of products to their consumers with lower
prices to attain competitive benefits. It can achieve this purpose by reducing its cost of production
and operation.
Financial Viability: It refers to generate sufficient income to meeting operating payments, debt
commitments. Company must check that it current financial position and performance is sufficient
enough to provide a return to business owner while also meeting its commitment to business
creditors. To evaluate financial ability Oak Cash and Carry Limited needs to examine their capital
investments requirements, cash flow projections and profitability of their business. This will help in
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determining the sustenance of Oak Cash and Carry Limited in their industry (Barnes, Hansson,
Manevska-Tasevska, Shrestha and Thomson, 2015). These strategies can support in achieving the
profit targets which has been set up by the company.
Growth Options: There are numerous growth option available to company. As Oak Cash and Carry
Limited is engaged in Grocery wholesalers firm can expand it business through increasing market
share within different parts of UK and Europe. Further, it can diversify their existing products to
garner attention of their customers through their core Competencies such as; Effective Decision
making skill, Critical thinking and Crisis Management skill. The main core competency for the
enterprise is innovation and managing change. They should lay emphasis on creating a product
which has unique features. Oak Cash and Carry Limited can conduct market and customer research
before launching their new products within existing market. These strategies can help in improving
the productivity and efficiency of the enterprise. It will also help them in expanding their market
share
Collaboration With other Companies: It is an effective way of expanding or growing a particular
business. It helps in creating shared decision-making and help in resolving possible management
and staff issues. Oak Cash and Carry Limited needs to join hands with successful business entities
like; Tesco, Aldi and Sainsbury for expanding their grocery retail business. It will help firm with
more resources with bigger pool of markets and reduce commercial risk. Further, Oak Cash and
Carry Limited will benefit from sharing of managerial load and effective and competent workforce
(Claessens and et. al., 2012).
Expand into New territories: Company should expand their business into new territories of Europe
and explore new market where there is demand for products of Oak Cash and Carry Limited. It will
help in getting new customers and market which will garner more revenue to Oak Cash & Carry
Limited.
Deep Analysis of available Consumer Market: This is another way through which company can
expand its current business in existing market. Oak Cash and carry Limited needs to conduct deep
and through research to identify needs and preferences of their target consumers. This will enable
organisation to meet preferences of customers and help in getting more profit.
Core competencies that need to be considered
It is very important for Oak Cash and carry limited that to consider various factors before
making planning for growth of organisation. These are explained as below:
Financial position: Company is required to make plan as per its financial position. If it is
planning to expand in other country and do not have adequate funds then it will not be able
to enter into new market. Thus, Oak Cash and carry Limited has to ensure its availability of
funds so that appropriate plan budget can be designed.
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Employee’s capabilities: It is very important for businesses to look at skills of employees. If
people do not have good knowledge then they will not be able to perform well. This will
create issue for business. Thus, it has to make plan by considering capabilities of staff
members.
Porter’s generic strategy is helpful for organisation in raising profit of business and gaining
competitive advantage.
Figure 1: porter generic
(Source: Porter's Generic Competitive Strategies (ways of competing), 2018)
Cost leadership: In this, entity offers goods and services to consumers at lower prices so that
large number of consumers can get attracted towards the brand. Low cost producers may
find benefit of cost leadership.
Differentiation: It is another strategy in which Oak Cash and carry Limited can seek to be a
unique sector. Entity adopts effective marketing strategies so that it can create its unique
image.
Focus: In cost focus, firm always look for low cost advantage whereas in differentiation
focus, enterprise always concentrates on creating unique image and maximising profit.
In the case of Oak Cash and carry Limited, company should take support of cost leadership
strategy. It has to offer products to consumers at lower prices so that it can gain their attention. By
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this way it will be able to establish its business in new market properly and will be able to grow
well.
Core competences using porters generic strategy model
Core competences can be achieved by company using porters generic strategic model. The
model is based on four components which are cost leadership, differentiation, cost focus and
differentiation focus. The organisation can adopt cost leadership method by offering low price
products to consumers. This will help them in attracting new customers and will support them in
enhancing their revenue. Differentiation can be adopted by company by offering unique, new and
creative goods to consumer. It will also help them in retaining customers and building consumer
loyalty. The company can also lay focus on cost and differentiation method. They can adopt
different pricing strategies for the consumers on basis of their purchasing power.
Growth opportunities using PESTLE
In order to grow the company can use pestle analysis. Political factors will help them in
knowing the different rules and regulations followed in other country. So, that they have a keen idea
about that, and they can enter the new region with full preparations. Economic factors will support
organisation in knowing about the tariffs, inflation rate of the other region which will support
company in maintaining the economic balance. Social elements will support them in knowing about
culture, beliefs and values of other region, that will help in knowing customers better and will also
assist in gaining competitive advantage. Company should also focus on technology advancement to
attract more consumers.
P2) Apply Ans off's growth vector matrix.
To evaluate opportunity for growth Oak Cash and Carry Limited must apply Ansoff Growth
Matrix. It is a strategic planning tool which help executives, senior, managers and marketers devise
strategy for future expansion of business. The matrix is discussed below:
Market Penetration: This strategy involves focusing on sales of existing products/services within
prevailing market to gain higher market share. To achieve this purpose Oak Cash and Carry Limited
must attract customers away from their competitors. Company needs to develop marketing strategy
so that customers buy their existing products more often. This can be accomplished by price
decrease, distribution channel, increase the promotion techniques by implementing various aspects
of promotional mix like; Sales Promotion, Personal Selling, Advertising, etc. Oak Cash and Carry
Limited can implement this strategy by acquisition of rival within their industry. Further, company
can increase base of existing customer by offering loyalty schemes so that more new customers are
attracted to avail products of Oak Cash and Carry Limited (Esteban-Guitart and Moll, 2014).
Market Development: It refers to strategic step taken by company to identify and develop new
market segments for current products. This strategy targets non-buying customers in currently
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targeted segments which means to target new customers within existing segments. To achieved this
purpose Oak Cash and Carry Limited needs to conduct analysis of the way in which their existing
products can be sold in new markets. Firm can sell their products like non specialised food and
beverages to other country or geographical market. It can adopt different pricing policies to attract
their wide range of customers that includes, retailers, caterers, newsagents and other local
businesses. More over Oak Cash and Carry Limited can adopt new distribution channel, for
example; e-commerce and mail order. This is riskier strategy as compare to market penetration
because it becomes difficult for company to sell their existing products within new markets or
segments (Hussain and et. al.,2013)
Product Development: The aim of company is to launch new products/services within existing
market. This strategy requires business entity to develop or create product with new or different
characteristics which offers additional benefits to consumers. It can be done in various ways like;
modification of existing products or formulating/ making of entirely new product which can satisfy
the customers want and needs. It is bee utilised by business entity who is well established within
their existing industry. Oak Cash and Carry Limited needs to adopt this strategy in order to be
competitive in their sector. Product Development strategy is used by company to increase their
turnover. To accomplish this objective Oak Cash and Carry Limited needs to perform certain steps
this includes;
Investments in Research and Development programmes for new products development.
Detailed insights into customer needs.
Developing new strategy for promotion of products.
Acquisition of rights to any innovative techniques or process which will help in faster
producing of products.
Buying the product of others and branding it under label of Oak Cash and Carry Limited.
Diversification: The last strategy in Ans-off Matrix Growth is diversification. It means to achieve
growth by developing new products for completely new or unexplored markets. It involves great
risk as company needs to explore completely different product and new market. To adopt this
strategy business must clearly investigate about the risk involves in and the benefits it generates out
of this strategy (Ansoff Matrix. 2018.). Oak Cash and Carry Limited can implement this strategy in
following ways:
Horizontal Diversification: In this type of diversification firm develops orac quires new product
that are different from its core business or technology, but which may appeals to their existing
customers. Oak Cash and Carry Limited can enter into business of household items. This will
benefit companies as it has vast consumer base.
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Vertical Diversification: In this strategy managers chooses new market in which the business entity
wishes to go with heir new product. It can be created out of using companies own resources or by
acquiring other companies. Oak Cash and Carry Limited is within Consumer Staples company can
produce their non specialised fodd items by operating another subsidiary that can assist company in
making these non-specialised food items.
Concentric diversification: It is a type of business strategy where company acquires or create new
products/services to increase their consumer base. There is a similarity between companies existing
products and newly developed products. The benefit of adopting this diversification is; it enables
Oak Cash and Carry Limited to achieve economies of scale. Concentric diversification will help
firm to expand their operations to new geographies where they do not currently have a presence.
Conglomerate diversification: In this form of diversification strategy a company enters one or more
unrelated industries. Company can enter into Conglomerate diversification through merger or
acquisition in an entirely different market that has no relation with its core business. The major
motive behind these diversifications is to earn high amount of profit and return on investments. Oak
Cash and Carry Limited can enter into new Conglomerate market by analysing it effectively.
TASK 2
P3)Assess the potential sources of funding available to businesses with their merits and demerits.
To start a new business companies needs finance to serve their day to day operations. Firm
need finance to purchase of assets, materials and employing people. As a organisation grows and
expand it needs higher capacity and new technologies to cut down unit cost and maintain
competition with their competitors. The SME needs finance to meet all the above mention needs
further, company requires exploring new market and develop new product. It must evaluate the pros
and cons of each alternative available to it. The various sources of finance available for Oak Cash
and Carry Limited are as follows:
Debt Financing:In this source of finance company borrows money for working capital or capital
expenditures by selling debt instruments to individuals. It borrow money to be paid back in future
date with interest. Oak Cash and Carry Limited can use this source of finance for expansion project
and growth plans (Haughton, 2012). Firm can obtain it by issuing debenture and bonds to investors
in market:
Merits:
The company enjoys full control over management decision. It gains right to run the
business in a way it wants.
The amount company pay in interest is tax deductible, effectively reducing the net
obligation of organisation.
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It helps in formulating budgets and plans as company has knowledge of how much amount
of interest it will pay back to their investors.
It is a cheaper sources of finance in compares to Equity Finance.
Demerits:
Company needs to have god credit ratings to avail for Debt financing.
Organisation is burdened by the repayment of the money it occupied from investors. It
becomes unfavourable in situation of loss as it creates unwanted burden over company. Sometimes, firm agrees to provide collateral to investors or lenders by doing this it put
certain business assets to risk.
Venture Capital: This source of funding comes from venture capital firms which are specialises in
building high risk financial portfolios. It provides funding to startup company in exchange for
equity share within business. Venture capital generally comes from investment banks, financial
institutions and well off investors.
Advantages:
Venture investors assist companies in high-level decision-making. This creates benefits for
those companies who take loan as VC's have diverse backgrounds and experience.
It assists company in finding and hiring the best talent for their business.
They provide firm with additional resources and provide help in legal matters, tax issues and
payroll affair (Haughton, 2012)
Demerits:
It takes away the control power of company as it has to assist Venture investors in taking
key decision for their business. There are high chances of leaking of business plans as most Venture capital do not sign non-
disclosure agreement with parent company.
Angel Investors: They are among entrepreneurs family and friends. They are called informal or
private investors, angel funders or seed investors. Angel investors invest through crowdfunding
platforms online or build angel investor network to ppol in capital.
Merits:
Company is free from obligations of repayment of Debt.
It is less risky as compare to other source of financing.
Angel investors provide the money required by company.
They have more informal business criteria as compare to other sources of funding.
Demerits:
It is unsuitable at time when company requires additional funds.
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Angel investors required high equity share within company and want more Return On
Investments (George, McGahan and Prabhu, 2012).
If all the strategies related to growth and financial aspects are followed by the company
investor will repeatedly invest in organisation. Also, good market value can attract the share
holders to take part in the development of the Oak enterprises.
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Bank loan: Bank loan is that source of finance for companies in which funds are arranged
through financial institution and banks.
Merits of bank loans:
It is the cheapest sources of funds.
It saves the cost of taking funds as it reduces the tax liability.
It terms are flexible and interest rate are stable throughout the loan period.
Demerits of bank loans:
In this strict compliance are required, it not followed and delay in repayment tends to
high penalty.
In this more formality are involved as verification, documentation, authorization etc.
Repayment amounts are irregular.
TASK 3
P4)Design a business plan for growth and expansion of Oak Cash and Carry Limited.
A business plan for company is considered as important document. It shows detail about
companies new products, vision and mission, it set target or entry into new market or market
segments. In this report a growth paln is also created for Oak Cash and Carry Limited to
determine the ways through which firm will expand its business operations. It includes various
steps which are as follows:
Vision and Mission:
The Vision and Mission of Oak Cash and Carry Limited is to provide all kinds of non-
specialised food items, beverages and drinks in bulk to their customers. Company wants to
become an E-commerce business by continuously increasing brand awareness and garnering
more profits to organisation.
Aims and Objectives:
The aim of company is to provide high quality non-specialised food products to their
various clients. There are some strategic goals of firm which are as follows:
To provide value added services for increasing customers base and maintain loyalty
within existing consumers.
To expand business to online platforms and social media sites to reach to higher level of
customers.
To implement new technologies to produce goods.
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To increase number of commercial clients from other countries.
To garner good amount of gross profit margins.
Organisation Overview:
Oak Cash and Carry Limited is continuously engaged in providing non-specialised food
and beverages in bulk to wide range of consumers which includes retailers, caterers ,
newsagents, off licences and other local business. It operates in United Kingdom. Company si
serving their clients for 17 years and 3 months.
SWOT Analysis:
This refers to research undertaken by an organisation to identify their internal strength and
weaknesses, as well their external threats and opportunities. SWOT Analysis of Oak Cash and
Carry Limited is as follows:
Strength:
Strong Dealer Community: Oak Cash and Carry Limited has built a culture among distributor
and dealers where dealers help in promote companies product but to the-end consumers. This
help the organisation in attracting and retaining consumers and also provides them with
competitive advantage.
Automation of activities: This means to use or introduce of automatic equipments in a
manufacturing process. Oak Cash and Carry Limited has benefited from automation of activities
which has enabled company to scale up their product line and reach much faster to their
consumers. They use highly advanced technology in designing and making the products which
enhance their productivity.
Economies of Scale: Oak Cash and Carry Limited has achieved economies of scale by
producing more units of goods on larger scale by employing fewer inputs. This help firm to earn
more profits and provide better quality products. This has aslo helped enterprise in expanding
their market share.
Weakness:
Limited Success outside core business: Oak Cash and Carry Limited faces challenges in
expanding it business in other segments or regions. They are not thinking about grwoing their
market share by involving in joint venture, collaboration or partnership
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