Business Growth Plan: Southern Business Technologies

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PLANNING FOR GROWTH

TABLE OF CONTENTS
Introduction......................................................................................................................................1
LO1..................................................................................................................................................2
P1 Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organisational context..........................................................................2
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix...................6
LO2..................................................................................................................................................9
P3 assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source............................................................................................................9
LO 3...............................................................................................................................................12
P4 Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business...........................................................................................12
LO 4...............................................................................................................................................16
P5 Assess exit or succession options for a small business explaining the benefits and
drawbacks of each option..........................................................................................................16
Conclusion.....................................................................................................................................17
References......................................................................................................................................18

LIST OF FIGURES
Figure 1: Porters generic model.......................................................................................................4
Figure 2: PESTLE model.................................................................................................................6
Figure 3: Ansoff Matrix...................................................................................................................8
Figure 4: Forecasting cash flow of business..................................................................................14
Figure 5: Forecasting profit and Loss statement............................................................................15

Introduction
Growth in the business is based on applying strategies that enables owner of the business mainly
plan and track the growth for maximizing revenue. It aims business to utilize the resources
effectively and take strategic actions for differentiating from the competitors. Current report will
evaluate and apply different models for achieving the growth opportunities in the market. Along
with accessing the suitable source of fund, report will design the suitable plan for business to
meet with the organisational objectives. Overall report will focus on the case study of Southern
business technologies that is one of the small-medium scale (SME) organisations that provides
telecom services operating with more than 70 employees with an approximate sales of 9.7
million (About Southern business technologies, 2018). At last, report will access different exit
and succession that is suitable for business. Moreover, report will have greater understanding of
applying strategies, actions and models for planning effectively for business growth.
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LO1
P1 Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organisational context
Considering the case, Southern business technologies falls in the category of SME and with this
management is required to apply the best possible strategy as it has wider growth options to
operate in the competitive environment. However, porter’s generic model is being applied for
assessing the competitive advantage for the business.
Porter’s Generic model:
Cost leadership: It is the basis for gaining the competitive advantage that means increasing
profits with reduction of cost and charging as per industry prices. This also includes business to
increasing market share by charging lower prices and making the reasonable profits. Southern
business technology needs to take corrective actions with accessing the capital invested in
technology, managing logistics; low cost base must be set in terms of labour, materials and
facilities, etc that helps to cut the cost.
One of the risks associated is that competitors can copy the cost reduction strategies (Harding,
2017). Moreover, for this, Kaizen philosophy can be adopted by the business to follow
continuous improvement in the business.
Differentiation: This is another growth opportunity that includes bringing modification in
product or service that differentiate from the competitors. Southern business technologies need to
focus on effective research and development that will lead to deliver quality of products. On the
other hand, focus must be made towards sales and marketing to introduce new product (Raith
and Siebold, 2018).
One of the associated risks includes the failure of the product because of increasing fear of
competition. Moreover, target market and segment must be focussed and innovation must be
applied in meeting with needs of customers.
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Differentiation focus: This includes selling the product or service to special niche market
segment. It includes basically meeting with satisfaction of consumers. Southern business
technology can offer services to mainly middle class people. Resources can be enhanced to offer
communication to many customers (Omsa et.al. 2017). Risk might occur in the form of lower
return on investment. This includes carrying out proper market research in order to gain the
advantage.
Cost focus: This includes taking the lower cost advantage to the small market segment. For
example, Southern business technologies can charge lower prices as compared to the competitor
and mainly middle income consumers to gain the competitive advantage. Moreover, reducing
cost can provide benefit but change in the preferences of the target market can occur as the
factor of risk. Moreover, it includes business to take decisions based on its current strengths
and weaknesses.
Being a small business, southern business technologies can adopt the effective cost leadership
strategy as reducing the overall costing and managing resources will automatically enhance the
business profits (Bell et.al. 2017). In order to differentiate from the competitors, new service line
is to be added by the business but the focus must be made on meeting with the satisfaction of
customers.
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Figure 1: Porters generic model
(Source: businessballs.com, 2018)
Link between competitive advantage and external environment
External environment concern about the factor that impact on the business directly or indirectly.
Moreover, external analysis of Southern technologies is being done through PESTLE model.
Political factor: Brexit impact had given the boost to development of the small business as it
directly impact on the development of economy. However, operational efficiency of Southern
business technologies is effective that helps business to operate in such environment.
Economical factor: UK generally has the good GDP and government also organised incentives
for small business to operate. Moreover, the incentives by government can be used to implement
latest technology and favourable economic conditions can help to set lower prices of services for
having strong connection with the customers helps to expand the business. In addition, the global
crisis might impact on business to work on its strategies (Namada, 2018).
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Social factor: This includes changes in tastes and preferences with time of the consumers. For
instance, Southern business technologies have strong base of customers and have clear and
flexible policies that enables to gain competitive advantage within such external environment.
Technological factors: Businesses are required to use the latest technologies as per changing
environment. Southern business need to work towards using the trends of technology to expand
its communication services. Innovation strategy can benefit business to enhance business sales
and customer satisfaction (Prajogo and Oke, 2016).
Environmental factors: Southern business with such factor is required to offer flexible and
healthy working conditions to employees. Moreover, some profits of the firm must be invested in
social services such as planting trees, recycling of waste, etc that would improve social image in
the market.
Legal factors: Southern business has many rivals in the competitive environment. It is required
by business to follow the legal policies in form of having own patent and copyright on the
strategy and process it uses. Legal laws are needed to be followed such as taking care about
health and safety of workers, offering them standard salaries and wages, etc.
As per the analysis, it requires Southern business technologies to utilise the competitive
advantage and such external factors are needed to be considered for operating effectively in
competitive environment (Noe et.al. 2017). For example, more workforces can be appointed to
increase sales, technology can be used to reduce operational cost and economic benefits can be
used to expand business on economic of scale and expanding current customer base.
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Figure 2: PESTLE model
(Source: business-to-you.com, 2018)
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix
Ansoff Matrix is considered as one of the important models that help in taking effective
decisions mainly for enhancing the growth potential in the market. It mainly considers different
growth options that business can use mainly to grow in the competitive market. Below is the
application of Ansoff matrix for Southern business technologies into the new market that is as
follows:
Market Penetration: This strategy is concerned with growing using the existing offerings in the
existing market share. Mainly focus of the strategy is based on increasing the market share with
the objective of selling more products by finding new customers. This can be done by decreasing
the price of decreasing, increasing the level of promotion, bringing modest service refinements
(Martinet, 2016). For example, Southern business can make changes in reducing the cost of the
services and Internet can be effectively for promoting the goods through social media.
Market development: This strategy conveys firm to expand in new markets with using the
existing products. Also the business will search for new market segment and adopt the suitable
option for entering the foreign market. For example, currently Southern business is offering
service to local consumers. With this strategy, business can offer the telecom services to different
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channels such as universities and colleges. Moreover, internet plans can be offered to such target
market for increasing the business revenues.
Product development: This mainly includes creating new products and services in the existing
market mainly to achieve business growth. For this, investment in research and development is
made for offering new products. More focus is made towards distribution channels and
increasing brand awareness in the market (Loredana, 2016). For example, Southern business
needs to offer new data plans with additional services are needed to be provided to customers on
the same price scale. This will mainly help in effective retention of the consumers.
Diversification: This strategy involves high risk mainly to grow new market share in new
markets. However, this strategy requires both development of the product and the market.
Southern business can apply such strategy for introduction of the new service that does not exist
in the market. It require firm to focus on creating strong value and introduction of new plans in
the market for more satisfaction of the customers.
Based on the analysis of the above stated strategies, Market penetration is one of the effective
strategies for the business as Southern business is one of the small businesses and to invest on
entering new market would be risky. However, for this it require business to mainly focus on
improving the marketing and distribution support for increasing business revenues (Ansoff et.al.
2019). As per the conducted Pestle, UK have favourable economic conditions and government
provide enough support to small business that can be utilised to expand in the existing market.
On the other hand, product development can also be considered as suitable option by offering
internet plans that will meet with the needs of the customers. Based on the social factors,
customers have the tendency to change and with offering new range to the customers it can
enhance their level of satisfaction. Moreover, it can be suggested for business to take advantage
of the effective technology to improve the current business operation and improve its planning
strategy for achieving the competitive advantage.
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Figure 3: Ansoff Matrix
(Source: corporatefinanceinstitute.com, 2018)
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LO2
P3 assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source
For every business expansion, it is required by business to choose the appropriate source of
finance for managing growth. Below section describes appropriate source of finance with
discussing suitable benefits and drawbacks. Some of the major options of the funds include:
Source of finance Advantages Disadvantages
Bank Loans:
This includes borrowing the
small amount of money for the
short period of time within
suitable terms and conditions and
repayment schedule. Some of the
business use bank loans as the
secured form of finance. Bank
offers loan on the basis of nature
of the business, credit scores,
revenue and also considers the
annual turnover.
 This acts as the driver
for growth that helps
borrower to manage
the small operation of
business.
 It is one of the flexible
sources where the
ownership remains
with the owner
(Gorbatai and Nelson,
2015).
 No external parties are
mainly involved with
such source of
business
 Sometimes the banks
charge high rate of
interest
 Banks sometimes
designs cost for
repayment and
penalties along with
high processing fee
 Increased compliances
is also observed with
raising finance from
this source.
Government grants and
subsidies:
Sometime, government provides
help to the small business to raise
funds by offering them grants
and subsidies for managing the
growth and expansion of the
 Advantage of such
grants is that it is not
required to be repaid
and does not require
any of the equity to
surrender in the
business.
 Getting government
grants can be majorly
tough as sometimes
government ask for
many documents
regarding the business.
 This might lead the
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