Business Growth Strategies for 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...................5
LO2..................................................................................................................................................8
P3 Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source............................................................................................................8
LO3................................................................................................................................................12
P4 Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business...........................................................................................12
LO4................................................................................................................................................16
P5 Assess exit or succession options for a small business explaining the benefits and
drawbacks of each option..........................................................................................................16
Conclusion.....................................................................................................................................18
References......................................................................................................................................19

Introduction
Main aim of a business organisation irrespective of their type and size or value is attaining
growth and sustainability. In business Growth is attained on the basis of applying different
business strategies to maximise to increase scale and size of operations that is accompanied
by amplified resources as well as output. Business organisation to maximise profit need to utilise
the available resources efficiently and must consider implementing different plan and strategies
to attain competitive benefit. The report currently discusses about different models that can be
applied by an organisation for achieving growth. In the current report, a business plan is
designed considering suitable funding source to attain business aim and objectives. In the report
to discusses about Planning for Growth a SME named Southern business technologies is
considered. The organisation is present in Basingstoke Town of UK that operates to offer
Telecoms services with about 72 employees. Report also discusses about different type of exit
and succession considering the size and type of business.
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Lo1
P1 Analyze key considerations for evaluating growth opportunities and justify these
considerations within an organizational context.
Southern business technologies are a SME with sale of £10 million. The organization is expected
to implement effective business strategy for attaining business growth and expansion with
increase of sale and revenue to survive in the competitive environment among many of the
telecom service providers.
In the report, porter’s generic model is applied for understanding the competitive benefits of
Southern business technologies (Aithal, 2016).
Porter’s Generic model:
Figure 1: Porters generic model
(Source: www.researchgate.net, 2019)
2

Cost leadership: This strategy is based in increasing the overall profit of the organisation to
attain competitive benefits through product cost reduction. The organisation is expected to
increase the overall market share by charging lower product prices and making profit reasonably.
The organisation must take some corrective actions along with some invested in innovation and
technology, low cost base for cost cutting (Aithal, 2016). However, the main risk associated with
it is that even competitors can copy the strategy of cost reduction. For continuous improvement
in the services offered the organisation can adopt Kaizen philosophy.
Differentiation: IT is also a strategy that can be applied by business organisation for attaining
growth opportunity that includes product modification that is slightly different than that of the
competitors. In case of Southern business technologies, the organisation can focus on R&D for
offering high quality product to the customers. The new product must also be promoted and
marketed with effective marketing tool and technology for attracting more customers. One of the
main risks associated with this strategy is product failure. The organisation needs to focus on
target market segment along with the innovation to meet customers need (Wakkee et al 2015).
Differentiation focus: In this method the business organisation focuses on selling product and
service to some special segment of niche market considering their need to increase their
satisfaction level. For attracting the customers, Southern business technology can focus upon
middle class people while offering the service. However, risk associated in these techniques is
related chances of low return. Thus, the management and marketing team is expected to perform
proper market research.
Cost focus: This involves taking advantage of lower cost from small market segment. For
instance, the Southern business technologies can lower all the prices of services offered to attract
more customers by concentrating upon customers that has middle income for achieving
competitive benefits.
Southern business technologies is a SME, from the above discussion it can be stated that the
organisation currently can adopt cost leadership strategy for attracting more customers by
reducing.
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Linking external environment and competitive advantage
External or macro environment is various uncontrollable forces that impact the overall business
organisation and functions. The management of the organisation for analysis on the external
environment effectively implements tools like PEST so that proper strategies can be applied can
be applied to minimise all the negative impacts.
Political factor: The growth and development of SMEs is encouraged highly after Brexit in UK.
SMEs in currently contributes about 90% in the overall economy of the country increasing the
overall job opportunity and offering facilities. Currently, UK has a stable political condition
supporting SMEs. But, the operational efficiency is supporting the business to sustain and
operate.
Economical factor: GDP of UK is stable and government are emphasising in offering various
schemes and plans to encourage small business. Government funds and grants can be used by the
organisation for implement differ technology (Aris, 2007.). Stable and favourable economic
conditions of the country are supporting in lower the overall product prices. The business
however can be influenced by the global crisis.
Social factor: The need and expectation of customers with the advancing tools and technologies
are changing rapidly. In case of Southern business technologies, the organisation has a very
strong customers base due to flexible and clear plans for data and calls that supports in attaining
competitive advantage.
Technological factors: The technology and innovation are rapidly changing and thus to offer
best services to the customer considering the current market trend the businesses must invest in
latest technologies. The organisation like Southern business technology must expand and
emphasis on offering innovative strategy for increasing sale and offering satisfactory service.
4

P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix
Ansoff Matrix is important models that support an organisation for making effective business
decisions to make strategies and policies for increasing the profit and potential growth in the
competitive market.
Figure 2: Ansoff Matrix
(Source: www.mindtools.com)
Ansoff Matrix is considers by business organisation as a growth options that can be reffered for
attaining competitive market (Ansoff, et al 2019). Application of Ansoff matrix as a strategic
tool for Southern business technologies is discussed below . According to the matrix a business
has four growth opportunities including Market development, Market penetration, Product
development and Diversification.
Market Penetration: It is mainly concerned about attaining business growth through existing
offerings of product and services of the organization in existing share market. The main
concentration of the strategy is to increase market share by selling the existing products to new
customers through innovative tools and techniques like decreasing product price, promotional
activities etc. In case of Southern business, the manager of the organisation can opt for altering
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the price of the product and services offered, internet facilities and social media can be used for
promoting the brand and services to attract more customers.
Market development: The main objective if this strategy is to expand the business in new
markets with existing products and services offered by the organisation. The business effectively
searches for new opportunity in new market segment by suitability entering in a foreign market
through effective marketing strategy. Currently the Southern Business Technologies is
effectively operating to offer service mainly to customers of the locality with very less
customers. But, with the strategy o market development, the organisation effectively can offer its
telecom services to wider area covering colleges and universities. And for increasing the revenue
and profit, the organisation can change its service plans (Bell, et al 2017).
Product development: The main focus of the organisation is to develop and introduce new
product and service through innovation and creativity. The main focus of the strategy is to attain
business growth by concentrating the present customer base. The organisation makes proper
investment in research and development to offer new products to attract customer and to
establish long term relation. Focus of the organisation is upon increasing brand awareness and
distribution channels (Hussain, et al 2013). For instance, in case or Southern Business
Technologies the organisation can offer new data plans, loyalty plans and price schemes to
support minimising customer retention.
Diversification: This is a risky strategy that involves growth of business by offering new product
and services in a very new market. Including this type of strategy in an organisation need both
product and market development together for attracting new customer in new market. In
Southern business technologies can introduce a very new service that is very new in the market
among the customers for attracting them. The organisation must focus on developing strong
value and new plans for offering more satisfactory services by consulting some strategic
consultants.
On the basis of the analysis of strategies based on Ansoff Matrix it can be concluded that, for
organisation like Southern business Technologies offering telecom services locally, Market
penetration is an effective strategies. Being a SME, entering a new market is a risky process. But
for effective implementation of Market penetration strategy the organisation require proper
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marketing and support of distribution channel for attracting more customers to increase the profit
level and revenues. Considering the Pestle analysis, it can be stated that currently UK has a
favourable and stable economic and political conditions. Government is supporting SMEs in
terms of funds that can be used for market expansion (Burgelman, and Doz, 2001). Southern
business Technologies can also implement the strategy of product development by offering low
cost internet plans, international call facilities etc to meet the customers’ needs. Considering the
social factors, customers of UK has tendency to change in respect to their need and expectation.
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LO2
P3 Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source
For proper business expansion, the organisation need implementation of effective strategies and
require effective amount of finance and funding. Thus, organisation needs to choose suitable
source of funding considering all its drawbacks and benefits for the organisation as per
organisational need and requirement. Some common source of funds is:
Funding
Source
Description Benefit Drawbacks
Bank Loans It is a financial option,
organisation can borrow
funds directly from the
banks for a time period
considering some terms
and conditions. Loans
offers by banks have
some tax breaks and
interest rates lower then
overdrafts and credit
cards. loan offered by
the bank is based on
business nature, revenue
and credit scores etc.
they are considered to
be drivers of growth, for
public and private
sector.
Bank loans offer
flexibility to borrower,
which is beneficial
considering long-term.
Borrower is allowed to
choose the duration of
loan repayment and also
the amount of EMI’s loan
amount along with those
interest rates can be
negotiated (Gorbatai, and
Nelson, 2015.).
Interest on bank loans are
deductible from that of
taxable income becomes a
way of tax savings.
Borrower gets advantage of
planning and budgeting for
loan expenses.
Strict Requirements as
bank loans need some kind
of start-ups, collateral, and
existing businesses for
approving loan for security
purpose.
Repayment Burden is upon
the Loan borrowers.
Instalment or EMIs must
be paid on the determined
time. Any failure may lead
to negative consequences
like seizing or low credit
score.
If bank loan is with
variable interest rate, the
rate tends to changes
depending upon market
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From ownership perspective,
bank loans is a great funding
sources and unlike other
method ownership remains
in the hand of owner.
conditions. Thus,
determining amount for
payments in future become
difficult.
Government
grants or
subsidies
Subsidy is offered by
state or nation
government to
businesses or individual
as a grant that supports
in reducing the product
pricing. Helps reduce
the prices of products.
Government doesn’t ask
for repayment for the fund
provided.
The Grants offered by the
government for the
business does not need
any kind of equity to
surrender.
Funding as government
grant is available in wide
range including to science,
education commerce etc that
can be used for business
expansion with more
revenue generation.
No limits in grants that can
be taken
Crafting a proposal for
grant application is
challenging aspect for
business organization. thus,
it require proper research
and time taking process
The grants offered by the
government have lots of
restriction and business
must comply with set rules,
progress must be tracked
and reports must be
submitted. Any kind of rule
breaking lead to
repayment.
Venture
capital
Venture capital is
financing from firm that
are investment made
upon small businesses
and startups that are in
high risk, but has
Business expertise:
venture capital along with
financing offers proper
consultancy and guidance
to business for growth for
making better decisions.
Loss of control: equity
financing compounded
with this financing. The
investors are reliable for
moulding the business
decisions and directions.
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potential of growth with
a goal of a high return.
VC is run by partners
raising sum of money
from limited partners for
making investments.
VC all provides support,
for business growth that
will support in attaining
greater success.
Venture capitalists have
well connection among
the business community
that will be beneficial for
owners for future growth.
Minority ownership status:
on the basis if size of VC
firm’s the business is
staked and if the
investment is more than
50%, that control of
management and
ownership is reduced.
Friends and
family
Money is lended from
close friend and family
members and repaid
considering the business
profits. The money
collected does not
involve any interest.
Raising the fund can be
easy.
The procedure of
repayment is on the basis
of trust and can be paid as
per convenience without
pressure (Prajogo, and
Oke, 2016)
Delay in repayment can
harm the personal
relationship between the
lender and borrowers.
Lender sometime may not
agree with business process
and stress among the friend
and family regarding the
business and repayment
can rise.
Peer to Peer
Lending
The money lending by
the borrower is through
online services and
websites that matches
prospective of both the
parties. This type of
funding does not involve
any kind of the financial
institution (Milne, and
Parboteeah,2016).
Higher returns to
investors, the P2P lending
provides higher amount of
returns.
For borrowers, the peer-
to-peer lending is an
accessible funding source
due to low credit rating.
The P2P loans is
A peer-to-peer loan is
exposed very high credit
risks. Borrowers applied
for P2P loans has low
credit ratings, thus lender
must be aware of fraud and
loss.
Government does not offer
protection or insurance to
the lenders.
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