Oak Cash & Carry: Evaluating Growth Opportunities and Funding Options

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This report provides a detailed analysis of growth strategies for Oak Cash & Carry, a UK-based SME. It explores the application of the Boston Consulting Group (BCG) matrix, the GE matrix, and the Ansoff matrix to evaluate growth opportunities within the wholesale food and tobacco industry. The report examines market penetration, product development, market development, and diversification strategies. It also assesses various funding sources, including internal and external options, considering their advantages and disadvantages to support business expansion and profitability. The report concludes with a discussion on exit options for the firm, offering a comprehensive business plan for sustainable growth and financial success.
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PLANNING FOR
GROWTH
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INTRODUCTION
Planning for growth is an essential term for every business. It is an effective business
strategy that ensure the business enterpriser to plan and track their growth in their profits. It
helps in adopting the changes in the industry with its limited resources that is driven by digital
disruption and differentiate from rivals. Oak cash & carry is one of the SME company in the UK
that was proposed in 2000, Banbury. They deals in wholesale of foods, tobacco and foods and
offers a wide range of products for retailers, caterers, offices, newsagents and other businesses.
This report consider the growth opportunities of the firm, and various methods of sources of
funding to build a business plan to increase the growth by profit margins. And at last suggest the
exit options for the firm (Davoudi and Sturzaker, 2017).
LO1
P1
In today's environment every business needs to earn more profits and growth by selling
their products to customers. It is very essential term to evaluate the growth opportunities for
SME companies. In oak cash and carry, manager need to evaluate the growth opportunities for
long term survival in the market place. To be successful firm needs to innovate new product and
expand and explore their market in the new area or within the local area and boost the market
share and growth. For examine the opportunities in growth manager apply Bostan consultancy
group model that are described below(Flannery, Clarke and McAteer, 2019).
Bostan consultancy group matrix
BCG matrix was proposed by Bruce Henderson since 1970. This matrix helps in long -
term strategic planning and giving the knowledge about products and services on the basis of
high and low performance that is depending on the market growth rate and relative market share.
This matrix is very useful to know the growth potential for the particular product. It is totally
based on the products (How to use the BCG Matrix model).
Stars product- These are those goods and services that is related to high growth with high
market share. To maintain the position in the competitive market consumes a ample
amount of money by selling their products to customers(Davoudi and Sturzaker, 2017).
In context of Oak cash & carry, star products includes groceries that consumes more
profit and large market share in the market. There groceries products covers major area of
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the market place. In this firm should make the top priority for their groceries products to
maintain their market share of goods in star quadrant to increase the sales and profits.
Cash Cows- This product matrix is related to those products that contains low growth
market with high market share. Company should divert profits from cash cows to help
defend market shares of star quadrant products. In context of Oak cash & carry BBQ are
considers in this quadrant. This product provides low growth market and high market
share in the current market. To evaluate the growth opportunities in this sector manager
can require little investment to maintain their high shares (Flannery, Clarke and
McAteer, 2019). Question mark- This is also known as a problem child in this goods in high growth
market with low market share. This quadrant contains weak positions in the market to
increase the market position firm invest more on the products. In context of Oak cash &
carry, product like beverages are related to this category and a problem child for a
company. To evaluate the growth opportunity in this step manager need to invest more on
this like innovate beverages and become a star product that earns more profits and large
market share in the market (Olesen, K. and Carter, H., 2018).
Dogs- This are those products that are low growth and low market share. This category
products are waste for the company. In this manager divest from the product. In Oak cash
& carry Tobacco is the product that are waste for the firm. Manager decide to control the
production of this product and divest it from the range entirely. In this quadrant manager
can evaluate the growth opportunity by removing the tobacco from their product range
and invest more on star product so they earn more market share and market growth (Pan,
H. and et. al., 2019).
GE Matrix
This matrix was developed by McKinsey and company consultancy group since 1970s. It
is also called nine cell grid which is based on industry attractiveness and business units. It is the
improved version of BCG matrix. In Oak cash and carry, manager used this matrix to analyse the
industry attractiveness and business units that is explained below(Friedmann, 2018).
Invest/ grow- This cell consider the high industry attractiveness and high business unit or
product market. It includes start category products which covers high market growth and
size of firm. In context of Oak cash & carry, company invest more on their groceries
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products because their market share and growth are high. Because of groceries products
company can earn more profits and share, and it is very difficult for the competitors to
beat their product in the market. It exit the new entrant in the market place(Friedmann,
2018). Hold/ selective- This cell of GE matrix include the question mark products in which
growth rate is high and market share is low. In this grid cell industry attractiveness is
medium and strength of business unit is also medium. In Oak cash and carry, manager
suggest hold the market and select the best features to become a offerings a star product.
For this firm needs to innovate the products and delivers in the market. It also include the
cash cows products that have high market share and low growth rate. Company focus on
the profits and make it star products (Gallent and Tewdwr-Jones, 2018).
Divest/ harvest- This grid includes the poor performing business units and unattractive
industry. This cell is related to dog category product of BCG matrix. In context of Oak
cash & carry, manager needs to divest from the Tobacco product and harvest on groceries
and beverages. This type of product does not satisfy the consumer demand as well as
harm the environment. They generate losses and reduce the market share and market
growth. Avoid manufacturing of tobacco help the company to invest in other type of
product range so they will earn more profits and revenue (Hall and Tewdwr-Jones, 2019).
P2 Evaluate the growth opportunities by Ansoff matrix
Ansoff Matrix
It is a strategic planning tool that help the managers, senior executive and marketers to
make a strategies for future growth. It was proposed by Russian American Igor Ansoff. It
includes two quadrants I.e product and market. In product quadrant it involves new and existing
product and market quadrant includes old and new market. It includes four stages I.e product
development, market development, market penetration and diversification. In context of Oak
cash & carry, manager used this theory to increase the profits and growth of the firm (Halsmayer,
2017). Market penetration- In this quadrant, company uses its product offering in existing
market. A manager plans to increase its market share by using market penetration. In
context of oak cash and carry, manager sell their existing product in existing market but
using some strategy to increase and cover large market share and profit margins. Manager
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using the market penetration strategy in following ways like decreasing prices to attract
more and more consumers of existing product of the firm, increased advertising and
promotion efforts, acquiring the rival firm in same market (Perera, N.G.R. and
Emmanuel, R., 2018). Product development- This strategy is belong to those category when firm decides to sell
their new product into existing market. In this company has the full knowledge of current
market and according to that they innovate their product to meet the needs of existing
market. In context of Oak cash & carry , manager suggest to develops their product for
existing market. In existing market to capture the large customer base they need to
innovate product like organic and dietary meal in their beverage category. In today's
world, people mainly focus on their health and they are more conscious about their
weight so the company develops a product according to the needs and wants of the
customers and earn more profits (Knaap, Avin and Fang, 2017). Market development- This marketing strategy belongs to that criteria where firm thinks
to enter into the new market with their existing product to earn more profit and revenue
and increase the market share from the new market. In means to expand their market in
different geographies, customer segment , regions etc. A manager of oak cash and carry
could expand their business to enter into the new market by operating this techniques like
entering into a new domestic market, entering into foreign market, catering to a different
customer segment. In this manager adopts entering into the foreign market so it will
strong the economy of the UK, that is affected by Brexit (Ruparathna, R. and et. al.,
2017). \
Diversification- It is related to a risky strategy where firm enters into a new market with
new product. There is two types of diversification that is related and unrelated
diversification. A manager of oak cash and carry could use this strategy to expand and
grow their business by using new product in new market. It is somehow risky because in
this firm does not know that new market accept the innovative product. And they present
themselves as a loyal customers or not. In this strategy manager need to appoint an expert
that give the full information regarding the innovation according to the new market. So
they will earn more profits and revenue in the new market (Krueckeberg, 2018).
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From the above concluded strategy, oak cash and carry follow the product development strategy
where they launch new product related to beverages. To expand their business in existing market
with new product is the best technique that is used by the company. Firstly company analyse and
examine the customer needs and wants and according to that they innovate and develop new
product i.e. organic and dietary meal with the product name “organic- o”. they highlight and
target those people who are conscious about taste, health and weight. Because of this they earn
more revenues.
LO2
P3 Sources of funding and its advantages and disadvantages
Finance is very important part of every business without it no functions can be performed
in the firm. It is an essential term to success and growth of any organisation. Money is requires
on the regular basis to perform and accomplish the task on time and generate more profits and
revenue. There are various source of funds that a like crowdfunding, angel capital, bank loan,
government assistance etc. In context of oak cash and carry company can examine various
source of funding that are explained below(Liang and et. al., 2018).
Internal source of funding- It refers to that type of funds that are raise within the organisation.
This is less risky to generate to this type of funds like cash from sales, sale surplus assets and
reserve profits. They are generated for normal and regular basis of work. It involves some
advantages and disadvantages in it that are as follows (Mansell, 2017).
Benefits- Internal source of funding generate capital on urgent basis or immediate basis
and it does not involve any interest rate and it is more flexible in nature. Because in this funds
can be raise on anytime and repay at anytime there is no deadline form.
Drawback- the major problem that holds internal source of funding is that its impact
negatively on the operating budget.
External source of funding – It refers to that type of source of funds that can be raised by a firm
from outside the business. This sources are very effective and related for long term operations
activities. Oak cash and carry, manager use and raise funds from the external source. It includes
bank loan, term loan, hire purchase, debentures, venture capital, bank overdraft etc. some of this
are explained below.
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Bank loan- It refers to that loan that is given by the banker to the firm. It is very useful
for the business when they plan to innovate new product for expanding and exploring the
business. In this bank fix the period of time on the basis of this firm repay the amount
with interest rate. It is generally for 3, 5 or 10 years.
Pros of bank loan – The major benefit to raise funds from banks is that they provided
fixed interest rate with a predictable monthly payments so there is no burden on the firm(Olesen
and Carter, 2018).
Cons of bank loan- Bank loan involves major or lengthy paper work from saving this
paperwork company ignore to using it. And it is very time consuming and sometimes it behave
like complicated.
Crowdfunding – It refers to that funds that is raise from large number of audience with
the use of vast online networks like social media, crowdfunding websites. This helps the
investors and the businessman together to expand and increase their circles by using this.
It includes some advantages and disadvantages that are given below.
Advantages- Major benefits of crowdfunding is that in this firm easily raise funds with no
upfront fees. In this a person can easily share ideas and give feedbacks and expert guidance to
improve it.
Disadvantages- the major risk in crowdfunding is that when the project is failed than it
destroy the image of the company. In this there is a fear of creeping the idea because there is no
right of using patent and trademark right.
From the above maintained source of funds oak cask and carry use bank loan method to raise
funds for their new product “organic- O” which is related to organic and dietary meal. Using
bank loan for the product development is the best idea because it is very secured type of loan and
contains a fixed rate of interests that does not create any burden on the firm because there is
predictable monthly rate is decided(Pan and et. al., 2019).
LO3
P4 Build a business plan of an organisation for growth and scaling up a business
Business plan is that kind of written document which is related to the nature of business,
its financial position, strategy of marketing, sales, profit and loss statements are included in it. It
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creates focus over both internal and external factors. In strategy of internal nature this plan
targets those goals which are to be achieved immediately and this also helps in achieving
external goals. In an extrinsic business plan outside stakeholders is focused upon. Oak cash and
carry is an SME which is their for extending its business over various markets with the existing
services of it. In order to full fill this manger of the company can make a business which is going
to help in operating their business with is services.
Oak cash and carry: This is an UK based company that has its warehouses an provide
services of delivering goods. It is an company which is incorporated on 19th October 2000. This
company which offers trade of goods over wholesale prices. This are their to achieve goals and
objectives which are setup for capturing larger are of market.
Vision and mission: Vision of the company is to create an influence over those people
and communities of larger nature. This is achieved by providing those best services to its
customers. Mission of the company is to achieve its vision this can be achieved by creating
efficiency in its services and providing better products. It has to satisfy needs of its customer.
Corporate values: These values are very much effective as they helps in creating a
connection to the customer by fulfilling their preferences. In order to achieve this balance of
profit earning and quality of product has to be maintained.
Stakeholders exceptions: stakeholder are those persons which are their for handling
investment of a company. They are their to do investments and expect returns for this investment
. In strategy of product development a new product is brought into an existing market and this is
very much effective for the company as it is going to help company in achieving profits.
Entrepreneurial Strategies: In this the company operates over new markets of other
countries like France, Germany and USA with is existing product. Operation of this business is
to attract new customers in a market. It is necessary to identify needs and wants of customer.
STP: In this oak cash and carry is going to use targetting, segmenting and positioning as
a strategy this is going to help in the consideration of new product into an existing market.
Segmenting: At this stage market gets divided into various segments that are having
uniform characteristics Oak cash and carry needs to segment targetted market on the basis of
behavioural characteristics and geography.
Targeting: Oak cash and carry has to target different strategies in market . In order to introduce
it to an international market.
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Positioning: Oak cash and carry has to position its vintage products through opening accessible
stores which helps in advertising their product and capturing market more efficently.
Marketing mix: In this managers is going to play and important role. As they are going
to examine product, price of the mew areas in which market is to be setup.
Financial information: launching of product in an existing market. The Oak cash and carry
has to analyse its finances.
SWOT Analysis
Strength Weaknesses
The biggest strength of Oak cash and carry is
uniqueness of product that attracts lot of
customers. This helps in increasing sales of
company which eventually provides profit to
organisation.
Biggest weakness of Oak cash and carry is
that it lacks innovation which makes it rigid
towards flexibility in market. This creates
decline in percentage of customer.
Opportunities Threats
Oak cash and carry being a new entity has an
opportunity to attract customers through its
product.
Oak cash and carry should be aware of its
competitors present in the market as they can
effect it sales .
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Evaluation: Monitoring and evaluation of business is used for analysing of growth and
sales of the company. Modification in customers base is also achieved because of this.
(Perera and Emmanuel, 2018))(Ruparathna and et. al., 2017)(Thornley, 2018)(Wang and et. al.,
2017)(Williams, 2017)
LO4
P5 Exit and succession option for small business with its benefits and drawbacks
Acquisition: it is an outlined in which an complete or part of shares and assets is
purchased by some other company in order to hold of seller company. This permits the buyers of
a company to take decision about operations of seller company without taking permission of
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capital investors of a company. By adopting of these methods Oak cash and carry has to face
some advantages and disadvantages and they are (Hall and Tewdwr-Jones, 2019).
Advantage : Is that it enhances the attainment of resources which results into broadening
of business with better financial position. This establishes new capabilities of doing business for
Oak cash and carry (Thornley, A., 2018).
New specialised work force helps into entering a business. As it aids towards generation
of new ideas which give birth to new aspects. This is going to help oak cash carry in expansion
of its business which is going to happen because of innovative ideas and new techniques
(Williams, K., 2017).
Disadvantages: Cost involved in acquisition is very heavy for oak cash and carry and
they may face loss of profit.
Conflicts can arise in oak cash and carry because of differences in customs and belief
because two different companies contain different working culture. This can increase running
cost for Oak cash and carry.
Merger: it is the procedure of integration on one company into another for enhancing
their operational capacities and productivity. This can be between two companies that carries
business of identical product and services line or which carries business of non identical business
lines. By adapting this Oak cash and carry may face the following advantages and disadvantages
(Wang, S. and et. al., 2017).
Advantages: It encourages cost savings which leads to economies in scale with high
amount of profits.
It increases the credit worthiness of Oak and carry and this may increase its finnacial
resources of the company. (Friedmann, 2018)
This helps in acquiring local as well as intentional market that can be lead to enlargement
of growth and generation of good will.
Disadvantages: merger effects mind set of ultimate customer in a negative way if merger
companies are from different background (Gallent and Tewdwr-Jones, 2018).
Merger may lead to job reduction in oak and carry so sometimes skilled employees can
be relived.
Through merger monopoly market can be created since share of market capture since
share of market capture is increased after merger (Williams, K. ed., 2017).
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Oak and carry should adopt for acquisition as they want to introduce its product in
existing market. This can be achieved by improving quality of products.
CONCLUSION
From the above report, it has been concluded that planning for growth is an essential term
for the success and growth of the business. For this oak cash and carry evaluate the growth by
using BCG or GE matrix to enhance the growth opportunities for firm. Further they evaluate
their business profits and thinks to maximise it for this manager of firm consider the Ansoff
matrix and identify the best strategy that is very much suitable for the growth and profit margins
of the company in this they choose product development strategy to earn more profits and
interest from the current market with new product. On the contrary firm identify source of funds
where they raise funds for developing the products and make a business plan to successful this
activity. At last this report give the exit option for the SME when they not earn profits.
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How to use the BCG Matrix model. 2020 [ Online]. Available Through:
<https://www.smartinsights.com/marketing-planning/marketing-models/use-bcg-matrix/>.
(Olesen, K. and Carter, H., 2018)(Pan, H. and et. al., 2019)(Perera, N.G.R. and Emmanuel, R.,
2018)(Ruparathna, R. and et. al., 2017)(Thornley, A., 2018)(Wang, S. and et. al., 2017)
(Williams, K. ed., 2017)(Williams, K., 2017)
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