Business Growth Strategies: Ansoff Matrix, Funding and Exit Plan

This report provides a comprehensive analysis of business expansion strategies, focusing on key considerations for organizations, the application of the Ansoff Matrix, various funding sources, and exit options for SMEs. It delves into the importance of assessing key performance indicators (KPIs), managing cash flow, strategic hiring, and due diligence when expanding. The report also examines different funding options such as bank loans, debentures, and angel investors, alongside exit strategies like liquidation, acquisition, and mergers. Furthermore, it includes a discussion on creating a business plan using SMART analysis, exemplified by Vectair Holdings, covering aspects like executive summary, company summary, product description, and market analysis using the 4Ps of marketing.

Unit 42- Questions
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TABLE OF CONTENT
Introduction......................................................................................................................................3
Main body........................................................................................................................................3
At the time of expansion what things should be considered by an organisation.........................3
Ansoff matrix...............................................................................................................................4
Sources of funding for the business.............................................................................................6
Exist options used by the SME....................................................................................................7
Business plan...............................................................................................................................8
CONCLUSION..............................................................................................................................11
REFERENCE................................................................................................................................12
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Introduction
Every business wants to attain Growth opportunities and expansion is the method through which
company can achieve growth. Marks and Spenser is the multinational company which
manufacture clothing, footwear, accessories etc for both men and women. This study will discuss
factors which business should have consider while expansion. Further will analyse Ansoff matrix
and various funding and exit options for small business. This report will also discuss business
plan for SME.
Main body
At the time of expansion what things should be considered by an organisation.
There are various things which must be considered by business before going for expansion which
are as follows-
Assessing key performance indicators-
This is the best way to check that Marks and Spenser are ready for expansion or not by checking
its key performance indicators (KPI). KPI is very helpful for businesses to know that they are
fulfilling their financial commitments or not and also business is making enough profits so that
they can survive or not (Krupina, 2021).
Pros-
If company is not able to achieve their objectives than KPI helps them in finding out learning
gaps. It further helps business in measuring results. It is important to measure success for the
purpose of more growth in the future.
Cons-
KPI takes lot of time of business. It does not provide results quickly as it takes few months to
show the results.
Cash flow-
Expanding the business is the expensive process so business should know that they are having
enough cash for survival or not. It is very important that Marks and Spenser access their cash
flow.
Pros-
It is helpful in forecasting earnings of the organisation. It will help company to know their
financial position.
Cons-
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Every business comes with unpredictability and that is not considered by the cash flow.
Hiring employees globally-
Marks and Spenser while hiring for international level or hiring workers for national level they
must carefully consider that they are hiring which candidate for which job role. Due to cultural
differences company can face difficulty in hiring candidates. Better evaluate candidate properly
before hiring them.
Pros-
When employees are hired internationally then it saves company’s employability costs
(Švagždienė, Štreimikienė and Jasinskas, 2021). In developing countries pay scale of workers is
low as compared with developed nations.
Cons-
When company hire candidate for their head office from different country then it includes costs
related to relocation and various settlements.
Due diligence-
Before expanding business in different countries marks and spenser should do proper research
and can even hire local firm for getting support for the purpose of expansion globally.
Pros-
It helps business in finding out various risks and problem associated with the country or target
company.
Cons-
This is the complex, time consuming and difficult process.
Ansoff matrix
This is the technique which is used by the organisation to plan and evaluate growth strategies.
This is also called as product expansion grid. This grid consists of four elements which is used
by the company to grab growth opportunities and also helpful for risk analysis and which are as
follows:
Market penetration-
Marks and spenser can increase their capacity of production so that they can reach towards more
customers within existing market. More production capacity will lead to more effectiveness.
Pros-
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When demand gets increases through Market penetration then organisation saves money on cost
of production because they manufacture in greater volume (Yu, 2019).
Cons-
If the company is having wide product portfolio, then Market penetration can be useless for
company.
Market development-
In order to find out new potential market marks and spenser should invest in research and
development. In order to explore new market, they can even go for regional expansion.
Pros-
This strategy will help company in getting new customers and increase its market share. As a
result, company will able to increase their sales and revenue.
Cons-
This strategy require investment when company plans to sell their product at new location. If this
strategy fails then company’s resources and capital will get wasted.
Product development-
Under this strategy marks and spenser can do modifications in the existing products in order to
improve customer experience. In order to offer new product to the customers company should do
extensive R&D.
Pros-
It can help company to increase their sales because customers preferred to buy new products. It
will also bring sense of innovation and can help to improve brand image.
Cons-
To introduce new product in the market is risky because there are possibility that customer will
not expect innovative product.
Diversification-
It means when company produce new products and sells that in new markets. Marks and spenser
can also bring new product in the existing product portfolio (Qadir, 2020). They can also start
another product line.
Pros-
This can help in getting more profits because customers always want something new.
Cons-
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It is expensive and riskier then other strategies.
Sources of funding for the business
Funding-
Funding is the process of providing resources to finance the business financial needs. Funding is
usually provided with money only. Funding can be taken by the business for the purpose of
expansion or to fulfil their daily needs. There are many ways of funding which are as follows:
Bank loans-
Bank which is the financial institution provides various loans to the business to fulfil their short
term and long term needs. Bank gives loan to the business on the basis of substantial collateral
and charge rate of interest. Interest rate depends on the type pf bank.
Pros-
It is easy to take and does not take ownership in the business like equity finance. Bank loan is
temporary and business can repay loan is easy instalments.
Cons-
It is normally seen that there are many banks which gives loans on high interest rate to the small
businesses. For small business it is difficult for them to qualify for taking bank loan as it requires
valuable collateral.
Debentures-
These are the debt instruments which helps in fulfilling funding needs of the organisation. There
are many times when funding given by the shareholder is not enough so that is why debentures
provide capital to the company (Tsatsoula, 2018).
Pros-
Debenture holder has not given right to vote or are not allowed to participate in company’s
management. It is useful for inflation times.
Cons-
Debentures reduces borrowing capacity of the company. Organisation have to repay the amount
which they had taken from the debenture holder and when company earnings fluctuate then it
became problem.
Angel investors-
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Angel investors provide funds to the small businesses in their start up phase. They are also called
as seed investor because they help business in their initial stage. Usually angel investor is within
the family and friends of the entrepreneur.
Pros-
Angel investor understand the value of business and risk associated with that (Roundtable,
2018). They do not afraid in investing capital in the business. They have potential to bring
multiple investors because they have investor network.
Cons-
As agnel investor invest in high risky business so that is why they can take partial ownership in
the company. If business will get sold then portion of profits has to be given by the owner to
angel investors.
Exist options used by the SME
Exit/Succession Options-
Succession or exit means giving or transferring the control over management of the company to
other person or other company. In simple language when owner leaves the ownership of the
business and give that to other people.
There are many exit options which can be used by SME some of them are given below-
Liquidation-
There is time came with some businesses when they are not able to pay their debt or manage
their business effectively. Then at such stage the best option is to liquidate the business (Doyle,
2018). After liquidating one company, owner can start fresh new company.
Pros-
It is better to go for liquidation when owner finds that he or she is not able to manage their
business. It is better that owner does it willingly because when creditors are involved in this then
it makes everything complicated. Assets of company can be used for paying debt.
Cons-
Liquidator who will do this process will ascertain history and finances of the company so owner
have to transparent with them and have to provide all necessary information which they are
asked for. At the time of liquidation money which is recovered by selling assets is used to pay
creditors and thus owner left with little or no money for future business.
Acquisition-
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It refers to the situation when a company purchases little portion or complete business including
its all the assets and shares. Under this target company sells shares and their assets to the
acquiring company. After acquisition, acquiring company becomes owner of the company.
Pros-
With the help of this option company can easily enter in new market because they are acquiring
that brand which already have recognition and market share. This method also helps in
overcoming market barriers.
Cons-
Acquiring company which have its own culture often causes cultural clashes (Moraczewski,
2017). It can even cause to duplication.
Mergers-
When two business combines together and form one single company is known as merger.
Merger can be taken place via takeover or any mutual agreement within two companies.
Pros-
It is helpful for the company to reach towards economies of scale. When two company combine
together then it brings more investment and that brings higher profits.
Cons-
There are chances that prices of products can be increases because monopoly increases. Two
different company which have their own culture finds difficulty in merger process.
Business plan
It refers to the document which gives information about the company which is related to its
objectives, activities and also how it will attain future goals.
SMART analysis-
It is the technique which businesses are used to plan for the future so that there goals can be
achieved. SMART stands for specific, measurable, attainable, relevant and time specific.
Business plan of Vectair Holdings
Executive summary
Vectair holdings is the SME which deals in various hygiene products. Company wishes to bring
innovative products in the market and also have objectives to get higher sales and revenue
(Barlow and et.al., 2021). In order to penetrate in the market, company have started carrying
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various promotional activities. It has also discussed financial plan which include costs which is
incurred by company in producing new product.
Company summary
Vectair Holdings is the small enterprise which is operating in UK. This company is doing
business in UK from last 30 years. Company work hard so that they can attain sustainable
growth. Apart from manufacturing innovative products, company also gives lots of donations
and charity. Company is providing sanitary solutions to the people.
Product description-
They produce and supply innovation aircare and hygiene products. This further includes hand
washing system, surface care, odour control, infant care and skin care products specifically
designed to enhance customer experience.
Market analysis-
This will be done through marketing mix which have 4 P’s.
Product-
Vectair Holdings produce hygiene related products. They are having range of products which
help customers in maintaining their hygiene level. Some of the products which are manufactured
by them are wash basin, hand dryer, air dryer, infant care products, surface care products etc.
company can even increase diverse products in its hygiene and sanitary product range (Watson,
McGowan and Cunningham, 2018). This will be helpful for company in attaining their
objectives.
Price-
Vectair Holdings offer luxury products in the market. But it is found that competitors in this field
have also increased so that is why they have started following competitive pricing strategy.
Prices are set by the company by reviewing their rival company’s pricing.
Place-
Place is where customer can purchase company’s product. Vectair Holdings sells their product
offline and online both. Customers can purchase their products by visiting their stores or through
company’s website.
Promotion-
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Company have started using modern marketing technique. So that is why they are doing
marketing using social media platforms. It is cheaper then other marketing method and also helps
in covering wide audience.
Strategy and implementation-
Objectives-
 To increase the sales by 20%.
 To increase overall revenue by 15% at the end of this year.
 To improve their product portfolio.
To attain growth opportunities is important for every company. Vectair Holdings will attain
growth by providing good customer service and also by manufacturing innovative products in
the market. In order to attain innovation company can even bring improvements in the existing
price range.
Management summary
Vectair Holdings is the small medium enterprise which have strong team of people who manage
the business effectively. They have highly skilled and trained workforce which is helping them
in attaining growth and success.
Swot analysis-
Strength- Vectair Holdings manufacture high quality products which is their biggest strength.
Weakness- product portfolio of company is small as compared to its competitors.
Opportunities- technology is the biggest opportunity (Barrow, Barrow and Brown, 2018). They
can opt for advanced technology and produce innovative products so that can increase their
customer base.
Threats- competitors are the biggest threat for company. They are increasing day by days and
bringing new products at low prices. This is cutting market share of company.
Pestle analysis-
Political factor- this factor consists of political stability, tax policy, trade restrictions etc. when
the government policies are in favour of company then company can attain growth.
Economic factors- it consists of exchange rate, inflation rate etc. small companies like Vectair
Holdings highly contributes in the economic development of the country.
Social factors- company should manufacture such products which is demanded by customers
because their choices are impacted from their beliefs and lifestyle.
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Technological factor- this factor influence company and help company to grow bring innovation
in the market. Development in the technology takes place rapidly. If company will adopt
advanced technology then they can achieve economies of scale.
Legal factors- it consists of all laws and rules of government. It is very important that business
should run as per government’s rules and regulations (Fauzi, 2021).
Environmental factors- company should carry their businesses in such a manner that they does
not harm the environment. Environment protection is also the responsibility of company.
Financial plan-
Particular Amount ( £)
Survey 1850000
Equipment 8000000
Advertisement expenses 250000
Salary 200000
Other expenses 100000
Total 10400000
CONCLUSION
Through this report it can be concluded that while going for expansion business should keep
certain factors in mind which are cash flows, due diligence, hiring candidates globally etc. report
has also discussed Ansoff matrix and discussed advantage and disadvantage of each element of
the matrix. Funding helps in business growth and there are many ways through which business
can take funding like bank loans, angel investors, equity, debentures etc. if business does not
want to run with its own identity, then there are various exit options which businesses can use
like liquidation, merger/ acquisitions etc. business plan is evaluated in this report which for
Vectair holdings which is small company. Objectives of company to attain higher revenue and
increase their range of products.
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REFERENCE
Book and Journal
Barlow, P. and et.al., 2021. Business plan.
Barrow, C., Barrow, P. and Brown, R., 2018. The Business Plan Workbook: A Step-by-step
Guide to Creating and Developing a Successful Business. Kogan Page Publishers.
Doyle, H., 2018. Doyle, H., to JP Babcock, regarding public and private funding options for
Seaton Lake hatchery.
Fauzi, R.U.A., 2021. The Influence of Business Plan Competition and Loan Provision on
Nurturing the Spirit of Entrepreneurship Among Students. Advances in Economics,
Business and Management Research. 161. pp.188-192.
Krupina, N.N., 2021. Development of a Matrix Tool for Visual Market Research in Strategic
Management. Development. 13(2). pp.10-23.
Moraczewski, E., 2017. Evaluate your funding sources. Strategic finance. 98(8). p.23.
Qadir, R., 2020. Small Businesses in Developing Markets Funding Options & Reasons.
Roundtable, R.W., 2018. Sustainable Funding Options.
Švagždienė, B., Štreimikienė, D. and Jasinskas, E., 2021. Tourism–a tool for economic
diversification for other sectors. Human studies. (7 (84)). pp.129-135.
Tsatsoula, E., 2018. Application of Ansoff's Matrix-Methodology: Marketing Growth Strategies
For Products.
Watson, K., McGowan, P. and Cunningham, J.A., 2018. An exploration of the Business Plan
Competition as a methodology for effective nascent entrepreneurial
learning. International Journal of Entrepreneurial Behavior & Research.
Yu, V.D., 2019. The analysis of methods for developing the marketing strategies.
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