Food Supplier Ltd: Strategies for Growth, Funding, and Succession Plan

This report details a growth plan for Food Supplier Ltd, a new venture aiming to supply fresh and organic food in the UK market. It begins by outlining key considerations for evaluating growth opportunities, including Porter's generic strategies (cost leadership, differentiation, cost focus, and differentiation focus) and PESTEL analysis to assess the macro-environment. The report then applies the Ansoff growth vector matrix (market penetration, market development, product development, and diversification) to identify potential growth strategies. Additionally, it explores potential funding sources and develops a business plan for Food Supplier Ltd, including strategies for an exit and succession plan for the small business. The report concludes by emphasizing the importance of strategic planning and adaptability for achieving sustainable growth in the competitive UK market.

Planning for
Growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Key consideration for evaluating growth opportunities...................................................1
P2. Evaluation of growth opportunities by applying Ansoff's growth vector matrix.............3
TASK 2............................................................................................................................................5
P3 Potential sources of fund available to business.................................................................5
TASK 3............................................................................................................................................7
P4. Business plan for growth..................................................................................................7
TASK 4............................................................................................................................................8
P5. Exit and succession plan for small business enterprises..................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Planning for growth refers to the formation of various strategies and policies as well as
implication of these tactics in business operations for achieving higher growth in market place
(Achtenhagen and et. al., 2014). This report is based on planning of an entrepreneur to establish
its new venture in UK market named as “Food Supplier Ltd ”, which offers fresh and organic
food items. For establishing their business, company is bidding for a contract of £180k named as
“Data collection and modelling for food business compliance indicators”. For entering into the
contract company is required to raise sufficient fund. This report explains about main key
consideration for evaluating growth opportunities and various sources of fund that can be used
by company to raise capital . Further it provide business plan of Food Supplier Ltd and
succession strategies that can be used by company for eliminating future uncertainty.
TASK 1
P1. Key consideration for evaluating growth opportunities
For starting a new venture, it is very essential for an entrepreneur to evaluate every
positive or negative aspects of its plan and area in which it is going to setup its business. This
supports in finding different growth opportunities available in marketplace and threats that might
impact business operations. Food Supplier Ltd, can make use of “Porter's generic strategy
model” introduced by Michael porter which advises four strategy which can used by organisation
to achieve competitive advantage in chosen market. This model will help Food Supplier Ltd in
achieving higher market share and in achieving competitive edge. As company is planning for
expanding its business by offering its food and grocery items in market of UK (Porter's Generic
Competitive Strategies, 2016). Below mentioned are strategies stated under Porter's generic
competitive model:- Cost leadership:- In this, Porter suggested that organisation must target the larger market
by offering product at lowest possible price. Firm have two options either they sell
product and services at moderate industry cost in order to earn high level profit or to sell
beneath industry cost to gain higher market share. By applying this strategy Food
Supplier Ltd can capture larger market share by offering products at low prices. The
lower pricing strategy tends to influence more customers towards this business. Differentiation:- It refers to the strategy where a company target a broader market with a
product that have unique features. By applying this strategy an Food Supplier Ltd can
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offer their product at higher price by making them more attractive as compare to
competitors product. Offering organic products can be referred to a differentiation
strategy which could be beneficial for business. But for achieving success in differential
pricing strategy company is require to invest more over promotional activities. This help
in communicating the importance of product to the market. Cost focus:- It suggest that organisation should target a niche market having minimum
competition and offer their product at lower manageable cost. By using this strategy,
company can achieve maximum profit by developing proper understanding of market
dynamics and needs of customer (Arzaghi and et. al., 2017). Cost focus help Food
Supplier Ltd in achieving competitive advantage offering lower priced products availed
through economies of scale and use of technology.
 Differentiation focus:- Under this strategy company target a niche market with a product
or service that have unique feature. Differentiation focus involve strong brand loyalty
among customers. For getting success in this strategy, it is very essential for company to
ensure that product remains unique so that competition can stay ahead. By using this
strategy Food Supplier Ltd can differentiate their product in marketplace which further
help in achieving competitive edge.
These all are competitive strategies given by Michael porter, among which cost
leadership is most appropriate for strategy for Food Suppliers Ltd. As they want to start its new
venture in UK market. This strategy will help in achieving higher market share as low price will
grab the attention of large number of people. So, by using cost leadership strategy company can
achieve higher market sustainability. Apart from this it is also necessary for Food Supplier Ltd to
analyse the macro environmental factor before entering into new market. Evaluation of macro
environmental factor can be done with the help of a strategical tool named as PESTEL analysis
(PESTEL analysis of the UK, 2018). This tool includes various external factors that have an
direct impact over functioning of business organisation. Following points describe the external
environmental factors: Political:- This includes factors like governmental policies, political stability, tax policies
etc., which directly affect the business operations. UK is consider as a most powerful
country and enjoys greater political stability. It provide higher growth opportunities to
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industries like real estate, grocery, technology etc. Therefore, UK is consider to be best
possible place for Food Supplier Ltd to start their venture. Economical:- It generally includes factors like economical growth, interest rate,
exchange rate, inflation rate etc. UK has the 5th largest economy in world and is a popular
destination for FDI. Hence, it provide greater opportunity to Food Supplier Ltd for
establishing their business in UK market which is consider to be a Hub for FDI investors. Social:- The social factor includes customer taste, preferences, value, culture and norms
of the society in which company operates. Social factors directly influences demand of
product or services. UK market is consists of larger number of consumers, therefore Food
Supplier Ltd has various opportunities for catering the diverse needs of people (Batabyal
and Nijkamp, 2014). This help in achieving maximum market share and profitability for
the venture. Technological:- It involves different factors like up-gradation of technologies and
launching of new method or innovative approach of doing business which directly affect
the choice of consumer toward product. UK is one of the most technologically advanced
country. Therefore, it is essential for Food Supplier Ltd to offer the product using some
innovative approach so that they can survive in this market. For example, it can use
mobile application for providing a home delivery option to their customers. Environmental:- This factor includes change in weather condition, rules or regulation
related to the environmental protection. UK government has formulated various
regulation regarding environment protection for avoiding negative impact and creating
environmental awareness. So, Food Supplier Ltd is required to comply with these rules
while operating their business activities .
 Legal:- The legal factor includes various law or regulation regarding the running of
business operation without legal compliances. Various law such as Employment Act
1996, Equality Act 2010 etc. along with consideration to food hygiene regulations and
approval for food premises imposed by UK Government must be followed by Food
Supplier Ltd for operating their business activities effectively.
BCG matrix:-
It refers to a framework which is basically created by Boston Consulting group for
evaluating the strategic position of a company's brand portfolio and its potential. BCG matrix
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consists of four basic categories based on competitive position and industry attractiveness. By
applying this model Food supplier Ltd will be able to detect that whether it should invest in its
plan or not and what are the growth opportunities. Following are the factors involve in BCG
matrix:
Question mark:- It consists of various type of product or brand categories which hold lower
market share in fastest growing market that require large amount of cash and also incurred
losses. Food supplier limited must evaluate such product categories and try to closely consider
that whether investment worth or not.
Star:- It refers to the group of products which have the capability to achieve highest growth
within industry and maintain high market share. In order to achieve higher success at market
place Food supplier Ltd should invest in product which shares high demand in market and can
become cash cow when maintained properly.
Poor dog:- It include products which hold the lowest market share as compare to its competitors
and operates in a slow growth market. So, food supplier limited must not invest in their product
that have low demand and negative cash return.
Cash cow:- It refers to those product which are more profitable and capable to generate as much
cash as possible. Food supplier Ltd must try to analyse such products, as this category does not
require company to invest but only need support to maintain this position in marketplace.
Product life cycle:-
P2. Evaluation of growth opportunities by applying Ansoff's growth vector matrix
For proper growth of business, it is important for an organisation to analyse the target
market. This help in identifying various factor that are require to be address in order to eliminate
future uncertainty. Further it also help in evaluating various growth opportunities while help a
company to achieve higher market sustainability (Birley and Stockley, 2017). Ansoff growth
vector matrix is consider as one of the best model for evaluating growth opportunities in the
operating market. This model help Food Suppliers Ltd in identifying various areas of business
growth. This matrix includes four quadrants which explains different growth strategies that can
be opt by an entrepreneur for achieving higher success and growth in market place.
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Source: Ansoff Matrix to identify growth opportunities,2018.
Above given image depict about four growth strategies given by Igor Ansoff in 1960, that help in
identifying different working style which provide better growth opportunities. Following points
describe about growth strategies of Ansoff matrix which will support Food Supplier Ltd in
identifying the appropriate strategy to adopt for achieving the highest possible growth in
marketplace: Market penetration:- This strategy is consider to be less riskier as it uses maximum of
firm's existing capabilities and resources. Market penetration strategy suggest through
reducing the prices of products and services a business can further penetrate in the market
to achieve higher market share (Byrne, Sipe and Dodson, 2014). By using this strtegy
Food supplier Ltd can sell its existing product or services in current place but at relatively
low price to capture higher market share. Market development:- It refers to a strategy where company tries to approach new
market by offering its product and services. This strategy involve high risk as compare to
market penetration strategy because don't have knowledge regarding competitors and
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Illustration 1: Ansoff Matrix to identify growth opportunities

information about customers choices in the latest market (Esmaeeli and et. al., 2015).
With the help of this strategy, Food Supplier Ltd can enter into new market with its
product or services and penetrate target market by focusing more over promotional
activities. Product development:- This strategy suggest that company can offer unique product or
services to its existing customer base for achieving higher growth. Since this strategy
involve development of new product, hence it include more risk along with expenditure
which may not be possessed by this small business venture. But this strategy is also
beneficial as customers need and preferences are already known to company. This
strategy can be used by Food Supplier Ltd in case it want to enter into market with a new
product. In this strategy company can get growth opportunity only when they offer a
product which is either different from others or provide more benefit as compare to its
competitors.
 Diversification:- This strategy is consider to be more riskier as it require both market as
well as product development i.e. company approach new market with new product or
services. Diversification include higher risk but also provide higher return. It includes an
potential to gain a foothold in industry and reduction in business portfolio risk. Food
supplier Ltd can use this strategy if it has an potential to launch a totally new product in
new marketplace.
These all are growth strategies of Ansoff matrix among which 'market development' is
consider to be best growth strategy for Food Supplier Ltd, because they are new entrant in retail
industry. Market development strategy help in capturing market share in UK market this in
return will provide high growing opportunities.
TASK 2
P3 Potential sources of fund available to business
Finance is consider to be one of the basic necessity for an entrepreneur to operate its
business operations (Fainstein and DeFilippis, 2015). Unavailability of fund may affect the
activities performed by a firm and its growth. An entrepreneur is planning to launch its new
venture, 'Food Supplier Ltd' in UK market. Therefore, it requires huge amount of capital to
perform its various operations effectively .firm is decided to enter into a contract “Data
collection and modelling for food business compliance indicators”. The highest value of bid is
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£180000 out of which it has £20000 and the remaining amount £160000 is required to be raised.
This amount can be raised through external sources such as Bank loan, venture capital etc. There
are two type of sources which are available in front of Food Supplier Ltd for generating fund
which are:
Internal sources:- It refers to the ways in which fund can be generated from within the
business such as retained profit, sale of assets and controlling of working capital. These can be
better understood using following points:
Sales of asset:- It refers to the process in which a business owner can arrange fund by
selling out the company's asset. Food Supplier Ltd can arrange required capital by selling its
fixed assets which is more secure option for them.
Advantages:-
 Biggest advantage of asset sale is that cash in hand once everything get finalised.
 It support in increasing the profitability of business by bringing money.
Disadvantages:-
 Building and machineries are very difficult to sell when these are used for longer period
of time.
 The sale of asset always provide lower prices despite of its original value.
Controlling working capital:- Food Supplier Ltd can work over improving its
operations which support them in reducing the expenses or extra costs that are incurred during
performance of its operations. This support them in improving their working operations and in
arranging the fund for reinvest in business for further expansion.
Advantages:-
 Controlling over working capital ensures liquidity by monitoring accounts receivables,
stock management, debt management and accounts payable.
 Proper management of working capital support in evades future hindrance within
business operations.
Disadvantages
 This strategy only consider monetary factors and non-monetary factors are generally
avoided.
 This strategy is not situational in nature.
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External sources:- It can be defined as the number of sources that are present outside the
organisation through which company can generate fund. It includes bank loan, venture capital,
angle investors and these can be better understood using following points.
Crowdfunding: It is one of the most trending way collect funds from different sources so
to increase their economies of scale. It refers to when more than one person invest their small
amount of funds to the company in exchange small share of company in through online platform.
Food suppliers Ltd can use this techniques though this process is time consuming but still great
way of attracting money in to the company.
Advantages:-
 This is one of the fastest way of raising capital without any upfront fees.
 Pitching a business using online platform is more valuable form of marketing which
support Food supplier Ltd in promoting their brand and in gaining media attention.
Disadvantages
 Not all the projects which opt for crowdfunding get positive result.
 In case, Food supplier Ltd fails to reach their finance target, they have to return all the
pledge that they get from investors.
Peer to peer landing: It is one of the way in which no financial institution or legal work
is required to attract funds into the country. It is a way of getting funds from an individual or
group of people on fixed amount of interest rate which is decided in the starting. This approach is
equipped with high risk and high time consuming.
Advantages:-
 It offer loans at relatively lower interest rate as compare to traditional lenders such as
bank.
 It is one of the most flexible option then other type of loans.
Disadvantages
 This is not available for large sum of capital.
 Borrower is required to pay off its application fees.
Angel investors: It is an organisation or company where group of people invest in small
business in exchange of some amount of equity in the company. Those people are experts in
handling executives position in the company and guide owner so that their sales and profitability
would increase to a certain level.
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Advantages:-
 Invested capital is not required to paid back in case of business failure.
 Provide an access to investor's sector knowledge and contacts.
Disadvantages
 It takes time find a suitable angel investor.
 They take up share of company and in decision making power.
Bank loan:- It considered as the process of taking credit from bank for specific time
period and this amount is to be return after the completion of this period with frequent payment
of interest fixed by Bank. Bank loans are mainly used as source of fund specially for small or
medium size businesses (Viitanen and Kingston, 2014). Food Suppliers Ltd for fulfilling its
financial need can raise short, medium or long term capital from bank. But in order to raise fund
from bank company is required to put an assets as a collateral security. Following are the
benefits and drawbacks of raising bank loan:
Advantage:-
 One of the major benefit of bank loan is that when it is taken for business purpose than
interest over loan is tax deductible. Another benefit is that, if the loan is taken at fixed interest rate then company can easily
predict the instalment amount to be paid.
Disadvantage:-
 Main drawback is that for taking bank loan collateral security is required and without an
asset small businesses and start-ups find it difficult to get loan.
 Another disadvantage is that when a loan is taken at variable interest rate than the rate
fluctuate according to the market condition. This make it difficult for a businessman to
make sound financial plan as they don't know in advance the amount which is required to
be paid.
Venture capital:- It refers to the financial help extended by investors to start up a
company as well as small businesses which provide long-term growth potential. This investment
may be done by well-off investors, investment bank and various financial institution. But in
order to attract an investor to invest in a small business, a firm must have an feasible business
idea (Hawkins, 2014). Food Supplier Ltd can attract investors by ensuring them about viability
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of business idea and return for which investors are seeking. Following are the advantage and
disadvantage of venture capital:
Advantage:-
 Venture capitalist are connected with larger business community that further help a new
venture in developing a huge network. VC firms extend a greater support to business such as in legal, tax and personnel matter
which help in achieving greater success and growth opportunity.
Disadvantage:-
 Major drawback of venture capital investment is loss of management control.
 VC is a long and complex process as company is required to develop a business plan for
attract investors.
These are external sources of fund which a Food Supplier Ltd can use for raising its fund
to establish its business. From above explained sources, bank loan is more beneficial for firm as
it is consider to be more secure sources of fund.
TASK 3
P4. Business plan for growth
Business plan refers to a written document or formal statement which elaborates about
vision, goals, objectives and plans for attaining them. This document act as blueprint of activities
which provide guidelines for achieving the goals (Mullaney, Lucke and Trueman, 2015).
Business plan is prepared by management for summarizing its financial and operational objective
for future perspectives. Following are the points includes in business plan:
Executive summary - Food supplier Ltd is planning to launch a venture in UK market as
a retailer of food item. Bank loan, venture capital and bidding contract are some sources of
capital through which company can raise fund for fulfilling its financial need.
Vision & Mission:- Vision:- To become best and more relied retailers of food items in UK.
 Mission:- To offer natural and organic food to customer for achieving higher satisfaction.
Strategic objective:- Main objective of Food Suppliers Ltd is to establishing their
business in UK and achieve higher sustainability by providing organic and natural food items.
This objective can be achieve through SMART objectives which are target specific, measurable,
reliable and time bound.
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