GEKKO: Planning for Growth - Unit 42 Report on Business Strategies

This report analyzes GEKKO, a small-scale marketing agency, and its planning for growth. It begins by identifying key considerations for evaluating growth opportunities, including competitive advantages, capabilities, and core competencies, along with the application of Porter's Generic Model and PEST analysis. The report then applies the Ansoff matrix to determine growth strategies like market penetration, product development, and market development. It explores potential sources of finance, such as venture financing and bank loans, along with their merits and demerits. A business plan for growth is included, detailing financial information and strategic objectives. Finally, the report assesses exit or succession options, such as mergers and acquisitions, providing an evaluation of these strategies. The report uses various analytical frameworks to demonstrate an understanding of competitive advantage within an organizational context.

UNIT 42:
Planning For Growth

Table of Contents
INTRODUCTION...........................................................................................................................1
P1. Key considerations for evaluating growth opportunities along with justification...........1
P2. Determination of opportunities for growth through application of Ansoff matrix..........3
M1. Discuss the options for growth using a range of analytical frameworks to demonstrate
the understanding of competitive advantage within an organisational context......................5
P3. Potential sources of finance accessible to company with merits and demerits of sources5
M2. Evaluate potential sources of funding and justification for the adoption of an appropriate
source of funding for a given organisational context.............................................................6
P4 and M3. Business plan for growth including financial information and strategic objectives
for scaling up a business.........................................................................................................6
P5. Assessment of exit or succession options for a small business along with the merits and
demerits of every option.........................................................................................................9
M4. Evaluation of succession options..................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Each and every entity operates with the intent of earning high level of revenues as well as
profits. The implementation of effective business strategy acts the route way to increment of
business networking. In this regard, corporations take strategic course of action in order to
facilitate growth and expansion of operations. The following project is conducted to analyse the
planning for growth done by GEKKO. This is a small scale marketing agency which sets out
strategic campaigns for its clients. It has its headquarters situated within the confines of
Newbury, United Kingdom. The project seeks to look upon the key growth considerations along
with sources of funds. Also, it includes a business plan which consists of strategic objectives and
strategies to facilitate growth and development of firm. Further, it includes Ansoff Matrix along
with succession strategies.
P1. Key considerations for evaluating growth opportunities along with justification
Growth is the primary aim of companies operating in an economy. For this purpose, an
entity needs to make use of its capability, resources and core competency (Mazzarol and Reboud,
2020). GEKKO is a small scale marketing agency which seeks to attain growth within market
place by leveraging its resources, competency and capabilities. All of these 3 are discussed in
context of GEKKO as follows:-
Competitive Advantage
Resource: The resources of the concerned firm are acknowledged to be physical, human,
technological, financial etc. All of these together contribute in accomplishment of organisational
goals and objectives within the predefined course of time.
Capability: GEKKO is capable of meeting the never ending demands of clients by
providing high quality marketing service packages.
Core competency: The concerned marketing agency is competent in delivering high
quality services to clients in a timely manner.
New products and services: innovation
Innovation is considered to be the most important aspect for each and every corporation which
provides aid to it in gaining the attention of large number of individuals. In this regard, it has
been analyzed that GEKKO Partners has the potential as well as capability to undergo new
product and service development process in a manner such that innovative offerings can be
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created as a result of it. Such new innovative offerings would allow the respective marketing
agency to gain a competitive edge in market place by appealing to the audience in an effective
manner.
Considerations for Growth
Porter’s Generic Model
Porter's Generic model is taken into use by the management of GEKKO to take into
account the considerations for growth. This model is applied to GEKKO as follows:-
Cost Leadership: Hereby, a firm seeks to lower down the overall cost of business
operations. The implementation of this strategy within GEKKO would imply production of
marketing services at a lower cost and provision of the same at high pricing to gain advantage of
high margins.
Differentiation: Hereby, an entity seeks to establish its distinct image within the
mindsets of customers. If this strategy is leveraged by GEKKO, it would mean that the company
establishes a unique image of its service portfolio among public and thereby earn high profits.
Focus: This is a kind of strategy pertaining to the strategic model which is only devised
for a particular customer segment (Hechavarria and et. al., 2019). It is of 2 types, cost and
differentiation. In relation to GEKKO, cost focus strategy can be leveraged by the management
through reduction of prices of its offerings for clients. On the contrary, respective marketing
agency can capitalise upon differentiation focus strategy by launching innovative offerings
within the confines of its target market.
Opportunities available to business
Management of GEKKO has undertaken the use of PEST analysis which would provide
aid to the business in assessment of available opportunities.
PEST Analysis
This framework is applied by GEKKO to gain knowledge of the influence of external
factors upon the functioning and growth opportunities of business.
FACTORS INFLUENCE ON GEKKO
Political The politically stable conditions of UK foster the growth of SMEs by
GEKKO. The firm gains knowledge of the uniform governmental policies and
thereby act within its favour.
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Economical UK is an economically developed nation which equips firms like GEKKO
with the required infrastructure, communication and other facilities. This
enables the firm to meet the needs and demands of clients in an effective
manner (Obeng, 2019).
Social Social media marketing is an emerging trend which can be leveraged by
SMEs such as GEKKO to inflate its market reach. The increment in its reach
leads to placement of effective influence upon the purchase behaviour of
clients.
Technological The advancements as well as technologies arising within UK at rapid intervals
of time tend to generate growth opportunities for SMEs such as GEKKO.
P2. Determination of opportunities for growth through application of Ansoff matrix
Ansoff matrix is considered as one of the most influential framework that provides
knowledge to the company about range of growth strategies which is helpful for them in
enhancing their sustainability at marketplace in effective manner (Grillitsch, Schubert and
Srholec, 2019). With reference to GEKKO, the respective manager of this company has made
use of this framework in order to determine best growth strategy through which they can easily
succeed at marketplace. Application of this framework is stated as below:
Market penetration: Implementation of this growth strategy can be easily done by
offering existing product within the existing marketplace. Here, if company wants to incorporate
this strategy then they are required to find out untouched customers within the same market
where they have been dealing from past years. Adoption of this strategy will directly lead to
enhancement of market share.
Product development: In this, main focus of the strategy is to offer completely new
product within the same marketplace with the motive of attracting huge number of customers
towards them in effective manner. In context to GEKKO manager of this company can easily
make use of this strategy by acquiring highly unique as well as innovative marketing services for
its clientele (Kolvereid and Åmo, 2019). This will directly support respective company in
influencing interest of new customers towards them as they are serving hi tech services to its
clientele.
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Market development: This strategy states that business organisations are required to offer
existing product at new marketplace for attracting customers towards them in effective manner.
With reference to GEKKO, it can be said that if this company plans to adopt this strategy then
they are required to start offering their existing marketing services to customers within the
periphery area too. Strong goodwill of company with the existing products will allow company
in attracting new customers at new marketplace. This will lead to improvement in sales
performance as well as profitability of the company.
Diversification: Diversification is determined as the most risky strategy among all. This
is so because, it simply states that business are expected to offer new products in new
marketplace with the motive of enhancing their growth in rightful manner. The small scale
company like GEKKO must not adopt this strategy as it requires huge capital investments as
well as there are more number of additional expenses in introducing new product and entering
into new marketplace (Davies, Haugh and Chambers, 2019). All of these kinds of financial
fluctuations cannot be managed by GEKKO. Thus, the company should not go for this strategy.
Collaboration
Merger or acquisition:
This is regarded to be the most prominent way of executing the succession strategy.
Hereby, a firm either intends to get integrated with another organisation or takes over another
entity (Mazzarol and Reboud, 2020). Both of these facilitate growth and expansion of business
operations of a company by inflating the existent level of resources, capabilities and networking
with the public at large. GEKKO can acquire or merge with other top notch companies working
within the domain of market, to attain rapid growth in market place.
 Advantage: This leads to an increment in capital of organisation resulting in enhancement
of existing profitability for entity (Mazzarol and Reboud, 2020).
 Disadvantage: This is a strategy involving a certain extent of complexity owing to which
the staff members face difficulty while operating with new employees. This may result in
decline in overall organisational productivity.
Mergers and acquisitions result in capital increment but involves extensive complexity.
On the basis of the overall analysis done above, it can be said that merger or acquisition would
be the most suitable strategy for GEKKO to execute the strategy of collaboration of its business
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operations. This will result in increment of revenues along with profitability. It would enable the
concerned firm to expand the reach of its marketing services.
M1. Discuss the options for growth using a range of analytical frameworks to demonstrate the
understanding of competitive advantage within an organisational context.
On the basis of Porter Generic Strategy, it can be said that the most suitable strategy for
GEKKO would be cost leadership. This strategy is suggested as it lowers down the cost for
company, thereby enhancing the profit margins by a significant proportion. With this, the firm
will be able to facilitate growth of business operations by providing services developed in low
cost at higher prices.
As per the analysis of Ansoff Matrix, it is found that GEKKO should go for market
penetration growth strategy as it is a suitable strategy for the company. In order to adopt it
effectively, its business managers are required to focus on finding out new customers within the
same marketplace by conducting market research. This will support them in enhancing their sales
performance. Along with this, company can also enhance its market share with this strategy.
P3. Potential sources of finance accessible to company with merits and demerits of sources
The major sources of finance for the potential growth of business are:-
Venture financing
Venture financing is the source of getting the financial aid by the giant recognised firms
in for those SMEs which have the potential for the long term growth and high returns on
investment.
Advantage- Identifying an organisation for the venture financing is quite easy and less
time taking as the major companies are listed in the various directories and have a popular image
of providing the venture capital (Davies, Haugh and Chambers, 2019).
Disadvantage- Using the venture financing has certain drawbacks as the investing
companies demands higher return in exchange of limited investment which leads to less
profitability of the respective SME.
Bank Loan
This is one of the most prominently used methods of procuring finance for business. This
method is quite effective for small and medium sized organisations. Procurement of bank loan
consists of certain advantages and disadvantages discussed beneath.
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Advantage- Taking a bank loan does not affect the ownership or control of organisation.
It is a less time consuming process. Further, it is determined that repaying the bank loan can be
done in accordance with firm's capacity. This can be done by diving whole amount in EMIs.
Disadvantage- Bank loan consists of high rate of interest and it becomes tough to get the
documentation as well as requirements approved by the bank authorities.
Angel investors
Any business tycoon or market growth investor, who tends to invests in potentially small
and medium ventures by providing required capital funds and general assistance, is termed as the
angel investor.
Advantages- Angel investments are safer and cost efficient as compared to other debts
and loans as there is no need for the repayment with high interest of capital invested. Timely
assistance of experienced professional is provided by the investor in respect to attain more
growth objectives effectively.
Disadvantages- The ownership of business faces a great threat by the angel investor as
the investment in capital demands certain share in the equity. That results in sharing profits and
all other benefits. The controlling and monitoring gets decentralised among the actual owner and
angel investors.
M2. Evaluate potential sources of funding and justification for the adoption of an appropriate
source of funding for a given organisational context.
There are various sources of finance, such as venture finance, bank loan and angel
investors. It is analysed that venture financing organisation is easy to find but demand high
returns. Further, bank loan is a secured source of finance, however, it consists of tedious and
time consuming documentation procedure. Angel investment is a safe financing source but it
results in dilution of control for the organisation.
As per the sources of finance analysed above, it can be said that choosing venture
financing as the source would be more beneficial to the GEKKO Partners, as in this factor, the
chances of growth are much higher as compared to any other fund resource.
P4 and M3. Business plan for growth including financial information and strategic objectives for
scaling up a business
Business plan is mainly seen as the written document which includes information on the
strategic objectives as well as financial data of company (Karpowicz and Suphaphiphat, 2020).
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It is mainly formulated to for forecasting growth of company. In context of GEKKO, respective
manager of this company has developed its business plan which has been stated below:
Overview of the company: GEKKO is a marketing agency which is small in size and
deliver is services within UK only. The main motive of the company is to provide maximise
benefit to its clients by doing their promotion in effective manner and enhance number of
customers effectively towards them.
Mission and vision: The main mission statement of GEKKO agency is “To create
engaging content for clients so as to retain them for long term”. Moreover, the respective vision
statement is “To become the marketing leading marketing agency across the global periphery”.
Situational market analysis: This analysis is mainly conducted for exploring
opportunities as well as strengths of the business entity. By acknowledging so company can
easily attain success in quicker manner situational analysis of GEKKO is stated as below:
Strengths Opportunities
 GEKKO offers good quality marketing
services to their client which directly
leads to development of positive
relationship with the customers (Lartey
and et. al., 2020).
 The company has skilled workforce
which effectively makes use of latest
technologies for delivering best
services to the customers in effective
manner.
 The respective company has effective
good range of resources which
ultimately develops opportunity for the
company as they can easily enhance
their market share by providing best
services to its customers.
Strategic Objectives: The management of GEKKO has laid down certain objectives
which the company seeks to attain with the business plan. Such objectives are enlisted beneath:-
“To enhance the profitability of entity by 15% by the end of 2020 by capitalising cost leadership
strategy”
“To increase the sales of company by 22.5% by the end of 2020 through social media
marketing”
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Strategies: The main strategy that would be adopted by GEKKO is to maximise their
command over operational cost with the motive of attaining success in the near future in
effective manner. Further, the entity will make use of social media marketing to gain the
attention of large number of customers towards the innovative offerings of the marketing agency.
Also, the entity proposes to leverage the use of cost leadership strategy to reduce the overall cost
of operations, thereby becoming a cost leader across global market place.
Formulation of budget: Budget of GEKKO is stated as below in effective manner:-
From above mentioned cash flow statement, it can be said that GEKKO is paying all of
its taxes at regular basis at annual basis. Along with this, its overall cash value that is cash in
hand was £102203, £200354, £238503 for 2015, 2016 and 2017 respectively. The total
determined income of this entity is £72001.
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Monitoring and Controlling: This is seen as the last stage of respective business plan in
which business manager of GEKKO prefers to make use of benchmarking as well as KPI
technique in order to monitor their performance at regular basis (Singh, Singh and Hanafi, 2020).
Also, if manager founds something non effective then they also takes required action towards the
same in order to control overall situation and maintain their performance so that growth of the
company can be attained in predetermined time frame.
P5. Assessment of exit or succession options for a small business along with the merits and
demerits of every option
In the modern era, each and every company, regardless of the scale of its operations,
intends to attain growth and development. However, it is determined that, many times, certain
situations raise which make the firm decide to liquidate or shut down its operations. Thus, it can
be said that every company has 2 options to take into consideration, namely, succession or exit.
The decision to select which one out of these 2 lies in the hands of top management which
analyses the overall situation as well as market positioning of firm. Finally, the decision to exit
or succeed is taken up by an entity. In relation to GEKKO, it can be noticed that the concerned
firm is doing quite well at market place (Tunberg and Anderson, 2020). So, the decision to
succeed its business operations would be suitable. This would enable the firm to achieve growth
in near future. Thus, the various ways of succession are looked upon the management of
GEKKO as underneath:-
Delegation of expertise:
Hereby, the business owner delegates their work to staff as per their skill set and
competence. This leads to growth and development of the company as the owner is able to
channelize their focus upon key areas of company. GEKKO can make use of this succession
strategy to attain an edge over rival firms present in market place.
 Advantage: It tends to reduce the pressure as well as work load for the business owner.
Further, the provision of empowerment opportunity to employees boosts their morale and
encourages them to give their best performance.
 Disadvantage: The probability of misuse of authority on the part of employees is high here
which pose the corporation to risk.
Use of internet:
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