Planning for Growth: Unit 42 Report on Business Expansion Strategies

This report provides a comprehensive analysis of growth planning strategies for Don't look further catering services. It begins with an analysis of key considerations for evaluating growth opportunities, including PESTLE analysis, Porter's Five Forces, BCG Matrix and GE matrix, and then evaluates growth opportunities using Ansoff's growth vector matrix. The report assesses potential funding sources and outlines the benefits and drawbacks of each. It includes the design of a business plan for growth, incorporating financial information and strategic objectives. Finally, the report assesses exit or succession options for small businesses, weighing the benefits and drawbacks of each option, and provides recommendations. The report utilizes various frameworks and models to analyze the business's current state and potential for expansion, including market penetration, product development, market development, and diversification. The report concludes with recommendations to support the implementation of the most suitable growth and exit strategies.

UNIT 42
PLANNING FOR
GROWTH

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Analyse key considerations for evaluating growth opportunities..........................................1
P2 Evaluate opportunities for growth applying ansoff's growth vector matrix..........................5
M1: Options for growth.............................................................................................................6
D1: Critically evaluate specific options and pathways for growth.............................................6
TASK 2............................................................................................................................................6
P3 Assess potential sources of funding available to businesses with drawbacks and benefits...6
M2: Justification.........................................................................................................................9
D2: Critical evaluation................................................................................................................9
TASK 3............................................................................................................................................9
P4 & D3: Design business plan for growth that indicates financial information and strategic
objectives....................................................................................................................................9
TASK 4..........................................................................................................................................13
P5 Assess exit or succession options for small business with benefits and drawbacks............13
M4 Analyse the exit option for small business and contrast the options and make suitable
recommendations......................................................................................................................15
D4 Critically evaluate the exit option for small businesses and provide suitable
recommendations to support implementation...........................................................................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Planning for growth is termed as a strategic tool which is used by an organisation for
attaining objectives. It assist in inhaling options related to growth in an efficient manner.
Growth planning within is essential because it made the business expansion easier. It is highly
essential for an organisation for getting profitable results within specified period of time so that
firm also gain competitive advantage in their long term survival (Meck, 2020). Planning for
growth includes several activities that align with business to capture several options for higher
growth. This project report is useful to acknowledge various terms of growth planning in relation
to Don't look further catering services that is engaged in highly specialised catering services in
Lincolnshire. This firm also offers event planning services, gourmet dinner parties for sports
club like golf and cricket clubs where they fulfil clients requirements to plan party details.
Margaret millions owns Don't look further catering services where she buys food products from
high quality suppliers due to this they rated high price while selling to customers. This firm have
an effective market image that helps in capture the high opportunities in a small period of time.
For this it includes several various models, applications and business plan so that objectives are
to be attained on time and face complexities of market effectively.
TASK 1
P1 Analyse key considerations for evaluating growth opportunities
At the time of growth planning Margaret Millions focus on analysing the several key
terms so that high level of growth opportunities are to be captured that are presented below:
PESTLE analysis
In this firm must includes external environment factors that would present opportunities
for growth to company. For this pestle is to be included:
Political Factor- It defines as a factor which is related to government rules and
regulations due to which company stability situation is reflected (Baran, 2019). In terms of Don't
look further catering services, current political condition is not in favour due to Brexit. It is
officially implemented because a political uncertainty that is negotiations with European Union
is increased. It imposes threat for company because this uncertainty might refrain the long term
growth.
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Economic Factors- It reflects economic environment of country that directly impact the
operation of company. In UK, economy is slowdown that lead to high inflation that will impact
value of pound that create challenge for firm to operate and negotiate with suppliers (Xu and Li,
2019). Therefore it is a threat for business as they create issue of hardships in selling goods at
premium price.
Social Factors- It involves preferences, social culture, fashion etc. that impact company
and their offerings. In terms of Don't look further catering service, current consumers in UK
market have started to fall towards healthier, organic products that are also affordable to them. It
contains opportunity for company in developing products that satisfy consumers demands.
Technological Factor- In the world technological advancements is taken into
consideration that is also essential for company to focus. In Don't look further catering services
several advancements like robotics, automation in ordering foods are present which reflects
growth opportunity and useful in manufacturing and distributing process.
Legal Factors- It is necessary for Don't look further catering service to focus on
legislation (Mobin and Hijawi, 2020). For Food and event parties servives there are several laws
which is essential in UK to follow like Equality Act 2010, where company ensure that every
worker get equal pay according to capabilities. As this legislation present an opportunity for
company in enhancing image and operations.
Environmental Factors- This factor directly impact company production and
distribution process. In UK there are several rules which are imposed by government in relation
to environment protection. It creates opportunity to concerned company in this they ensure that
products are environment friendly.
Hence, it is analysed that above all factors are essential for company for determining
growth opportunities in effective manner. In relation with this there are several other framework
that shows reflection on this opportunities and threats that are discussed above in pestle analysis.
This framework is based on porters five forces model that helps in presenting the way an
organisation adopts to market their products and services for gaining competitive advantage so
that firm will sustain for a longer period of time. Hence, this framework is elaborated below in
context of Don’t look further catering services:
Porters Generic strategy
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This model is very useful as it reflects how a business firm must provide their offerings
within market to enhance profits and gaining competitive advantage in an effective manner. This
model is presented below in relation to Don't look further catering services (Sparkman, 2018).
 Cost Leadership- It refer to an effective strategy for business enterprise. In this firm
would compete to other company in business industry on the basis of price to become a
low cost producer in market. It is an appropriate for business to gain the position in
market within country. However, it offers the advantage to firm in relation to the fact that
once a business enterprise start to lower their price range than competitive edge within
marketplace is might be lost.
 Differentiation- In this aspect, company focus on producing new and distinct products
for creating demand in marketplace due to it unique and exclusivity. In this manager of
company analyse several factors that are valued by customers (Blázquez-Salom and et.
al., 2019). It also offers advantage to company because they offer their goods at high
price because of exclusivity. To gain higher values firm need to indulge in market
analysis timely to effectively examine the demands related to differentiated products.
 Focus- It is a strategy in which organisation focus on competitiveness in industry and
focus on choosing one specific market on which strategies are to be developed. It is
bifurcated into two aspects that are:
Cost Focus- In this strategy company takes advantage to target the segmented market through
cost.
Differentiation Focus- In this differentiation is selected towards target market of a business firm
within business industry.
By analysing above strategies, Don't look further catering services must adopts the cost
leadership strategy that helps business to engage new customers in a small period of time. It
could be done by reducing price of offerings and attracting new people by proper marketing and
advertising. To maintain sustainability within marketplace don’t look further catering services
focus on another framework that is BCG matrix to examine their products capabilities and value
within marketplace. This framework is to be elaborated below:
BCG Matrix
It refers to that matrix which reflects the mixture of all product portfolio that is used as
strategic intent (Mai and Smith, 2018). This helps an organisation to attain objectives
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prominently and also managing all offerings in such a manner that fuller capabilities is to be
used. In case of Don't look further catering services it is presented below:
Dogs- In this product with low market share are involved. For developing market share it
is prominent to use highly innovative promotion but firm do not focus on advertise their dog
products (Syssner and Meijer, 2020). For instance- In terms of Dont look further catering
services their gourmet dinner services for clubs are included in this category.
Cash Cows- It is useful for business to gain profits and higher business insights so it is
beneficial to invest in this category. For instance- Event planning service of Don't look further
catering services is fall under this category where they fulfil clients demands effectively.
Star- This category products contains huge cash so that overall market segment is
enhanced. Don't look further catering services supply lunch meals in supermarket is reflected
under star category where they earn high profits and revenues.
Question Mark- It includes those product portfolio which started to loose market share.
In this future investment is needed to bridge the gap effectively. In terms of Don't look further
catering services their high rated truly occasion services are fall under this because of premium
price.
By analysing BCG Matrix Company need to focus on calculating the investment and
harvesting of the products and for this they need to applied GE matrix that can be elaborated
below:
GE matrix
It refers to that matrix which includes nine cell grid matrix for calculating effectiveness
within industry (Friedmann, 2020). For Don't look further catering services this matrix is
prominent in order to grow effectiveness so that strategies are placed in significant manner. For
concerned company this matrix is shown below:
Invest/ grow- It is more prominent for business because it includes more opportunities
within marketplace to grow (Pettit and et. al 2018). In terms of respected company, they focused
on enhancing their event planning services so that they receive more order of customers because
in this they fulfilled their demands and grab high market position.
Hold/ selective- This cell is related with question mark category that are having low
market share but contains high opportunities for growth. In this Don't look further catering
services focus on innovating their question mark offerings for developing market and profits.
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Divest/ harvest- It includes industry unattractiveness and business performance where
company dog category offerings are included. In this concerned company stop involving dog
category services harvest their amount for further growth deals.
P2 Evaluate opportunities for growth applying ansoff's growth vector matrix
Several growth opportunities are analyse from above analysis that helps in developing
strategies effectively. To evaluate growth strategy effectively Ansoff matrix is taken into
consideration that are to be shown below:
 Market penetration- In this strategy company introduce existing product in existing
market to develop market share (Gualini, 2018). It could be done through reducing price
for attracting new customers. In this another aspect that is effective for company to
developing market share is focusing on enhancing distribution and promotional methods.
 Product development- In this strategy organisation develop new offering for attracting
customers of market. In this Don't look further catering services indulge in doing market
researches and expansion of product range (ul Hussnain and et. al., 2020). Firm could
involve in this category to investing in R&D activities so that successful outcome is
generated. Another way related to this strategy is strategic partnership in this firm must
formulated by other of same sector that will enhance profits and gaining access of
distribution channels.
 Diversification- This strategy is highly risky for an concerned company. In this company
needs new offerings to enter into new market (Li and et. al., 2019). In case of company if
they could adopt this strategy then they need more investment in several activities like
r&d, market research etc. that is quite complex for concerned firm.
 Market Development- In this strategy company sell their existing products in new
marketplace. In terms of concerned company they would expand their market outside UK
where it does not have commercial presence. It helps in gaining competitive advantage
within marketplace. Further it also includes dependent factor in which customer of that
market offered profitable results (Tomaney Krawchenko and McDonald, 2019). It could
be attained by emphasising on different segment intro home and foreign market.
By above all strategies Don't look further catering services implement product
development strategy that helps business enterprise to expand its growth and profits. It also helps
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in attracting more new customers that are useful for long term sustainability of business
enterprise.
M1: Options for growth
There are several options which are available for concerned company to growth. In this
they adopts the use of pestle, porter generic, BCG, GE matrix to examine competitive advantage,
innovation and best strategy that are applied by business enterprise. This helps in attaining high
sustainability goals and also helps in gaining competitive advantage.
D1: Critically evaluate specific options and pathways for growth
It is critically evaluated that there are several pathways for growth that are available for
company. Using ansoff matrix and pestle analysis manager identified the area of opportunities so
that best strategies are to be reflected. In this BCG, GE matrix helps company to develop the best
strategy so that high profitable results are enjoyed. In this firm adopts product development
strategy to attract more customers and gaining high sustainable profits. Using this growth
opportunities determinants company includes more cost and time that impact financial resources
of the business enterprise because more funds are involves in analysing growth opportunities
within market. For this firm need to hire an expert so that they get profitable results in market
and enjoy more growth opportunities for longer period of time. Focusing on this determinant
helps in gaining competitive edge in business industry.
TASK 2
P3 Assess potential sources of funding available to businesses with drawbacks and benefits
Payback period and net present value calculations
Payback period
Year Cash inflow in £ (000) Cumulative cash inflow
(000)
1 28 28
2 32 60
3 35 95
4 55 150
5 78 228
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Formula of payback period: = Base year + primary outlay - collective cash inflow of base year /
future year cash inflow
3 + 100000 – 95000 / 55000 = 3.09 year
NPV
NPV = [Cn/(1+r)^n], where n={0-N}
Net present value: current value of money inflow of software project – current value of
original outlay cost of software: 159296 – 100000 = 59296
Sources of finance
A business is an activity that manufacture and distribute products and services to
consumers for generating profits. An organisation needs money for smooth functioning of
activities and operations for this they need capital so that firm look forward to new ways to
generate more revenues (Gallent and Tewdwr-Jones, 2018) It includes two types of sources
which are internal and external:
Internal and external source
Internal source of funds refers to that types of funds which are collected within business
enterprise like sales, collection of debtors etc. on the other hand external source of funds are
those in which an organisation collect funds from outside business enterprise. In terms of Don't
look further, firm focus on external sources and select the best alternative that are evaluated
below:
Bank loan- In this money is to be borrowed from a bank by an organisation or an individual
person. In this organisation can pay off bank loan with interest on a pre decided agreed period of
time (Sarin, 2019). It includes some benefits and disadvantage that are shown below:
 Benefits- Interest on Bank loan is tax deductible which is valuable for business
enterprise for easy planning the payment. In this an organisation have no obligation after
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the whole interest is paid. It is also beneficial for company because it is one of a secured
type of loan.
 Drawbacks- For business enterprise is to difficult to pay high interest to complete the
needs of business enterprise. It is also very time consuming where lots of paperwork are
needed.
Crowdfunding- It refers to a small amount of capital that is used by a number of business
enterprise to finance for growth. Crowdfunding helps in developing vast network of people using
social media and crowdfunding websites to bring investors and business firm together.
 Benefits- Crowdfunding contains benefits for an organisation if they marketed their idea
effectively, due to this high quantity funds are to be arranged in appropriate manner.
 Drawbacks- It also contains some drawback as it is highly risky because in this there is a
issue of leaking idea and proposal. It also contains more time in collecting funds.
Peer to peer lending- It refers to that source of fund which enables an individual person or an
organisation to obtain loans directly from other person by cutting down financial institution as a
middleman (Kalman and Létourneau,2020). It is useful for business to connect directly with
investors where terms and conditions are set already to transactions.
 Benefits- Peer to peer lending is beneficial for company because in this organisation get
the loan conveniently and quickly. It is very flexible in nature that does not contain more
paper work and allow borrower to get loan in shorter period of time.
 Drawbacks- Peer to peer lending contain credit risk due to this they are not allow to
obtain a conventional loan from bank. In this government also not provide any type of
protection in terms of default borrowers.
Angel and Venture finance- In this an angel investor offers a large funds of their own money to
new start up business and in return investor get equity or convertible debt. In terms of concerned
business enterprise if they adopts this source of fund than they get the funds very easily but in
this manager evaluate pros and cons that are presented below:
 Benefits- Angel investor is beneficial for business enterprise because it does not contain
more time and money in arranging funds for growth.
 Drawbacks- It contain some drawback because in this more risk is involved and in this
firm invest more time to find suitable angel investor.
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M2: Justification
Don’t look further catering services focus on product development in their catering related
services for this they need more funds. At this time manager of company analyse the various
sources of collecting and examine that bank loan is the best source. Hence, it is evaluated that
Don't look further catering services adopts the use of bank loan as a source of fund for
distribution and production of new product and within marketplace. It is secured as compare to
other type of sources. It is effective for company because they pay the interest on time as they
have appropriate earnings.
D2: Critical evaluation
From above analysis it is critical evaluated that from the number of sources of funds,
bank loan is best source of finance to don’t look further catering services. It is the best decision
that a manager of an organisation can taken place. But at the same time bank loan have some
disadvantage that they pay high interest over it which is quite difficult for the firm to pay. Firm
can pay the interest on bank loan effectively because it is fixed in nature so that they collect and
arrange funds prominently which does not impact overall, operations.
TASK 3
P4 & D3: Design business plan for growth that indicates financial information and strategic
objectives
Company overview- Don't look further catering services is a prominent business that
specialised in catering business within Lincolnshire. This catering business is owned by
Margaret Millions where she also involves several other services like event planning, gourmet
dinner parties for sports club, working with supermarket to supply lunch meal.
Vision- The vision of company is to become a prominent catering company within
country by offering quality food products and services to customers for retaining them to a
longer period of time.
Mission- The mission of Don't look further catering service is to offer high quality
products and services to customers by effectively analysing customers needs and requirements.
Strategic objectives- In this Don't look further catering services planning to achieve 20%
profits within coming year. For this they try to focus on marketing their products and services in
an effective manner to manage and transparency in an organisation and also managing operations
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and activities of business. It is highly expected by shareholders for this they arrange funds by
bank loan so that profits are to be attained appropriately and effectively.
To identified the opportunities for growth company can adopts the use of Ansoff
matrix and in this they select the product development strategy because it helps in attracting
more new customers (Yates and Bradshaw, 2018). Product development helps in maintaining the
high brand position within marketplace. It also helps in gaining competitive advantage for a
longer period of time. By implementation this strategy stakeholders expectations are to be
fulfilled effectively to get the high returns.
In this values and ethics are play an essential role where the company mainly emphasis
on CSR policies where they provide the welfare to employees by offering equal pay so that high
productive results are to be enjoyed. Ethics are very essential part for growth as it helps in
gaining high market position.
STP: It is a model that is used by a business to enhance market productiveness and it is as
briefly explained below as:
Segmentation: It is an aspect under which catering service produced ensure to divide
group of people on the basis of its likeliness. In this demand and requirement of marketplace is
recognised that is also be incur with expenses.
Targeting: It is a strategy that is more significant under which catering service provider
offer various services as per congregation of religious. In this different menu is offered in order
to satisfy need and demand of customers that process prohibitive values (Thornley, 2018).
Positioning: In this service provider ensure to advance quality services under which
strong competitive advancement is processed in better manner.
Financial plan
Income statement:
INCOME STATEMENT
2014-06 2015-06 2016-06
Revenue 59893 62102 65512
Cost of revenue 41424 43045 45525
Gross profit 18469 19057 19987
Operating expenses
Sales, General and administrative 11340 11855 12850
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