Evaluating Growth Opportunities and Funding for New Car Deals Ltd

This report examines the growth plan of New Car Deals Ltd, a van manufacturing business based in Horbury, aiming to expand its operations by introducing new commercial vehicles and moving to larger premises over the next five years. The analysis includes evaluating growth opportunities through Porter's generic strategies (cost leadership, differentiation, focus), and assessing growth strategies using Ansoff's matrix (market penetration, market development, product development, and diversification). The report also explores potential funding sources for the expansion, detailing their benefits and drawbacks, and develops a business plan for the new venture. Finally, it considers exit and succession planning options for the small business. The report provides a comprehensive overview of the strategic considerations, market analysis tools, funding options, and business planning elements crucial for New Car Deals Ltd's growth initiatives, offering insights into market positioning, financial planning, and long-term sustainability.

PLANNING FOR GROWTH

Table of Contents
INTRODUCTION...........................................................................................................................1
P1. Analysing key consideration for evaluating growth opportunities for New Car Deals Ltd. 1
P2. Evaluating the opportunities for growth using Ansoff's growth vector matrix....................3
P3. Assessing the potential source of funding available for New Car Deals Ltd with their
benefits and drawbacks...............................................................................................................5
P4. Business Plan for New Car Deals Ltd 's new business.........................................................8
P5. Assessing the exit or succession options for small business with their advantage and
disadvantage................................................................................................................................3
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Planning for growth is an essential part for the companies who are planning to expand
introducing new products in order to attain growth in business market to achieve its business
objectives. Planning to expand the business operation will help in increasing sales and revenue
for a business entity. The present report will help in understanding the growth plan of New Car
Deals Ltd which is dealing in Van manufacturing business. The company is based in Horbury
and run jointly by family members. They have a plan for next 5 years of expanding their business
by introducing new commercial vehicle and moving to large business premises. The report will
help in analysing the factors that needs to be considered by evaluating growth opportunities. The
growth opportunity strategy will be discussed with help of Ansoff' s growth matrix. Different
source of funding will be evaluated, a detailed plan for new business will be made for New Car
Deals Ltd. Further, various strategy for exit and succession planning will be discussed in report.
P1. Analysing key consideration for evaluating growth opportunities for New Car Deals Ltd.
In the competitive business environment, it is very essential for any business to keep on
expanding its business operations for its survival in industry. Business world is growing fast and
in order to remain competitive, organisation should whether expand its business or launch new
product and services in order to attract customer and increase revenue for the business. Planning
for growth is an essential part for the companies who are planning to expand introducing new
products in order to attain growth in business market to achieve its business objectives.
New car Deals Ltd is is going to expand its business by introducing new commercial
vehicles. They also plans to open few easily accessible shops in order to create customer
awareness and attract to their brand (Archambault and Masunaga,2015). Making an effective
plan for growth of business is not enough, New Car Deals its' s sales team has to make effective
strategies in order to execute these plan on floor. There are various factors which company
should take care of before planing to expand its business operations. Their consideration for
growth opportunities can be well explained with the helps of analytical frameworks, which are as
follows:
Porter generic strategies:
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This model is an effective way that assist the management to determine the firm's
profitability in order to remain attractive in the market. This model helps in setting the four
concepts which will help in further procedures of the business. Porter generic strategies will help
in providing different ways of competitive in the market. This model will help in providing four
strategies which will help New Car Deals Ltd to reach its success goal in business:
 Cost leadership: This strategy can be used by the company to become the low cost
producer company in industry. This strategy can be adopted when firm wants to gain
higher profit by selling product at average price in compares to its rivals, or will sell the
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Illustration : Porter Generic Strategy
Source: (MICHAEL PORTER'S FIVE GENERIC STRATEGIES , 2018)
Illustration 1: Porter Generic Strategy
Source: (MICHAEL PORTER'S FIVE GENERIC STRATEGIES , 2018)

product at lower average rate in order to earn the market share
(Metzger and Flanagin ,2013). New car Deals Ltd can sell its new vehicles in
comparatively low cost than rivals which helps in making profit in long run. In this
strategy the firm can earn profitability by selling vehicles at low cost when prices in the
industry will declines. This strategy is useful when the company is going to target the
large market. In this strategy New Car Deals Ltd can earn cost advantage by improving
its operational efficiency, maintaining cost control and optimum utilization of resources
which assist it in making profit even with lower sell price.
 Differentiation strategy: In this strategy New Car Deals Ltd has to introduced its new
vehicle with unique and advanced features which will differentiate it from other rival
firms in industry. New car deals Ltd is launching new vehicle which is based on the
commercial used and are also helps in saving cost of the customer by opening small agent
style shops. In this way firm is adding value for the customer which will help in making
their perceptive different from that of other rivals (Levy and Ronco ,2012). These
differentiation will assist the management to choose premium pricing for the product that
will also help in making extra profit to cover the cost of production.
 Focus strategy: This strategy will used to focus either on making profit by ordering low
cost by targeting smaller market which help in become major player which helps in
remain competitive in the market. It can be termed as remaining cost focus only. There is
another perceptive of this strategy which focuses on remaining differentiated by
manufacturing unique products. In this strategy company will focus to produce more
unique product that will help in making more profit by offering value added products to
the customers. New Car deals Ltd can adopt this strategy, when they look after balancing
both cost advantage and delivering quality products (Conley and Gil, 2011).
Porter' generic model is a great tool for New Car Deals Ltd that will assist it in order to
analyse the growth opportunities in market. Differentiation strategy is the most appropriate
strategy for company in terms of expanding its business.
P2. Evaluating the opportunities for growth using Ansoff's growth vector matrix.
In order to evaluate the market for growth opportunities Ansoff's growth matrix is also an
effective tool which helps in providing strategies which will assist the management in making
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strategies for growth in market. New car deals Ltd can use this strategies effectively to analyse
the market and product for growth opportunities.
As per the Ansoff' s growth matrix, there are two main approaches for growth in market
that is the product growth and market growth. This model is mainly used in order to evaluate
opportunities present for the company which assist in increasing their sales through alternative
combination for new market as against to new product and services by offering four strategies.
These are:
 Market penetration: this is the simplest strategy in this model. According to this strategy,
the firm should sell its existing product in the existing market. If New Car deals Ltd will
adopt this strategy, its has to sells its van products in the same market. The company has
to find different ways in order to attract more customers and gain the existing customer's
loyalty (Barron and Apple, 2014). In order to achieve this, company needs to adopt
various plans that includes order processing time, disclosing entire product portfolio,
allowing different discounting offers. Any type of action which is done by management
for the purpose of increasing its market share is known as market penetration technique.
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Illustration 2: Ansoff Matrix
Source: (Ansoff Matrix , 2018)

With this market strategy New car deals will able to influence its customer for switching
on the new products of company. Therefore, by lowering prices and by most forms of
advertisement, New car deal will able to promote market penetration. This strategy of
company helps them in gaining or obtaining more customers which is from those who are
seen as potential ones. Market development: when the product reaches to its saturation limit in exiting market,
its essential for the company to expand its market region in order to attract more
customer from new market. In market development Company will sell its existing
product in completely new market in order to increase the sales and attracting new
customer. In this strategy company has to evaluate the need and demand of their product
in new market. It has quite a risky in entering a new market with the existing product. Product Development: For New Car Deals Ltd this strategy can be more useful, as the
company already succeeded in providing quality product and after sales services of the
product which helps in maintaining customer loyalty of the company. In product
development strategy, company will launch or develop new product and will sell in the
existing market. A company can either innovate its existing product or can introduce new
product to offer its existing customers. New Car Deals Ltd is going to introduced new
commercial vehicle with more unique features for commercial use
(Armstrong, Brown and Smith, 2014). As the company has good customer base in
market, this strategy will help in attracting more customer and increase the revenue for
the firm.
 Diversification: This strategy is the most riskier among all. In this strategy company is
selling new product in completely new market. The firm has to adopt this strategy when it
has a strong supply chain and had done adequate research for the new market to enter. If
New Car Deals Ltd is opting for this strategy, it has to launch its new vehicle in a new
market. It can be riskier as owner has no or limited idea regarding the new, market, but if
succeeded it will give higher return of profit as compared to other strategies.
By evaluating the Ansoff' s growth matrix, it can be analysed that New Car Deals Ltd
should opt for product development and it can also choose market development strategy. As the
company has a good customer base in existing market, it can introduced its new commercial
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vehicle in existing market. It also be said that, company has a long term plan for expanding its
operations in new large offices, and also plan to open new small agent type shops which help in
expanding the market for company. Hence, New Car Deals Ltd can also opt for market
development strategy by staying with its van car business.
P3. Assessing the potential source of funding available for New Car Deals Ltd with their benefits
and drawbacks.
For every business whether it is going to start a new business or expanding its business
operations, foremost essential requirement is having sufficient funds for the company. Funding is
considered as a fuel for the business. The requirement for funds is depend on the business
operations. An owner can require funds for meeting various needs such as working capital
requirement, Purchasing for new assets, expansion of business operations. As New Car Deals Ltd
is looking for further growth with launching new product and starting new business premises, it
would require funding for the growth. Growth funding is essential to execute the new business
plan. Funding is essential increasing sales, expansion of product range, moving or purchasing
new business premises.
One of the difficult task is raising funds is evaluating various sources and the requirement
of fund that a business is required. There various sources of funding that are available in market,
but it is very essential for a company to select the best suitable sources by evaluating their
advantage as well as the disadvantages also. The various sources for financing new business plan
of New Car Deals are as follows:
Bank Loans:
It is the first option for every entrepreneur to raise their funds. It is the most common
sources of funding for the small and medium-sized funding. Banks offers loan for the short term
as well as for the long-term also. The amount of loan will be based on the business plan and need
for finance. In order to grant the loan (Advantages & Disadvantages of Bank Loans , 2018).
Company will have to present its business idea. Bank in some cases ask for something as
collateral like assets. On agreed term basis, bank will grant loan for a specific period of time and
will charge regular interest based on the amount of loan.
Advantage of bank loan:
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 One of the benefit of taking loan from bank is that it doesn't take any ownership position
or will not interfere in the business activity.
 The amount on interest that is charged by bank are tax deductible which will help in
retaining profit of firm. If owner is taking a fixed rate loan, there will be no fluctuation in
interest rate through the entire term periods.
 Bank loan are considered as cheapest option as other sources.
Disadvantage of bank loans:
 As bank requires collateral in form of assets, businesses may found it difficult in getting
loan approval if they fail to provide collateral.
 Repayment of loan of periodic basis may found it difficult for strictly repayment, if the
borrower fails to do so their assets will get seized. Interest rate with fluctuation will keep changes with market condition. It will be difficult
for owner to determine the exact amount of payment in future.
Retained earning:
It can be defines as the share of profit that company earns from selling of its product.
This is the profit of company after deducting all the expenses incurred from selling and cost of
production (Hall and van Reenen, 2012). This is the most basic source of funding which it uses
for its further expansion or investment purpose.
Advantage of retained earning:
 Retaining earning is safe as it doesn't involve any acquisition cost, company has no
obligation to pay the amount back.
 It helps in maintaining full control over the operations of the business.
 Retain earning helps in strengthening the financial position of the company and helps in
increasing goodwill of the company.
Disadvantage of using retained earning:
 Funding through retained earning will affect the need of cash to funds ongoing operations
of the company.
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 In case of business failure, company will loose all its earning which will affect the
repayment of shareholders and ongoing business operation will also suffer.
Sale of fixed asset:
When a business has assets which is of no use or no more in use will be well utilised by
company for growth funding. New Car deals Ltd is going to move in large business premises, it
has old premises to be utilised for funding (Cowden and Alhorr , 2013). Selling off the assets at a
right price is very important. The price from selling of assets can be used for financing the new
business plan.
Advantage of Sales of fixed assets:
 The main benefit of asset sale is that company can get money easily and quickly after
selling the assets.
 It will help in getting full control on fund and in the profit earned.
Disadvantage of asset sale:
 Sometime, the depreciated amount will get deducted and company may not get the
sufficient amount.
 it provide accurate knowledge of fund needs, as reducing capital may result to reduce the
money to manage daily expenses.
P4. Business Plan for New Car Deals Ltd 's new business.
Business plan of New Car Deals Ltd.
Overview:
New car dealer is organisation which deals in providing professionals and efficient
services to its clients. Industry is currently representing more than 390 new cars and trucks
dealers throughout British Columbia. However, to expand its business company has planned to
introduce new specialized commercial vehicles through opening small outlets which easily
assess and advertise company's services to its customers. This unique idea is been developed by
company to save lot of time and money of customers.
Vision:
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Vision of New Dealers company is to improve sales volume and profitability of company
by delivering complete customer satisfaction products with continuous improvement and
development of production and services.
Mission:
New dealer company is committed in providing the best services and products to
customers that build strong customer relationship in business market.
Objectives:
We work with honesty and integrity in which we are abided to work under proper code of
ethics in offering our services to customers. Our objectives is to provide the best possible
services by respecting each customer of organisation. We treat our customers and employees in
fair manner for developing strong relationship with them.
Market strategies:
Firstly, to target customers of business market, the company will target commercial
institute who deals in business of vehicles. To attract them in organisation, we will open small
easily assessable agents which will do effective advertising of products and services. This
strategy will develop to save customer's time by directly providing agents who work for
company. People comply more with doing face to face dealing rather to deal in phone.
Therefore, we will hire our agents which has their own offices and will focus on personal leasing
of products.
As target customers, we will target commercialised people who are involved in business
of vehicles such as transporting etc. Effective advertising activities will be provided to them by
small agent where they get attracted in buying company's products and services. To target
customers, attractive policies are provided through online websites and social media by which
direct communication will get developed to customers of business market.
Brand positioning will be developed effectively with proper strategies and policies. To
promote brand positioning, advertising of products will do to target customers which get
influences to purchase the products of company. Comparison of brand with its competitors is
also provided to customers so that they will encourage in trying products of company.
Marketing mix:
To find the output of the business, marketing mix is the model which represent the
analysis of products and services which offered to consumers of business market. Therefore, this
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marketing mix model will analyse place, promotion, price, and product which needs to
developed in opening a new business.
Product:- in this decision will get developed regarding products which needs to offer to
consumers. To attract customers products like new car dealer auto-mobile, engines, spare partes
and accessories will be offered by the company.
Price:- pricing strategies will be developed by analysing price strategies of competitors.
By offering low prices with high quality of products, customers will get attracted easily in
organisation.
Promotion:- effective promotional strategies such as advertising through social media,
websites will be done by small agents. direct interaction from customers will be done in
providing explanation of goods and services of organisation.
Place:- to improve sales volume of the company, small stores are to be opened in areas of
cities where more commercial vehicles will pass so that agents will able to explain them about
the products and services of company.
SWOT of NEW car deal:
Strength:
 Effective, friendly and professional services to consumers.
 Provides innovative products with the best quality.
Weakness
 Newer website and re branding of the pipeline can be a weak point at present time.
 Company has high employee turnover which affect overall business operations.
Opportunities
 Enhancement of consumer attraction throughout diversification of promotional strategy.
 By adopting fuel driven combustion engines, company will able to achieve excellent
growth of company.
Threats
 Intense competition in market.
 Government regulation regarding constantly increasing fuel prices badly affecting
company's profitability.
PESTLE on s auto-mobile industry in UK
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