Planning for Growth: Newbury News Limited Expansion Strategy

This report examines Newbury News Limited, a UK-based SME specializing in newspaper and magazine printing, and its plan to expand into book publication in Australia. The report begins with an introduction to planning and its importance in achieving organizational goals. It then delves into Porter's generic strategies (cost leadership, differentiation, cost focus, and differentiation focus) and PESTLE analysis to evaluate growth opportunities and the macro-environmental factors influencing the expansion. The Ansoff matrix is used to explore growth strategies like market penetration, market development, product development, and diversification, with diversification being the most suitable for the company. The report also explores various funding sources, including bank loans, overdrafts, crowdfunding, and angel financing, along with their respective advantages and disadvantages. Finally, the report discusses the creation of a business plan, including succession and exit plans for small businesses, considering their advantages and disadvantages, and concludes with an overview of the key findings and recommendations for Newbury News Limited's expansion strategy.

Planning for growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Key considerations for evaluating growth opportunities......................................................1
P2. Opportunities for growth using Ansoff's growth vector matrix............................................3
TASK 2 ...........................................................................................................................................5
P3. Sources of funding with their benefits and drawbacks.........................................................5
TASK 3............................................................................................................................................7
P4. Business plan for growth of business....................................................................................7
TASK 4............................................................................................................................................9
P5. Succession and exit plan for small business with its advantage and disadvantage..............9
CONCLUSIONS............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Planning refers to the process of thinking in advance about the future activities and
actions that is to be perform in order to achieve the organisational goals and objectives. It helps
in determining the factors which may affect the operations and profitability of a business and
strategies for overcoming these issues (Barnett, 2017). Newbury News Limited is a SME,
established in United Kingdom and work for printing & publication of newspapers and
magazines. Now, they want to expand their business in Australia by adding new service to
business i.e. book publication. This report contains a detail analysis of Porter's generic strategy
and Ansoff matrix in order to determine growth option. Further, it explains about sources of fund
used by company and various succession options available for its growth.
TASK 1
P1. Key considerations for evaluating growth opportunities
Planning refers to the process of deciding and evaluating the actions to be performed in
future for achieving the desired goals and objectives. This process helps a company in bridging
the gap between where a firm stands and where it wants to go. Newbury news is a small business
enterprise which is established in UK and is now want to expand its business operations in
Australia.
Porter's generic strategy:
Porter's generic strategy describes that how a company can achieve competitive
advantage within the marketplace. Porter describes four strategies that can be used by companies
of all sizes in order to achieve edge over rivalry and for formulating strategies to expand their
business.
 Cost leadership: - This strategy suggest firm to offer product and services at relatively
low price in target market which help in achieving higher market share (Chen and et.al..,
2014). Using cost leadership strategy Newbury News Limited can capture larger market
share which in turn will help in oper,ating business operations at relatively lower cost as
compare to its competitors.
 Differentiation:- Under this strategy porter suggested that a firm can achieve higher
market share by offer the product having some unique feature which is not currently
present in the market. This strategy requires high market research as well as innovation
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and ability to deliver high quality. Differentiation strategy can help Newbury News
Limited in achieving competitive advantage and in attracting large number of customers.
 Cost focus:- In cost focus strategy company focuses on niche market and provides
product at lowest possible price. Company achieve success in this segment only if they
have complete knowledge about market dynamics and need & preferences of customers.
Under this strategy Newbury News Limited can cater large number of people with
product at low price which help them in capturing larger market.
 Differentiation focus:- Under this strategy company offer products to niche market
having some unique features. Differentiation focus strategy requires brand loyalty of
customer so that firm can remain competitive in market. By using this strategy, Newbury
News Limited can offer unique product within new marketplace which help them in
generating maximum revenue and to avoid future competitions.
These are the strategies given by Porter which an organisation can use in order to achieve
competitive advantage over rivalry (Colantoni and et. al., 2016). Newbury news limited is a SME
established in UK which publish newspaper & magazines and now it wants to expand its
business operations by involving an additional unit for book printing and publication in
Australia. From the above all strategies cost focus strategy is most suitable for the Newbury
news, in which company can offer their services at relatively low price from that of competitors.
This will help in achieving Newbury news in attracting larger number of customers at new place
and in achieving competitive advantage.
PESTLE analysis:-
Before expanding its business operation in new market, Newbury news must analysis the
threats and opportunities present in macro environmental factor which help in company's growth
and expansion. The macro environmental analysis can be done with the help of PESTLE which
is an analytical tool that identifies various elements that may affect the operations of enterprise.
It examines following factors:-
 Political:- These factors includes legislative policies, government interventions and
political stability of a country. Australia has efficient and transparent legal structure
which provides various opportunities to businesses for investment and expansion. Hence,
it is a greatest advantage for Newbury news as stable regulatory of Australia provides a
degree of certainty
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 Economical:- These includes factors like inflation, pricing policies, foreign exchanges
and economical position of country. Australia has strong economical growth rate which is
higher than UK and US. Hence it is a great opportunity for Newbury news, as they can
expand their business and achieve higher revenue generation (Denton, Forsyth and
MacLennan, 2017).
 Social:- This includes customers taste, social values and norms of society, these social
factors affects the demand for company's product and services. The literacy rate of
Australia is relatively higher and its residents are more interested in reading books and
magazines which proves to an advantage for Newbury news in its expansion.
 Technological:- Australia is more technology proven country where industries uses
updated technologies in order to maintain their market share and to satisfy their customer
need in best possible manner (Fahlvik, Elfving and Wikström, 2014). Newbury news
requires to use new and updated technology in order to remain competitive and survive in
new market.
 Legal:- These factors are related to the legal environment of the country in which a
business operates. With the increase in disputes related to discriminations, minimum
wages etc., the government of Australia has restricted various business practices. So
Newbury news must follow all the laws and regulations in order to avoid legal
compliances and penalties which may affect the operations and goodwill of company.
 Environmental:- These factors includes change in weather and environmental protection
& safety law. Australia has very strict and hard rules related to environmental protection
which have a great impact over the functioning of a company. Newbury news should
avoid wastage of papers by using recycling method for gaining higher attractiveness in
marketplace.
P2. Opportunities for growth using Ansoff's growth vector matrix
Ansoff's growth matrix is a model used as strategic planning tool which provides a
framework which help company in formulating strategies for future growth. This model focuses
on the existing and potential customers for determining the ways for growth. Ansoff growth
matrix help in evaluating the opportunities present in market which assist a company in
increasing the sale and revenue within the marketplace (Fulong, 2015). This model includes four
different growth strategies:
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 Market penetration:- This strategy include selling of existing product in existing
market in order to achieve higher market with the objective to achieve higher market
share. Market penetration strategy is beneficial for Newbury news limited because it is
more secure and required low cost as firm already have the knowledge about the
choice of customers as well as information about competitors within the market.
(Source: Ansoff matrix, 2018)
 Market development:- This strategy focuses on selling the existing product by targeting
a new market. Market development strategy requires huge investment and is more risky
in comparison to market penetration. In order to achieve success using this strategy
Newbury news limited has to put more emphases on generating demand and brand
awareness using various promotional and pricing techniques which requires larger capital
investment (Gatukui and Katuse, 2014).
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Illustration 1: Ansoff matrix

 Product development:- This strategy involves the introduction of new product into
existing market place which requires that a company develop an modified product which
attracts customers. Product development strategy can be used by Newbury news that help
in achieving higher market share and revenue as they already have knowledge about the
competition and customer demand.
 Diversification:- Diversification is growth strategy which involves the launching in new
and innovative product within a new market. This the most riskiest strategy and also
requires huge investment for expansion of business. Newbury news can use this strategy
for their expansion as it involve higher growth opportunity.
These all are the growth strategies of Ansoff matrix which help Newbury news in
deciding future course of action for their business expansion. Among above explained strategies
diversification is the best suitable growth strategies for Newbury news as they want to expand
their business operations by introducing new service book publication within the new country i.e.
Australia (Haaland and van den Bosch, 2015). Diversification help company in achieving global
presence with higher brand image and being a high risk higher return strategy company have an
opportunity to achieve higher revenue using it.
TASK 2
P3. Sources of funding with their benefits and drawbacks
Funding refers to the arrangement of capital or money for financing the business
operations of an organisation which contribute toward the success and growth. Company
requires £300000 for its expansion plan but it has only £20000 fund available, so Newbury news
limited has to raise remaining fund. There are number of sources present from where the
company can raise fund, these sources are further divided into two parts:
Internal sources:- It refers to the number of options which are present within the
organisation that can be used to generate the fund. It generally includes sale of asset, reduction of
working capital and retain earning (Huang and Zhang, 2014).
External sources:- External sources refers to the process of raising fund through options
which are present outside the organisation. It includes equity share capital, debenture, hire
purchasing, leasing, crowdfunding etc.
Following are the sources that can be used by Newbury news for raising the fund
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Bank loan:- The amount of capital borrowed from bank and is repayable in future along with
interest which is fixed by bank. It is the most commonly used source of fund used for financing
the business operation. Bank loans are available for both long term as well as short term, hence it
is very beneficial for Newbury News Limited as they get fund at fixed interest rate. Advantage:- One of the benefit provided by bank loan is that the interest rate of
repayment is fixed in advance while taking the loan hence company knowns the amount
repayable throughout the life of loan.
 Disadvantage:- major disadvantage is that loans are granted against some security or
asset that may be seized if the borrower fails to make payment.
Overdraft:- Overdrafts refers to an agreement between financial institution and its customer
in which bank extent the credit limit to their client to withdraw the maximum amount (Lu, and
Yu, 2014). Advantage:- it is the most flexible method of fulfilling the financial need as one can
withdraw the fund in excess to their balance anytime.
 Disadvantage:- for extending the overdraft company has to pay arrangement fee to their
banks.
Crowdfunding:- It is a method of financing a project by inviting the small fund from large
number of people instead of seeking larger capital from small number of individuals.
Crowdfunding is generally done by using social media platform for pulling fund from vast
network of people. Advantage:- Crowd funding uses online platform which in turn will help company in
generating brand awareness and gaining the media attention.
 Disadvantage:- major drawback of choosing this option is that a company has to generate
the interest of public within their project in order to pool money.
Angel financing:- It is an another method of financing business operation in which investors
invest in companies for achieving equity position within the organisation (Mason,2015). Angel
investors also support companies by providing them guidelines and suggestions. Advantage:- the major benefit of angel financing is that company get access to the
knowledge and contacts of investors along with fund.
 Disadvantage:- The drawback of Angle financing is that company has to give up their
shares to investors.
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These all are sources of fund which can be used by Newbury News Limited for raising
capital for expand its business. Newbury News Limited should adopt bank loan for raising their
fund as it safe and provides loan at nominal interest rate.
TASK 3
P4. Business plan for growth of business
Business plan is a written document which describes the goal and objective which is to be
achieve and the actions that must be taken in order to achieve these objectives. It also contains
the information related to the organisation. It is very essential for Newbury news limited to
prepare a business plan which includes information related to the vision, mission, strategical
objective and financial data. This information will help company in performing its operation
more efficiently and it also support company in making decisions quickly and appropriately.
Further business plan also help in formulating policies and plan related to the future course of
action and investment and financial decision making (Unit, 2015). The main aim behind creating
a business plan is to attract large number of investor for investing in their business by providing
them confidence that they achieve higher return over their investment. Newbury news is SME
enterprise which print and publish newspapers and magazines in UK and now it wants to expand
their business in Australia by adding new service to their business i.e. publication of books. So,
before expanding a business company have to formulate a business plan which is as follows:
 Vision :- The vision of Newbury news limited is to become recognised as a benchmark
of outstanding service provider and became number one within their industry.
 Mission :- their mission is to provide exceptional services and to deliver individualised
solution to clients for satisfying their need and creating value within the marketplace.
 Strategical objectives :- The main objective of Newbury news limited is to maximize
their profit rate from 10% to 20% in next three years and to fulfil the demand of their
client by providing them services as per their requirement in minimum time. The desired
objective can be achieve through SMART objective which means that a goal must be
specific, achievable, measurable, realistic and time bound.
 Financial information:- The success of a business is depend upon the proper functioning
of business operations and for performing these activities effectively company requires
fund. Finance plays a very essential role in proper functioning of business activities
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which in turn will help in achieving the organisational goals and objective (Ward, J.,
2016). Newbury news limited can raise fund from various sources either internal or
external.
Before expanding its business Newbury news has to prepare a budget plan which show
the fund which is required by a company to perform its operations as well as for determining the
finance which is required to be raise. This statement shows the number of expanses that a
company may incurred in its expansion process such as advertisement, training, promotional
activities, technological installation, transportation etc.
Marketing strategies
For performing business expansion effectively in Australia the strategies would being
formulated with the help of 7 Ps which are mentioned below:
 Product:- In order to achieve success with the help of business expansion the Newbury
news has decided to launch a new service range i.e. publication of books in order to
achieve more profit and market acceptance.
 Price:- For offering the services in the market of Australia, Newbury will adopt price
skimming strategy in order to capture larger market share.
 Place:- The Newbury is currently offering its product or services within United Kingdom
but it is now entering in the market of Australia by adding a new category of service.
 Promotion:- For promoting its brand in Australia, banner, newspaper, bill board related
promotional activities will be performed in order to make customers inform.
 People:- For running the new business branch within Australia few managers from
Australia will be assigned with work and along with this new staff members will be hired
from Australia in order to provide services as per their requirement.
 Process:- Managers of Newbury News will plan to contact with schools and other
educational units through which they can creates awareness among students. This makes
easy to market newly launched books. Physical evidence:- The managers of Newbury news will arrange the ambience of office
in a manner that attract customers for purchasing book. In this the best publications of
company will be paste over the walls and prizes will be displayed to represent the
achievePartnership:- It is a kind of arrangement where parties involve in business bind
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with an agreement with mutual understanding to share their business practices, profit or
losses for effective processing of business. Advantages:- Partnership make it easier to establish the business and start-up cost also
remains low as compare to sole proprietorship.
 Disadvantage:- The liability of each partner toward the debts of business is unlimited as
each partner is liable for the debt of business.ments and quality of work so that more and
more customers will be attracted.
Total forecasted budget
Particular 31/12/15 ($) 31/12/16 ($) 31/12/17 ($)
Implementing
technology cost
15000 - -
Promotional expense 9000 8000 6000
Advertisement
expense
6000 5600 5800
Catalogues 2000 4000 3000
Training charges 6500 8000 8500
Total Cost 38500 25600 23300
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From the above budget, manager of Newbury news Limited get an idea related to the
expenses that are incurred by company while expansion within Australia.
Above cash flow shows that company has enough capital which is required to pay off all
the debt and liability incurred. Newbury news limited has to pay taxes which may varies year to
year. The cash in hand for year 2015, 2016 and 2017 are $102203, $200354, $238503
respectively and average income estimated is $72001 for three years.
TASK 4
P5. Succession and exit plan for small business with its advantage and disadvantage
As Newbury news limited want to expand its business within the new market so it is very
essential for a company to prepare a succession and exit plan in order to deal with contingencies
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