Oak Cash & Carry: Analysis of Growth Opportunities and Funding Methods

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This report provides a comprehensive analysis of growth strategies for Oak Cash & Carry, a grocery wholesaler. It begins with an introduction to the importance of small and medium-sized enterprises (SMEs) in the UK economy, highlighting their role in innovation and job creation. The main body of the report analyzes growth opportunities, including new product innovation, competitive advantages, and collaboration. It then evaluates Ansoff's Matrix, discussing market penetration, product development, market development, and diversification strategies. The report further assesses various funding methods essential for business expansion. Additionally, it covers business plan development and scaling up strategies, along with an assessment of potential exit strategies. The report concludes with a summary of findings and recommendations for Oak Cash & Carry's growth initiatives.
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PLANNING FOR
GROWTH
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
TASK 1............................................................................................................................................3
Analysis and evaluation for growth opportunities.......................................................................3
Evaluation of Ansoff’s Vector matrix for growth.......................................................................5
TASK 2............................................................................................................................................8
Assessment of funding methods..................................................................................................8
TASK 3..........................................................................................................................................10
Business plan development and scaling up business.................................................................10
TASK 4..........................................................................................................................................13
Assessment of exit plan or method............................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16
Books & Journals:......................................................................................................................16
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INTRODUCTION
Small and medium sized organisations are defined as independent, non subsidiary forms
which have employees less than 250 according to the European Union. It plays an essential role
in the country’s economy as it represents a source of innovation, entrepreneurship abilities and
also creates job opportunities (Toliver, 2017). It is identified that small and medium-sized
enterprises have different capacity and disseminating new technologies. It generates lots of
opportunities of employment across the UK. It also creates a group of semi skilled and skilled
workers in order to support business expansion and future industrial in the country. In UK, the
economic stability relies on the lower level of unemployment rates. This is the reason that
country is focusing on planning for growth in order to support small and medium sized
organisations. In the survey, it is identifying that small and medium enterprises become one of
the driving forces for employment, worldwide economic growth and prosperity. In this context,
Oak Cash & Carry is undertaken to planning for growth which is the grocery wholesaler that
start the business from Banbury. It is a small size organisation which has less than 250
employees. They are planning for growth so that they can successfully run their business. This
report will be discussing the growth opportunities and analysis of Ansoff’s Vector matrix for
growth.
MAIN BODY
TASK 1
Analysis and evaluation for growth opportunities
Oak Cash &Carry is small size organisation which offering grocery products as a
wholesaler that operate their business from Banbury. It is very necessary for Oak Cash &Carry
that they should make up plans in order to grow their business practices. They wanted to grow
their business activities which can be done with the help of many ways (Byrne and et. al., 2019).
But before making a plan to grow, company should consider some important growth
opportunities and should justify that why the need to grow. So that there are some important
factors which need to be considered while they are analysing the options for growth. Factors are
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including capabilities, core competency and resources of the company. They also need to
consider innovative capability in order to bring new products and services in the market so that
they can identify growth options. Some important key considerations for growth opportunities
are mentioned below:
New product and service-innovation
Innovation is the key of success which very well known by every organisation. This is the
reason that Oak Cash &Carry consider innovation for growth opportunities. Innovation can be
done with the help of introducing new product and services and modifying existing products and
services. Innovation becomes the need of every organisation and the reason behind is increasing
in competition at fast speed (Scheurer, 2020). Competition day by day is increasing which shows
that Oak Cash &Carry require new products and services which are able to attract consumer’s
attention. That's why it is one of the important considerations which should be considered by
every organisation if they want to plan for growth. This consideration is just not help in
increasing the customer base but also it increases the trust and loyalty of customers which make
them permanent one. The innovation should be qualitative so that customers of Oak Cash
&Carry enjoy the growth and success of company. In addition to this, company should also look
forward to portfolio strategy which include Boston consultancy group matrix. This matrix is
design in order to help with long-term strategic planning. It also helps reviewing of portfolio of
products so the company can take decision regarding where to invest, to develop or discontinue
the products. It is also known as growth share market which includes four important strategies
that are dog, question mark, stars and cash cows. With the help of this growth share matrix, Oak
Cash &Carry is able to decide that what they have to do in further next steps.
Growth options
It is identified by Oak Cash &Carry that there are many growth options are available in
the market. With the use of those growth options, Oak Cash &Carry can easily achieved a
growth with the use of growth options. One important route of growth is using Ansoff’s growth
factor which undertakes four important strategies (Xue, 2018). This matrix is very efficient in
order to achieve the growth. But they have to identifying and mitigating risk with the use of
growth options or strategies.
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Competitive advantage
Competitive advantages are one of the factors which every organisation want to achieve
in the growth journey. But it is not easy for Oak Cash &Carry as day by day competition is
increasing which create complexities for organisation as it is the small size enterprise. There are
many firms available in the market which already providing best quality of products and services
at reasonable prices. So that’s why company need to analyse the competitive business
environment. This can be done with the help of using porter’s five forces model which is
necessary in order to analyse the competition in the market. It consists of five important forces
which include competitive rivalry, threat of new entrants, threat of substitute, bargaining power
of suppliers, and bargaining power of buyers. With the analysis of these forces, Oak Cash
&Carry is able to analyse the competition in the market and take a step for maximizing their
capabilities and core competences which helps in competitive advantage.
Collaboration
Collaboration is the important tool which make sure the efficiency and effectiveness of
performance. In collaboration, member of Oak Cash &Carry are ready to work with each other
and in coordination (Clifton, Hampton and Jeyacheya, 2018). This will lead to perfection in the
performances of employees. It is identified that collaboration is very important in order to
minimise the risk and also provide many benefits such as achievement of goals and objectives.
But it also has a drawback in which company can reduce the control.
Above discussion of consideration in growth opportunities are discussed in order to
achieve growth in the market. Some important considerations which are undertaken are growth
options, collaboration, competitive advantage and new products and services with innovation.
These considerations are very important and that’s why our company should consider in the
planning for growth.
Evaluation of Ansoff’s Vector matrix for growth
Ansoff matrix is also known as product or market expansion grid. This tool is used by
organisation in order to plan and analyse the strategies of company for the growth. It is a matrix
which shows four important strategies that helped organisation for growing their business
practices and also analysing the risk associated with each strategy. This is the reason of
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organisations to use Ansoff matrix it is just not provide strategy options but also provide risk
association because it is inherited in the growth of organisation. With the help of using Ansoff
matrix, Oak Cash &Carry is able to choose best strategy in order to grow their business. It
consists of four important strategies that are market penetration, product development,
diversification and market development. It is the communication tool that helps organisations to
see the possible growth strategies of Oak Cash &Carry. The explanations of four important
strategies are mentioned below:
Market penetration
It is the first quadrant of Ansoff matrix in which organisation uses their existing product
for the growth purpose. In this strategy, Oak Cash &Carry uses their existing project in existing
market in order to increase their sales (Keller and Newberger, 2017). This can be done with the
help of many ways such as decreasing prices in the product so it will attract new customers. It
also can do by increasing distribution and promotion efforts. Oak Cash &Carry has also an
option to acquire a competitor which reduces the competition. This strategy is effective in order
to grow the business which also helps in to increase the market share.
Pros
With the use of this method organisation can lead to direct sales if they effectively decide
the price in a correct way.
It also creates customer reference as well as lead to brand awareness which helps in
increasing of market share.
Cons
Market penetration strategy is using low price which results to unmet of production cost.
It also reduces the profit margin of organisation that directly impact on their investment
opportunities.
Market development
It defined as a strategy in which organisation is just focusing on new market that means
they do not change their products and services (Peters and et. al., 2020). For example, Oak Cash
&Carry is selling grocery products with no change in their products and services but they decide
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to enter into a new market. This is strategy which focusing on entering into new market. It can be
done with the help of expanding their business practices regionally and internationally. It also
includes catering of products and services to different customer segments.
Pros
With the help of market development organisation can create competitive advantage
which is very necessary in order to grow their business practices.
It also very beneficial in order to identify the partners which reduce the risk after duct
failure.
Cons
When organisation uses market development strategy then they require a high capital
investment and it becomes very difficult for Oak Cash &Carry to arrange such a big
amount.
It is also identified that this strategy sometimes become fails if the new market cannot
accept the products and services due to change in customer’s demand.
Product development
Product development is referred to the strategy in which organisation in overweight their
products. This is one of the most important strategies which require extensive research and
development in order to expand the company's products range (Ellis and Eaton, 2021).
Innovation is the key of success which is very well known by every organisation. It can be
implemented by investing in research and development department of Oak Cash &Carry so that
they can develop new products in order to cater in the existing market.
Pros
Every customer wants some new products and this demand can be satisfied with product
development strategy.
It will also lead to competitive advantage in which organisation enjoy some time
monopoly due to their innovative products and services.
Cons
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It is not necessary that new products are acceptable by customers due to change in
demands.
It has a risk of losing the opportunity as organisation stick into single development plan.
Diversification
Diversification is the best strategy which focusing on new products into new market.
Company is identifying new market in order to cater their new products (Liu and Liao, 2018). It
provides greatest potential for increasing in revenues. But at the same time it also includes much
risk.
Pros
Diversification is the best strategy in order to provide high revenues.
It also facilitates number of varieties to the customers which reduces the risk of product
failure.
Cons
It is the riskiest strategy which includes higher risk of new market and new product.
It also provides market risk because company cannot know anything about market
conditions.
After the analysis of all important strategy, it is analysed that diversification is the riskiest
strategy and market penetration is the least risky strategy. So it is up to the organisation that what
they want to adopt in order to grow their business. But they should consider risk for deciding the
growth strategy.
TASK 2
Assessment of funding methods
Funding is the backbone of organisations as without funds company cannot invest on
other important investments and also unable to bear day to day expenses (Stelzenmüller and et.
al., 2021). This is the reason that why every organisation is finding the best source of funds
which are appropriate ford company’s plan execution. Oak Cash &Carry has many options of
source of funding with some benefits and drawbacks. In addition to this, company should
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consider the net present value and payback period in order to decide the best source of fund. Net
present value is defined as a present value of cash flow which is decided on the basis of rate of
return of the selected source. Payback period is refers to the requirement of time which necessary
in order to recover the initial cost of selected source of fund. These two considerations should be
adopted by organisation in order to take right decision. It is necessary for company that they
should critically analyse each potential source of funds by discussing pros and cons in order to
take right decision. For that purpose, some potential sources of funds are explained in below
section:
Bank loan
Bank loan is the most widely used source which used by every organisation in order to
invest in other important activities. Loans can be provided by financial institution as well as
banks which are controlled by Central Bank of country. Some important drawbacks and benefits
are mentioned below:
Benefits
It is the most widely used source in the organisation and also becomes secured source in
order to arrange funds for company.
This option is used by organisation because of tax deductible interest which reduces the
tax.
Drawbacks
Generally the rate of interest is high in bank loans which become very difficult for Oak
Cash &Carry in order to pay.
Company is liable to pay interest amount in every situation that means if organisation
faces losses even then they have to pay the interest.
Peer to peer loans
It is a source in which organisation take loans with low interest rates. It is very flexible
option as compared to other bank loans and conventional loans (Barry and Coombes, 2018). In
this loan, they do not require any collateral security which is the best part of this option.
Benefit
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The best part of this option is lowest rate of interest which is very beneficial for company
in order to pay the interest rate.
It also give higher rate of returns and transparent as compared to other options.
Drawback
This option requires a credit cheque which is becoming a drawback for company.
It is option which is time constraint.
Crowd funding
This option is very beneficial for organisation as it is easy to access by company. It
require small amount of capital which can be collected from large number of members in order
to start the new business start-up (Geneletti and et. al., 2017). It also require social media website
and can be accessed through crowd funding website which provide finance to the new
entrepreneurs.
Benefits
It is very beneficial for Oak Cash &Carry as this option is mainly for small size
organisation in order to get funds with lower rate.
Company can easily access the funds.
Drawback
If organisation is fail to pay the amount then it will ruin the image or reputation of
company.
TASK 3
Business plan development and scaling up business
Business plan is defined as a document which is a road map or blueprint that provides
guidelines and direction to the organisation that how they can achieve their strategic objective.
This is one of the important factors which should be considered in the planning for growth. It is
the most important element that require in the success and growth of organisation. With the help
of business plan, company can easily achieve their objectives and goals. Some important element
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should be considered in the business and which are effectively mentioned below with their
explanation:
Company overview
Oak Cash & Carry is organisation that has small size business practices. It offers grocery
product and have employees less than 250 (Hassan and Kokkranikal, 2018). The aim and
objective of a company is to provide best quality of products and services to the customers.
There are currently looking forward to grow the business practices in order to increase the
returns.
Vision and mission
The vision of Oak Cash &Carry is to make a brand awareness which can be easily
recognised by every customer.
The mission of Oak Cash &Carry is to expand their business with satisfying the customer
needs and wants.
Strategic objectives
In a business plan, it is very necessary for Oak Cash &Carry that should mention their
strategic objective which provide direction and guidance to the number of organisation that what
they have to do. But company should make sure that their objective should be SMART so that
they can achieve them easily:
Oak Cash &Carry is looking forward to expand their business practices by opening of
stores in next 3 years.
To increase the sales by 10% in the upcoming years.
They also look forward to increasing brand recognition which helps in competitive
advantage.
SWOT analysis
It is the tool which is used by organisation in order to analyse the internal environment so
that they can determine their capability and core competencies (Jokinen and et. al., 2018). In
planning for growth, company should know about their strengths and weakness in order to
decide the strategy.
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Strength Weakness
Oak Cash &Carry is providing a good
quality of grocery which is very necessary
for customers and that's why they take
advantage of competitiveness.
It is the small size organisation and that's why
it reduces the big opportunity as it requires the
high amount of investment.
Opportunities Threats
To invest in emerging market which
includes Africa and Asia becomes a great
opportunity for the company in order to
grow their business.
Competitors are the biggest threat of Oak Cash
&Carry as it increases day by day.
STP
STP is stands for segmentation, targeting and positioning which is necessary for
organisation in order to achieve their goals and objectives. This is the approach of strategy which
determines the company growth and success. Oak Cash &Carry can achieve their target market
only with the help of using this strategy. It is identified that Oak Cash &Carry help segmented
their market on the basis of psychographic. They are targeting all types of ages of people as
every person need grocery. In addition to this, they are using best marketing method which
includes digital marketing in order to position their target market.
Marketing budget
Marketing budget is defined as estimation of expenses which will be occurring in
implementation of business plan. It requires some important marketing skills in order to
implement the business plan and preparing an effective budget of marketing.
Marketing budget
Particulars 1st year 2nd year 3rd year 4th year 5th year
Initial money 6000 8500 12000 14500 18350
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Investment 12000 14000 25500 32000 13500
Total 6000 22500 37500 46500 31850
Marketing outlay
Promotion 6500 3200 4300 3300 3250
Sales publicity 2200 2100 3300 2200 2000
Direct selling 4200 2500 6000 3000 4650
Total 12900 7800 13600 8500 9900
TASK 4
Assessment of exit plan or method
It is very necessary for organisation that they should prepare for succession as whenever
the need then they can’t face any problem (Chaffey and Smith, 2017). Every organisation knows
the nature of business environment which is very dynamic and that’s why company cannot
assume the future of organisation. So there are some important strategies of exit option are
mentioned below:
Selling a business in open market
It is option which can execute by every organisation as it is easy to implement. This
option refers to sell the business in the market at the market value or decided price (Al-Ahmadi,
2018). It also consists of some important risk and benefits which are very well explained below:
Pros
It is very beneficial for organisation as this method is easy to use and faster than other
method.
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Company can recover there all losses as it is the feasible option in which company can
easily sell their business without any trouble.
Cons
The legal higher cost is identifying by the organisation is very high.
Uncertainty is identified that it has a high degree.
Liquidation
It is one of the best options that are available for every type of organisation whether it is
small or large. This option requires an expert who name is liquidator that possess all important
knowledge which can easily used by organisation in order to sell their assets and set off all
liabilities (GUPTA, JENA and SAMANTARAY, 2019). This is one of the best options available
for Oak Cash &Carry.
Pros
It requires a low cost in the process of winding up the business which can be easily done
by stress free.
The main advantage of this option is it return of all the outstanding debts so company
cannot need to worry about anything.
Cons
Company is liable to pay all the debts which reduce the share of owners.
In this option, generally the rate of return is very low after selling of assets.
CONCLUSION
It can be concluded that planning for growth is very important concept and it should be
understand by every organisation in order to analyse and decide the best strategy for their
expansion and growth. Every organisation has an ultimate objective that they have to run their
business for long term period. This can be achieved with the help of planning for growth. For
that purpose, they need to be consider some important elements which are necessary in order to
grow their business that include competitive advantage, innovation of products and services, etc.
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This report is also covered funding sources with a business plan that are the most important
factors. In addition to this, company can also need to analyse succession options.
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REFERENCES
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Inclusion: A Brief Conversation with Chicago Planning Agencies. Profitwise, (3), pp.29-
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Scheurer, J., 2020. Public transport network planning. In Handbook of Sustainable Transport.
Edward Elgar Publishing.
Stelzenmüller, V., and et. al., 2021. Evaluation of marine spatial planning requires fit for purpose
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