Softwire Ltd: Growth Strategy, Funding, and Business Plan

This report examines Softwire Ltd's growth strategies, focusing on key considerations for evaluating growth opportunities and applying Ansoff's matrix. It analyzes potential sources of funding, including SBA loans, and discusses their benefits and drawbacks. The report also develops a business plan for growth, incorporating financial information and strategic objectives, and considers exit or succession options for small businesses. The analysis includes market penetration, product development, market development, and diversification strategies, emphasizing the importance of innovation and financial position in achieving growth. The report provides a comprehensive overview of Softwire's growth prospects within the context of digital technology and the competitive IT market, offering insights into strategic planning, financial management, and sustainable business practices. The report highlights the importance of competitive advantage, environmental analysis, and portfolio strategies in achieving sustainable growth.

Planning for growth

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Key considerations for evaluations of growth opportunities and justification..................1
P2 Opportunities for growth applying Ansoff's matrix for Softwire......................................3
TASK 2............................................................................................................................................5
P3 Potential sources of funding available to business along with their benefits and drawbacks.
................................................................................................................................................5
TASK 3............................................................................................................................................7
P4 Business plan for growth including financial information and strategic objectives.........7
TASK 4............................................................................................................................................9
P5 Exist or succession options for small business determining the merits and drawbacks.. .9
CONCLUSION.............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Planning for growth is analysed as strategic business activity which provides an ability to
the business owners to make plan and track the organic growth in their business revenues. It
mainly provides the businesses to allocate their limited resources towards a centred effort in
order to adapt to changes within industry driven disruption and make differentiation from market
rivals (Eddleston and et.al., 2013). Strategies and tactics which are included by owners in their
growth plan concentrates on the hey business driver of revenue generation. Present report is
based on evaluation impact of digital technology supporting small business growth and
innovation. For conducting research, Softwire Ltd is selected that delivers bespoke software
engineering, digital design solutions and consultancy services to some top most UK brands.
Company was formed in year 2000, present company has grown to 130 employees and turnover
of around 13 million. In this report, there are some key consideration for evaluation of growth
opportunities for Softwire are discussed along with the valid justification. Further, various
potential sources of finance available for the organisation are also determined along with their
merits and drawbacks.
TASK 1
P1 Key considerations for evaluations of growth opportunities and justification.
In order to make successful plans for achievement of growth in business, organization
needs to identify various important business opportunities available for organisation. Digital
technology is one key factor which is continuously supporting small business enterprise towards
attainment of growth and innovation. In this context, business of Softwire is also based on use of
new and latest digital technologies for providing software solutions services to their leading UK
clients. There some key considerations have been identified that needs to considered by
organisation for evaluation of growth opportunities such as:
 Competitive advantage: These are conditions that enables a company to develop its
products and services at equal values but a lower price or in more desirable options.
These conditions allow the productivity entity to generate more sales as compared to
competitors (Moseley, 2013). For making growth plans, employers of Softwire needs to
consider competitive advantage they have over their rivals. They need to analyse their
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core competencies such as High quality products, qualified customers service capability,
newly designed software and customer satisfaction etc.
 Environment analysis: While making growth plans, Softwire also needs to consider the
factors in external business environment that provide influence on their business growth
and innovative. These factors are political, social, economical, technological, legal and
environmental (Chapin, 2012). Further, technological factors generates positive
influences through creation new and latest software development opportunities. This aids
the Softwire to meet expectation of its clients and generating higher revenues in market.
 Generic strategies: A competitive advantage over competitors is gained by offering
consumers greater values, either by means of lower prices or by providing greater
benefits and services that justifies higher prices. While making growth plans, company
also needs to consider strategies suitable for them to adopt and achieve growth in sales
along with earning higher revenues. These important strategies are cost leadership,
differentiation leadership, cost focus and differentiation focus. In this, Softwire can
apply cost leadership strategies to become low cost producer in IT industry and maintain
its dominate position in market on competitors.
 Products and services innovation: While making plans to achieve growth in IT sector,
employers of company needs to consider ways to innovate their products and services.
This aids the organisation to influence its potential customers in market for installing
their new and latest technology software relates to cyber security and other business
Software (Ziari and et.al., 2012). By carrying out innovation in engineering, IT and
consultancy service company will be able to achieve high revenue and making plan for
business expansion.
 Relationships: Having positive relationship with necessary customers, partners, hires,
investors etc. will save a lot of time, reduce costs and risk. Without having exiting
relationships, Softwire will not able to evaluate its growth opportunities in market. They
need to develop positive relationships by meeting their requirements and supply quality
services at lowest possible prices to enjoy higher profitability.
 Portfolio strategies: For evaluation of growth opportunities, company needs to analyse
its strategies which they applied while making their product portfolio for customers. It
implies that company needs to have an appropriate range of products and services in their
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portfolio. For example: Products portfolios of Mobile companies starts from low to
higher range of products which enables the users make selection. In this, Softwire needs
to adopt an effective portfolio strategy in order to attract small and big clients towards
their products and services. This aid the company to sustain its dominant position in
market and achievement of growth in revenues.
 Financial position: For evaluation of growth of opportunities, it is also essential for
employers of Softwire to consider financial position of their company in IT industry. This
will enable to organisation to make proper plans and taking correct decision to gab the
growth opportunities (Pugalis and et.al., 2015). For example: If company has strong
financial position, it will tend to raise its investment in new product and services
development whereas if company has weak financial position then it will concentrate on
increasing sale of their existing products and services. In present context, Softwire has
achieved high growth in its revenues and posses a strong financial position in market.
This enable the management to develop strategies for introduction products and services
for achievement of growth in market.
P2 Opportunities for growth applying Ansoff's matrix for Softwire
In UK, Small business enterprise have identified various growth opportunities through
implementation of digital technologies in their business operations. Through application of this,
companies have analysed various options through which they can generate high revenue in
relevant industry. Implementation of digital technology has also transformed business activities
of organisation (Wynn, 2017). In present context, employers of Softwire also needs to identify
various growth opportunities through which can expansion their business in different countries of
UK and also generates high revenue in market as compared to competitors.
Ansoff's growth vector matrix is used to evaluate the growth opportunities for Softwire in IT
industry. It helps the management team in organisation to focus on the options for business
growth. Mainly there are four growth options for enterprise according to this model such as:
Market Penetration: This strategy is most preferred route of achieving growth for many
organizations because it is analysed as safe and contains low risk (Osiyevskyy and et.al., 2013).
In this, Softwire will identify and focus upon their existing top leading clients as well as other
consumers. Further, they can also concentrate clients of competitors and try to influence them to
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purchase their products by services by offering low prices. Management will also lead its
emphasis on increasing market share through more marketing promotions, more effective
marketing, and strengthening the offers by creating more customers values.
Product development: In this, company will continue to focus on requirements of its current
potential clients and wider market of customers in IT sector they represent but they seek to
analyse their underlying needs and desires better so that they can consider opportunities for new
products
 To exchange existing products with something new and innovative.
 To deliver complementary products that clients needs to purchase before, during and after
buying of main product sold by business.
 To sell other values software the clients buys as way to strengthen the relationship and to
deliver added convenience.
In this, Softwire can work with their existing suppliers businesses with established resources as
well as competencies by offering them new ways to market.
 Market development: In this strategy, company will focus upon finding new market
segments for its existing products to achieve growth in sales and revenue. Different ways
are available for Softwire to do this such as Opening up market segments which are
excluded in past through their pricing policies. For example: discounts for its existing and
previous customers. Further, company can also achieve growth by establishing new
marketing and distribution channels. By making their products available on internet with
optimization of search engine so that every one looking on internet will find it. Another,
option for growth in this strategy is entering in to new geographical segments by moving
from local to regional, national and international (Arasa and K'Obonyo, 2012). By
adopting this strategy, company will be able to put pressure on the marketing and sales
functions of the business and also leaves the operations side to concentrate differentiation
of products and service from competitors.
 Diversification: Application of these strategies is most controversial because it involves
taking new products to the new customers. In this context, Softwire can diversify in to
related markets at the time when the customers and products are both new that makes
sense to the outside. It can also diversify in to related markets by using resource which
are available to them along with the capabilities at the time consumers and products of
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organization are different. Further, company also diversify in unrelated markets that
requires new resources and capabilities. Diversification is most risky strategy in Ansoffs
matrix and especially when there is requirement of development of new resources and
capabilities for organisation to expand its business.
New product development approach is identified as most effective and important strategy that
needs to be adopted by organisation for achievement of objectives. It mainly implies to
introduction of new products in existing market. Through this, Softwire will be able to retain
customers provides them ability to sustain its position in market. They also need to provide their
service at low prices so that they will achieve competitive advantage over rivals in market.
From this analysis, it is clear that product development strategy will be more effective for
Softwire to achieve growth in business because it contains low risk. By developing new products
and service, company will be able to meet the requirements of its clients.
TASK 2
P3 Potential sources of funding available to business along with their benefits and drawbacks.
For development and implementation of growth plans, company needs to adequate
amount of financial resources in order to perform the activities which are included in plans.
Companies having strong goodwill in market didn't get any problems in getting financial
resources from externals. In this context, Softwire is also well established organisation in IT
sector which has achieved growth in its revenue and profitability. For implementation of new
growth plans and development new products for customers it also requires high amount of
resources. Various funding options are available in market for small business enterprise in
market which have their own merits and demerits. Some of them are mentioned above:
 SBA Loan: SBS is analysed as a government authority in UK which is dedicated to
provide support to small business enterprise (Osiyevsky and et.al., 2013). It provides
loans to company having better economic conditions in market and achieved growth in its
business. SBA does actually lends money but it acts a guarantor for companies on loans.
It has the responsibility to ensure that 23% of government contracts must be awarded to
small business. In order to fulfil requirement of financial resources, Softwire can also
take support SBA for getting business loans from banks. Company can also take
government project and provide software for government departments.
Pros:
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 By proper treatment of SBA loan, Softwire will be able to increase the chance of getting
a bank loan in the future.
 It helps in creation of company's goodwill among the financial institutions in market.
Cons: It is very complex and time consuming process for organisation because SBA consider
the data and financials statement of previous 2 to 3 years of organisation for provding
guarantee of loan.
 Angel investors: These are analysed as wealthy individuals who tends provide an
entrepreneur financing in exchange for share of equity in the organisation (Goodfellow,
2013). For implementation of growth plans and introduction of new software, Softwire
can take financial resources from these Angel investors by providing equity share in
exchange. These can be retired bank executives, government officials and serial
entrepreneurs etc.
Pros: Angel investors normally have there experienced in industry and also provides appropriate
guidance and introduction to their network. In this, Company can easily get financial resources
without any major formalities.
Cons: High amounts of interest will charge by angle investors on lending of financials resources.
They can also force the organisation to provide some degree of controls on organisation.
 Venture capital: may organisation thinks VC is an important key to their success. There
are investors who are willing to make investment of large sum of money in profitable
organisation ion exchange of equity with an aim to achieve high return on investments. In
this, company can also raise funds from venture capitalists available in market by
providing the equity in exchange.
Pros: Through this source, company is able to get large sum of money and VC can provide
expertise and other assistance which is supportive in achievement of growth and sustaining
business in competitive market (van Assche, Lo and Beunen, 2013). By taking funds from VC,
credibility of Softwire in market will tend to increase continuously. Venture capitalist can also
open doors for company to vast network of individuals involving partners and future
investments.
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Cons: These investors seeks high amount of return on investments and also take necessary steps
to consider their return on investments. Company can also be forced to provide some controls on
ownership in exchange on investments. Collaboration: It is also important source of getting funds for organisation to implement
its new business growth plans and introduction new products and services to sustain their
existing customers. In this context, Softwire can also make partnership will other
organisation working in same or other sector and raise funds for its growth plans. Merger
is also best options for company to make collaboration with other organisation. Through
this, company will get support in funding the business plans and able to perform the
activities to raise its revenue and profitability in market. Almost, 20% of small business
enterprise in UK use this method of getting funds for establishment and regulation of
their business.
Pros:
 Limited liability of companies towards profits and losses. Most effective as there is no requirement to interest on funds.
Cons:
 Less amount of funds can be raised from collaboration.
 Requires more time in completion of formalities.
The most effective and appropriate source of funding for softwire is collaboration in which they
will get funds from their partners firms and together they will be able to accomplish new
projects. Softwire can also make partnership will other organisation working in same or other
sector and raise funds for its growth plans. Merger is also best options for company to make
collaboration with other organisation. This will be effective for organisation as it contains liw
risk and provides major market segment that needs to be achieved by organisation.
TASK 3
P4 Business plan for growth including financial information and strategic objectives.
In order to make business expansion, it is essential for organisation to develop an
effective business plan which provides them support in accomplishment of their objectives. In
this context, a business plan has been developed by organization in order to make use of growth
opportunities which are available in market for achievement of growth by increasing revenues
and profitability (Chapin, 2012). There are various elements which needs to be included by the
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management in Softwire in order to develop an effective business plan. Below given are points
that needs to be consider while development of business plan.
Strategic objectives:
 To expand profitability by 10% every year.
 To increase market share by 5% in every half year.
 Increase in sales of new and existing product service.
 Rise in financial positions and gaining competitive advantage
Products and services: These are major elements which are included in business plan. It implies
that companies needs to decide about the products and services which needs to introduce in
market to achieve high sales and profitability. In this. Softwire needs to use new product
development strategies in which they tend to meet requirements if their exiting customers by
introducing new and latest technology software in market.
Market Analysis: It states that company needs to know about their target market who they have
to influence and sell their products and services. In this context, Clients of Softwire are top most
leading brands who requires cyber security software, data base management software and other It
solutions etc. Therefore, it is clear that company will target top most leading brands in order to
analyse their requirements towards IT services and Software (Ziari and et.al., 2012). Then it will
make changes in their products to meet their requirements. Company can also provide its
services at low prices to influence of competitors in market.
Competition: Making analysis competitors products and position in market is also important for
organisation in order to develop strategies for gaining a competitive advantage. In this context,
company can achieve a competitive advantage over its rivals by using cost leadership strategy in
which they will tend to influence customers by offering products and services to customers at
lowest prices.
Operations: In this, company will provide description about the changes they will make
business operations for making it more reliable for achievement of growth. In this context,
company has decided to make changes in software development operations by using new and
effective methods to make the software more reliable for customers. Company will also use
different methods for marketing of products such as Social media, digital communication, e-
commerce websites and other sources to promote their business.
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Personnels: For implementation of business plan and achievement of growth, it is also important
for company to have qualified employees at workplace. Presently there 130 employees in
Softwire which are highly competent in development of Software and providing IT services to
customers. In order to make improvement in products, company needs to provide training to their
employees so that they will provide innovative idea for making improvement.
Financial data:
Particulars Amount
(GBP)
Purchasing materials for refurbishment 1700
Acquiring software license 2300
Database licensing 400
Equipment cost 1800
Labour cost 1200
Server cost 800
Network cost 1800
Total 10000
The data which is provided in table is an estimated statement of cost which is needs to be
incurred by organisation in implementation of business growth plan. There are various important
business activities have been included in financial statement along with their estimated cost
which is required for completion of these activities.
Execution: It is the last stage of business plan in which all the activities which are stated below
will be accomplished by managers after getting permission or consent top management on
business plan (Osiyevskyy and et.al., 2013).
Thus, it can say that these business will help the organisation to achieve growth in business by
increasing its sales revenue and profitability in market as compared to competitors.
Business plan for organisation involves some steps which are mentioned above:
 Mission:
 vision:
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 strategic objectives:
 operational strategies:
 Market analysis:
 Financial planning:
At initial stages, management will analyse the mission of Softwire which is to be market leader
in IT sector and delivery of service large number of premium customers in market such as
business entities at international level. Vision of organisation is to attain high position in IT
industry and expansion of business operations at international level. Strategic objectives of
Softwire are identified as increasing market share, sales and profitability as compared to rivals.
New product development strategy will be an operation strategy for organisation to attain
success in operations. Financial planning is based on analysis of financial resources which are
required for new product and service development. It is clear analyse that organisation will
achieve financial resource by collaboration and its stakeholders.
TASK 4
P5 Exist or succession options for small business determining the merits and drawbacks.
There are various important methods have been identified which are used by small
business enterprise for exit or succession business plan. In this context, there are some important
strategies have been analysed that must be used by Softwire in order to exit or succession in
business.
Exits strategies:
 Liquidation: For SMEs, only for those who are dependent upon the efforts of single
individuals. In this, organization will sell their all equity and assets which held by them in
their business to stop functioning (Ward, 2018). In this, Softwire can also use this
strategy if they want to stop their business or face any losses.
Advantages:
 It is analysed simple approach.
 Through this, business can be wound up very quickly.
 Depends upon sales of assets.
Disadvantages:
 Investors and owners will get fewer returns on investments.
 Second hand values for assets will be received by organisation.
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