Strategic Planning for Growth: Thomas Developer's Business Report

This report, prepared for Thomas Developer, an IT firm, examines strategic planning for business growth. It begins with an analysis of key considerations for evaluating growth opportunities, including Porter's generic strategies and PEST analysis. The report then evaluates growth opportunities using Ansoff's growth vector matrix. It assesses potential funding sources, including crowdfunding, venture capital, and bank loans, discussing the benefits and drawbacks of each. Furthermore, the report designs a business plan for growth, incorporating financial information and strategic objectives for scaling up the business. Finally, it assesses exit or succession options for small businesses, explaining the advantages and disadvantages of each. The report aims to provide Thomas Developer with a comprehensive guide to strategic growth and financial planning.

PLANNING FOR GROWTH

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organisational context.....................................................................1
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix..............4
TASK 2............................................................................................................................................5
P3. Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source.......................................................................................................5
TASK 3............................................................................................................................................7
P4. Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business........................................................................................7
TASK 4..........................................................................................................................................10
P5. Assess exit or succession options for a small business explaining the benefits and
drawbacks of each option.....................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Planning for growth is considered as a strategic activity of a company which enables
employers to plan and track progress of business. This will give opportunity to organizations to
allocate limited resources towards a centred effort for adaption of changes. Under this process,
strategies and tactics are included in growth plan and mostly concerned on key driver of revenue
generation (Wu, 2015). This report is based on Thomas Developer which is small IT firm that
develop software. “Electoral Management System for The City of London” is a government
contract under which company has made bid of £160k. In this assignment, key considerations of
business such as porter's generic, Ansoff's matrix and PEST for examining growth opportunities
is described. This company has shortage of resources for which its managers are searching
potential sources of funding. Furthermore, exit or succession options for small business are also
described in the last section of report.
TASK 1
P1 Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organisational context.
With emergence of new technologies, small organisations gain various opportunities to
expand their business in international market. To utilise opportunities by which a company can
grab attention of customers and win competitive advantage, it is essential to executives to
conduct proper market research. For this process, the two main concept helps in analysing
situation of marketplace and develop strategies accordingly i.e.: Porter's generic strategies and
PEST analysis (Keough, 2015).
Competitive advantage: It refers to main component behind growth of any organisation
as competition at marketplace assists a firm to conduct business in innovative manner. This
would provide benefits to customers to avail products on best price and high quality. In context
with IT sectors, innovation refers to central aspect of competitors where people line up to
purchase those products which are faster, smaller and give better services. Therefore, it becomes
essential for Thomas Developer to offer innovative software to customers which help in
exceeding their satisfaction level. In order to examine competitive advantage, managers of this
technological company has used porter's generic model in following manner:-
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Porter's Generic strategies: It is a sum-up of 4 different strategies which can be adopted
business organisation for handling competition at market place. These strategies were given by
Michael Porter in 1985. These four Strategies are mainly based on three strategies named as
differentiation, cost leadership and focus. Focus strategy is further diversified into two parts that
is differentiation focus and cost focus. In relation to IT sector, all of these strategies are described
as below:
(Source:Porter's Generic Model, 2018)
Cost leadership: Under this strategy, a company concern more on the way to become
low cost producer in marketplace. For this process, it is essential for such organisations to
identify and exploit all sources of cost advantage. In context with Thomas Developer, for
developing cost leadership strategy, its employers are required to concern on- increasing
profitability by reducing costs of services; enhance market share as average cost will increase
sales performance (Grover, Bokalo and Greenway, 2014). Since organisations and individuals
always seek to acquire fast IT services, therefore, this will give advantage to Thomas Developer.
As if its products of company are unique and available on low price then it will help in
enhancing sales and giving a tough competition to rivals.
Differentiation: This strategy entails a firm to make products in different form and more
effective as compared to competitors. It includes differentiability on the basis of functionality,
features, durability and brand image. To create differentiation in products or services, the success
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Illustration 1: Porter's Generic Model

tactic for Thomas Developer is to design skills for efficient production (Beatley, 2014). Along
with this, managers are also required to concern on developing strategies for effective sales and
marketing. It will help in creating awareness among customers about services which are
differentiated from others.
Focus: This tactic includes two narrow segments that are cost advantage or
differentiation. Therefore, by implementing focus strategy, Thomas Developer can enjoy a high
degree of consumer loyalty. But, this process involve many risks like imitation, changes in
targeted segment and limited opportunities for growth as well.
Thus, in this regard, from above mentioned strategies, managers of Thomas Developer
can use differentiation tactics. For this process, they can give employment to high skilled
candidates who have capability to develop innovative software. Through this technique, Thomas
Developer can create differentiate its bid contract from others company and get opportunity to
get the same (Ying, Chaolin and Xiaojiang, 2014).
PEST Analysis: This analysis aid a firm in identifying opportunities by which they can
expand their business market. Through this process, executives of Thomas Developer need to
consider certain rules and regulations, economic situation of marketplace, demands of public and
technology for conducting business operations (Understanding Pest Analysis with Definitions
and Examples, 2018). Political factor: This component of business environment shows political condition, rules
and regulations formulated by government of a country. Therefore, if such factors are
stable and flexible then it aid a company to get opportunity to run its business in smooth
manner. Hence, in context with UK, its political stability assist Thomas Developer to
expand business at global scale (Leigh and Blakely, 2016). Economic factor: It includes factors like inflation and deflation period, per capita income
and so on. Thus, if economic condition of a country is good then it will give chance to
small organisations to get funds on easy rates. As in UK, per capita income is good so it
shows high purchasing power to people. Therefore, Thomas Developer has chance to
increase sales performance and generate profitability by serving good quality of products. Social factor: This element define that organisation provide items and services for
fulfilling demands and requirements of people. Market survey helps executive to gain
information about needs of public. This aid them to have knowledge about growth
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chances for expanding firm. Thomas Developer is an IT firm, if people belong to high
educational segment than they require to use advanced software. This benefit firm to
develop new application and software for increasing business and satisfying buyers.
 Technological factor: It includes those factors which aid firms to utilise resources in
proper manner. Electronic equipments, IT processes and other tools which are
implemented in system help executive to conduct activities effectively. Business person
of Thomas Developer provide software and IT application to clients. Their is
technological advancement that can help firm to have large opportunities for framing new
and unique software (Haaland and van den Bosch, 2015).
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.
Ansoff's growth vector matrix: This model was developed by Igor Ansoff to define
expansion strategies for organisation. Potential and current market and product are two focus of
firms which support them to increase sales and profitability ratio. Business person of Thomas
Developer which is a software company can adopt these tactics for expansion that are defined
below:
(Source: Ansoff's Matrix, 2018)
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Illustration 2: Ansoff's Matrix

 Market penetration: In this strategy, market focuses on increasing sales of existing
products and services into existing market. It depends on resources available to them and
helps business to increase their market share of their products and services (Pothukuchi,
2015). Thomas Developer can achieve this by advertising, sales promotion and
competitive price strategies. These strategies may help business to make market
unattractive to its customers. Market development: It focuses on entering into new market with current portfolio of
products. This strategy is more risky than penetration strategy because company is
expanding its business into a new market. Thomas Developer can approach it by entering
into a new geographical area, new packaging, distribution channels for distributing their
software to its potential and new customers. Company can adopt new pricing strategies
for different consumer and to attract new market. Product development: In this strategy, business tries to innovate or provide new products
to its current market for growth in market share. This requires creating core competencies
to attract current customers in order to use new products offered by them. Thomas
Developer can use this strategy by research & development and innovation in existing
products. Analysing consumer needs for introducing new things into market for being
ahead in competitive environment (Hess and Sorensen, 2015). Diversification: This strategy emphasises on introducing new products into new market.
Companies use this to increase their market share. It is most riskier strategy among all
because business is expanding into new market with new product without having any
experience about it. For Thomas Developer, using this strategy needs a lot of market
research and they need various financial resources to implement it.
Therefore from the above strategies, business person of Thomas Developer require to
adopt market development for increasing market reach and customer base.
TASK 2
P3. Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source.
Organisation require money for execution of business operations effectively. Small firms
are started by people who require to generate revenue. Entrepreneur didn't have sufficient funds
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for making growth to enhance market reach (Zheng and et. al., 2014). Thomas Developer is
small IT firm which is expanding firm so executive require to increase capital. For this, they find
out different sources of funding which are mentioned below:
Crowdfunding: The type of funding in which small wealth in form of money or assets
are used to finance fresh businesses by large number of investors. It protects the non-wealthy
investors for putting their money at risk. This type of funding can be done through social media
platform also. Benefits: It can assist to reach to thousand of investors who are looking for investment in
small amount which can easily be promoted through social media platform, e-mail
marketing etc. This is an efficient way of funding as it does not need large amount of
resources to work. Drawback: Crowdfunding is time consuming tool as executive require to inform people
about business prospect. After this, group members find out whether it will be profitable
for them (Janssen and et. al., 2014).
Venture capital: It is a kind of financing which define that investors provide money to
start-ups and small businesses that are committed and have potential of long-term growth. It
comes from well-off investors, investment banks and any other financial institution. These fund-
rising is done by circulating a prospectus to potential investor who agree to commit money to the
fund. Benefits: Venture capitalist includes investor who provides financial assistance to start-
ups and small businesses in belief of favourable ROI. Drawback: Executive lose their business control and require to involve investor in
decision making processes. This result in conflict and disputes which affect on
functioning of firm.
Bank loan: It is most common source of capital for a business which provides short,
medium or long term finance. Their is fixed period over which loan is provided at fixed interest
rate. Types of bank loan are personal, education, home and car loans. Banks has added now
business venture loans to their curriculum (Allmendinger and Haughton, 2014). Benefits: Bank and financial institution provides loan and financial assistance to start-up
and small business. This help executive to relive themselves from taxation as stated by
government.
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 Drawback: Business person require to make documentation in respect to bank guidelines
which is time consuming and tiring. Besides this, they even need to pay money on time,
otherwise bank seize assets in against of failure of repayment.
Angel investors : These investors are the one who provide funding to small businesses
and in return shares the equity on the basis of their invested amount. Angel investors are highly
experienced and also owns lots of skills which are helpful in the business growth. They also
provides innovative ideas and helps in decision making process. Benefits : These investors are comfortable with the flexible business policies which
helps the organisation in modifying their policies according to the requirement of
business. Valuable advice and guidance of angel investors helpful for the organisation in
order to achieve its goals and objectives.
 Drawback : Angel investors owns the authority and power that involves them in decision
making process. Sometimes this authority is non beneficial for the organization as there
decision may harm the goodwill of the organisation.
Peer-to-Peer : This lending is more accessible source of funding than conventional loan
from the financial institutions. This may be caused by the low credit rating of the borrower or a
typical purpose of the loan. Most loans organised by this lending platforms are used by
borrowers to consolidate debts, to fund large purchases such as cars or for business purposes. Benefits : This source of fund generally provides higher returns to the investors relative
to other types of investments. They are usually come with lower interest rates because of
the greater competition between lenders and lower origination fees.
 Drawback : These loans are open to high credit risks. Many borrowers who apply for
these loans have low credit ratings that do not allow them obtaining a conventional loan
from a bank. The government does not provide insurance or any form of security to the
lenders in case of the borrower’s absence.
Henceforth, “Electoral Management System for The City of London” is government
contract under which Thomas Developer has made bid of £160k. Under this amount, company
has only £20,000 therefore, for remaining £140,000, it will arrange funds by taking loan from
bank and crowdfunding source.
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TASK 3
P4. Design a business plan for growth that includes financial information and strategic objectives
for scaling up a business.
Business plan is a written documentation of the formal structure and ways sthrough
which the growth of business will take place. Background of company, vision and mission
statement, objectives, SWOT analysis, financial information are elements stated in this plan.
Thus, this is business plan of Thomas Developer which is described below (Sager, 2017):
Company overview: Thomas Developer which is an IT firm that develop software and
application to other company. “Electoral Management System for The City of London” is a
government contract in which firm has made bid of 160k Pound.
Vision and mission statement: Vision of Thomas Developer is to make world automated
by building technology and effective software. Mission of Thomas Developer is to provide
quality IT services and solutions to become well known and respected firm.
Strategic objectives: Executive frame goals for directing and guiding team members to
carry out activities through which objectives are accomplished. It is necessary that SMART
tactic is followed so that objectives are specific, measurable, achievable, realistic and time
bound. Thomas Developer objective is to increase sales and revenue by 15% each year.
Product and services: Thomas Developer develops IT application and software which
aid other organisation in managing operational activities.
Situational analysis: Business person require to have knowledge about market conditions
and system capabilities. SWOT analysis is technique by which strengths are used by executive of
Thomas Developer for utilising opportunities. Besides this, weaknesses and threats are analysed
by them to prevent them from affecting business (Abolhasani and et. al., 2016).
SWOT Analysis of Thomas Developer:
Strengths:
 Thomas Developer have strategic alliance with famous brand which are Dell and
Infotech. This help company to create strong image and market position.
 Expert team of software engineers having sharp skills and knowledge in technical field.
Weaknesses:
 Thomas Developer is IT firm which involves high initial investment which affect on
business.
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 Company expenses are large that is maintenance of hardware and software.
Opportunities:
 Thomas Developer has chance of market development and penetration for increasing
market reach and customer base.
 Technological development are conducting at fast rate so company have possibility to
frame new and advanced application and software (Bunker, 2015).
Threats:
 There are well known and popular IT firms which influence on profit of firm. Government of UK keep framing laws for regulating IT companies so that harmful
application and software are not designed.
Financial information for scaling up business: Cash flow statement helps executive of
Thomas Developer to have information about circulation of money. Operational, investing and
financing are three tactics in which funds are divided. Thus, net increase/ decrease in cash are
estimated by business person (Wu, 2015).
Thomas Developer
Cash Flow Statement
For the Year Ending 31/12/18
Cash at Beginning of Year 22,500
Operations
Cash receipts from customers 4,25,875
Cash paid for
Inventory purchases (1,58,252)
General operating and administrative expenses (10,658)
Wage expenses (1,05,852)
Interest 8,502
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