TXO System: Growth Strategy, Funding, and Exit Options Analysis

This report analyzes the growth strategy of TXO System, a telecom asset management and consultancy firm. It begins by examining key considerations for evaluating market growth opportunities, including competitive and external market analyses using Porter's generic strategies and PEST analysis. The report then applies Ansoff's growth vector matrix to evaluate market penetration, development, product development, and diversification strategies, recommending market development as the most suitable option for TXO System. Furthermore, it explores potential funding sources, discussing their benefits and drawbacks, and designs a business plan for growth. Finally, the report assesses exit or succession options for a small business, highlighting their advantages and disadvantages, providing a comprehensive overview of strategic growth and financial planning for the company. The report aims to provide a detailed roadmap for TXO System's expansion and success within the competitive telecom industry.

Planning for growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Key considerations for evaluating growth opportunities......................................................1
P2 Evaluate Opportunities for growth applying Ansoff’s growth Vector Matrix......................4
P3 Potential source of funding along with their benefits and drawbacks...................................6
P4 Design a business plan for growth.........................................................................................8
P5 Assess exit or succession options for a small business explaining the benefits and
drawbacks .................................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Growth Planning is crucial task for every business organisation which involves
envisioning long term business success. It helps business owners to plan and track their organic
growth in revenues. In order to prepare a plan for growth, there is required to adapt changes
within workplace which driven by digital disruption. Although, planning has a vital role to guide
and navigate a business organisation thus it can expand into new markets. At this time, managers
are required to identify all internal and external forces which may hinder firm's market position
in future. The prime motive of growth strategy is to improve their existing performance and
obtain high competitive edge (Barbour and Deakin, 2012). TXO system is the chosen
organisation for this report which provides professional telecoms asset management services and
consultancy. The firm was founded in 2005 and presently its main clients are Tier 1 and 2 fixed
and mobile operators, large corporations and wide range of channel partners. Apart from this, the
report is going to be described key considerations for evaluating market growth opportunities.
There will be a discussion on various sources of finance with their merits and demerits. A
business plan is prepared thus to ensure future growth and success of the company.
TASK 1
P1 Key considerations for evaluating growth opportunities
In this ever changing corporate world, every enterprise desires to gain maximum
defensible edge and stay successful at market place. For this purpose, business owners assess
potentials and pitfalls inherent at workplace so as to take important decisions and ensure market
success. Managers should focus on determining growth opportunities by applying diverse tools
and tactics. Although, market growth is uncertain cause new innovations, technological advances
and further external forces may reduce life cycle of business and its offerings as well (Beatley,
2014). In this present scenario, TXO system is planning to expand its business in new markets,
i.e. from Wales to other popular location of UK. So that, management is focused to determine
those local market areas which can help company to grab better future opportunities. Henceforth,
execution of an imperative growth strategy helps in developing well structured business
framework and getting optimal utilisation of resources. Below is defined two strategies that
evaluate future market growth opportunities of a business, such as -
Competitive analysis – Assessment of competitors is one of the critical task for
management, to do this firms can identify what makes their products more consumable or
1

unique. Although, competitive analysis is made for demonstrating who are the competitors, what
are their strategies or policies, their products and so on. If a business has proper knowledge then
it can easily develop effective growth strategies and policies. In order to analysis its competitors,
TXO system consider Porters' generic strategies and identify market growth option accordingly.
In this process, management assess its rivals then prioritise into strategic groups and develop
tactics to complete them in an effective manner. While doing competitive analysis, there must be
also analysis core competencies, resources, skills and capabilities of employees to measure that
whether or not employees are able to attain competitive edge. Competitive analysis also focused
on analysing strength and weaknesses of the company and compare them with market
competition. But in this present scenario, business models have been modified, several new
rivals appear from external environment therefore that kind of instability force business to look
towards new opportunities.
Porter' Generic Model:
As TXO system is adopting generic strategies of Porter that support it to identify firm's
profitability high or low from industry average. The model was established in 1980 which aims
to specify how a company can pursue its competitive position across market. Although, this
reflect choices which has made for growth opportunities.
 Cost leadership – The tactics relies upon increasing profit margins and revenues by
cutting down prices of products while other industries are charging average price. Most
of firms acquire this strategy for extend their market position and still generating
sufficient profitability on selling of each volume. Cost leadership strategies is tend to
being a leader in respect of prices and maintain competitive position for long term
survival.
 Differentiate leadership – This strategy is based upon creating new and innovative
products which also gives maximum satisfaction level to customers. Differentiation
leadership is acquired to differentiate products or offerings from competitors and attain
wide range of consumers. The main focus of this strategy is to improvise current features,
brand image, functionality, credibility and durability of products to which customers'
value (.Brinckmann, Grichnik and Kapsa, 2010).
 Cost Focus – Most of business association apply this tactics in order to target niche
markets as well as raising their sales. Cost focus strategy is based to recognise changes in
2

market trends then provide products and services to customers' accordingly. Here, firm
will deliver low cost products in niche markets and satisfy their needs in an effective
manner.
 Differentiation Focus – In this section, firm's focus is on making their products or
services more effective rather than competitors and serve them into small group of
customers. Basically, the strategy is acquired to generate products for special buyers who
only wants qualitative and value added products and obtain high profit margins.
From all above strategies, TXO systems' need to acquire Cost and Differentiation focus
strategies that helps company to obtain high competitive advantage and grab better future
opportunities. By using both tactics, firm will be able to serve innovative products into niche
markets or specific number of clients. As the referred company wants to enlarge its market areas
and for this firstly it needs to capture niche markets and provide them something unique that is
able to satisfy customers' needs in best possible manner.
External market analysis - In external business environment, there are certain factors
which may affect working activities and practices of a company in direct and indirect way.
Although, the analysis is conducted to determine all negative elements so as to make imperative
business decisions and ensure future market growth of the company (Burton, 2010). External
environmental analysis can be done through by PEST analysis so as to determine all elements
and improve market growth.
Political factors
Factors like – government laws and
regulations, taxation policies, duties, tariff
rates, import export and VAT policies etc. may
affect companies. Due to political stability in
UK business organisations can easily survive
at there. British government is also supportive
towards telecom industry as it provides funds
or other assistance to growth and expansion of
telecom companies. All firms who deals in
same sector must follow National Telecom
Policy.
Economical factors
UK economy is growing at fast pace which
leads enhancement in disposable income of
people as well as improving their living
standard. As more business built, need of
telecommunication will also increases.
In UK, fewer trade barriers helps in better
growth rate for TXO systems'. i.e. no license
required in setting up telecom business.
3

Social factors
Rapid changes in market trends as well as price
wars between companies may shift customers'
interest from one brand to another so that firm
has to give preferences to customers' needs and
wants.
On the hand, more and more people wants to
get connected with each other; its a part of
their lifestyle (Chapin, 2012). In this case, they
utilise cellular network which is beneficial for
TXO systems' by ensuring their long term
growth.
Technological factors
The aura of telecom sector is based upon
innovations or technical advancements. Use of
mobile computing is on rise whereas
computers and cloud technology has become
core of productivity, 7G is about to arrive. All
these technical aspects help TXO system to
attain large group of customers and increase its
market share as well.
Henceforth, if a business organisation enables to assess all those external factors then it
can grow and diversify at market place. Due to political stability in UK, companies can easily
survive there for long thus it could be beneficial for SMEs like – TXO systems. On the other
hand, technological advents would be great opportunity for the company as by making new and
innovative products the firm can easily enlarge its market or functional areas.
P2 Evaluate Opportunities for growth applying Ansoff’s growth Vector Matrix
Application of Ansoff Matrix refers with an model which was generated by Igor Ansoff,
so as to determine market growth options through business would attain its goals and objectives.
In this contemporary corporate world, the framework is acquired in strategic planning and will
contribute to opt out possible growth opportunities. There is defined detailed description of all
four grids of Ansoff Matrix, such as -
Market penetration – It is first quadrant of Ansoff Matrix which signifies that a business venture
can explore its functional area in marketplace with its existing product line. There is intense
competition at marketplace therefore, companies like – TXO System should decrease its prices
thus to seize interest of more and more customers. Although, the company also deals with large
corporations thus price may not be an issue, it needs to focus on implementing attractive
advertisements and promotional campaigns as many people can know about the brand and its
offerings (Chen and et. al., 2014).
4

Market development - Its a second growth strategy in grid of Ansoff Matrix. The market
development strategy is best for those organisations who wants to expand their venture in newer
markets by serving their existing products or services. In context of TXO system which have
gained credible place in telecom services and now planning to expand business in other locations
of UK. In this present scenario, people are tend to adopt fastest and effective networks thus to
communicate effectively thus market growth strategy would be beneficial for company as it
really wants to expand its market areas.
Product development – This kind of approach is mostly used by companies those have high
market share and put efforts to add more clients in their database. The primarily reason behind
using product development strategy is rejuvenate current position of the company thus to arrive
at saturation level. But, this kind of growth strategy may be beneficial for TXO system because it
serves in five continents by making innovations in its current product line. But the business
association does not have much credibility at market as it cannot venture into various segments
of products.
Diversification – At last, this growth strategy render a option to an organisation to invest into
unrelated segments with a new product portfolio (Christofakis and Papadaskalopoulos, 2011).
For example – TXO system starts to provide financial advise to customers by undertaking
horizontal diversification strategies. But, the strategy carries out high market risks that can affect
market position of the company.
However, evaluation of growth opportunities will supports an association thus to select
best one which will render high chances of growth. Thus, recommended strategy to TXO system
is market development strategy as the firm is able expand itself successfully in new markets of
UK. The company is expert in telecom services and asset management as it follows all current
trends of market. But at this time, the business has to formulate business practices thus to itself
from incurring unexpected future events.
5

P3 Potential source of funding along with their benefits and drawbacks
TXO system is small size company and it deals in the telecommunication sector. It is one
of the largest supplier of multi vendor supplier of telecom equipments. This company provides
the consultancy and also professional telecom management. The main objective of this
organisation is to expand its better quality of services and capture the high growth rate. In
context to expand business operations, the management of TXO organisation start its business
operation in the new city with proper amount (Moseley, 2013). There are several sources by
which company can increase its money which are internal and external.
Internal sourcing
It consists sources which are exist in business and also used through firm for expand their
business operations. Under this includes modes concern with the sale of own assets and also
retained earnings. There are different internal sources of funding mention below:
Retained earnings- It is that amount which remain from profit with company after the
dividend distribution. These are net earning after the dividends which are available for
reinvestment in core business or firm and pay down debt. TXO system company has successfully
operate its business and also earn the profit level.
Advantages
 It is regarded as cheap funding source that is available with small size organisation. Finance acquired from won earning give the flexibility to management of company
related to use. These are not bounded through outsider.
Disadvantages
 It will develop the adverse affect on existing working of company as it is more complex
for company to maintain it liquidity (Pallagst, 2010).
External sources
It involved modes concerned with the venture capital, bank loans and many others. The
benefits and disadvantages of each resources are different from the each other.
Venture capital- IT is a necessary source of funding for small and new companies. In
this, funds are to be given through investor to small size companies with long time growth. It is
helpful in terms of managerial as well as technical aspects.
Benefits
6

 This is not necessary for company to repayment. It is beneficial condition fort
TXO company to expand business related operations in other city.
 Capitalists give large amount of the equity finance on the basis of current growth
related capabilities.
Disadvantages
 Main disadvantage of venture capital is loss of control due to the share majority is
to be taken through them in a business firm, under this condition, organisation
management not permit to take the decisions through their own and also need to
consult the capitalists.
Bank loans
It is regarded as most common finance form for the small size company. TXO business
organisation uses the mode to increase its 50%amount from the total needed. Bank provide the
loan for the fixed time period and also should be repaid through firm to the bank after finish
mention time period with particular interest amount. In addition to this, time period is based on
nature of loan. In this present era, loan is needed for the long period of time and also repaid in 10
years with 12% of interest rate.
Advantages
 Its main benefit is to increase the limit of fund any time whenever company
requires. It will permit the small size company to increase the funds without any
kind of delay in achieving the set aims and objectives (Pallagst, 2010).
 In this, bank gives facility for the fund repayment in instalments. It will permit the
TXO organisation to generate the more funds in easy manner and also repay in
next 10 years.
Crowdfunding
It is practice of financing a venture and project through increasing the small
amount of funds from many people with the help of internet. It is form of alternative finance as
well as crowdsourcing.
Advantages:
 It is more effective as comparison to the traditional fundraising.
 It is helpful in double the media exposure along with the marketing.
 It is fast way to increase funds with no additional charges.
7

Disadvantages:
 It does not provide the guarantee to fail the more campaign.
 Under this, finance are to be allocate with the small room for development
purpose.
P4 Design a business plan for growth
Business plan – It is known as a written document which provides pathway to accomplish
business goals and objectives in a certain time period. Business plan defines detailed information
about roles and responsibilities of team members as they can work accordingly. Following is
defined business plan of TXO system -
Overview of the company - The organisation, TXO Systems provides professional asset
management services and consultancy to the telecoms industry. The business association work
with its principles, i.e. clients to responsibly and sustainably acquire, redeploy, resell, and
recycle technology assets, allowing them to generate revenues, reduce expenses and achieve
corporate responsibility objectives. The business association is certified with ISO 9001, ISO
14001, OHSAS 18001, ISO 27001, TL9000 and AATF and WEEE compliant processes
Vision and Mission of the company – The mission statement of the company is to acquire global
leadership by committing towards corporate social responsibilities (Eddleston and et. al., 2013).
Apart from this, the vision statement of TXO systems' is to create a world in which all
technology and telecoms network assets are responsibly and sustainably acquired, reused, resold
and recycled in order to contribute to a fair circular economy and a more sustainable planet for
all.
Products and services of the company – TXO systems offers a broad suite of telecom assets
services and end to end solution to adequate telecom asset management. Main services which are
offered by company are – Telecoms network asset recovery, telecom hardware asset consultancy,
asset valuation, network de-installation & decommissioning, spare parts management and so on.
Situational analysis
It is a fundamental framework that is acquired by business associations in order to
calculate or measure its competitive position at market. Situational analysis is an effective
strategic planning tool that supports managers to attain their goals and objectives.
Strength
The main strength of TXO systems is it gives
Opportunities
it is overviewed that telecom sector is booming
8

importance to innovation and generate new
products that are able to satisfy customers'
needs and wants in best possible manner.
The firm also focus on increasing capacity of
human resources by providing them necessary
training and development assistance. Having
strong technical knowledge forced employees
to do all business activities in best possible
manner (Galland, 2012).
Products and services which are offered by
TXO systems are reliable that contribute to
improvise brand image and raise customers'
faith or loyalty.
The small business entity has ventured one
third of its profits in research and development
activities and conversion of energy. It helps
company to attain cost efficiency whereas
energy consumption get trust of society and
government.
up as there enhancement in per capita income
of UK public. It generate future opportunities
for TXO system to expand its functional areas
in new areas and obtain high market position.
British government has provided support to
small telecom start ups, they gives loans and
subsides at lower interest rates which helps
TXO systems to extend their market areas.
Emerging markets and bring innovations
Mapping out a budget – After analysis market situation, managers are required to
formulate an appropriate budget which suits out company's growth strategy. The budget of TXO
system will help in identifying how much amount will be spend on working activities which are
involved in business plan. By using this, management will invest accordingly in their new
projects (Hough and et. al., 2010). There is given annual budget of TXO systems, i.e. -
Cash flow Statement
Cash budget for the year
9

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year
Beginning cash balance 25000 32250 31750 29750 26750
Budgeted cash receipts 12400 1600 1100 1000 15000
Total cash available 37400 34850 32850 29850 28250
Cash distributed
Direct material 1400 1150 1150 1300 1500
Direct labour 1200 650 650 650 650
Overhead 900 600 600 600 600
Selling and distribution 650 700 700 700 700
Total cost use 4150 3100 3100 3100 3100
Cash surplus/ deficit 32250 31750 29750 26750 2515
Marketing budget
Marketing budget
Particulars 1st year 2nd year 3rd year 4th year 5th year
Initial money 40000 10000 12000 25000 10000
Investment 20000 12000 25000 25000
Total 40000 30000 24000 30000 35000
10