Analysis of Planning for Growth for XYZ Software Company Report

This report provides a comprehensive analysis of growth strategies for XYZ Software Company, focusing on a contract bid with Fluid Branding Limited. It begins by analyzing key considerations for evaluating growth opportunities, including resource management, core competencies, and Porter's generic strategies (cost leadership, cost focus, differentiation). The report then evaluates growth opportunities using Ansoff's Growth Vector Matrix (market penetration, market development, product development, diversification). It assesses potential funding sources such as bank loans and venture capital, outlining their benefits and drawbacks. A business plan for growth, incorporating financial information, is included. Finally, the report assesses exit or succession options for the company. The report also uses PEST analysis to give a broader view of the situation.

Planning for Growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Analyse key considerations for evaluating growth opportunities..........................................1
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix...................3
TASK 2............................................................................................................................................4
P3 Assess the potential sources of funding with benefits and drawbacks..................................4
TASK 3............................................................................................................................................6
P4 Business plan for growth.......................................................................................................6
TASK 4............................................................................................................................................7
P5 Assess exit or succession options with benefits and drawbacks............................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Planning for growth refers to make more effective as well as efficient plan of action to
gain profitable growth opportunities which facilitates to achieve appropriate benefits. The
present report is based on XYZ Software Company which deals in web designing SEO (Search
Engine Optimisation) – SMO (Search Mobile Optimisation), web development, application-
development and provide services to business clients in an appropriate manner as per their needs
and demands. In this assignment, the Company is coming under a contract with E-commerce
Website “Fluid Branding Limited” for bidding. It also includes description for key
considerations of evaluating growth opportunities and several potential sources of funding along
with benefits as well as drawbacks (Eddleston and et. al., 2013). The business plan for growth
including financial information and strategic objectives with several exit or succession options
for small business involving merits or demerits are given below.
TASK 1
P1 Analyse key considerations for evaluating growth opportunities
There are various kinds of factors which are required to be observed, analyse and
evaluate thoroughly which helps to determine potential growth opportunities for business. The
new and innovative ideas, thoughts or concepts provide support to improve brand image in
market which facilitates to gain growth and success of business properly. It is necessary to
identify beneficial chances and put efforts to grab them at correct time to improve profitability of
an organisation (Mahmoudi and et. al., 2013). In case of XYZ Software Company, they are
required to evaluate several key considerations that are explained further –
Resources: There are various kinds of resources which are available in company such as
staff members, raw material, machines, equipments and many more. Thus, it is essential to utilise
them appropriately to generate maximum outcomes from the same. In context to given company,
they are required to manage overall resources in correct way to produce desired services to fulfil
expectations of their business clients in proper manner along with achieving satisfaction (Valler,
Phelps and Wood, 2012).
Core competences: This can be described as to observe different competitors with their
products or services to compare them with own goods. Thus, it is helpful to determine several
effective ways to improve quality of services to improve brand image in market which supports
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to sustain strong position amongst competitive firms. The given company have to thoroughly
analyse about efficiencies of product of competitors an then implement certain modifications to
boost up effectiveness of own products successfully.
Porter's generic strategies: This model was primarily introduced by Michael Porter who
provides four strategies of business which render support to organisation in order to gain
competitive advantage. It is helpful to determine more effective as well as efficient practices
which provide help make strong brand of given company amongst different competitive
organisations in market (Kraaijenbrink, Ratinho and Groen, 2011) . It involves several strategies
which are as follows:
Cost Leadership: This can be described as to make manufacture product with better
quality and render to customers at affordable price to become more preferable brand than other
firms in market. It is helpful to increase profitability as well as satisfaction of consumers through
providing services at reasonable rates. Thus, XYZ Software Company are required to
manufacture software services at affordable price to sustain their effective position in market.
Cost Focus: This includes to target niche market which has little competition and provide
services at lower prices to people. It requires to understand dynamics of particular market place
and then render goods to customers at reasonable or comparatively low price. In context to given
company, they can decrease rates of their software services in terms of increasing number of
consumers along with improving brand image.
Differentiation Focus: The factor of differentiation focus refers to make strategy to add
unique features of product for making it separated from other brands. It basically involves strong
brand loyalty of customers towards brand in market as compared to other competitive firms. It is
very important to make services differentiated easily from other brands which can create an
image in minds of customers and motivate to purchase the services of selected enterprise
(Grover, Bokalo and Greenway, 2014).
Differentiation Leadership: This includes the criteria of making product more effective
and satisfactory than other competitors so that people become ready to pay premium price for the
same. It involves to improve superior quality, promotional support and generate brand loyalty in
clients so that clients prefer only to buy services of XYZ Software Company.
PEST analysis
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Political Factor: This can be explained about several norms of political parties which is
required to be analysed thoroughly because it impacts on business operations effectively. Thus,
the given enterprise is required to determine political stability of particular area before
conducting business as it effects operations and profitability as well. For example, if government
make policies to conduct overall legal procedures online then it will become an opportunity for
given company in terms of increasing their customers and profits.
Economic Factor: This includes several factor such as taxation, inflation, interest rate
and growth rate which facilitates to identify scope of business at particular geographical place.
Moreover, favourable condition of all these factors provide support know that selected company
can attain growth and success in future. For example, inflation rates increases then selected firm
can decrease price of services which facilitates to boost up sales of the same.
Social Factor: There are various kinds of people are living at particular place having
different cultures, religions, values and beliefs which reflects in their choice of preference. It is
essential for given company to take care of religious thoughts while conducting promotional
activities or increasing attractiveness (Chapin, 2012). For example, modifications into
requirements of people create new opportunities for given firm to make new strategy of fulfilling
their desires through applying minor changes which improve brand image in market.
Technological Factor: This includes various kinds technological innovations which are
helpful in carrying out various operational activities or procedures in an appropriate manner. The
XYZ Software Company is required to adopt fresh and creative technologies so that they can
produce more effective software services to satisfy actual desires of clients accurately. For
example, changing trends of technology generate several growth opportunities for companies
which can be adopt by selected enterprise to increase profitability.
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix
There are various kinds of opportunities are available in market due to changing trends
which generates several beneficial chances for companies. It is important for organisations to
observe along with analyse favourable opportunity for business to grab them by putting an
appropriate efforts at correct time. In case of XYZ Software Company, they can utilise Ansoff's
Growth Vector Matrix to determine profitable opportunities which is explained below:
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(Source: Moore, 2018)
Ansoff's Growth Vector Matrix: This is commonly considered as product/market grid
of matrix which is used to determine more effective as well as efficient opportunities for
expanding market share of particular business. In context of given company, they can utilise this
method to identify appropriate ways for expanding business to attain growth and success
(ANSOFF MATRIX FOR EVALUATING GROWTH OPPORTUNITIES, 2018). Thus, it includes
several factors which are given below:
Market Penetration: This refers to current product in existing market in which
companies are required to make an accurate strategy to boost up sales in market to grab more
profits share of the same. It involves to put an appropriate efforts to attract more number of
clients towards current product though generating brand loyalty of given company for
maintaining profitability of business.
Market Development: The market development can be explained as to expand
geographical area for current services which helps to boost up number of consumers for brand. It
includes to determine demands of specific product at different places and try to supply good
there to fulfil desires of people which increase sales as well as profits of selected enterprise.
Product Development: This can be described as apply certain innovation and add on
several features to improve quality of product at affordable rates to fulfil actual requirements of
people. In case of XYZ Software Company, they can implement creative features in their
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Illustration 1: ANSOFF MATRIX FOR EVALUATING GROWTH
OPPORTUNITIES

software applications which satisfy their business clients and helps to make them loyal to brand
along with ensuring long time profitability.
Diversification: This refers about an effective situation of new market with fresh product
which should be launched by innovative concept so that it can be easily accepted by people.
XYZ is a software company can apply this factor to introduce new service with creative concept
to fulfil expectations of people in different market place successfully (Todes, 2012).
TASK 2
P3 Assess the potential sources of funding with benefits and drawbacks
Finance term will play an important role in operating and managing business functions in
well organised manner. For completing all business activities, small company need huge funds or
investment through which they easily determine different sources of funds. As per the present
scenario, XYZ is a software company that supply different applications, web development and
provide services to business customer in an proper manner according to their needs. The
maximum contract bid is £160K in which £20K has been available in the company. For this
contract, the bid price has decided is £130K so company require £110K for completion of this
project. There are various methods of finance are described as follows:
 Bank loans – It is one of the best option which can be used by small business when they
want to raise their capital or funds. Along with this, banks are convenient to all customers
because this will provide easily facility to deposit and withdraw the amount. If XYZ
company consider bank loan for the purpose of bidding then they can get require funds in
easy manner.
◦ Advantages – Bank loan help in making flexible transactions while deposit or
withdraw the funds or capital in contingent situation. It provide loan at lower rate
where no issue occur regarding insecurity. With this, people easily believe in bank
loans (Mitchelmore and Rowley, 2013). If company taken bank loan so they can
easily acquiring various materials which are required for this work.
◦ Disadvantages – The bank follow very lengthy procedure at the time of providing
loans such as document verification of all the details of an individual with two times.
There are number of banks who prefer existing with effectively running of business
operations which help them in matching standard of financial position and sometime
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business are facing certain issues or problems. The XYZ company need to follow all
terms and condition as per this, company pay the interest which are described before
taken loan.
 Venture capital – It is a way of funding which provided by investor at the time of start
up organisation and small businesses which are believed in long term growth and
development. Venture capitalist are recreation that return from their successful funds will
outweigh finance that lost in fail venture. The XYZ company owner need to attract
various investors through this they can invest capital for completion of their project.
◦ Advantages – The venture capital is not the loan strategy so there is no requirement
of earnings schedules that means business owners does not need to return the amount
of conducting business. With the help of venture capital, company can locate their
business because they are verify their documents in business directories. They
required to satisfied to their capitalist because they are investing large amount of
funds in the firm. Also they are developing strong relation with them which help in
future time period.
◦ Disadvantages - Venture investor need to prefer inventory in association which allow
company to issue preferred stock which are required. The procedure of funding in
venture capitalist that includes negotiation and due to diligence time period. It require
operational, legal and accounting assessment of the firm with the help of experts that
are very expensive and time consuming in nature (Barbour and Deakin, 2012). XYZ
firm require to follow all critical condition which are develop by investors and also
pay time to time interest.
TASK 3
P4 Business plan for growth
Business plan refers to making an effective formal statement that includes several
efficient strategies, goals and plan of action to complete desired objectives along with generating
better outcomes on regular basis successfully. It is an important aspect to build an appropriate
planning for achieving required targets through creating needed productivity. In context of XYZ
Software Company, a business plan is prepared which is as follows:
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Executive summary: This business plan is based on XYZ Software Company which
produce several web designing, SEO (Search Engine Optimisation) – SMO (Search Mobile
Optimisation), web development, application- development and may more relevant services.
They provide these facilities to business clients to fulfil their actual needs, wants and demands
properly to satisfy them (Schetke, Haase and Kötter, 2012) .
Mission: The mission of XYZ Software Company includes the target of providing better
quality of services along with addressing challenges with help of professional constants,
optimizes decisions, and reliable software solutions.
Vision: The vision of statement of XYZ Software Company is to become global software
firm through using innovative technologies to fulfil as well as maximize overall business dreams
successfully. They have an appropriate aim to be known symbol of reliability, innovation and
hard work.
Objectives: They have several objectives such as to become pioneer in mobile
application, increase market share by 5% within 6 months along with develop overall sorts of
mobile apps and produce software solutions to all relevant issues. Another main objective is to
enhancing its profit amount in every five year which help company in getting higher growth and
productivity.
Segmentation: The market segmentation is that procedure which divide into small
groups in the large market for carry out customers who have same needs and demand. In this,
XYZ company target their consumers on the basis of different segmentation area and satisfy their
all requirements and wants regarding firm products or services (Li, Mobin and Keyser, 2016) .
Targeting: Target market is the process which involves dividing the whole market into
two parts and developing appropriate marketing strategies on the basis of each area which help in
enhancing share of market. XYZ company offer its application software in all over the target
market to their desired customers.
Positioning: It is most important step of this process. Positioning assist organisation for
developing perception regarding their commodity or products among customers minds. In this,
XYZ firm place their product, service and brand to appeal in the target market in order to
develop interest among their potential customers (Denton, Forsyth and MacLennan, 2017) .
SWOT Analysis
Strengths Weaknesses
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 Using advanced technology and
methods.
 Company enhancing its growth and
development level in minimum time.
 Provide updated technologies and
application software to their customers.
 They are hugely concentrate on brand
recognition.
 The narrow products line focus on
improvement and backup.
 Website speed is low as compared to
competition.
Opportunities Threats
 Company can emerging towards
international markets.
 They can shift higher price competition
with new application or technology.
 Promote their products through
advertisement and publicity.
 There are large number of competitors
in software products.
 The major threat is always change in
customers needs and requirements.
 There is lack of updated techniques and
methods.
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
Marketing
expenditures
Advertisement 9000 8000 3000 8000 5000
Mobile promotion 2000 8000 3000 7000 5000
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Interface 9000 8000 4000 6000 7000
Expenditure of
networking 3000 4000 2000 2000 4000
Total 23000 28000 12000 23000 21000
Available balance 17000 2000 12000 7000 14000
TASK 4
P5 Assess exit or succession options with benefits and drawbacks
There are two option for the company which help in deciding whether they are exit or
moving towards growth to their business. If XYZ firm adopt exit option so they need to sale their
assets to the creditor and on the other hand, if they are adopt succession option in which they
need to joint their business with other organisation. This will help them in proceeding towards
existence of company in the market place. There are some options regarding exit and succession
that are described as under:
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Liquidation – It define as that process where organisation's presence going towards to
the end. All the company assets are liquidated and proceed the sale of assets which is used to
repay the creditors. XYZ organisation can used this process of liquidation for winding up their
business through selling its assets and inventories at heavy discount rate (Ziari and et. al., 2012) .
Benefits Drawbacks
 This will help in gaining experience,
reputation and assets of the business. If
XYZ purchase another firm which help
in improving its business efficiency.
 Acquisition develop strong market
existence and enhancing its market
share.
 This will assist in overcoming arising
barriers and issues. If XYZ company
having some problem at the time of
acquisition so this will directly impact
on its business efficiency.
 The role of liquidator is to sale all the
company assets for earnings cash from
creditor.
 Sometime director of firm will
becoming liable for company debts.
 Sometime accusation of wrongful
trading has been done.
Joint Ventures – It refers as the procedure where two or more parties mutually decide to
combine their resources and assets for achieving desired goals and targets. In this, each partner is
responsible for its loss, profit and cost integration. The XYZ firm can also use this method for
developing its presence in the large market place and it will help in combine all assets or
resources with other party for gaining higher profitability.
Benefits Drawbacks
 It is one of the most popular way for
enter in the emerging market. If XYZ
company need to remain its presence in
the market so they require to combine
their business.
 With the help of joint venture, XYZ
 Sometime there are risk of buying
wrong business and paying very much
for this business concern.
 The impact of competitors products can
be strong in the large market place.
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