Planning for Growth

By
0279-Andreea Cristina
Table of Contents
Introduction.................................................................................................................................................3
LO1. “Analyse the key considerations SMEs should consider when evaluating growth opportunities”......4
P1. “Analyse key considerations for evaluating growth opportunities and justify these considerations
within an organisational context”...........................................................................................................4
P2. “Evaluate the opportunities for growth applying Ansoff’s growth vector matrix”............................8
M1. “Discuss the options for growth using a range of analytical frameworks to demonstrate the
understanding of competitive advantage within an organisational context”....................................10
LO2: “Assess the various methods through which organisations access funding and when to use different
types of funding,”......................................................................................................................................11
P3. “Assess the potential sources of funding available to businesses and discuss benefits and drawbacks
of each source”......................................................................................................................................11
M2 “Evaluate potential sources of funding and justification for the adoption of an appropriate
source of funding for a given organisational context”.......................................................................15
LO3. “Develop a business plan (including financials) and communicate how you intend scaling up a
business”...................................................................................................................................................16
P4. “Design a business plan for growth that includes financial information and strategic objectives for
scaling up a business”............................................................................................................................16
M3. “Develop an appropriate and detailed business plan for growth and securing investment,
setting out strategic objectives, strategies and appropriate frameworks for” achieving objectives,.21
LO4. “Assess the various ways a small business owner can exit the business and the implications of each
option”......................................................................................................................................................23
P5. “Assess exit or succession options for a small business explaining the benefits and drawbacks of
each option”..........................................................................................................................................23
M4 “Evaluate exit or succession options for a small business comparing and contrasting the options
and making valid recommendations”................................................................................................26
Conclusion.................................................................................................................................................27
References.................................................................................................................................................28
Introduction
With the “passage of time, SMEs are flourishing rapidly to compete for the global market, Many
established companies like Subway and Walmart started as a very small company, Their current
achievement is the result of an extensive plan for growth, A precise planning for growth fetches
the SMEs to the door of success, As per the scenario, small businesses come to market with a
short amount of money and with few product variations, Eventually, not all business but some
become successful by expanding its market in different ways(Leadership and management,
2009), In this assignment, the objectives, strategies and necessary plan for the growth of a small
company will be discussed in detail, For the purpose, we have selected a small business of the
UK named Okra, a first-class designer and consultant, For rapid and effective growth, the
analysis of growth opportunities, strategies and financial information must be done, This
assignment will comprise all the necessary information.”

LO1. “Analyse the key considerations SMEs should consider when

evaluating growth opportunities.”
P1. “Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organisational context.”
Okra is categorised “under SMEs which design and construct buildings, They take all the
responsibilities from design to managing project and furnishing, As a small business
organization, it is competing in the market but the rivals are the treats now(Massy, 2009), So, it
needs to think about its growth opportunities, Growth opportunities are referred to as the scopes
for business expansion in a new or existing market, Therefore, Okra needs to analyse the
following considerations to assess the growth opportunities:”
Competitive Advantage

This is a type “of advantage whereas a company obtains a unique feature which makes the
company superior to the others, Okra must find out its own competitive advantages to grow fast
and compete its competitors, Okra needs to analyse its resources and capabilities which help the
company to go for development and expansion, The core competencies need to be figured out for
designing the business plan, There are some strategies to know a competitive advantage” which
also assists “the company to gain a competitive advantage, One of these strategies is Porter’s
Generic Strategy.”

Porter’s “Generic Strategy: Generic strategy is the way companies gain their competitive
advantages, This strategy is a combination of four different strategies(Ford, 2010), For finding
out the core competencies of Okra, these strategies can be applied in this case, Here are the four
strategies of Porter's generic strategy:”
“Figure: Generic Strategies of Porter”

“Source: www.mindtools.com”

The first “strategy, cost leadership let the company to keep the cost of its operations low and to
gain more market share, The second one, the differentiation strategy is all about offering
innovative and unique products and services in the market(Buckley, 2009), The focus strategy
has been divided into two parts which are cost focus and differentiation focus, Cost focus is the
same as the cost leadership but it focuses on a niche market, Also,the differentiation focus
strategy is similar to differentiation strategy and it also concentrates on a dist6inct niche market.”

Innovation

Innovation “refers to the invention of new ideas, methods or techniques, The main offering of
Okra is its service to another business area, Unique design, distinct features are innovative
services, These play role as the competitive advantages of Okra, Therefore, Okra must think
about new design, a consultancy with unique and effective suggestion and new style to make
buildings, These things are the part of innovation which helps the company to gain its
competitive advantage for impetuous growth.”

Portfolio Strategies

There is “several portfolio growth strategies exist for the rapid growth of a business, Here two of
those strategies have been discussed, The two portfolio strategies are in below:”
BCG “Growth-Share Matrix: The growth-share matrix is a planning model which shows that
business can be classified into four categories, Following chart shows the categories, divided on
the basis of market growth rate and market share:”

“Figure: BCG Growth Matrix”

“Source: www.smartinsights.com”

BCG “matrix helps companies analyse the growth rate of the market and the market share, The
above picture shows four conditions of a business, Here “star” shows the condition of a company
with a high growth rate and high market share(Buckley, 2009), The condition in “question mark”
means that the company has high growth but low market share, When the company’s share” is
high and “the growth is low then that company become a cash cow, Lastly, the dog shows a
company is in a condition whereas its growth rate as well as the market share, both are low.”

GE-McKinsey “Matrix: This is also called the nine-box matrix, This is a tool which prioritises
investment among its all business unit through offering a methodical approach to multi-business,
The following figure shows the nine-box matrix:”
 “Figure: GE-McKinsey Matrix”

“Source: https://www.cleverism.com”

This “matrix also shows the opportunities for growth of the business, But it uses business unit
strength and company attractiveness as its dimension whereas BCG matrix uses market growth
and market share.”

P2. “Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.”
Business organizations “like Okra, have huge opportunities in the creative sectors, These
opportunities can be evaluated through different strategies, Ansoff’s growth matrix is one of
those strategies to evaluate growth opportunities.”

Ansoff’s “Growth Matrix: This growth matrix is a tool helps to build strategies with the
purpose of accelerating business growth, Through a strategic plan, business organization can go
for development of its products and market, There are four strategies under the Ansoff’s growth
matrix:”
“Figure: Ansoff’s growth matrix”

“Source: www.fourquadrant.com”

“Evaluation of the growth of Okra will be easy by applying these four strategies:”

Market “Penetration: This is the strategy of initially setting a high price to reach the break
event point fast and then after getting the desirable profit margin, the company goes for low price
setting, to gain more profit, the company do market penetration (Massy, 2009), Okra may follow
this strategy as it is a designer and consultancy business organization.”

Product “Development: Offering new product or service in the market is called product
development, It is also known as product modification (Knecht, 2014), Okra may introduce new
ideas and design to attract its customers by applying this strategy.”

Market “Development: One of the most popular strategies is a market development strategy, It
is also known as market expansion, Based on the geographical areas, companies go for market
development, This expansion may go for global expansion(Massy, 2009),Okra has huge
capabilities to go for global with its services.”
Diversification: “This is totally different from previous strategies as it comes with completing a
new market and new product or services (Knecht, 2014), Okra should go for diversification in
near future in the service market.”

M1. “Discuss the options for growth using a range of analytical frameworks to demonstrate the
understanding of competitive advantage within an organisational context.”
In the “previous discussion, we have found many options and strategies of growth for the
organization Okra, These options are to be discussed below with a range of analytical
framework:”

“Options for Growth”

Innovation: “New product or service development fall in the category of innovation, Innovative
ideas and services create a new era for a company so that they can compete with the rivals and
achieve rapid growth.”

Techniques and solution

Okra can “introduce a unique project plan that has never been launched before to grab the
attention of their clients(Buckley, 2009, They may also come up with new services like they can
provide their customers with insurance facilities for two or three years for their constructed
building by maintaining the insurance policy by themselves.”

Diversification: “Diversification refers to go for a totally new market with new products and
services, Okra can introduce the new business idea in the market which will boost up their
growth.”

Techniques and solution

Following this “strategy Okra can go for both product and market expansion, As they are already
involved in designing and consulting, they may now go for production the essential materials for
their business.”

Making “company a Star: Star means both the growth rate and market share is high of a
company, so for profitable growth company may make the company a star.”
Techniques and solution

Okra can “increase the number of stockholders of the company and also go for attracting
customers by promoting their services so that they can earn a good profit(Buckley, 2009).”

LO2: “Assess the various methods through which organisations access

funding and when to use different types of funding.”
P3. “Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source.”
Investment “decision-making is a crucial decision for all size of business, Financial basement
makes the company strong and speeds up the company’s growth, Hence, proper decision making
is a must for effective investment in companies like Okra, The following financial appraisal
methods will be used for Okra to make its investment decisions:”

Payback “Method: This is a method which has been tied with a time frame, Payback method
helps the company to recover the amount, initially invested within a fixed time period,
Therefore, the time value of money isn’t focused here (Ross, Westerfield and Jaffe, 2010), The
following formulas are used in payback methods to recover initial investment:”

“Payback Period with Even Cash Flow”

“Payback Period with Uneven Cashflow”

Net Present “Value Method: Unlike the previous method, the net present value method
prioritises on the present value of money(Shim, 2012), The distinction between the current value
of cash inflow and outflow is considered as the net present value, There are three concepts of this
methods, which are shown in the figure is below:”

“Potential sources of funding”

Okra is “an existing small business in the UK which needs funds to operate its daily activities,
There are many sources of funding for a company but all of them may not be convenient for the
company Okra, There are two types of sources for funding which are in below:”

Sources of fund for a company

Internal Sources External Sources

“The benefits and drawback of the sources will be discussed in the following discussion:”

Internal Sources

Retained “Earnings: The amount of profit which is kept up after paying all the shareholders of
a company is known as retained earnings or profit, “Ploughing Back of Profits” is another name
of this type of profit, This source is more reliable and a long-term source of fund.”

Reducing “Working Capital: Working capital is considered the most important capital as it’s
needed to complete the daily activities, For maintaining cost effectiveness, the amount of
working capital needs to be reduced which helps to make an internal fund for business(Nelken,
2009).”

External Sources

Bank “Loan: Among the external sources of fund bank loan is the most popular source as well
as most trusted, The money loan provided by the bank gives a great opportunity to the small and
medium business for growth (Stronck and Eigelberner, 2009), Okra also has the opportunity to
make fund from the bank loan and to make a contribution to the economy of the country.”
Crowd “funding: This is the concept of collecting money in a small amount from a large
number of people to fund a project or a business, This has been considered a very popular
funding source of recent years (Nelken, 2009),This is an online based funding system.”

M2. “Evaluate potential sources of funding and justification for the adoption of an appropriate
source of funding for a given organisational context.”
We have “found some authentic and reliable sources of funding for Okra to speed up its growth
with proper financial support, The evaluation of these sources are done below with proper
justification:”
Internal sources

Strengths: As we “mentioned earlier that Okra’s potential internal sources are retained profit
and reduced working capital, so we are focusing on some of the strengths of these sources:”

“Long-term sources for funding”

“As these are internal sources the reliability is more than other sources”
“This fund helps the company in being efficient in cost management”

Weaknesses: “Along with some positive sides of these internal sources, some negative sides are
also there, Followings are few weaknesses of the internal sources:”

For “the selected sources the stockholders sometimes become a barrier to retain profit.”
The “company may face the problem of bankruptcy while making the working capital
very low to create a fund.”
External Sources

Strengths: Okra “has already decided to collect its fund from two external sources, one is a bank
loan and another is crowd funding, The reason behind choosing these sources are some benefit,
The strength of these sources are stated below:”

“The amount of money is huge to support the growth of the business”

“Create an image to customers through the collection process”
“Provide an opportunity to the business owner to collaborate with clients and investors.”

Weaknesses: “Every positive thing has a bad side also, So along with these positive sides
external sources of the fund also have the following weaknesses:”

“High-interest rate discourage business owners to take a bank loan”

External “sources sometimes are not so reliable and long-term source such as crowd
funding”

LO3. “Develop a business plan (including financials) and communicate

how you intend scaling up a business.”

P4. “Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business.”

“Okra’s Business Plan for Growth”

Okra as “doing business in creative sectors has enough opportunity to grow and to acquire its
position as an established large organization, New design and idea about the structure of the
interior and the exterior can be promoted through a proper business plan and it will definitely
accelerate the growth of the small business Okra in the UK, Therefore, for making a proficient
business plan the management team of Okra needs to start with including the mission and vision
of Okra, Together the mission and vision are called strategic intent, The following structure is of
the business plan of Okra:”

Vision

The illustration of “the objectives and the future of a business is referred to as a vision of that
particular company(Yeats, 2014), Vision helps to attain the desired future of an ambitious
company.”

Company business Destination Objective

Okra Our “contribution will Market expansion, providing

inspire the client to provide technical excellence, honesty, long-
asustainable product, term relationship with clients,”

We “will see our company as one of the

recognized company in as a designer and
consultancy firm, With our architecture and
construction, we will provide more sustainable
building structure for better living, Being a
recognized company internationally, we will
improve our deliverable of our company, Okra
will deliver the unique design and structure
with best effort.”

Vision “Statement: Okra sees itself in the superior position than its competitors being committed
with the clients for proving sustainable building structure and best ideas, With the unique
features Okra will go for expansion for building better image.”
Mission

The combination of “strategies for achieving the vision by fulfilling company objectives is
known as mission (Spires, 2011), Okra also creates a mission statement by including the
mission, objectives and values of the company”

Company Name Objectives

Okra Market “expansion, providing technical

excellence, honesty, long-term relationship with
clients.”

Mission Statement

Okra is “expanding the business by providing the best services to the clients with highly skilled
team members.”

“Followings are the strategies to achieve the objectives of the Okra:”

 Making “the team members skilled through training and learning session.”
 Finding “out core competencies to reach the top of the success in the industry.”
 Constructing “and designing sustainable building for business areas maintaining safe
and construction code.”
 Using “environment friendly materials in the construction and decoration process.”

“Values and Ethics”

 “Honesty and fidelity in management”
 “Concentrating on safety and standard of the service”
 “Ensuring technological advancement”
 “Respect for employees regardless age, race and culture”
 “Protecting the rights of stakeholders”
 “Keeping the environment safe and clean”
 Business Case for Investment

Executive “Summary: Okra has built some strategies for achieving its goal, As per its
objectives, Okra needs to flourish more in the creative sector, As its plan is to be a worldwide
recognized company, Okra must maintain international standard in operating business by
satisfying its clients, Profit margin will be high soon if it maintains goodrelations with all the
stakeholders by delivering proper services.”

Financial “Information: The owner of Okra is responsible for a searching contract for this
small business, “Contract Finder” may help in this case as it provides data about the contracts
which monetary value is more than £10,000, For going for expansion it may merge with another
company or may sell its parent company to other giant company with a giant amount of money,
Forbidding the owner of Okra will submit a proposal, They can also go for expansion without
merger and acquisition, In that case, they will need a huge amount of capital which they may
collect from both internal and external sources.”

Market “Analysis: The demand in the market for architect, designers and consultants should be
observed, The rivals and competitor at same stages need to be recognized, Well, market research
will provide all the information(Mitręga, 2009, Customer research is also included in the market
analysis which helps the company to know the interest and expectation of the customers.”

Structure of “Business: Prosperity requires better plan and well structure of the business,
Competing with other companies becomes easy when the company itself has a strong basement
(Buckley, 2009), Okra has designed a business structure to speed up its growth, The structure of
its business in below:”
“Presenting Business Plan to Investors”

A business “plan is the written form of the structure and future of business, The effective growth
of all companies depends on companies financial and managerial excellence, Therefore, owners
of companies need to search for investors and to pursue them for investing in the business, The
visual presentation along with a verbal presentation of the plan is much more effective than the
written one, Investors are the external source for funding, Okra has already decided that they
will collect fund from the bank and through crowd funding, Hence, Okra must present its
business plan to its investors to get a good amount of financial support.”

M3. “Develop an appropriate and detailed business plan for growth and securing
investment, setting out strategic objectives, strategies and appropriate frameworks for
achieving objectives.”
For any “business to flourish in its own arena, there needs a strong convergence of its goals and
aims, mission and vision, And as Okra being a creative field of work, it itself demands a creative
way of putting things to its place, when it comes to – strategic intent, And the followings are the
parts of the business plan of Okra discussed in details:”

Vision: This is “something that takes a company forward to achieve its dream destination, And
Okra has the objectives of – market expansion, that is either penetrating the market or increasing
the existing market share, providing technical excellence – which is one of the cores of business
now a day, honesty, long-term relationship with clients.”
Mission: Okra “as a highly ambitious company which has some distinct missions to follow to
reach their desired destination, And they aim to follow this on their way of achieving their
objectives to take Okra to a different height.”

Structure of “business: A well-designed business structure can make a great difference to the
growth of the business, It is because every single one in the hierarchy is responsible for the
betterment of the company, Here is the structure of this company where the CEO of Okra holds
the topmost position whose responsibility is to execute the task of decision making and approval
of all sorts of the development project of the company, Then comes the- Senior
Architect/Designer whose job is to approve the final designs, And then comes – Project Manager
who handles the projects, Next, there is the HR Manager who employs staffs and other
executives in the company, Then there is the Marketing Manager whose job is branding and
making the company known, And lastly comes the Interns who are being apprenticed themselves
works with the company to assist it to grow.”

And most “important of all, there is the Strategic Objective of Okra which will lead this
company to its way of success.”

“STRATEGIC OBJECTIVE OF OKRA”

“Here is some strategic objective of this company:”

 “Being a recognized company globally.”

 “Providing sustainable product and services.”
 “Making a strong workforce.”
 “Satisfying customer priorities in an environment-friendly way.”

“And to attain these objectives the company has some strategies to follow, which are as below:”

1. To find “the core competencies of the company attain the highest success in its arena.”
2. To strengthen “the skills of the team members through more learning and training
programs.”
3. Be much “concerned while designing and constructing a building for business purpose,
keeping the safe construction code in mind.”
 4. To use “material which isenvironment-friendly in the process of décor and construction.”

LO4. “Assess the various ways a small business owner can exit the
business and the implications of each option.”
P5. “Assess exit or succession options for a small business explaining the benefits
and drawbacks of each option.”
All business “doesn’t sustain in the market for a lifetime, Existence in the market depends
sometimes on the goal of business or his capabilities to compete in the market (Leadership and
management, 2009), The end of all of the business happens by success or failure, Often short-
term business goal let the business end up after gaining the goal successfully, There is also the
possibility to fail in gaining the ultimate goal, So, businesses can exit from the market in two
ways:”

Success and
Failure

Behind “the failure of a business, many reasonsare there, An efficient businessman should
predict the future to make back up plan for avoiding failure in any stages, Small business like
Okra, faces failure for the following two types of reasons:”

Internal Reasons

Mismanagement “lack of financial support, inappropriate business plan are the internal reasons
for failure, Very small mistakes may cause the ultimate failure(Ford, 2010), Okra should avoid
any kind of faults to avoid failure, Apart from the stated reasons, there are many more reason
behind the failure like the followings:”

 “Wrong decision making”

 “Weak workforce”
 “Weak Management”
 “Poor Funding”
 “Failure to understand customer need.”
External Reasons

Okra “must do PEST analysis to know the impact of external actors on the company, The impact
of these factors sometimes causes failure of a business which resists the business from growth
(Ford, 2010), Followings are some external reasons for failure:”

 “Economical unrest”
 “Natural calamity”
 “Obstinate Competition”
 “Cultural Diversity”

Overcoming “failure is difficult but not impossible, Tactful business owners can find out ways to
confine the term failure, There are some ways to overcome failure:”

1. “Concise and accurate business plan”

2. “Exquisite strategies”
3. “Deep market analysis”
4. “Parallel cash inflow and outflow within the organization”
5. “Number of debtors should be more than that of creditors”
6. “Analysis of the clients”

“Exit routes for successful business”

There are “ways for the successful exit for small companies, Ending up a business in a profitable
way is considered as asuccessful exit, Okra can follow some succession ways which are
explained below:”

i. Merger & “Acquisition (M&A): Two or more companies deal strategically when they
go for merger and acquisition, They engage through purchasing or joining another
company, Two companies join together with the same interest through creating a new
identity when they merge together (Bliss, 2010), In the case of an acquisition, small
companies are purchased by giant companies, After acquisition by another company,
small company lose its brand name.”
 ii. IPO: “Initial Public Offerings” or “IPO is a profitable exit for any small or medium
companies, At the time of dissolving the company, the board of director can choose this
option to exit (Espinasse, 2014), In term of private companies, the company is sold
through IPO to the public.”
iii. Turning “into a Cash Cow: This strategy shows the way to make the growth rate of the
company low and the share in the market high, This one is one of the states among the
four of the BCG growth matrix, When a company become a dog, making it a cow is
necessary to make it a cash cow for a successful exit.”

Succession planning

This “process is the way of transferring the business ownership from one entity to another, It’s
also called the process of making a leader, The continuous business growth cannot be possible if
the ownership is not transferred to another one after the retirement or death of the present
owner(Succession planning, 2011), This process inspires the existing employees, Sometimes the
decision of choosing the successful exit might be not so profitable sometime, Okra needs a
succession planning including in the business plan, Because the succession plan indicates the
future successor, This is the proper guideline to make a decision regarding the distribution of
responsibilities.”

M4. “Evaluate exit or succession options for a small business comparing and contrasting
the options and making valid recommendations”
Several “succession options have been found for Okra to exit from the business, the evaluation of
these options is in below with valid recommendation:”

Comparing and Contrasting

If we “focus on the three successful exit ways for Okra, we can see that there are lots of
differences among these options, Already there is difference merger and acquisition, Merger
happens when a small business thing of being large but basically they do not end up, In the case
of an acquisition, the small business gets purchased by another big company and just end up in
this way.” In the case of “IPO, the small company also sell itself to the public through public
offerings, They just exit totally from the market which is similar to acquisition(Espinasse, 2014),
Then comes making the company a cash cow which let a company stay on the market but just an
exit from the current situation, For example, making it a cash cow from a dog, This is also
similar to the merger in this case of staying in the market by changing the situation of the
company.”

Recommendations

Small “business like Okra must go for merger and changing the current situation of business by
making it a star or cash cow, Because this two helps a business to expand and stay in the market
with an identity, On the other hand, acquisition and IPO let the business to get out from an
industry which makes no future for the business, So for Okra choosing merger or changing the
current position.”

Conclusion
The government of “UK is largely patronizing the small and medium-sized business, It is also
providing the entrepreneur's many intensives for encouraging the SMEs, In the business
environment, as a new medium business, Okra has faced numerous threats and new challenges,
which with a revised business plan can surpass all those hurdles, And after the implementing all
the required steps and attaining a perfect standard of SMEs, it evidently depicts how a
successfully completed business plan can let a company strike for global expansion that is too in
a way which meets the customer demands I a nature-friendly way.”
References

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vi. Leadership and “management, (2009), [Washington, D,C,]: Independent Sector.”
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University of Economics.”
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McNally & Co.”
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