BGS Module 2

Business Growth & Sustainability
MODULE 2
Preparation for Long Term Expansion
Course Instructor: Dr. Ritty Francis

Challenges in managing a growing firm
ü Managing the flow of cash.
ü Responding to competition.
ü Nurturing a great company culture.
ü Learning when to delegate and when to get involved.
ü Keeping up with market changes.
ü Decisions relating to strategic planning & implementation and also its removal.
Business Growth & Sustainability 2022-23 Course Instructor: Dr. Ritty Francis
Scaling the business
Setting the stage to enable and support growth in the company. It
means having the ability to grow without being hampered. It requires
planning, some funding and the right systems, staff, processes,
technology and partners.
Two aspects to be considered-

• Capacity
• Capability
Business Angels And Venture Capital
Differences
• Individual vs Fund
Business angels are individuals, often successful business people, who
are using their own funds to invest in businesses they like, whereas
venture capitalists manage the pooled money of others in a
professionally-managed fund.
• Early-stage vs. established businesses
Angel investors and venture capital funds focus on businesses in different
life cycles. Business angels fill the ‘gap’ between friends & family and
venture capital. They typically invest in early-stage business and start-
ups, which also means that they face a higher risk than venture
capitalists. The latter are less interested in early-stage businesses and
prefer more established businesses.
• Invested amount
As mentioned before, business angels operate individually and sometimes in so called angel
groups or angel networks. Capital provided by venture capital funds often start from a big
amount. For early-stage businesses, this amount is often too much.
• Role in your business
Both groups receive shares of the company when investing. However, venture capitalists
often require a seat on the board, where business angels will function more as a mentor, to
coach and advice the entrepreneurs running the business. In general, venture capitalists
will exercise more control over your business than angel investors.
•
Similarities
• Private equity
Whether you get your investment in the form of venture capital or from angel
investors, you are giving away part of the ownership in your firm. Keep this in
mind, because this will give you extra responsibilities. Your investors’ aim is to
maximize their ROI and it’s your task as a manager to take care of this.
• More than ‘just’ capital
Capital is not the only thing they provide you with. Venture capitalists and angels
have a large network which they can introduce you to. Moreover, they probably
have a lot of experience, gained by investing in businesses or by running a business
themselves. They’ll give you fruitful advice and hands-on tips.
Review of a potential project idea- entering into a new market
• Why are you doing this?
• What problem are you solving?
• For whom are you solving this problem?
• How are your potential customers solving their problem today?
• Do you think you can make money?
Customer Base
• The people to whom a business sells products and services. The customer base
is a relatively broad number of customers, with a smaller section of the base
being comprised of repeat customers.
• These customers are a main source of revenue for a company.
• The customer base may be considered as the business’s target market, where
customer behaviours are well understood through market research or past
experience.
Validation of the business idea using customer base
• Talk to your potential customers
• Show the prospective customers a prototype of the product
• Figure out how much people are willing to pay
• Find critics for your idea
• Find out how much finance will be involved
• Start at a smaller scale
• Stay flexible
New product expansion
• Product expansion is when companies grow their businesses

by adopting a market expansion strategy. This is when a
company will attempt to reach out to other markets after
capturing the interest of their target market.
Product Market Expansion Grid
The Product Market Expansion Grid, also called the Ansoff Matrix, is a tool used to develop
business growth strategies by examining-
1. The relationship between new and existing products
2. New and existing markets
3. The risk associated with each possible relationship.
The matrix aids growth plans through the introduction of existing or new products, in
existing or new markets.
Product Market Expansion Grid Strategies
üMarket Penetration
üMarket Development
üProduct Development
üDiversification
Market Penetration Strategy: Existing Products + Existing Markets
= Low Risk
• Increasing or growing the market share of current products with pricing
strategies, promotions, advertising and an increase in sales efforts
• Securing dominance of growth markets by identifying which markets offer the
best prospects for existing products
• Driving competitors out of a mature market with aggressive pricing and
promotional campaigns
• Increasing usage of a product by existing customers through special offers and
loyalty schemes
Market Development Strategy: Existing Products + New Markets
= Some Risk
• Focus can be turned to new and untapped geographical areas
• New pricing procedures can be used to attract new target audiences
• New distribution channels can be created to offer products in new

ways and to new customers
Product Development Strategy: New Products + Existing Markets
= Some Risk
• Adding new features to existing products
• Innovative and new technologies can be added to products or used to improve

products
• Emphasis needs to be placed on a detailed analysis of customer needs,

research and development, and early introduction to ensure products are first
to market.
Diversification Strategy: New Products + New Markets
= High Risk
• This strategy requires the highest amount of investment of both time

and resources.
• Ansoff reinforces that this strategy will require the company to acquire
new skills, techniques and possibly facilities.
• Diversification offers a company security and an advantage that if it

suffers in one sector of the business it can then rely on the other.
Diversification Strategies
• Concentric Diversification – leveraging a company’s core technical know-how

to diversify its current products into new markets
• Horizontal Diversification – the introduction of products that are unrelated

to a company’s core products to existing markets
• Conglomerate Diversification – joining with another company in order to

diversify
Social responsibilities of entrepreneurs
• Adopt a mission to create and sustain social value (not just private or
financial value)
• Recognize and relentlessly pursue new opportunities to serve this mission
• Engage in a process of continuous innovation, adaptation, and learning
• Act boldly without being limited by resources currently in hand
• Be accountable to the customers and stakeholders for outcomes
Product Life Cycle
• The term product life cycle refers to the length of time a product is
introduced to consumers into the market until it's removed from the
shelves. The life cycle of a product is broken into four stages—
introduction, growth, maturity, and decline. This concept is used by
management and by marketing professionals as a factor in deciding
when it is appropriate to increase advertising, reduce prices, expand
to new markets, or redesign packaging.
• A product life cycle is the amount of time a product goes from being
introduced into the market until it's taken off the shelves.
• There are four stages in a product's life cycle—introduction, growth,

maturity, and decline.
• The concept of product life cycle helps inform business decision-

making, from pricing and promotion to expansion or cost-cutting.
• Newer, more successful products push older ones out of the market.
• There are four generally accepted stages in the life cycle of a product—
introduction, growth, maturity, and decline.
• Introduction: This phase generally includes a substantial investment in

advertising and a marketing campaign focused on making consumers
aware of the product and its benefits.
• Growth: If the product is successful, it then moves to the growth stage. This
is characterized by growing demand an increase in production, and
expansion in its availability.
• Maturity: This is the most profitable stage, while the costs of producing
and marketing decline.
• Decline: A product takes on increased competition as other companies

emulate its success—sometimes with enhancements or lower prices. The
product may lose market share and begin its decline.
Process building for expansion
• Small businesses become big businesses through expansion.
• In most cases, business expansion occurs due to an increase in demand, an

increase in efficiencies, new production lines, more diverse or international
markets and the need to bring certain functions, such as logistics or
manufacturing, in-house.
• Planning for expansion is a strategic exercise which involves identifying the

exact need for expansion.
Points to be considered during expansion efforts
• It is important to identify exactly what needs to be expanded. Expanding for

the sake of expanding might lead to increased inefficiencies. Determining exactly
what parts of the business the entrepreneur wishes to expand. Producing more
product does not necessarily translate into a broad expansion across the board.
There might not be a need to expand administrative functions and/or move into
a larger building. Perhaps the only need is to hire more staff and/or purchase
additional equipment.
• It is important to determine the effect of the expansion on personnel. Also, payroll
for increased personnel should come from the increase in revenue, not outside
funding.
• Training programs for employees should be developed. Expansion efforts and goals
should be shared with employees through training sessions.
• Expansion can be done through the Internet. Brick and mortar (traditional
building space) costs a great deal more than the cost of maintaining a website. This
is also a great way to reach overseas clients while extending the hours to 24/7.
The Product Planning and Development Process
Market Research for Product Planning
• The process of gathering, analysing and interpreting information about a
market
• Information about any product or service that has been offered for sale in
that market
• Information about the past, present and potential customers for the product
or service
• Information about the location and needs of the target market
• Information about the industry as a whole
• Information about the competitors.
Types of data in market research
• Primary data
Primary data is first-hand information the entrepreneur gathers for himself, or with
the help of a market research firm. He controls it.
• Secondary data
Secondary data is pre-existing public information, such as the data shared in magazines
and newspapers, government or industry reports. The entrepreneur can analyse the data
in new ways, but the information is available to a large number of people.
Sources of primary data
• Surveys
• Focus groups
• Observation
• In-depth interviews
Sources of secondary data
• Published data on industry associations and trade groups
• Government reports
• Competitor websites
Importance of market research
• Spot Business Opportunities
• Lower Business Risks
• Create Relevant Promotional Strategies
• Deal with Competitors Strategies
• Set Better Goals for the Business
• Decision-Making Becomes Simple
Design Thinking
A process that seeks to solve a complex problem by approaching it
from the users’ perspective
What is a design?
ü How a ‘thing’ looks
ü How a ‘thing’ works
ü What are the costs involved in the that ‘thing’
ü How that ‘thing’ feels

• Design thinking refers to the cognitive, strategic and practical processes by which design
concepts (proposals for new products, buildings, machines, etc.) are developed by designers
and/or design teams. Many of the key concepts and aspects of design thinking have been
identified through studies, across different design domains, of design cognition and design
activity in both laboratory and natural contexts.
• Design thinking is also associated with prescriptions for the innovation of products and
services within business and social contexts. Some of these prescriptions have been criticized
for oversimplifying the design process and trivializing the role of technical knowledge and
skills.
Design Thinking has to be…..
• Human centered- Understanding the needs
• Identifying an Opportunity- Solution Focused
• Action Oriented- From ‘what is…to….what can be’
• Building up of ideas- Thinking wildly and testing rapidly
• Creating multiple solutions
Design Thinking
Desirable
Viable Feasible
Three phases of design thinking
• Immersion
• Ideation
• Implementation
Five steps in design thinking
• Empathize
• Define
• Ideate
• Prototype
• Test
Values of design thinking
• Empathize with your customers
• Be curious, investigate
• Be imaginative, it will lead to discovery
• Make, break, remake, keep trying
• Have a positive mindset

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Business Growth & Sustainability

Preparation for Long Term Expansion

Course Instructor: Dr. Ritty Francis

ü Nurturing a great company culture.

ü Learning when to delegate and when to get involved.

ü Keeping up with market changes.

Two aspects to be considered-

Business angels are individuals, often successful business people, who

venture capitalists manage the pooled money of others in a

amount. For early-stage businesses, this amount is often too much.

• Role in your business

• Why are you doing this?

• What problem are you solving?

• For whom are you solving this problem?

• How are your potential customers solving their problem today?

• Do you think you can make money?

• These customers are a main source of revenue for a company.

• Show the prospective customers a prototype of the product

• Figure out how much people are willing to pay

• Find critics for your idea

• Find out how much finance will be involved

• Start at a smaller scale

• Product expansion is when companies grow their businesses

1. The relationship between new and existing products

2. New and existing markets

3. The risk associated with each possible relationship.

• Focus can be turned to new and untapped geographical areas

• New pricing procedures can be used to attract new target audiences

• New distribution channels can be created to offer products in new

• Adding new features to existing products

• Innovative and new technologies can be added to products or used to improve

• Emphasis needs to be placed on a detailed analysis of customer needs,

• This strategy requires the highest amount of investment of both time

• Diversification offers a company security and an advantage that if it

• Concentric Diversification – leveraging a company’s core technical know-how

• Horizontal Diversification – the introduction of products that are unrelated

• Conglomerate Diversification – joining with another company in order to

• Recognize and relentlessly pursue new opportunities to serve this mission

• Engage in a process of continuous innovation, adaptation, and learning

• Act boldly without being limited by resources currently in hand

• Be accountable to the customers and stakeholders for outcomes

• There are four stages in a product's life cycle—introduction, growth,

• The concept of product life cycle helps inform business decision-

• Introduction: This phase generally includes a substantial investment in

• Decline: A product takes on increased competition as other companies

• Small businesses become big businesses through expansion.

• In most cases, business expansion occurs due to an increase in demand, an

• Planning for expansion is a strategic exercise which involves identifying the

• It is important to identify exactly what needs to be expanded. Expanding for

• Published data on industry associations and trade groups

• Lower Business Risks

• Create Relevant Promotional Strategies

• Deal with Competitors Strategies

• Set Better Goals for the Business

• Decision-Making Becomes Simple

ü How a ‘thing’ looks

ü How a ‘thing’ works

ü What are the costs involved in the that ‘thing’