Key Considerations For Evaluating Growth Opportunities

TASK 1

P1 Key considerations for evaluating growth opportunities

Growth planning is strategic business activity which enable managers to plan and track business performance. It allows companies to allocate their resources towards changes in external environment by digital disruption and helps it to differentiate from competitors. Planning helps small size firms to attain large market share and increase its revenues in a certain time period. In this scenario, EduCom ++ is a small business association which offers various training and educational programmes by using digital technologies to community centres and institutions. Therefore, the business association use various e-learning tools and techniques which makes easier the process of training and learning (Brinckmann, Grichnik and Kapsa, 2010). In order to enhancing its profit margins and sales revenues, EduCom ++ is developed an effective plan which provides guidance to all activities that are liable for assuring future growth and success of the company. Planning also helps staff members to accomplish all operations and practices in the best possible manner; it also make them to able to face upcoming challenges or threats at marketplace. Following is defined various key considerations which must ensure by business organisations: -

Competitive analysis –Obtaining high competitive edge is one of the most important element of planning strategy of the company. EduCom ++ is involved in providing educational training and learning programmes to people so that to become superior at marketplace the firm is required to assess its competitors. It contribute in formulation of effective strategies and policies which enables company to compete with its rivals. In present market scenario, several changes are being occurred which may hinder business operations and its activities. Hence, while planning management is required to determine its current and potential rivals (Burton, 2010).

Competitors' analysis can be done through Porters' five forces model: -

This assessment supports to analyse external rivals of the company while developing plans for competitive markets and trends. Porters' five forces model was introduced in 1979 with an aim to get better understanding of rivalry. There are five components of this model which are gradually stated as under: -

(Source: Porter’s Five Forces of Competitive Position Analysis, 2018)

• Bargaining power of suppliers– Strong power of suppliers allows them to sell raw materials at higher prices with low quality which directly affect firm's profits as they have to pay more to buy inputs. Therefore, to handle this situation EduCom ++ find out suitable supplier and manage good relationship with them.
• Bargaining power of customers - Buyers are the people who can force companies to driven their prices down. This elements of Porters' five forces model signifies that how many clients a firm have and how large their orders are (Chapin, 2012). In addition, buyers have the power to demand low prices products with high quality which may lead low revenues or profitability.
• Threat of substitutes– In current market scenario, there is an ample amount of similar products and services can be easily founded. An effective substitution is easy and cheap which can make weaken current market position of the company and threaten profitability as well. For example – buyers can easily switch from one product to another with little cost.
• Threat of new entrants – Profitable industries which earn high profits are enable to attract new firms. Although, these entries will eventually reduces the profit of other firms which deals in same sector. New entrants always come up with new and innovative ideas with an aim to drawn large group of customers; it results decreasing the number of clients in existing firms (Eddleston and et. al., 2013). Thus, to protect business from new entries EduCom++ can apply key technologies and strengthen its marketing strategies.
• Competitive rivalry – It is linked with number of competitors or rivals are available in target market, thus small businesses are required to analyse who are they, how they will affect as well as quality of products and services. Where, there is intense rivalry managers are focused on offerings their services on aggressive prices cuts.

In-depth market analysis – Proper knowledge of market trends helps small business entities to develop systematic plan to attain future growth and success. In current market, there are numerous factors available which can affect business activities in direct and indirect manner. To analyse them, SWOT and PEST analysis should be done by firm. Along with this, in depth market assessment will also assists in identifying needs and wants of customers so as to serve them accordingly. With this assistance, companies are able to create long term plans and strategies in respect to obtain their vision and mission.

Incorporation of digitalisation in business - The concept of digitalisation has become wide and significant for business organisations in current market aura. Digital tools and techniques helps small businesses to improve efficiency and creditability of their operations. As the firm is catering training programmes for individuals as well as institutions thus to improve their pratical knowledge in particular field or areas; in this manner it can acquire various e-learning concepts which makes easier the procedure of learning (Grover, Bokalo and Greenway, 2014). All these tools are liable for better understanding any concept to employees.

Assessing profitability and market share - While planning of growth and success, firms assess several areas or sectors where they can get high profit margins and revenues. On the other hand, to increase their market share small size businesses are focused on merger and acquisitions. As EduCom ++ can combine its business with other companies for short or long term so as to improve their market position as well as raising the number of customers. At this time various aspects should be involved, who will be the target audiences, competitors and current market trends etc.

P2 Growth opportunities applying Ansoff matrix

In this changing environment, every corporate association wants to grow and radiate in market and for this it focusing on applying latest tactics or strategies so as to gain defensible edge. EduCom ++ works as per the market changes by creating impulsive marketing strategies and policies thus to expand its core functional areas. In order to identifying growth opportunities in external environment, it is essential for companies to apply Ansoff matrix to measure future risks and uncertainties which may hinder their current market position. Under this grid, EduCom ++ able to determine those areas which helps in to flourish its function activities and gaining high competitive edge in a certain time period. The Ansoff matrix is known as strategy of market diversification that gives a chance to firms to grow in either new and existing market with new and current products (Yousefi, Shafaghat and Shakeri, 2014). The motive behind this is that organisation can enter into a new quadrant (horizontal or vertical) for increasing market areas. There is defined four elements of Ansoff matrix, such as -

• Market penetration –It is first strategy of Ansoff matrix which entails to sell same products and services in present markets. For effectively completion of this, companies are required to demonstrate several ways which contribute in increasing customers' trust or loyalty. They can also improve the quality as well as adding more features within existing products. Thus to penetrate in its current market EduCom ++ has better opportunities as it can implement digitalisation in its existing services that helps to improve working activities and practices. This also boost up the quality of products and make their more imperative and effectual. Therefore, to performed effectively in London EduCom++ can adopt various promotional and marketing campaigns which attain large group of clients towards it.
• Market development – The strategy implies to enter into a fresh market with its current offerings so as to expand market areas and improve market position as well. Market development carries out numerous opportunities of small businesses like – EduCom ++ in respect of extend brand image and market goodwill among customers. In comparison with other strategies, this strategy is quite flexible and effective as it is also focused on booming up customers' value. While applying the strategy, firms are required to determine geographical areas or locations from where it going to be served (Sreedhar and et. al., 2018). If products are not matched with customers' preferences then the concept get failure.
• Product development– This block of Ansoff matrix deals with using several tactics or tools so as to generate a new products as well as re-innovate the existing ones. It supports companies to keep victorious and superior under competitive market. EduCom ++ is focusing on applying several new techniques and modifying its distribution processes which enables to deliver effectual training and learning sessions to individuals. Along with this, it also supports businesses to extend its operations scale and attain large group of customers. In order to modify its services EduCom ++ uses advanced technologies thus to make services better and efficient.
• Diversification – This quadrant of Ansoff matrix is quite risky for business associations. In diversification strategy firms are entered into new markets with their new products. It is fundamental for small businesses to acquire this kind of tactics so as to gain maximum competitive benefits. But before moving into other areas firms are required to determine customers' needs and wants at least once so as to produce products and services accordingly (Balli and et. al., 2014). For example – EduCom ++ has grabbed a contract to provide education and training services as well as health and social work services to people which it has no more experience.

TASK 2

P3 Potential sources of funding with their drawbacks and benefits

Finance is lifeblood of every business organisations which supports it in completion of all tasks and activities in the best possible manner. Funding a business implies with expansion of functional areas and make them more imperative. In present case study, EduCom ++ is a training provider organisation and recently it has permitted in a contract named Community Learning Project & Partnership contract whose actual value is £105k. The contract deliver Education, skills and knowledge for those aged 19+, but EduCom ++ has available only £20k to invest in this project. Therefore, the firm has decided to receive a proportion of its funding to third parties which enables to improve the efficiency of its services (Yahui and Lijuan, 2015).

The main sources of funding are stated as under: -

Bank loan: It is one of the most frequently source of financing and can be pursue nearest lending centres of the company. Bank loans are quite tricky because they provide several options of financing with diverse interest rates to company. It is essential for small businesses to educate themselves with the loan processes.

• Advantage: Banks provide a wide range of funding facilities and payback options as per the needs of the firm. If business owner are qualify then bank process will be fair. UK government has permitted to provide loans to small businesses on lower rates (Gamal, Abdel Ghaffar and Alghezwy, 2016).
• Disadvantage: Due to constant changes in market trends, bank loans are too difficult to obtain. The entrepreneur owes the borrowed amount doesn't matter company succeed or not. In addition to this, documentation is time consuming and tedious.

Crowdfunding –It is known as one of the most effective practice of funding to a new venture. In crowdfunding, business owners collects money in small amount from large group of people through internet and social media sites. If a business has new and unique idea then it can easily earned lots of funds.

• Pros – It is flexible and easiest way of getting finance which requires no more additional fees. Pitching any project via online modes is also helpful in its marketing and promotion.
• Cons –In case if a business get failed then affects its market goodwill (Lyee and Cowling, 2015).

Venture capital – In present market, there is a variety of venture capitalists; there are the people who invests their money into businesses in exchange of certain equity. Before putting their money into any business idea, VC always evaluate firm's profit & loss statements and other financial records. These are the professional investors and look for investments which can render that 6X more returns on their investments.

• Pros – Venture capitalists put large amount of investments; they also provide expert advice and further assistance to business organisation regrading whether business will grow or exit. Being VC funded carries out instant credibility for small companies. It opens door of wide networks for individuals.
• Cons - Venture capitalists take certain essential steps in order to gain high returns on their investments, including exclusion of owners from their own business. They may also steer the firm in a wrong direction which is totally different from its goals and objectives.

TASK 3

P4 Design a business plan EduCom ++

A business plan is a procedure which aligns business objectives and practices together so as to obtain future growth and development. Business plan is pathway which dictates what will be done, how to done, to whom, and when will be done. It also signifies which kind of actions or initiative should be undertaken in order to attain firm's goals and objectives in the best possible manner. Following is discussed various stages of the business plan of EduCom++ -

• Overview of the company– EduCom ++ is the chosen organisation which is providing educational training and development programmes to people and community centres so as to improve their skill and knowledge level (Reddy, Ambati and Koduganti, 2015). For this, the firm is using several new and innovative tools, i.e. e-learning methods.
• Mission and vision of the company– The mission and vision statement of EduCom ++ is to fulfil in most effective manner, clients' needs and wants. For this, it is accompanied advancement and encouragement that goes to raising competitive benefits.
• Products and services offered by the firm – The main services of the company is Educational programmes, motivational events, learning activities, skill and development programmes.
• Situational analysis– It can be done through SWOT analysis of the company that is stated as under: -

Identification of target market -

There are numerous target audiences of organisations like – EduCom ++, such as – local people, schools, large and medium business associations and other people who are willing to learn some kind of practical knowledge of work in specific area of study. Apart from this, the firm is also required to identify Niche Marketing which signifies market segmentation. It is the market in which there is no competitor exist thus the firm has decided to emerge in such markets. Basically, the firm has targeted employees of multinational companies who wants to add more skills and competencies in their working areas.

Formulation of marketing budget– There is given annual budget of EduCom ++ -

TASK 4

P5 Assess exit or succession options for small businesses

Implementation of any business does not mean it will gain positive outcomes as there could be some potential negative outcomes as well. Although, the main objective of every business is to earn high profit margins and it is totally relies upon performance level. But sometimes it is quite difficult for businesses to effectively cope all changes in external environment; this leads exit of business. There are numerous ways through which firms can way out from its existing business, such as -

Liquidation–It is known as “close up the company and sell all of its assets” exit strategy. Liquidation strategy is suitable for those small businesses which are dependent on the performance of single people; the situation occurs when there is nothing sell to else of a business to cover all losses. At this, business owners spend some time to retooling their business and make necessary modifications thus it can be operated by another one who will buy it (Pumklin and et. al., 2015).

Advantages -

• Simple and flexible in nature.
• Businesses can be easily wound up (depends on the sale of assets)

Disadvantages -

• It form of exit provides lowest return on investments.
• The acquirer will only give money of tangible assets – equipment, land, plant and machinery etc.
• Creditors have first claim to get funds from assets of sales.

Sale business in open market – Many companies can also sell their business in open market to people who are interested to purchase it. At a certain point when business owner wants to retire then they sell their business to others and walks away from it.

• Advantages – Profitable business would be easily sold at high prices.
• Disadvantage– Finding a suitable buyer who will do right with business is a long process.

Approaches of succession planning: -

• While planning of succession strategy, small businesses can apply the the concept of digitalisation in its working processes thus to make them more imperative and understandable to all people. The main digital tools which can be used by EduCom ++, such as – automation, online videos, gamification, massive online open courses and so on.
• Another succession strategy for small businesses is to provide training and development assistance to employees; it improves existing skills and knowledge level of people thus they will deliver something better to clients. The strategy is emphasised on optimal utilisation of human resources.

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CONCLUSION

From the above mentioned report, it get evaluated that planning for growth is one of the crucial task for every business association which helps company to ensure future market and success. The assignment has stated that EduCom ++ needs to measure certain key considerations, such as – competitors analysis, market analysis and so on. Apart from this, with the assistance of Ansoff-matrix managers can assess market area which are beneficial for it and supports to attain their goals and objectives. Furthermore, there has developed as business plan in order to determine activities which supports attain firm's goals and objectives. Assessment of exit and succession options of small businesses has been also done later.

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REFERENCES

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