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Analyse the key considerations SMEs should consider when evaluating growth opportunities

Unit 42:            Planning for Growth

Unit code         J/508/0601

Unit level         5

Credit value     15

Introduction

This unit provides students with an appreciation of how small and medium enterprises (SMEs) develop and grow. Students will learn about and apply techniques for identifying opportunities for growth, and appraise options for achieving growth, including via collaboration. Students will also learn about the sources of investment finance and consider how an SME attracts investors. They will gain an understanding of the options for SMEs in terms of exit or, for family businesses, succession, and be able to appreciate the importance of making informed choices when choosing routes to growth and have an understanding of the potential risks vs rewards involved with growth.

Learning Outcomes and Assessment Criteria

Pass

Merit

Distinction

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.

P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.

M1 Discuss the options for growth using a range of analytical frameworks to demonstrate the understanding of competitive advantage within an organisational context.

D1 Critically evaluate specific options and pathways for growth, taking into account the risks of each option and how they can be   mitigated.

LO2 Assess the various methods through which

 

organisations access funding and when to use

 

different types of funding

 

P3 Assess the potential

M2 Evaluate potential

D2 Critically evaluate

sources of funding

sources of funding and

potential sources of

available to businesses

justification for the

funding with justified

and discuss benefits and

adoption of an

argument for the

drawbacks of each

appropriate source of

adoption of a particular

source.

funding for a given

source or combination of

 

organisational context.

sources, based on

 

 

organisational needs.

LO3 Develop a business plan (including financials) and

 

communicate how you intend scaling up a business

 

P4 Design a business plan

M3 Develop an

D3 Present a coherent

for growth that includes

appropriate and detailed

and in-depth business

financial information and

business plan for growth

plan that demonstrates

strategic objectives for

and securing investment,

knowledge and

scaling up a business.

setting out strategic

understanding of how to

 

objectives, strategies and

formulate, apply and

 

appropriate frameworks

achieve business

 

for achieving objectives.

objectives successfully.


Pass

Merit

Distinction

LO4 Assess the various ways a small business owner

 

can exit the business and the implications of each

 

option

 

P5 Assess exit or

M4 Evaluate exit or

D4 Provide critical

succession options for a

succession options for a

evaluation of the exit or

small business explaining

small business comparing

succession options for a

the benefits and

and contrasting the

small business and decide

drawbacks of each

options and making valid

an appropriate course of

option.

recommendations.

action with justified

 

 

recommendations to

 

 

support implementation.


Learning Outcomes

By the end of this unit a student will be able to:

1.    Analyse the key considerations SMEs should consider when evaluating growth opportunities.

2.    Assess the various methods through which organisations access funding and when to use different types of funding.

3.    Develop a business plan (including financials) and communicate how you intend scaling up a business.

4.    Assess the various ways a small business owner can exit the business and the implications of each option

Essential Content

LO1 Analyse the key considerations SMEs should consider when evaluating growth opportunities

Competitive advantage:

·         The basis of competitive advantage as a foundation for growth: resources and capabilities and core competences.

·         Generic strategies (Porter).

·         Linking competitive advantage with opportunities for growth (PESTLE).

New products and services: innovation:

·         The development of products and services as a basis for growth.

·         Portfolio strategies (Boston Consultancy Group Matrix and GE/Mckinsey matrix). Product life-cycles.

·         The diffusion of innovation.

Growth options:

·         The main routes to growth (Ansoff’s growth vectors − market penetration,

·         product/service development, market development, unrelated diversification) Identifying and mitigating risk.

·         Exploiting technology and digital platforms to expand network and generate growth.

Collaboration:

·         The benefits and drawbacks of collaboration, including mergers, acquisitions, joint ventures and strategic alliances and how they might be applicable growth options for small businesses.

·         The benefits of horizontal and vertical integration. Partnerships in the value chain (e.g. bidding consortia). The potential of franchising for expanding a business.

LO2 Assess the various methods through which organisations access funding and when to use different types of funding

Investment decision-making:

·         The main methods of financial appraisal to compare strategic or project options: payback period and net present value calculations.

Sources of finance for growth:

·         The main sources of finance for growth and the benefits and drawbacks of each: bank loans, crowdfunding, peer to peer lending, angel and venture finance.

LO3 Develop a business plan (including financials) and communicate how you intend scaling up a business

Strategic intent: vision and mission:

·         Developing a vision and mission for the organisation based on areas of strength, identified opportunities, values and ethics, and the expectations of stakeholders.

·         Exploring successful entrepreneurial strategies (e.g. addressing niche markets).

Preparing a business case for investment:

·         The key aspects of a business plan aimed at securing investment and what investors are looking for.

·         How to present the plan to investors.

LO4 Assess the various ways a small business owner can exit the business and the implications of each option

Exit: success and failure:

·         The main ways an owner-manager might exit the business.

·         The key reasons for business failure (external and internal) and how business failure might be prevented.

·         Mechanisms for exit in the event of failure.

·         Exit routes for successful businesses: selling or floating the business, valuing the company.

Growth and succession in the family business:

·         How the considerations of growth affect the family business. Areas of potential conflict.

·         Succession planning. Cultural issues.


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