Unit 42 Planning for Growth

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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

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.


  • 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.


  • BLANCHARD, K., ONCKEN, W. and BURROWS, H. (2011) The One Minute Manager Meets the Monkey. London: Harper Collins, London.
  • BURNS, P. (2011) Entrepreneurship and Small Business. 3rd Ed. Basingstoke: Palgrave MacMillan.
  • BURNS, P. (2014) New Venture Creation: A Framework for Entrepreneurial Start-ups. Basingstoke: Palgrave MacMillan.
  • MOORE, G. (2014) Crossing the Chasm, 3rd Edition: Marketing and Selling Disruptive Products to Mainstream Customers. New York: HarperCollins.f

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