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.
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.
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.
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 businessDeveloping 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 optionThe 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.
| LO1 Analyse the key considerations SMEs should consider when evaluating growth opportunities | ||
|---|---|---|
| Pass | Merit | Distinction |
| 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 | ||
|---|---|---|
| Pass | Merit | Distinction |
| P3 Assess the potential sources of funding available to businesses and discuss benefits and drawbacks of each source. | M2 Evaluate potential sources of funding and justification for the adoption of an appropriate source of funding for a given organisational context. | D2 Critically evaluate potential sources of funding with justified argument for the adoption of a particular source or combination of sources, based on organisational needs. |
| LO3 Develop a business plan (including financials) and communicate how you intend scaling up a business | ||
|---|---|---|
| Pass | Merit | Distinction |
| P4 Design a business plan for growth that includes financial information and strategic objectives for scaling up a business. | M3 Develop an appropriate and detailed business plan for growth and securing investment, setting out strategic objectives, strategies and appropriate frameworks for achieving objectives. | D3 Present a coherent and detailed business plan that demonstrates knowledge and understanding of how to formulate, apply and achieve business objectives successfully. |
| LO4 Explain the various ways a small business owner can exit the business and the implications of each option | ||
|---|---|---|
| Pass | Merit | Distinction |
| P5 Explain exit or succession options for a small business explaining the benefits and drawbacks of each option. | M4 Evaluate exit or succession options for a small business comparing and contrasting the options and making valid recommendations. | D4 Provide critical evaluation of the exit or succession options for a small business and decide an appropriate course of action with justified recommendations to support implementation. |
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 Startups. Basingstoke: Palgrave MacMillan.
MOORE, G. (2014) Crossing the Chasm, 3rd Edition: Marketing and Selling Disruptive Products to Mainstream Customers. New York: HarperCollins.
WALL, S., CODAY, C. and MITCHELL, C. (2014) Quantitative Methods for Business and Management: An Entrepreneurial Perspective. Harlow: Pearson Education.
WILLIAMS, S. (2015) Financial Times Guides: Business Start-up 2015. Harlow: Pearson.
This unit links to the following related units:
Unit 8: Innovation and Commercialisation
Unit 22: Product and Service Development
Unit 29: Managing and Running a Small Business
Unit 43 Tapping into New and International Markets