Evaluating Qubic Hotel's Growth Strategies

The assignment involves analyzing Qubic hotel's competitive environment and identifying its competitors' strategies. It also requires examining the cost of implementing a new strategy and its impact on overall profitability. Furthermore, the task includes recommending that Qubic should evaluate the effective strategy before making decisions about raising funds from various sources.

Planning for growth

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
P1. Analyzing key consideration for evaluating growth opportunities for Qbic Hotels in
implementing digital technology............................................................................................1
P2. Evaluating the opportunities for growth applying Ansoff's growth vector matrix..........2
TASK 2............................................................................................................................................4
P3. Evaluating the different sources of funding available to business...................................4
TASK 3............................................................................................................................................7
P4. A business plan for growth that includes both financial and strategic objectives............7
TASK 4............................................................................................................................................9
P5. Different exit and succession plan available for small businesses with their benefits and
drawbacks...............................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Entrepreneurship is significant for economical growth of any country. Small scale
industries are the hey contributors in GDP of a country. In the recent technological era, it is
important for SMEs to implement digital technology in their operations. The present report is
based on Qbic Hotels limited which is UK based hotel company and going to introduce digital
technology in its business operations. The present report will evaluate the growth opportunities
for Qbic Hotels. Further, the growth opportunities will be discussed using Ansoff' s matrix.
Study will also focus on various potential source of funding available to Qbic. Later, a business
plan will be made which help to understand the plan. The report will also include exit and
succession plan for small business.
Task 1
P1. Analysing key consideration for evaluating growth opportunities for Qbic Hotels in
implementing digital technology.
Qubic being the small-scale hotel wants to expand its business for growth and increase its
profit. In order to plan for growth, Qubic hotel coming up with the implementation of digital
technology and social media in its operation. Qbic is taking the hotel on social media network
and outsourcing the business activities by launching new website. Social media and website will
help the company to reach at global platform and attract new customers through social media.
In order to plan for a growth of business, is is very important to analyse the market and
different growth opportunities. Qubic also requires to evaluate its competitors anfd the factors in
business environment. The PESTEL analysis will help Qbic hotels to evaluate the growth
strategies in implementing digital technology in their business operations. The use of social
media and online digital websites will help the company to attract more customers and
expanding business at global level.
PESTEL analysis:
Political: In some countries government has block the using of social media, some websites.
That may affect the business of Qbic hotels as advertising option is not possible in these
countries.
Economical: internet has created many pricing problems that are not possible to ascertained
(Belton, 2017 ). 24 hour sales are easier to accommodate with a code to enter at checkout, "only
available until midnight.” software for websites will cost to business profit.
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Social: Knowing the target customers are very important. Not everyone has access to social
media or digital technology, this is generally to the lower income people.
Technological: its all about technology which is being used. The design of websites, tablets,
picturisation of hotels in social media is important. Whether new technology makes elements of
your marketing mix.
Legal: There are some legal issues online are a major consideration. Stealing images issues from
websites like copyright, patents etc.
Porter's Generic Competitive strategies:
It is also very essential to evaluate the strategies that helps Qubic to gain competitive
advantage across the target market. Porter's Generic Competitive strategies is an essential model
which assist in determining the company's strength to be a cost advantage or differentiation.
Cost leadership: it mainly focuses on introducing the new method at lower cost as compared to
other companies. It will help Qubic to attract more customers buy cost-effective manner.
Differentiation: under this strategy company will focus on creating its online services that will
be completely different from other company's digital communication services.
Focus: this method will assist Qubic to be focused on their target market which would be more
beneficial for them. There are two focus strategy, cost-focus which emphasis to the cost factor in
order to make it affordable to the customer. Another one is differentiation factors, which focuses
on differentiation in target market, such as youth groups, certain age-group etc.
P2. Evaluating the opportunities for growth applying Ansoff's growth vector matrix.
The Ansoff's matrix is a common tool for growth strategies, it focuses on firm's present
and potential products and markets (USE THE ANSOFF MATRIX FOR EVALUATING
GROWTH OPPORTUNITIES, 2018) It considers the ways to grow via existing products and new
products, and in existing markets and new markets, there are four possible product-market
combinations. It concerned that marketing strategies is a joint work of four growth areas: market
penetration, market development, product development and diversification. These four areas
creates the Ansoff Growth matrix. Qbic hotels is implementing new digital technology in its
services, Ansoff growth matrix will be beneficial to understand the potential of new growth
strategies.
The Ansoff's growth matrix quadrants explains the four possible growth strategies for
Qbic Hotels. The four strategies shown in picture above is:
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 Market Penetration: the first quadrant of the matrix is market penetration. It is a
strategy which an organisation chooses when they are coming up in an existing market
with an exiting products to services with a new strategies for growth. This growth
strategies can be choose by Qbic hotels if they are opting to increase their market share in
the existing market, here competition level can be high. The organisation needs to find
new ways to increase customer loyalty and grow customer lifetime value. Market
penetration will requires to have a strong plan for growth in order to grow in their own
market.
 Market development: the second quadrant is defined as market development. It is a
growth strategies which intended to increase new customer to an existing product by
entering a new market. This strategies focuses on expanding the market of business, by
entering new market sectors. If Qbic hotels are opting for this growth strategy, they have
to maintain the same services offering by entering new market. This strategies will help
the company in entering new market, attracting new customer in in new global market.
 Product development: This strategies is appropriate for the company which has a good
market share in existing market (Gurcaylilar-Yenidogan and Aksoy, 2018). The third
quadrant defines launching a new product or services in the existing market in order to
grow the business share in market. This strategy can be implemented by a company if it
has a good customer base in the existing market. Product development strategy is needed
when the existing product or services of a company has reached to it saturation point and
almost offered by most of the competitors in market.
 Diversification: the last quadrant of Ansoff growth matrix is the highest risk strategy for
growth. This strategy applies when a company is going to launch a new product or
services in completely new market. it is considered as most riskier strategy but it can give
the highest rate of growth if the new plan of business becomes successful in new market.
If Qbic hotel is considering this strategy, they have to offer new services in new market
to achieve diversification.
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By considering the above growth matrix strategy, Qbic hotels should opt for the Market
Development growth strategy. In market development, company is entering in new market with
the same product or services in order to attract new customer and increasing the market share and
expanding the business in global level (Rowley, 2016). As the Qbic hotels are planning to launch
the new hotel website and starting implementing social media with digital technology with the
same services they are offering. They are entering in global level market with digital technology.
This strategy will help them to expand their business and attracting new customer with social
media and website to let the customers know about their services offered.
TASK 2
P3. Evaluating the different sources of funding available to business.
Financing a business is essential requirement in expanding of business. Qbic Hotels is
going to introduce a plan for growth by implementing social media and digital technology for
expanding its business in broader way. So, it will requires sources to fund their plan. There are
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Illustration 1: Ansoff's growth matrix
Source: (Ansoff Matrix, 2018)

many sources available for Qbic Hotels, but its important to evaluate which sources is potential
to raise fund from. The different sources of funding available with their benefits and drawbacks
are as follows:
Personal savings: Qbic Hotel's owner can utilize their personal savings for funding the new plan
for business. Personal savings are fundamental source of financing one owns business which is
considered first by SMEs (Ruan and et.al., 2018). Personal investment can include cash or with
collateral on your own assets. Investing personal savings also indicates the bank and investors
that the new project plan is less riskier as the owner is taking risk with his personal savings.
Bank Loans: This is the most common sources of financing,which is being used by all small
scale or large scale industries for financing their projects. Qbic hotel can raise its fund through
bank loans as it is easy method to borrowed money for a set period time within an agreed
repayment schedule (Villani and et.al., 2018). The repayment can be done in instalment depends
on the amount of loan with an agreed rate of interest. Bank usually grant loans to the well
established company that have a sound track records in order to to be assured about their
repayments.
ADVANTAGES DISADVANTAGES
 The bank do not take any ownership or
part of profit from business like
shareholders and investors. All they
worried about is their instalment and
rate of interest. Hence they give benefit
to retain all profit.
 The rate of interest charged by bank are
taxable amount, which gives benefits in
tax returns.
 The loan amount is not repayable on
demand and is available up to an agreed
time period like 3-5 years.
 Many bank loans are usually requires
some form of collateral securities to get
their loan approved, or they charges
higher rate of interest sometimes.
 Bank requires monthly or quarterly
repayments or instalments based on the
loan amount.
 If company fails to repay amount
timely, they have serious circumstances
like having their assets seized. It will
affect when a company applies for
another loan in future.
 Bank loans with a variable interest
rates, it will make difficult to get the
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future amount of payment. Which will
affect the financial plan of business.
Government Grants:
The another source of financing available for Qbic Hotels to finance its new business
plan is government grants. It is debt free source of financing which is offered by both
organisation and government entities (Lane, 2018). Government provides funds on the basis if
plan or business a company wants to start. The location, employment opportunities and
contribution in GDP are considered before granting funds to the company.
ADVANTAGES DISADVANTAGES
 Government grant amount are nor
repayable as it is not a loan.
 Grant money is also not a taxable
amount, which will help in tax return.
 Obtaining a government grants for
business projects will also attracts other
investors too.
 It is a time consuming process, as it
requires heavy paper work regarding
new business plan before applying for
grants.
 There are tough competition of taking
grants from government. The plan of
new business should be better than
competitors for getting grants.
 The amount granted by government
may not be up to the required amount.
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TASK 3
P4. A business plan for growth that includes both financial and strategic objectives.
A business needs to have a written business plan about their new services, products or
growth planning. This business plan will provide direction to attract investors. Business plan is
very important for the success of the organisation.
Business plan for Qbic Hotels.
Idea for business:
Qbic Hotels Limited is small scale UK based hotels and similar accommodation
company which is incorporated on 15 march 2012 . Qbic is coming up with the implementation
of digital technology and social media in its operation. Qbic is taking the hotel on social media
network and outsourcing the business activities by launching new website. Social media and
website will help the company to reach at global platform and attract new customers through
social media.
Mission and Objectives:
To provide superior quality of services to our guests and maximize the company
profitability at global level with the new digital technology.
Market analysis: SWOT analysis:
Strength- The locality of hotels is suitable for the guest. The services offered by Qbic is better
than other competitors in market.
Weaknesses: required new ways to attract the new customers.
Opportunities: Implementing digital technology and social media marketing will help to attract
new customer with the existing services.
Threat: growing digital technological era in hospitality sector.
 Marketing Mix:
Marketing analysis can be done by 4 P's of marketing:
product/services: services offered by hotels are better than competitors with new websites,social
media marketing etc. (Wu, 2018)
Price: prices for services will be varying with services taken.
Place: new websites and social media network will allow customers gain the information from
anywhere.
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Promotion: Discounts on online booking, promoting hotels room and ambience through social
media. PESTEL analysis:
political: Level of corruption, intellectual property protection, trade regulation and tariffs related
services.
Economical: types of economic system in country, government intervention in using digital
technology.
Social: leisure interest, users of social media and websites, education level of population.
Technological: impact of digital technology on product and services offering, rate of
technological diffusion.
Economical: laws regulating environment pollution, waste manager in service sector
legal: copyright, patents property law, data protection of websites law.
Financial Analysis-
financial flow chart:
Particulars 2018 2019
Sales revenue 220000 253000
COGS 66000 75900
Gross Profit 154000 177100
Less: Operating cost
Salaries of personnel 25000 27500
Promotional expenses 1500 1750
Miscellaneous expenses 1800 2000
Maintenance 6000 6500
Interest 3000 2400
Depreciation 2000 2000
Total operating cost 39300 42150
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Operating income 114700 134950
Less: Tax @ 30% 34410 40485
Net profit 80290 94465
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TASK 4
P5. Different exit and succession plan available for small businesses with their benefits and
drawbacks.
A business owner should always be ready with all the circumstances that might arise in
future. A business owner should also be prepared about his exit strategy. An exit strategy is
quitting from all the business responsibilities and also from the owner's ownership as well.
Different options available for exit strategies are as follows:
Liquidation:
In this strategy the owner usually decided to shut down the business completely by
selling out all the assets. The business that are dependent on the performance of the single
person, they have the only option of liquidized their business completely. Liquidation can also be
done if the business is going through loss from long time, and coming near to become insolvant.
Advantages of Liquidation:
 It is a simple and quick method to exit from a business.
 There is no problems about transferring of ownership or negotiating price of business.
 There will be no legal liabilities to repay the debts owned by the business.
 There is an opportunities for owner to start a new business rather than investing in exiting
debts. All the legal action against the companies will be stopped after liquidation.
Disadvantages of liquidation:
 If the director has made a personal guarantee against debts of the business, they would
become liable for company's debts.
 There will be no remaining assets left to start a new business. All existing assets will be
sold off to provide a dividend to creditors.
 All the employees of the company will have to loose their job, and have to look for other
employment. That also means that if owner is intended to start new business, he has to
hire new employees that would increase the cost to company.
Selling the business in open market:
It is the most common exit strategies for small businesses. At a time when owner
of a business decided to retire from his business, the owner put business up for the sale in an
open market for a certain price (Stahovich and et.al., 2018). Selling of business can include two
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type of buyer, individual who wants to become small business owner and to large firm who
wants to acquire a new business as part of their existing company. Selling the business will result
in converting it into new business with a new owner.
Advantage of selling business in open market:
 If the business is profitable , it will attract the potential buyer and help in selling quickly.
 A profitable business owner can get higher price for his business. The owner can get a small but important role in the new business.
Disadvantages of selling business in open market:
 Selling of a business can affect the goodwill of the company.
 Selling the business can have negative impact on the customers of business.
 This method can be time consuming if owner can not find the potential buyer.
Succession planning is the process in which owner is transferring the ownership of
business in order to replacing the existing leaders. When the owner decided to sell, retire or do
something else, he would give his position to other leader (Hawkey, 2017). It is transferring of
leadership or management from one generation to the more skilled person.
Succession planning is also important to smoothly transition out of a business. Having a
successful plan will maximize the value of business in future. Following are the steps involved in
making a successful succession plan:
 Developing a plan: The plan made should be realistic and easy to achieve. The owner
should discuss the plan with legal advisor, accountant and lawyer. There are no set rule
about what to include in a succession plan. The following should be included in plan, the
successor who can either be family member or business partner. Types of succession
partially or fully. Time frame within the succession has to be done, financial
consideration etc.
 Keeping the business in the family: Legal obligation needs to be consider before
transferring ownership within family. Discussion needs to made with family to avoid any
disputes regarding choosing successor.
 Buy sell agreement: it is a legal binding agreement between partners or co-owners
which states the condition if owners dies, force or choose to leave. This will include,
departing owner's share of the business, price that would be paid for the share of
business.
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CONCLUSION
By summing up the above report, it can be concluded that digital technology is very
important for the growth of any organisation. Above report has concluded the planning of
implementing digital technology in Qbic Hotels Limited' s operations. The report has concluded
different growth opportunities that are available for Qubic Hotel. It has been analysed that
through various strategic tools like PESTEL and Porter generic model, Qubic can successfully
analyse the opportunity for growth in market. Report has also identified different sources of
funding through which hotel can raise its fund for new business plan. The present report has also
concluded that owner of business has to be prepared with the strategy of existing or succession of
business.
RECOMMENDATIONS
 It can be recommanded to Qubic hotel that it should evaluate the competitive
environment also to identify it competitors and their strategy.
 Qubic should also examine the cost of the implementation and its effect on overall
profitability of hotel.
 Qubic should evaluate the effective strategy before making decision off raising the funds
from various sources.
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REFERENCES
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Hawkey, J., 2017. Exit Strategy Planning: Grooming your business for sale or succession.
Routledge.
Lane, J., 2018. THE EXIT STRATEGY: The difference between building a business and being
an entrepreneur is what you can sell at the end of the day. Strategic Finance. 99(8). pp.23-
25.
Mikołajczak, P., 2018. Sources of Funding and Revenues of Social Enterprises in Poland in
Comparison to Selected European Countries and World-Wide. Bezpieczny Bank. (2 (71).
pp.113-125.
Rowley, J., 2016. Information marketing. Routledge.
Ruan, Q. Z. And et.al., 2018. Identifying Sources of Funding That Contribute to Scholastic
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S218.
Stahovich, M. And et.al., 2018. Family Participation in Daily ECMO Rounds. The Journal of
Heart and Lung Transplantation. 37(4). p.S189.
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Villani, J and et.al., 2018. Sources of Funding for Research in Evidence Reviews That Inform
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Widya Yudha and et.al., 2018. A PESTLE Policy Mapping and Stakeholder Analysis of
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<https://www.smartdraw.com/ansoff-matrix/>
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(https://www.kgmoore.co.uk/strategy-tools-use-the-ansoff-matrix-for-evaluating-growth-
opportunities/)
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