Planning for Growth: Evaluating Growth Opportunities and Funding Sources for Natuzzi Services Limited

This report evaluates growth opportunities and funding sources for Natuzzi Services Limited, an Italian company that designs, produces, and markets high-end furniture. It discusses key considerations for evaluating growth opportunities, options for growth via analytical frameworks, and potential sources of funding available to businesses. The report also assesses the ways for a small business owner to exit the business, better planning growth, strategic objectives, and different plans of succession for each option.

Business

Table of Content
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Part 1: Investing in the future.......................................................................................................1
Analysis of key considerations for evaluating growth opportunities and justifying it in
context with Natuzzi Services limited..............................................................................1
Discussing the option for growth via a range of analytical frameworks to demonstrate with
competitive advantages understanding..............................................................................4
Evaluating the opportunities for growth and applying Ansoff's growth vector matrix ....5
Critical evaluation of specific options and pathways for growth taking the account of risk. 6
Assessing the potential sources of funding available to businesses and discussing the
benefits and drawbacks of each source..............................................................................6
Evaluating the potential sources of funding and justifying the adoption of an appropriate
funding source...................................................................................................................9
Evaluating the potential sources of funding with a better justified argument for a worthy
adoption of particular combination source........................................................................9
Part 2: Developing an Exit Plan...................................................................................................9
Designing a business plan for growth in association with financial information and
strategic objectives for scaling up the businesses..............................................................9
Evaluating the sources of funds and justifying the adoption of different sources of funds in
context of organisation....................................................................................................10
Presentation of in depart business plans to demonstrate knowledge and understanding of
formulation of business objectives..................................................................................10
Assessing the exit and succession options for small businesses along with benefits and
limitations for each option...............................................................................................10
Evaluating exit or succession options of small businesses comparing with different
operations and making recommendations.......................................................................11
Evaluation exit or succession options of small businesses and deciding proper action with a
justified recommendation to support its implementation ...............................................11
CONCLUSION..............................................................................................................................11

REFERENCES..............................................................................................................................13

INTRODUCTION
Mangers adopt Planning for growth as a strategic framework to provide the correct
resources to an organisation in order to accomplish the growth objectives. Planning for growth is
applied by various organisations to obtain high productivity and to formulate effective plans.
Every enterprise uses their own distinct plans for generating a huge opportunity via a range of
sources. Their aim is to achieve positive outcomes and generate more resources (Haider and
Tehseen, 2022). The report is based on Natuzzi Services limited which is an Italian company,
designing, producing and marketing the high end furniture’s. Its headquarter is in Santeramo in
Colle, Italy. The organisation is providing employment to approx. 6000 employees. The revenue
it generates is, 488.5 million dollars. The report includes analysis of key considerations for small
and medium enterprises to evaluate growth opportunities by applying Ansoff's Matrix. In
addition to this, the report asses the methods via which organisation access funding and different
types of funding requirements. The part 2 of the report asses the ways for a small business owner
to exit the business, better planning growth, strategic objectives and different plans of succession
for each option.
MAIN BODY
Part 1: Investing in the future
Analysis of key considerations for evaluating growth opportunities and justifying it in context
with Natuzzi Services limited
Eliminating the threats and uplifting the opportunities can be proved as the effective
dimension for an organisation in order to secure a central key position within the market and to
bear the competition in an effective way (Buffington and et, al., 2020). This can be demonstrated
as a catalyst and as a barrier which can be eliminated. Natuzzi Services limited adopt several
strategies to receive effective competitive edge within the market and to make better profits as
well as to deal with threats. Some strategies that can become beneficial for Natuzzi Service
limited, by using porter generic are:
Porter Generic Model:
Cost leadership: The strategy plans on decreasing the market price and providing
discounted rates for selling products and services. The strategy is helpful for an organisation to
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increase sales and revenue to secure a better competitive edge in an oriented manner. Natuzzi
service limited is currently dealing with economic range of furniture’s so applying this strategy
will help it with market threats.
Differentiation: The strategy is used to improve overall sales as well as to deal with
rivalries. Natuzzi service limited produce and design its own unique furniture’s, which
differentiates it within the marketplace (Loredana, 2016).
Focus on cost: The strategy is implemented in order to obtain the focus of business on
market segments. The objective of following this strategy is to enhance the market position in a
prominent manner. Natuzzi service limited can follow this strategy to improve its sale in an
effective manner.
Focus on Differentiation: The strategy maps the business's focus on providing better
services and products in an average price rate. In context to Natuzzi service limited, the
organisation is having proper strategy for tackling the rivalry by using a perfect set of controlled
measures.
The discussion concluded that Natuzzi service limited should adopt cost differentiation
strategy to enhance its revenue and to secure a better market position. Natuzzi service limited is
already a central enterprise within the market, as it is creating unique products and has
maintained a standard in its products and services which is providing it’s the beneficial in
withstanding the market competition. Competitive advantages increasing the reputation as well
as the market share of the organisation especially like Natuzzi service limited. Key business
resources like Physical, financial and human resources are essential in analysing the
organisation's reputation. Physical resources of Natuzzi service limited involve raw materials,
water, electricity and transport. Financial resources include cash, business fund and cash
equivalents.
PESTLE Analysis:
PESTLE Analysis is a tool to examine the effect of external environmental factors of an
organisation to evaluate their impact over business functioning. PESTLE Analysis guide an
organisation to establish its venture in an international market to secure a high benefit. Natuzzi
service limited is planning to utilise the PESTLE Analysis as:
Political factors: Political factors have role in rules and regulations along with the
stability of politics within the country, tax policies, control of government. The political
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environment of United Kingdom acquires its stability on the basis of priorities of government,
such as which government is having more interaction with business and which one is merging
real estate with benefits of human. Government needs to provide its support to companies in
order to expand their businesses in an easy way. Therefore, the government is an unstable factor,
Natuzzi service limited faced trade restrictions due to this (Zafar and Akhtar, 2020).
Economic Factors: Economical factors are associated with economic aspects like GDP
rates, employment rates, purchasing power of people, fluctuation in currency, international trade
norms and an efficient manner of business. Implication of Brexit within United Kingdom is
associated with negative impacts for business, Natuzzi service limited is required to develop
some strategies in order to get better returns from the money they invest in designing and
production of furniture’s.
Social Factors: Social Factors emphasises on dimensions like, demographics, age,
gender, value etc. These factors focus more on customer preferences and give value to their
likings. With the perspective of UK people, trends and liking towards Morden living are creating
opportunities for business of organisations like Natuzzi service limited. The organisation can
utilize market trends and can create their own unique ideas in designing of furniture’s. This
motive will help the organisation to expand its business as well as in improving its popularity
(Damer, 2020).
Technology Factors: Technological factors are associated with use of latest
technological trends for business to make high profits. United Kingdom is advancing its
technologies, which give wide opportunities to business holders of United Kingdom to attain
some competitive advantages and to create a high venture. Natuzzi service limited have
opportunities to make better products via advanced technologies to attain customer sustain
abilities. The organisation on similar hand is introducing its own unique technologies to provide
distinct variety of products to its customers.
Legal Factors: Legal factors are linked with laws, regulations made by government of
particular country and their impact over the functioning of enterprises. In Natuzzi service
limited, the service is associated with designing and decoration so there is need of import and
export regulations to govern the international level of marketing (Saeidi and et. al., 2019).
Environmental factor: Environmental factors are associated with the techniques used by
an organisation which can cause any kind of effect over the environment. In context with Natuzzi
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service limited, the organisation performs effective management (Salvador and et, al., 2021). The
enterprise focus on waste management and environmental safety during their production. So
these techniques and principles followed by Natuzzi service limited will provided them high and
distinct market age to survive for long term.
Discussing the option for growth via a range of analytical frameworks to demonstrate with
competitive advantages understanding
Demonstration of better growth range of analytical framework for understanding
competitive advantages focusing on industries or enterprises is achieved by using Porter's five
forces in context of Natuzzi service limited.
Porter's five forces:
Porter's five forces is a frame work which examines the market competition and is
focused on analysis of detailed competitive structure in accordance with the strategies such as
competitive rivalry, substitution threat, threat because of new entry and power of purchasers as
well as suppliers, the five elements of porter are:
(Source: Cascade Strategy)
Competitive rivalry: Competitive rivalry is a force which defines the capability of
competitors to withhold their position within the marketplace. In context with Natuzzi service
limited, there is a high rage of competition within the market.
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Substitution threat: Threats like losing the customer due to switch in their likings of
products and services affect the business most. Natuzzi service limited is facing a threat of
substitution because of a variety of organisations dealing in same businesses like POLI. Design,
Flexform etc (Geissdoerfer and et. al., 2018).
New entry threats: Natuzzi service limited is facing a moderate level of threat because
of new entries. Such threats are mostly involving small and medium enterprises. Though high
investment is needed but with the aid of banks and funding houses new firms may come in the
market and impact the Natuzzi’s profitability.
Power of Buyers: Buyer's power shows the efficiency of them for purchasing, it should
be high in order to deal with furniture’s designing and manufacturing. The power of buyers is
high as they are the one who purchases the firm’s product and if they buy the goods from other
firm then the firm will get affected.
Power of Suppliers: Power of suppliers determines the stock of product available.
Assessing the supplier's power give estimation of market revenue (Farrukh and et, al., 2020). It is
low in context of firm as they can buy the raw material from other suppliers from the market and
it will not affect the operations of the firm.
Evaluating the opportunities for growth and applying Ansoff's growth vector matrix
Ansoff Matrix
Strategic tools is the term used for specific strategies, the tools are used by organisations
to choose a better option for their business expansion which is providing them the high
productivity and efficiency in their outcomes (Bakos and Halaburda, 2019). Ansoff Matrix is a
tool, beneficial in choosing better strategy for business growth as well as to pay high advantages
and to earn profit revenues. The Ansoff Matrix have four basic strategies for growth, which are:
Penetrating the marketplace: The strategy is used by organisations to achieve market
expansion. The strategies plan expansion of market within the current market with current
strategies, products and services. The strategy is utilised by enterprises which are focusing more
on expanding their business. In context with Natuzzi service limited, the organisation is using
strategy to give its customer the satisfaction with services and products by creating different
kinds of products and unique services.
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Market development: Market development strategy is used by organisations, who
willingly want to step in new segment of market. Such strategies are beneficial for enhance
customer loyalty as well as in profit revenues. In scenario of Natuzzi service limited, the strategy
can be utilised for expanding the business into the global periphery. The strategy of expansion
will give Natuzzi service limited, high opportunity for sustainability within the competitive
marketplace (McKeever, 2018).
Product development: Product development strategy is utilised by organisations to sell a
new product in existing market. The scenario of Natuzzi service limited can acquire product
development strategy to capture new customers by giving more new market or services to
expand its business and to spread awareness about the offers of company, they can acknowledge
latest market trends and change the negative perception of customers.
Diversification: The diversification strategy plans to create some strategies or plans
regarding new business and selling of products into new market. In context with Natuzzi service
limited, there is a high risk of facing failure and ruining of image of company.
Evaluation of strategies:
The discussion concludes that the correct strategy that can be beneficial for Natuzzi
service limited is, Market development. Market development strategy can provide the
organisations a high revenue. Natuzzi service limited is a large business organisation so it will be
beneficial for it to expand its business to gain more profit. Along with that the Natuzzi service
limited can use other strategies in their services enhancement (Elo and Riddle, 2019).
Critical evaluation of specific options and pathways for growth taking the account of risk
Evaluation of growth strategy for an organisation can be achieved via, mapping the
performance of organisation and attaining a good competition. In current scenario of Natuzzi
service limited, factors like policies, manpower, investments etc. contributes to the major risks.
All these factors are responsible for effecting the growth of organisation. Few strategies can be
developed in order to generate positive results along to secure a position within the market and
bear the competition.
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Assessing the potential sources of funding available to businesses and discussing the benefits
and drawbacks of each source
There are various potential sources of funding for businesses in order plan an expansion
plan of business in an effective manner. Natuzzi service limited can collect funds from market by
methods as:
Internal sources of finance:
This sources of finance, gathers money from internal dimensions of organisations.
Internal dimension includes, selling the business assets and using the preserved earnings. The
advantages and disadvantages of internal sources of finance are:
The internal sources of finance are effective in nature as they generate funds specifically.
So the Natuzzi service limited can acquire these methods for better financing by utilizing its
retained earnings, becoming an advantage. With the scenario of Natuzzi service limited, the
profit it makes in resolve of bankruptcy is less, which creates a disadvantage for it(He and Ortiz,
2021).
External Sources of finance:
External sources of finance include, bank loan, venture financing, debenture etc. In the
scenario of Natuzzi service limited, the organisation is having unique and distinct sources for
raising the funds along with the expansion of organisation (Alonso-Vazquez and et. al., 2018).
Bank loan: Bank loan is the external source of finance where the organisation takes loan
from bank with an agreement to repay the amount with some addition of charge referred as
interest. Banking loan have some advantage and disadvantages which are: Advantage include,
banking loan provides fund for developing stage and reduces the liability for a period of time.
For Natuzzi service limited, the service is the centre of market so It will be easy for organisation
to repay the loan structure in appropriate time. And disadvantages consist of Banking loans
reduces the liability burden of organisation, the development stage of business makes less
profitability and difficulty for organisation to balance its finance.
The rigid structure of policies related to loan repayment and non repayment may create a
negative image of organisation in marketplace.
Banking Overdraft: Bank Overdraft is a loan provided by banks to its clients with a
credit limit as per which they can utilise the limit and pay its bill and other expenses until the
balance of account reaches zero (Kahn and Baum, 2020). The advantages and disadvantages of
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these methods are: advantage include Banking overdraft is a flexible method for paying the
expenses as it require less paper work and an easy way. A high tech service like Natuzzi service
limited can easily manage banking overdraft. Natuzzi service limited can tackle its fund and
financial trades with this method of funding. Disadvantage consist of Profitability of organisation
can get reduced due to high interest rates of banking overdraft. Additionally the bank can ask for
repaying the remaining draft any time.
Natuzzi service limited may face difficulty in arranging the funds within the short span in such
scenario.
Crowd funding: This funding method includes, collection of funds from a group of
people. The method of crowd funding have several advantages and disadvantages as: The
method is beneficial for Natuzzi service limited as it create a vast opportunities area for
improving customer base. The method provides feedbacks from investors, in relation to
modifications and expansions of customer bases, services and products. Disadvantages are, The
method of funding can create a negative image of company in marketplace. The image can be the
outcome of expansion plan failure. Companies face high risk in dealing with losses.
Peer funding: This funding method is an alternative financing method for an individual
to avail loans from other person via online methods of transactions (Akbar, French and Lawson,
2019). The method has advantage and disadvantages like: Peer funding is an easy way of funding
as there are less difficulty for availing the funds. The loan is granted on less interest rate as
compared to other funding methods. Disadvantages are, the peer funding method is a risky
method, as there is a high credit risk. There is no insurance from government in the protection of
borrower.
Venture finance: This type of funding is a form of private equity where investors provide
financing to small enterprises and startup companies. Advantages and disadvantages of this kind
of funding are: Venture financing can provide high opportunities to Natuzzi service limited for
business expansion. This kind of financing have increase expertise. Disadvantages are, this
funding process is quiet hard to fin. The funding of this kind may cause under valuation.
In addition to this, government of UK grants fund to business (Coronavirus (Covid-19)),
which are:
Business supporting grant: This is given to businesses in order to support the enterprises
who are impacted during Covid pandemic.
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Bounce Bank loan: The method of funding provides support small businesses in order to
provide them accessibility of financing during Covid pandemic.
Local Authority Discretionary Grant Funds: here, local authorities provide funds to
small and medium enterprises of UK in Covid outbreak.
Evaluating the potential sources of funding and justifying the adoption of an appropriate funding
source
Potential source of funding and justification for Natuzzi service limited can be Crowd funding.
This source of funding can create multiple options for the organisation to gather funds via its
client and other investors (Tykkyläinen and Ritala, 2021). Every organisation which is planning
for a expanded business as well as long term plan can map their business and track their
investments.
Evaluating the potential sources of funding with a better justified argument for a worthy
adoption of particular combination source
Potential sources of funding for Natuzzi service limited can be crowdfunding, capital
venture, peer funding and others for financing to attain some competitive advantages and for
business expansion. These sources of funding can help the organisation during the development
process, where a large set up is required along with funds (Musyoka, 2018).
Part 2: Developing an Exit Plan
Designing a business plan for growth in association with financial information and strategic
objectives for scaling up the businesses
Business plan development is a strategic process, essential for growth of the organisation.
It is a formal approach of business goals and plans for meeting them, it also accounts for reason
for their attainability (Business Plan, 2022). An organisation needs to design a perfect business
plan for its growth in regards to finance and strategies. The business plan is developed by
Natuzzi service limited for creating unique furnitures as per the market trends. Natuzzi service
limited is utilising digital techniques for creating various designs and unique products. The
digital technology is helping the organisation with current marker competition. The start up cost
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for the business plan of Natuzzi service limited is calculated using expenses that may add up in
creating the new products. Their business goals for financial 5 years project are:
Goals for short term: Natuzzi service limited is focused on quality of its products as well
as on services and have chosen it as the short term goal for starting years. This is helping the
organisation in building the trust of customer.
Goals for long term: Natuzzi service limited is focused on enhancing loyalty of its
customers. For this purpose the company needs to form strategies for it.
Strategic development: The strategies for Natuzzi service limited should be developed in
order to make a good profit for business. The strategies should be profitable and should enhance
development of organisation's objectives. The service should focus on reducing the cost and its
market position (Dumitriu and et. al., 2019).
Evaluating the sources of funds and justifying the adoption of different sources of funds in
context of organisation
Smooth and profitable running of an organisation require a sufficient fund. Natuzzi
service limited should create budget plans, including expenses estimation and estimation of
income. This will help the organisation in mapping its daily expenses and income. The
organisation can use technology software for this mapping. The funding can be achieved via
Crowdfunding, Peer venture, bank loan, bank credit etc.
Presentation of in depart business plans to demonstrate knowledge and understanding of
formulation of business objectives
Business objectives should be SMART that is specific, measurable, achievable, relevant
and time bounded. The business plan should be developed according to SMART business
objectives. Implementation of these objectives in an enterprises require effective communication
in between the employees (Davies, Haugh and Chambers, 2019). Manager of Natuzzi service
limited should develop the business plans in accordance with the current market position of
company and the understanding of employees.
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Assessing the exit and succession options for small businesses along with benefits and limitations
for each option
Business plans for small enterprises consist of succession plans as well as exit plan in
order to manage the succession of business. Assessment of these options have their benefits and
limitations. The options are:
Merging: The strategy can easily have adopted by small enterprises to combine in
another business. The merging can help small businesses to create a new business and expand its
business by sharing the resources. This option can be beneficial as well as have limitations for
Natuzzi service limited, which are as: Merging can help business in increasing their market
share. Merging can assist the business to reduce their cost of business operation. Merging can
lead to high product prices, making a limitation. Also it can promote the lack of communication
within the organisation.
Buyout of Employees: Employee boy out is the situation where business employers offer
a wide range of packages to their chosen employees. This option can be beneficial and have
limitations for Natuzzi service limited in following ways: The process can be beneficial in
improving employee’s efficiency and can assist them with their performance. The strategy is also
helpful in elimination the competition. The strategy is responsible for debt burden.
it may cause loss of personnel.
Evaluating exit or succession options of small businesses comparing with different operations
and making recommendations
Succession options help a small enterprise in improving its sales and financial position
within the market. The process assists an organisation to secure a leading position with in the
market. The option includes other options like initial public offering, which is the option for an
organisation to become capable in selling its sharing and increase its capital. Public approach is a
lengthy and challenging process for small enterprises and it require proper planning with efforts.
The option is not suitable for companies who are looking for fast method (Keiningham and et.
al., 2020).
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Evaluation exit or succession options of small businesses and deciding proper action with a
justified recommendation to support its implementation
The above mentioned methods recommend that Natuzzi service limited should go for
merging and acquisition method. The methods are easy and can allow the organisation to share
resources with other company. The resources can include funds, human resources, equipment’s,
technology and others.
CONCLUSION
The report concludes that an approachable and effective planning for business growth can
provide a good profit to the organisation as well as it contributes in the growth of business. The
report describes and evaluate the components of growth opportunities for an organization. The
report includes strategic development for an organisation to improvised the performance of
business and acquire a competitive advantage in market. Report consist of opportunities in
context with Natuzzi service limited, with use of Ansoff matrix. An organisation can have
funding form different sources for business development or in process requirement, such sources
have their own advantages and disadvantages. Scaling up of business required effective plans
and SMART objectives along with exit and succession options especially for small enterprises.
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Online:
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