Planning for Growth and Expansion of Merchant & Mills

This report discusses growth opportunities, financial resources, and strategies for expansion of Merchant & Mills, a small-scale fabric and clothing retail business in the UK. It includes a PESTEL analysis, Ansoff Matrix, evaluation of funding sources, and a detailed business plan with marketing mix strategy.

Planning for growth

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................1
REFERENCES................................................................................................................................2

INTRODUCTION
Palling for growth and development of the business is helpful to clarify the aims and
objectives of the company. It summarises all the operational goals and required activities to be
performed to achieve the goals. Significant strategies need to developed and implemented when
a small business want to expand. It is very important to rectify the opportunities in order to grab
their to increase the market share. This report will cover a planning for growth and expansion of
merchant & mills which is a small scale up business established in UK. It is a kind of private
fabric store in England which is famous for its cloth rolls, handmade fabrics, sieving tools,
weaving and many other tools. Financial resources are also very important to expand the
business. In this report all the succession and exit options are recommended for the company.
TASK
P1 Evaluation of Growth Opportunities with Justification
PESTEL Analysis
It is a structure to examine all the external environment which hinders the organisational
operations. These external factors include evaluation of six factors which affects the company
and that is technological, legal, environmental and social factors which consist macro
environment of the company. PESTLE analysis of the company has given below:
Political Factors: The factor such as international trade policies, regulation of foreign countries
and government policies comes under political factors. Fashion industry of UK had suffered
a lot during the pandemic in context of sustainability. Most of the clothing and fabrics are
imported from the Europe and during the pandemic import was totally restricted. After
Betrix there are many challenges faced in trade relations. Merchant and Mills also deals
with problems associated with trade relations. Restrictions associated with import has
created hurdles for the company (Madsen and Johanson, 2022).
 Economic factors: Economic factors includes the economical status of the nation like
interest rates, foreign exchange rates and disposable of the company etc. the cost price of
manufactured clothes is very high. Company can decrease the cost price of manufactured
products through manufacturing products in other nation such as china and India.
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 Social factors: Customers needs are the top of priority. Social factors includes fashion
and clothing, trends of fashion and location of store. In order to enhance the number of
customers the company is increasing the number of fabric stores in other countries
(Liang, X., and et. al., 2022).
 Technological factors: It is defined as utilisation of commercialisation of products and
advanced sewing machines . According to the fashion trends, the clothe stores offer
products on online platform. In context of Merchant and Mills, the company is also
having online outlets which offers scissors, buttons and many other requires for
manufacturing the fabrics. Technologies need to increase the process of delivery.
 Environmental factors: The factor consist of measurement of sustainability and
avoiding pollution. Fashion and clothing factories of UK, is responsible for 1110
percentage of greenhouse gas release. Wastage of clothing is burnt every year which
cause pollution. Company need to avoid the wastage to make a contribution to make
environment pollution free (Man, R., and et. al., 2022).
 Legal factors: This consist all the law and regulations which is applied on the company.
The company need to adhere to the given rules and regulations to ensure safety of
employees. To avoid unwanted conflicts company requires to follow all the rules and
regulations. Following all the legal rules and law helps company to save money.
Porter's generic Strategies
This model provides three strategies to make competitive organisational advantages.
Michael porter has introduced this strategies which helps business to earn profits. These three
strategies consist of differentiation strategies, cost leadership and focus strategies. In context
with Merchant and Mills, these strategies are mentioned and explained below:
 Cost Leadership Strategy: The strategy is very important to decrease the cost of
products in order to earn more and more profit. Companies implement this strategy to
maintain a log term probability. The organisation sale all the products under the average
cost to expand the market share (Kim, Kim and Lee, 2022).
 Differentiation Strategy : To maintain the sustainability in the market, it is very
necessary to manufacture only unique products. Manufacturing unique products helps to
compete with rivals to acquire high market share. The company need to produce such
products which are totally different from other. Manufacturing unique products helps to
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lead in the market. For example if the Merchant & Mills will produce innovative products
such as leather jackets and other winter wears it will help to expand the market.
 Focus Strategy : It is considered as a very narrow segment to be emphasised. It is
divided into two strategies including cost focus strategy which is used to decrease the
cost of target market segment. Merchant and Mills is emphasising on clothing or
haberdashery business. In order to make profit, expanding clothing business is more
profitable (Ekman, Dahlin and Keller, 2022).
Merchant & Mills is a very small company deal with the fabric and clothing in retail
industry. In order to expand the business, company is increasing customer base. The company
requires to adopt the cost effective process for manufacturing the cloth because it is very costly
process in UK. Company always leas it manufacture product's import and it assist company to
achieve more foreign capital and increase the market share and probability (Mariappan and et.
al., 2022).
P2 Ansoff Matrix of Growth Analysis
Igor Ansoff was the one who developed the matrix. It is a method used for the business
expansion and develop strategies for growth and development of the company. It includes four
strategies to help business to grow. With the help of appropriate strategies company can expand
the business. The following market growth strategies are adopted by the company for the
business expansion:
 Market Penetration : The strategy is applicable to minimize the risk and increase the
sale of the manufactured products. Company use this strategy to increase the sale in the
existing market. In UK, Merchant & Mills is running a small scale business. Currently, it
is having its outlet in Rye but want to expand the business in different markets of UK.
Company should provide all the services online apart form the online haberdashery.
 Market Development : The strategy assist company to introduce the same product in a
new market to increase the customer base. Market development is done ion the foreign
market as well as in domestic market. Company can offer some woollen clothes to attract
customers towards the products. Company wants to introduce the innovative products
into various market of UK apart from it current location. Company can launch its
products in to Welwyn garden and another local market of UK. It requires a large amount
of money to be invested to expand the business (Dell and et. al., 2022).
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 Product development : Using this strategy company can introduce its innovative
products to the existing market to increase the probability. To launch the product in the
market, products need to be researched and developed effectively to meet with the
customer's need. The company can introduce some innovative products such as woollen
jacket and another woollen jackets. Company requires to invest the money in research
and development of the product. Small scale business can not access high investment
along with few market share (Väli and Zhurbas, 2022).
 Diversification : Organisation requires to develop the services and so as market to adopt
this strategy. It is considered as most risky strategy for the company. Company can also
introduce tradition clothes in market of India and China in order to diversify its products.
Company can not adopt this strategy because it is a very risk strategy. According to the
preference of customers, company need to introduce some innovative products.
From the above discussion, it has been analysed that Merchant and Mills need to
implement development strategy for the growth and development of the business. It will help the
company to increase its market share as well as increase the number of customers.
M1 Option for growth to Merchant & Mills to get competitive advantage
The company need to adopt the cost strategy leadership to make competitive benefits in
such competitive market and acquire innovative effective designing and low cost materials in
product manufacturing process to lead in the market. It will help company to achieve the capital
for efficient to invest in further projects. As per Ansoff growth analysis structure, the company
requires to develop market strategies for the expansion of the business. Opening different
clothing and tool stores help company to make profit. New outlets in different locations helps to
enhance customer base and increase market share of the company.
D1 Evaluation of the options with associated risks
Cost leadership is the best strategy to reduce the cost price but rivals can also reduce their
cost price in order to attract customers towards their product. Technology advancement is also
adopted by the customers to increase the customer base. There is a risk of changing preference of
customers in new location because all the customers are new. This strategy will make more profit
if there new outlets achieve the same customer base as the old one (Warjiyo and Juhro, 2022).
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P3 Financial resources to expand the business
In order to expand the business, every single company requires a huge amount of money.
Financial resources are very crucial to make money available for the company to ex[pand the
business. Merchant and Mills need a huge amount of money to introduce new products in the
market of UK. There are several source available for the company mentioned below:
1. Venture Capital : It is considered as best private equity investor which put money into
small start up business and the main purpose is to achieve long term capital.
Advantages Disadvantages
 Venture capital has good relationship
and contact with consultancy institution
to get consulted for the company.
 Venture capitalist only acquire equity
of business in exchanges. They do not
demand for repay.
 The Venture Capitalist redemption
within 5 years which is too earlier.
 Companies need to pay higher returns
to investors because investors
contribute major amount of money.
2. Angel Investors :It provides money to small scale up business to expand it.
advantages Disadvantages
 Angel investor do not claim any
repayment of capital unlike any debt or
bank loan, in case of exit of the
business.
 Companies who are expanding their
business, get information about the
strategies of other companies by
contacting business angel funding
because angel investors are experienced
(Wijayapala and et. al., 2022).
 Raising funds with the help of angel
investors enhance the chances of risk
because company may loose the control
over the business.
 It is very hard to find angel investors to
invest their money in business.
3. Bank loan: Small scale companies can get sanction their loan from bank with minimal
interest.
Advantages Disadvantages
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 There is no fear of loosing control over
the business.
 Banks do not claim for any share of the
business.
 Companies need to pay their instalment
along with high interest.
 Bank can seize all the assets of the
company in case company do not repay
the debt.
M2 Evaluation and Justification for recommended source of fund
Among all the financial resources, venture capital is the most suitable one for financing
and gives more money for investment as it does not require any interest along with the
instalments. It does not require any personal or organisational assets of the company. It also
demands higgher return from the company but angel investors do not do such.
D2 Analysis of recommended source of fund in context with Merchant & Mills
Merchant and Mills has recommended to select Venture capital for the investment as it is
considered as most suitable source of investment for the company. venture capital will suit best
for its requirement because Merchant and Mills is a small business that requires to expand the
scale of operations. In order to expand the business, Merchant and Mills also get suggestions
from venture capitalist.
P4 Suggestive Business Plan for Merchant & Mills including its Financial information
and Strategic Objectives to expand the business
Summary
The company wants to make their position in the market of England and London with its
already launched products in new market segment. In Order to expand the business company is
developing strategies to maintain the sustainability against the rivals. Company need to rectify
and grab the opportunities for the expansion of the company (Zhang and et. al., 2022).
Vision
In order to expand the business increasing the market share to make competitive benefits.
Mission
with the help of market development strategies, company is increasing the customer base
and opening the new outlets in different locations in the market (Dell and et. al., 2022).
Strategy
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market development strategy and cost leadership strategy is implemented by the company
in order to enhance the market share and make competitive benefits.
Marketing Mix Strategy
In order to increase the customer base, company increase the demand of product in the
market. As per the entrance in the new markets, following are the marketing mix strategies:
Product Strategy : Merchant and Mills is going to introduce jackets and woollen products to get
the more benefits.
Pricing Strategy : In order to lead the market Merchant and Mills is decreasing the cost price to
attract the customers towards the products.
Distribution Strategy : Company is opening its outlets in new geographical region to increase
the customer base.
Promotion Strategy : Merchant and Mills perform promotional activities such as hoardings,
demonstration of products, advertising campaigns etc. to attract customers.
Control and Monitoring
In order to analyse the performance of the business, organisation requires to develop and
implement controlling policies and strategies. Merchant and Mills may utilize benchmark tool of
performance to eliminate disparity.
M3 Detailed Business plan including vision of company for expansion of business and
strategies
Panning a business for its growth and development includes aims and objectives of the
company. All the financial data included in the business plan. It also consist of marketing mix
strategies of the business. Business plan is required to be constructed for expansion of samll
scale business.
D3 Business plan demonstrating the effort to implement strategies to target aims of the
business
As per the size and sustainability of the company and examined risk associated with the
business Merchant and Mills has implemented new strategies including cost leadership strategies
to deal with the market competition to penetrate the market in order to increase its market share.
As per needed market mix strategy along with suitable measurement of monitoring (Day, 2022).
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P5 Exit and Succession options For small Businesses
Exit options
1. Sale of business: It is considered as the most suitable exit option for the company by sailing
the assets to another company.
Advantages Disadvantages
 It would be better to sale the business
and utilising the money for another
project that provides opportunities for
expansion if the current business is not
generating enough profits or not having
opportunities for the future .
 Selling the business at high price will
generate more profits if the demand of
the business is high in the market so as
to earn a big amount of funds.
 During exit of the business, selling a
profitable assets by which company
has chances to grab the opportunities or
expansion lead to lose business's
profitable revenue flow.
 To sale off the business, lots of
formalities need to be done such as
negotiation and legal formalities.
2. Winding Up of Business : It is a process of terminating the business. All the assets of the
business are hanged over to the investors in order to pay all the liabilities.
Advantages Disadvantages
 Amount recovered from sale of assets
of the business can be used to return the
investors that assist the organisation in
decreasing the pressure of repay all the
debt, after the company is dissolved,.
 Money required for dissolving the
business is less than in case of paying
debt as the official insolvency takes the
money when all the assets of the
business have been sold out (Dawson
and et. al., 2022).
 Every individual holding and asset of
the organisation is used to return the
creditors and debts.
 Owners of the company have fear
shortage of money for the required
funds after the winding up the existing
company to move on to another
venture.
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After considering all the advantages and disadvantages given above, Merchant and Mills
is suggested to select the option sale of the business in case of exit oof the business because
winding up the business requires a lot of formalities such as appointment for insolvency and
liquidator. Merchant and Mills should sale off the business as very few formalities are requires to
be done.
Succession Options
1. Franchising : It is a method to expand the business where another business is allowed to
utilise companies' trademark and brand name for commercial activities and organisational
operations such as distribution of services and products. The main is business in known
as franchisor where as business that utilises the name is called franchisee.
Advantages Disadvantages
 The main business has opportunities to
take benefit of increasing brand
awareness where as franchisee take
advantages of different locations of
business because customers are aware
of the brand name of franchisor.
 It makes franchisor capable of
expanding the business without any
chances of risk (Chan and Tai, 2022).
 There is risk of loosing control of
talking decisions regarding the brand of
franchisor. Franchisor enjoy the
awareness of brand name of franchisor
but always having fear losing control
over the business.
 It is very time taking. The cost is very
high as company need to take
appointment of consultant for the
agreement of the business.
2. Merger : It is the second option for the success of the business. In this way business is
expanded with the help of integration and assist company to become strong to deal
competition.
Advantages Disadvantages
 It assist business to enhance its market
share because customers are also
integrated with the integration of the
businesses. It also helps to develop the
 Ii causes diseconomies of scale because
large scale up companies would not
capable of enhancing the manufacturing
level.
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business stronger to face the
competition (Budiman and et. al.,
2022).
 It assist company to expand the
business in many more geographical
regions and penetrate new market
regions of UK.
 It removes the underperforming human
resources and thereby creates
unemployment to face the competition
as a single entity.
The most suitable succession option for Merchant and Mills is merger. Company is
recommended to adopt the merger expansion for their growth and development. It will help to
attract the customers towards the product of the company as Merchant and Mills is a small scale
company. Merging expansion is better than other available options because other options will
take more effort and money.
M4 Comparative Evaluation of Recommended Exit or Succession option
It is very crucial for the company to choose the best exit and succession method for the
business to make it easy. It has been analysed that sale of the business is the most suitable option
for the exit where as merging expansion is the best option for business expansion. Both the
options helps business to access exit and succession with less formalities and efforts.
D4 Evaluation of the Justification of Recommended option to Merchant & Mills
The company has recommended to go for merger expansion as it is a small scale
company. Merger expansion will assist the company to attract more customers and increase the
sale. Merging the companies integrate the number of customers of both companies in different
geographical market areas. In this report all the factors are considered for the expansion of
Merchant and Mills in market of London and England. In order to avoid all the legal and official
formalities, company need to go with sale for business option (Bosah, 2022).
CONCLUSION
From the above report, it has been analysed that the growth of the business requires a
planning which includes all the organisational operations to promote the growth and expansion
of the business. All the aims and objectives are included in this planning. External and internal
factors which affect the growth and development of the business are well analysed to determine
chances of risk. Organisations required to determine the external factors to recognise the
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opportunities for the growth an development of the business. Cost leadership strategy and Ansoff
growth is implemented by the company to access the promotional activities which assist for the
expansion of the company. In order to expand the business, company requires a large amount of
money. Investors such as angel investors, venture capital and bank holders are considered as
financial resources for the company to get money for the expansion of the business. Appropriate
and easily accessible exit and succession options has been also covered in this report.
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