Unit 42 – Planning for Growth

This report analyzes the growth opportunities and strategies for Merchant & Mills, a clothing company in the UK. It includes a PESTLE analysis, Porter's generic strategies, VRIO model, and SWOT analysis. It evaluates growth opportunities using Ansoff’s growth vector matrix and discusses options for growth using a range of analytical frameworks to demonstrate the understanding of competitive advantage within an organizational context.

Unit 42 – Planning for
Growth

Table of Contents
INTRODUCTION ..........................................................................................................................4
TASK ..............................................................................................................................................4
P1 Analyze key considerations for evaluating growth opportunities and justify these
considerations within an organizational context.........................................................................4
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix...................8
M1 Discuss the options for growth using a range of analytical frameworks to demonstrate the
understanding of competitive advantage within an organizational context................................9
P3 Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source..........................................................................................................10
M2 Evaluate potential sources of funding and justification for the adoption of an appropriate
source of funding for a given organizational context................................................................11
P4 Design a business plan for growth that includes financial information and strategic
objectives for scaling up of business.........................................................................................11
M3 Develop an appropriate and detailed business plan for growth and securing investment,
setting out strategic objectives, strategies and appropriate frameworks for achieving
objectives..................................................................................................................................14
P5 Assess exit or succession options for a small business explaining the benefits and
drawbacks of each option..........................................................................................................15
M4 Evaluate exit or succession points for a small business comparing and contrasting the
options and making valid recommendations.............................................................................16
CONCLUSION .............................................................................................................................16
REFERENCES..............................................................................................................................18

INTRODUCTION
The operational functioning of a business is determined through the achievement of goals
and objectives that is gained for the growth and development of the company. A business growth
plan is the authorised document that provides the details for successful development of the
company. There is an immense need of plan for plan of business growth due to various
circumstances such as loss of customer retention, decrease in sale of business which is in turn
increasing the competition in the market. The organisation aims to grow and develop its business
with the service of increased sales which in turn will help in gaining profit. The success of an
organisation is determined through the enforcement of a business plan. The organisation chosen
in this report is Merchant & Mills, which is a clothing company in United Kingdom. It
specialises in providing quality material in clothing with its exclusive packaging which makes it
stand out from the rest companies (Adebola, 2019). The price tagged is a bit high but is
reasonable in consideration of its quality and packaging. This report will cover the factors in
consideration of the growth opportunities with enforcement of Ansoff growth matrix which in
turn will help in achieving the goals and will also cover the positive and negative sides through
the sources of finance used in the company.
TASK
P1 Analyze key considerations for evaluating growth opportunities and justify these
considerations within an organizational context
The PESTLE analysis framework help in analyzing the growth opportunities that are
provided through the external factors that impact the growth of an organization. The operational
activities of business are affected through the PORTER strategies which helps in analyzing the
opportunities for growth in an organization (Azubuike, Songi, Irowarisima, and Chinda, .et.al
2018) . The framework of Merchant and Mills will be analyzed through the following strategies
and analysis which are mentioned below:
PESTLE Analysis:
The external factors of an organization is determined through the PESTLE framework which
may impact the growth of an organization and the operational functioning of an organization is
determined through the internal and external factors that in turn helps in analyzing the

opportunities of growth in an organization. SWOT analysis is extension of PESTLE analysis.
The external framework of organization of Merchant and Mills will be determined through the
following factors:
 Political factors – The enforcement of government regulations of the company such as
will be determined various factors such as regulation of environment, tax policy and
restrictions of trade and tariffs. In context to Merchant and Mills, the long term
profitability of the company is majorly affected and the functioning of company in major
countries helps in exploring the existence of political environment with the association of
risk. The activity of corruption could be prevented through determination of political
factors with the implementation of legal and taxation rules for the legal enforcement of
contracts.
 Economic factors – The economic growth of an organization is affected through the rate
of unemployment, exchange of interest, wage and inflation rates. In context to Merchant
and Mills, the growth rate of material of company with the expenditure through the
customers determines the performance of company (Chi, Li, Trigeorgis, and Tsekrekos,
2019). The material quality of the organization with its quality of infrastructure through
the government will be analyzed by the company in order to maintain the economic
growth of organization.
 Social factors – The social factors majorly determine the health, safety, career with
increasing rate of population in order to evaluate the cultural norms of the company. The
customers can be gained through the achievement of social factors. In context to
Merchant and Mills, the marketing strategy of the company can affect the structure of
planning of company. The marketing of material industry is able to flourish with
implementation of social factors.
 Technological factors – The operations of business is majorly affected through the
development and innovation of technology. Some of the major developments in
technology is with the enforcement of Artificial Intelligence, Machine learning and IOT.
In context to Merchant and Mills, the recent developments of the company can be
determined through the increasing competition in the field of technology and the
execution of quality service with the enforcement of technology.

 Legal factors – The legal barriers that is faced by the company while neglecting the
operational regulations can be determined through the legal factors of the company
(Deshpande, 2018). The internal and external environment of the company can be
affected with the implication of legal factors which includes the rules of taxation with the
import and export services. In context to Merchant and Mills, the factors that determine a
new segment of the company can be evaluated through different aspects of employment,
discrimination, protection of data and health and safety services.
 Environmental factors – The ecological aspects of the company will be affected through
the surrounding environment. The standards of the company should be met on a level that
helps in evaluating the consideration of environment friendly practices within the
organization. In context to Merchant and Mills, the factors like air and water pollution
with the management of waste in material industry should be regulated by the company
in order to effectively manage the ongoing issues in the company with consideration to
environment.
In context to Merchant and Mills, the PESTLE analysis of the company will help to evaluate the
issues that are currently occurring in the surrounding environment of the organization. The
profitability level of material industry with competitive advantage can be analyzed through the
company.
Porter's generic strategies:
The position of the company is determined through the level of profitability in order to analyze
the average level of the organization. The opportunities of growth with the sustenance of long
term competitive advantage can be evaluated through the company (Deshpande, 2018). In
context to Merchant and Mills, the porter generic strategies includes the three major elements
such as Cost leadership, Differentiation and Focus which are mentioned below:
 Cost leadership – The company becomes a low cost producer in comparison to its
competitors with the use of this strategy. The structure of a company is determined
through the advantage of cost in order to gain an advantage for the company. In context
to Merchant and Mills, the main consideration of the company is in relation to the access
of raw materials and economies of sale for the production of low cost. The sustainability

of company is gained through the advantage of cost which has helped in enhancing the
performance of it with growth in its success with the application of this strategy.
 Differentiation – This strategy is almost preferred by all companies in order to achieve
the objective of standing out from rest of the companies. In context to Merchant and
Mills, there are various areas that are identified by the company in order to get validation
from buyers or customers of materials of the company. The buyers are considered as an
important element for growth of the company. The main aim of this strategy is to get
recognized and rewarded for its exclusive quality of standing out from the rest
companies.
 Focus – The main aim of this strategy is to expand its focus on selling of products to
customers or to a specified place. It can termed as differentiation focus or cost focus
(Duvier, Anand, and Oltean-Dumbrava, 2018). In context to Merchant and Mills, this
strategy helps in understanding the needs and wants of customers according to their
requirements which in turn is of great help for the company.
The company is able to create and retain the superior performance of its members with the
effective use of Porter's generic strategy.
VRIO model:
The internal functioning of an organization is determined with the help of this model which
further helps in identifying the advantages and resources for achievement of competitive
advantage for the company. VRIO stands for value, rarity, imitate and organization . In context
to Merchant and Mills, this framework will help to expand the potential for creation of value for
the company. VRIO model will be determined through the following elements:
 Value – The product or service of the company is determined through the need which is
provided through the capability of the company. This factor will help the company of
Merchant and Mills to recognize the main reason behind demand of products and services
to the customer. The company is also able to direct its resources for the accomplishment
of goals and objectives with the help of this element.
 Rarity – The availability and accessibility of resources in accordance to the competition
in market is considered with this element. In context to Merchant and Mills, the element
of rarity in combination with value helps to achieve success in an effective manner. There

are different exclusive ways found by the company in order to enhance the experience of
customers with the help of this element.
 Imitability – This element is similar to the element of rarity but there is a minute
difference among them. The main difference is the imitation of business model of
company (Duvier, Anand, and Oltean-Dumbrava, 2018). In order to gain a competitive
advantage, the company of Merchant and Mills would consider the solution of imitation
as an effective source for enhancement of performance of the company.
 Organization – The working structure of the company will help in providing an internal
picture for achievement of progress and growth for the company. The company of
Merchant and Mills in the final stage will consider this factor in order to gain competitive
advantage for the achievement of sustainable growth in the company.
SWOT Analysis:
The company of Merchant and Mills will analyze its internal functioning with the aid of SWOT
analysis. This internal analysis will help in determining the strength, weakness, opportunities and
threats for advancement in competition in the market.
Strength
 The quality of its fabric is very pure
and authentic.
 The packaging of its products is very
appropriate.
Weakness
 The rates of its products is very quite
high in comparison to its competitors.
 The networking of the company is not
that strong.
Opportunities
 The customers are more inclined
towards good quality products which
can prove to be a good opportunity for
the company.
Threats
 The prices of other competitors is low
in comparison to the company which
can prove to be a threat for growth of
the company.

P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.
The revenue of company can be improved with the use of Ansoff's growth vector matrix
which helps in finding opportunities for development of new products in the market. In context
to Merchant and Mills, the growth of company will be analyzed through Ansoff's growth vector
matrix which is mentioned below:
 Product development – The introduction of new product in the market will help in
developing the product in the company. In context to Merchant and Mills, the application
of product development will help in enhancing the value of brand of the product (Else,
2018). There can be major development in product with the creation of new offering and
investment in research and development for achievement of success in development of
product.
 Diversification – There is a very high risk in consideration with the association of
growth of the company. In context to Merchant and Mills, it aims to work on the new
revenue opportunities for the reduction of risk in the company. There should also not be
complete focus or targeting on one product.
 Market penetration – The existence of company in the product line will help in
increasing the market share. There is less risk with the use of market penetration in
comparison to other strategies. In context to Merchant and Mills, the enhancements and
improvements in the level of sale with expansion of network of dealers will further help
in enlarging the segment of customers for achievement of market penetration strategy.
 Market development – The entry of existing products in the new market will be
considered with the help of market development. The main requirement for development
in market is examination of market with the help of research. In context to Merchant and
Mills, the entry in new market requires a lot of effort which further leads to entry in the
international market. There can also to tie up with other companies that are selling the
same products with entry in other domestic market.
In context to Merchant and Mills, the strategy of diversification will be the effective strategy for
expansion of operations and earning of profits in the market (Gkoltsiou, and Paraskevopoulou,
2021). The high experience in same field will lead the company to use the effective strategy of
diversification.

M1 Discuss the options for growth using a range of analytical frameworks to demonstrate the
understanding of competitive advantage within an organizational context.
The company is able to gain competitive advantage for its effective performance in order
to strengthen its operational functioning in comparison to the competitors. It will further help the
company to earn profits and strengthen its position in the market. In context to Merchant and
Mills, the services of product quality, branding, cost structure and service of customers will help
in enhancing the value of the company (Grima, Spiteri, and Romānova, 2020). The strategy of
differentiation will help in gaining competitive advantage for the uniqueness of the company.
P3 Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source.
The capital of the company can be raised through different sources of funds that helps in
expanding the business into new areas. The investment in research and development plays a
significant role for raising funds in the company. There are various sources that are available to
the companies which are:
 Retained earnings – The income that is left after the expenditure is retained earnings.
The companies can earn huge profits by selling the products at prices which are higher
than the incurred costs. The funds could be raised with the use of retained earnings for
growth of the company.
Advantages
It is the most effective source for raising of funds due to its availability at cheap cost and the
company is also able to strengthen its financial position with the use of retained earnings.
Disadvantages
The stakeholders of the company are not able to gain full benefit with the use of retained
earnings.
 Debt capital – The use of source of debt capital is mostly used by the companies as it
helps in expanding the operations of business for growth of the organization (Grima,
Spiteri, and Romānova, 2020). Traditional loans can be borrowed from the banks
publicly in order to strengthen its financial capacity.
Advantages

The payment of interest will help in reducing the tax and there is no need to share the profit with
shareholders.
Disadvantages
The interest need to be paid out even at the time of loss and accumulation of less income of the
company.
 Equity capital – The selling of shares to the investors which enables them to become
stakeholders can even help in raising the stakes of ownership. The capital can be raised in
private companies through IPO which is an initial offer from the public and public
companies uses public offer in FPO.
Advantages
The company does not rely on creditors but rely on investors for repayment of finance.
Disadvantages
The selling of shares distributes the control which arise the funding of small business through the
role of venture capitalist.
In context to Merchant and Mills, funding of Retained earnings must be used by the company in
order to provide a source of finance which is considered less expensive for the company. The
safety and security of the company is ensured with the use of this source (Kumala Dewi, and
Dartanto, 2019). If debt would be used as a source of finance then the company is not required to
owe anything to any other person or company.
M2 Evaluate potential sources of funding and justification for the adoption of an appropriate
source of funding for a given organizational context.
The most appropriate source of funding is Retained earnings in comparison to Debt
capital and Equity finance and is also affordable source of funding. In context to Merchant and
Mills, the company intends to save its expenditure in comparison to the payment of interest with
issuance of bonds and this source is more flexible than rest of the sources.
P4 Design a business plan for growth that includes financial information and strategic
objectives for scaling up of business
There are various elements that determine the operational functioning of company
through financial projections, marketing objectives that further helps in demonstrating an

executed business plan. A company can run successfully with the help of well defined business
plan (Park, Cho, and Heo, 2021). In context to Merchant and Mills, business plan includes:
 Executive summary – The operational functioning and location of the company with its
leadership style helps in determining the mission statement of the company.
 Products and services – The process of manufacturing and production will help in
engaging the detail of product line of the company.
 Market analysis – The operational functioning of company can be maintained through
the analysis of company in order to secure the position of company. The needs and
demand of the customer can be identified with the long term analysis of shares in the
market.
 Marketing strategy – The use of marketing mix will help in retaining the customers for
a longer time in order to develop strong marketing strategy by the company.
 Financial planning – The source of finance and financial status of the company can help
in expanding the operations which in turn will provide a brief description of the financial
capacity of company.
 Budget – In order to retain in the market for a longer time, the factor of budget is
considered as a very important part of business plan.
Financial budget:

M3 Develop an appropriate and detailed business plan for growth and securing investment,
setting out strategic objectives, strategies and appropriate frameworks for achieving
objectives.
The strengths and weakness of operations of business can be achieved with a well
developed business plan (Sweeting, 2022). In context to Merchant and Mills, the short and long
term objectives of the company can be achieved which further helps in securing the investment
with aid of an effective tool.

P5 Assess exit or succession options for a small business explaining the benefits and
drawbacks of each option.
Small business has a number of entry options in the international market for expansion of
its operational activities on an international level. A plan is demonstrated through the exit
strategy for sale of company to investors and other firms which is made by leader of the
organization.
Entry options:
 Partnering – Whenever a company desires to enter in the foreign market then the option
of partnering is used by the company (Tennent, 2020) . In context to Merchant and Mills,
the culture pursued by the company is different in comparison with the local partners
which in turn enables an effective strategy for expansion in international market.
Benefit:
The sharing of costs excludes a positive impact which also reduces the amount of investment.
Drawback:
The distinct culture makes it very difficult to cooperate through entry in different market.
 Exporting – The sales of goods in different country is determined through exporting. In
context to Merchant and Mills, the company uses this method for expansion in
international market.
Benefit:
The entry in foreign market can be really quick and there are lesser chances of risks associated
with the company.
Drawback:
The low level of knowledge asserts low control which negatively affects the environment with
the use of transportation.
Exit options
 Acquisition – In exit strategy, when one company is acquired by another company then it
is termed as acquisition.
Benefit:
Negotiation is done in the prices and other details of the company.

Drawback:
It is an expensive process in comparison to other options as well as time consuming.
 IPO – This exit option is pursued in various business in order to earn higher profit.
Benefit:
The company can get higher profits by selling the same in comparison to other exit strategies.
Drawback:
This strategy consumes a lot of time, money and effort.
M4 Evaluate exit or succession points for a small business comparing and contrasting the
options and making valid recommendations
In order to further avoid difficulties, the entry and exit options can be achieved through
the wise choice of business. Exporting is considered as an appropriate option for gaining
advantage in order to have an advanced reach in the market (Yayla, Yeniyurt, Uslay, and
Cavusgil, 2018). It is suggested to choose the option of merger for exit in order to continue the
existence of company.
CONCLUSION
From the above report it is concluded that, an organisation can be developed with an
effective business plan which should be planned in a very brief description. There are various
methods, ways and strategies that are to be considered for the successful operation of a company.
The organisation can also strengthen its financial position by use of various financial resources
and the organisation can gain competitive advantage through the use of Retained earnings. The
company can also expand on international level through entry and exit options that are available
to the company. There are various advantages and disadvantages associated with the company in
order to strengthen its current position in the market.

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