Key Considerations for SMEs in Evaluating Growth Opportunities

UNIT 42
Planning For Growth

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1. Key Considerations for SMEs while evaluating growth opportunities..................................1
Competitive Advantage..........................................................................................................1
New Products and Services....................................................................................................3
Growth Options......................................................................................................................5
Collaboration..........................................................................................................................7
Benefits of Horizontal and Vertical Integration.....................................................................8
LO2. Methods to access funding along with different types of funding.........................................9
Investment Decision Making..................................................................................................9
Sources of Finance...............................................................................................................10
LO3. Business Plan and communicating the intention to scale up by the business.......................11
Business Plan for Bonmarché...............................................................................................12
LO4. Various ways small business owner can exit the business and implications of each option14
Exit: Success and Failure......................................................................................................14
Growth and succession in the family business.....................................................................16
CONCLUSION..............................................................................................................................17
REFERENCES .............................................................................................................................18

INTRODUCTION
Growth is the motive for which each organisation functions within the market place. The
following project is based upon Bonmarché which is a renowned clothing retailer engaged in
provision of women apparel. The project contains growth considerations for SMEs. Additionally,
it encompasses methods to access funding together with different types of funding. Apart from
this, it includes business plan as well as exit strategies.
LO1. Key Considerations for SMEs while evaluating growth opportunities
To attain growth and development, it is important for SMEs to take into account certain
key considerations. Furthermore, resources, capabilities and core competencies provide aid to
organisation in gaining an edge over rivals (Anatolie, 2019). The same are analysed in context of
Bonmarché as under:-
Competitive Advantage
Basis of Competitive Advantage
Resource: The main resources of Bonmarché include human resource which is
responsible for producing fashionable clothes for women. Other types of resources held by it are
physical, technological and financial, that aid in attaining growth.
Capability: The fashion retailer has the capability to gain access into new markets by
capitalising upon the available resources.
Core competency: The core competency of the respective firm lies in its approach to
market research and innovation owing to which it is able to cater to the needs and demands of
customer base.
Porter Generic Strategies
Michael Porter is the management specialist who first started the analyses of the business
using 3 generic strategies. These strategies are discussed as follows:-
Cost Leadership: The best way to beat the level of competencies is to grab the distinct
market position. Through various measures but according to cost leadership strategy there are
two ways to attain the organisational objectives by focusing on the costings. One is to minimize
the manufacturing cost of product for higher profit growth. As other factor is to decrease the
actual price to get ahead of the competition and catch the customer attraction to cover more of
the market share.
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Differentiation: Making the brand and product more classified is the focal point of
differentiation strategy (Bautista, 2019). This is the effective measure to increase the popularity
of brand. Differentiation can only be achieved by continuous innovations and trend adoption
Focus: It is necessary for a SME like Bonmarché to focus dynamically on both of the
strategies to achieve the desired goals. In the cost focus, the major stress is put on the lower
market niches as it is to make sure to implement the lowest possible cost. The another category
in market growth focus is differentiation, it is performed by providing the product and services in
a unique segment for the upper level branding of business and to get the targeted market share.
On the basis of above analysis, cost leadership is ascertained to be the best strategy for
Bonmarché as it enables the firm to reduce the overall cost of operations and enhance the profits.
PESTLE Analysis
Bonmarché is one of the most popular brands among the clothing market of United
Kingdom. The management of this company has applied PESTLE analysis as under:-
Element Description
Political UK Trade policies are constant as the ruling party is common since a long
time period. It helps in setting up of fix rules and regulation for the ethical
working process of Bonmarché.
Economical Due to the low inflation rate and flexible economy development UK has
always been a favourable destination for the FDI (foreign direct investment).
Thus it gives certain growth chances for SMEs such as Bonmarché to
enlarge their brand value scale.
Social UK is ranked as the worlds third best country, due to the higher literacy rate
and its multicultural environment. Thus, Bonmarché gets more spending
customers and it becomes easier to target and position them.
Technological Major SMEs of the UK set up new technological trends in the domestic as
well as in international market. As the emerging technologies are needed to
be adopted by the business to maintain the growth and survival in market.
Legal Certain regulations are there for the commencement of new trade. According
to the UK business laws there is a balanced level of flexibility and rigidity
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(Brinckmann, 2019).
Environmental Issues regarding the climatic and whether conditions which affects cycle of
trading. In the present time as the country is not going through good climate
situations. Corporations are needed to take genuine initiative in the way to
solve out the problem to increase the growth and moral of organisation.
New Products and Services
Development of products and services as a basis for growth
For a SME to attain growth and development in a rapid manner, organisations like
Bonmarché should focus upon new product and service development procedures. This would
provide aid to the corporation in gaining the attention of large number of customers in a rapid
course of time, thereby appealing to them with high quality products offered by company at
market place.
Portfolio Strategies
It is important for Bonmarché to take into account portfolio strategies so as to facilitate
growth and enhancement of scope of operations.
Boston Consultancy Group Matrix
BCG matrix is the systematic module first introduced by Boston Consulting Group. The
main aim of using BCG matrix is for the planning of long term future oriented decisions. In this
matrix there are four quadrants classified respectively as dogs, question marks, star and cows.
Each segment represents the particular shares of market.
Dogs: This is the product segment which holds low market share as opposed to rival
firms and thus function in a steadily growing marketplace. In general, they are not worth
investing in because they generate low or negative cash returns. Within the confines of
Bonmarché, footwear falls under this category (Casas, 2019).
Cash Cows: This product segment is the most profitable brands and should be “milked”
to provide as much cash as possible. The cash gained from “cows” should be invested into stars
to support their further growth. In relation to this, dresses of Bonmarché pertain to this category.
Star: This product segment operates in high growth industries and maintain high market
share. Stars are both cash generators and cash users. They are the primary units in which the
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