Planning for Growth : Guildford Tyre Company

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Planning for growth

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Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Analyse key considerations which will help an organisation in evaluating growth
opportunities................................................................................................................................1
P2 Apply Ansoff's matrix to evaluate opportunities for growth which available for
organisation.................................................................................................................................5
TASK 2............................................................................................................................................7
P3. Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source............................................................................................................7
TASK 3............................................................................................................................................8
P4 Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business............................................................................................8
TASK 4..........................................................................................................................................13
P5 Assess exit or succession options for a small business explaining benefits and drawbacks
...................................................................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16
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INTRODUCTION
Planning for growth for every business organisation is very essential because it is the
main factor due to which firm can aim at achieving the established targets. Moreover, it is an
strategic business activity adopted under which the owners of business track and plan for organic
growth that enable them to generate more and more revenue. This allows businesses to
effectively allocate limited resources towards a centred goal. Furthermore, business growth
helps in bringing change within small organisation because it primarily aims at making business
well established into the marketplace. It includes elements of company where consumer are able
to see value of products. This report is based on Guildford Tyre Company which is a fully
independent tyre distributor. The company's prime products includes tyres for all types of
vehicles which includes car, MPV, 4x4, commercial as well as motorcycle. Furthermore, the
company also offers additional services which are four wheeler alignment, laser alignment,
servicing as well as repairs etc. It is a private limited company situated in United Kingdom.
Moreover, this report aims at covering growth opportunities through Ansoff's growth model.
Furthermore, it will cover various methods through which organisation access funding. However,
this report will cover aim covering the business plan and various exit and succession strategy
which can be used by respective company in order to understand benefits and drawbacks of each.
TASK 1
P1 Analyse key considerations which will help an organisation in evaluating growth
opportunities.
Small Business usually aim at expanding their business activities by adopting various
growth opportunities which are available in marketplace in order to capture a share into the
marketplace(Alden, 2017). Moreover, growth opportunities helps in overall development of
overall organisation and the turnover of the respective company trends to improve. This
ultimately results in improving quality of products and services provided by respective
organisation. Therefore, Guildford Tyre Company should aim at implementing the best growth
opportunities in order to expand its business operations worldwide. The most common as well as
effective framework for identify business opportunities in the market includes porter's generic
model and pestle analysis. Following are the growth opportunities available in the market:
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Porter's Generic Model: It a model that aims at describing how a company can pursue
competitive advantage across the available market scope. Moreover, porter's generic model
basically includes all those strategies which help organisation in finding opportunities to grow
business. Company can pursue any of these strategies as it will help in attracting more
customers towards organisation as well as increasing profitability (Beatley, 2014). Guildford
Tyre Company will be able to capture large market share by implementing this model
effectively. The four major sub categories of porter's generic model are:
Cost Leadership: This strategies will help company to sell its products in competitively
lower rate and become cost leader of the industry. Under cost leadership company
basically aims at becoming leader in that particular industry. By adopting this strategy
company can sell its products at lowest prices as compared to its competitors by lowering
manufacturing cost and maintain quality of product. Moreover, Guildford Tyre Company
can also achieve economies of scale and preferential access of raw materials and several
other factors.
Differentiation: In this strategy the company primarily aims at selling the products in
unique manner. Majorly one or two attributes are selected by firm that helps to capture
many buyers. Guildford Tyre Company can also make use of differentiation strategy and
provide products to customers which are unique and never sold before.
Focus: It is a generic strategy which focuses basically on narrow competitive scope.
Segment of customers are selected which the company aims at targetting. Under focus
generic strategy there are basically two variants:
Cost Focus: Under cost focus company generally seeks to make cost advantage. Key to
make success of generic focus strategy is ensure adding some extra value to niche market.
Guildford Tyre Company can adopt cost focus strategy as it will help organisation to target a
segment of group on the basis of cost.
Differentiation: Under differentiation strategy the main focus of companies is to provide
exactly different products has compared to firm's competitors. However, Guildford Tyre
Company can also make use of this strategy.
Therefore, in order to effectively attain growth in the marketplace and successfully
acquire good market share, Guildford Tyre Company is suggested to implement cost leadership
generic strategy during the initial stage (Bevilacqua and et.al., 2015). Under which the company
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will have to reduce its manufacturing cost while keeping the standard quality products.
Companies that have low-cost leadership typically have more sustainable business position in the
market. However, through this cost company attains sustainability.
PESTEL Analysis: It is a business tool which is generally used to analyse and identify
macro-environmental factors which impacts the overall organisation's performance. Moreover,
this helps an organisation to effectively understand the surrounding of business environment .
Following are the factors included under PESTLE analysis:
Political Factors: These factors basically includes the level of government intervention
in business activities. UK is primarily a fair and stable country which have plenty of
opportunities (Blackburn, Hart and Wainwright, 2013). Moreover is it a politically stable
country. Guildford Tyre Company have been enormously affected by the political factors of UK
government. It has impacted the company in negative as well as in positive manner. The
continuous emphasis of government on small business like Guildford Tyre Company has helped
company in developing. Government proactively makes decision for these type of business
organisation.
Economical Factors: Economic factors are those factors that significantly impacts the
overall business performance. Major factors included are: economic growth, interest rates,
inflation rate, disposable income of consumers as well as unemployment rate. Such factors
directly or indirectly affects the overall functioning of company. Guildford Tyre Company can
effectively make use UK's economic condition. However, the company has growth opportunity
because UK has large population which primarily allows small markets to make profits.
Social Factors: These factors basically represents the demographic characteristics that
are: customs, values and norms which are adopted by the customers. Population trends basically
highlights age distribution, income distribution, lifestyles and many others. These factors are
very important under UK market because the standard of people is ver different. However,
Guildford Tyre Company has growth opportunities due this factor because if the standard of
living of people is high ultimately people will purchase cars that will impact the oversale of tyres
under UK market.
Technological Factors: Technology factors basically consists of innovation that are
adopted by respective company (Breheny, Rookwood., 2013). It normally includes technological
changes, technology incentives, automation and several other factors which impacts the overall
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development of an organisation. Moreover, UK being an economically developed company has
great access to technology. Guildford Tyre Company should aim at adopting the most
appropriate technology to produce tyres for consumers. Further under UK market Guildford Tyre
Company have opportunity for growth because there plenty of internal competition which
stimulate to grow (Cordeiro, 2013). However, if Guildford Tyre Company adopts cost leadership
generic strategy then technological factors will play crucial role. Because these are those factors
of the organisation which are responsible for manufacturing products with proper efficiency.
Environmental Factors: These factors majorly effects the business organisation. It
basically includes environmental aspects which are: weather, environmental offsets as climate
change. These changes in environment impacts the business because production of raw materials
is affected. However, Guildford Tyre Company have huge scope for growth, they should aim at
producing ecofriendly product. This opportunity for growth will enhance the company reputation
in the market.
Legal Factors: These factors are interconnected to the political factors of a country. But
they are generally specific in nature which consists of employment laws, copyrights, patent laws
and several others. However, UK government has implemented various laws for the betterment
of employees as well as the consumers. Some the major laws are: employment act, maternity and
paternity leave and many others. However the copyright introduced by government has helped
the Guildford Tyre Company in many ways.
So, it can be concluded that both porter's generic model as well as identification of pestel
analysis is very essential. Both of these factors helps the respective organisation to make
decision regarding the growth opportunities available to the company.
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P2 Apply Ansoff's matrix to evaluate opportunities for growth which available for organisation.
Ansoff Matrix is basically a tool which provides framework for the top management of
the company to invent strategies for future growth. It aims to evaluate opportunities for
companies that will help them to increase overall sales (Douglas, 2013). However, it is a matrix
which shows four different strategies that can help Guildford Tyre Company to grow and
effectively analyse risk associated with each of the strategy. The four strategies of ansoff matrix
are mentioned below:
Market Penetration: This is one of the least risky strategy under the Ansoff's Matrix.
Herein the company primarily focuses on increase the overall volume of sales. However
the company seeks at selling more and more products in the market through aggressive
promotion and distribution strategy (Eddleston and et.al., 2013). Guildford Tyre
Company can adopted the strategy of market penetration in order to increase the sales of
the company in market. This can be accomplished by decreasing prices of the products or
by increasing promotional strategies and it can even aim at acquiring rival of same
market. It is least risky growth option.
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Illustration 1: Ansoff Matrix
(Source:Ansoff Matrix,2019)

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Market Development: Under this strategy the aim focus of firms to expand its business
operations into new markets. Expanding basically into new geographical areas, regions or
customer segmentation according to their wants and purchasing power. However,
Guildford Tyre Company should development its market to capture good market share.
Company can cater different customer segments or enter into foreign market to expand its
business operations internationally.
Product Development: In this strategy firms basically tries to introduce and create new
products and services in existing market in order to attain good market growth. This can
only be implemented by firms when they have strong understanding of current market
situation (Gabrielsson and Gabrielsson, 2013). However, Guildford Tyre Company can
introduce new products or they can also acquire competitor's product and merger their
resources in order to create new product which effectively meets the needs of customers.
Diversification: Diversification is one of the most risky strategy because it requires both
product as well as market development. However, under this the prime focus is to reach
out new markets with introducing new products (Eggers and et.al., 2013). There are two
ways through which diversification of products can be done: related diversification under
this the organisation generally stays within the market segment with which there are
familiar however the unrelated diversification is basically when an organisation moves
into different industry which is completely unknown to them. Guildford Tyre Company
can also aim at adopting unrelated diversification under which they should expand there
business operation in different product line.
Guildford Tyre Company has adopted market development strategy in order to expand its
business operations in Germany. Through this strategy the company's overall sales volume will
be increased. Therefore, in order to increase company's profitability this strategy will be very
useful for respective company.
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TASK 2
P3. Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source.
Funding is very important factor for organisation to complete its business activities.
There are various sources available for funding which help company to fulfil its financial
requirements. Guildford Tyre Company is small size company so it is very essential for this
company to chose correct option for funding. There are various potential sources of funding to
business and it is very important to carefully analyse these sources with their pros and cons
(Hilber, 2015). Funding sources available for this organisation are bank loans, angle investor,
peer to peer funding, small business administration loans. All these sources have some benefits
as well as drawbacks so careful evaluation of these sources is very important. Potential sources
available to Guildford Tyre business is mention below:
Bank Loan: This is the most common used source of funding and it is most frequently
used by many companies. In simple term, bank loan can be refers to borrowing of money or
finance from bank for operating business activities. Taking loan from bank is quite tricky process
as there are various types of financial option available with different interest rates. Benefits: Bank offered a wide range of options company about finance loans as well as
their payback time period. For small business like Guildford Tyre it is very convenient
and accessible source of funding. Bank loans offerers tax benefits to business as by
taking loans from bank company can enjoy some tax relies.
Drawbacks: Bank loans are very lengthy process as bank needs to verify each and every
details and credentials about business before sanctioning loans. It is disadvantages for
bank loans that it is very time consuming and long process. Banks also have long list of
conditions or criteria that needs to be followed by company.
Angle Investor: These investors are people who are interest in inventing their money in
business, so that business can conduct its operations (Karadag, 2015). Angle investor is the term
given to person who usually have high net worth and provide financial support to small and start
up business. These are the people who are willing to accept risks with limited or no control in
return. Benefits: Angle investors are not very rigid so it is easily possible for Guildford Tyre to
have flexible business agreements. These investors are generally experience in industry
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so it is very helpful for company to get right guidance and it will also help in building
good networks in industry.
Drawbacks: It is very long process to find out right and suitable angle investor for
business. By adopting this source as financial funding, company have to give up a share
of business to angle investor and this leads to loss of degree of control over company.
Interference of angle investor on business operation can leads to problem for business.
Peer to peer: This is the method of borrowing money or lending financial amount for
peer. This source is usually lending loan from other individuals by cutting cost of financial
institution as middleman (Mason and Brown, 2013). Peer to peer financing is also known as
crowd-lending or social lending. This type of lending is done through online platforms by
connecting lender with potential borrowers. Benefits: This is most convenient and fast source of getting funding as it is an online
application. Peer to peer lending also reduces the cost of middle man or other financial
sources and it directly connect borrowers with lenders.
Drawbacks: This source of funding is quite riskier and it is not secured by any
government guarantee. Peer to peer lending is not covered in financial services
compensation schemes so this method is not safe financial sources of lending money.
Guildford Tyre should adopt bank loans as a financial source. Bank loans are very
flexible and it will provide wide variety of options of loan. This will help in selecting best loan
option as well as payback option for conducting business operation (Mason, 2015). Banks loans
are legal and safe option for small size business and it will also provide tax benefits. Owner does
not loss any control over business by adopting this source of funding.
TASK 3
P4 Design a business plan for growth that includes financial information and strategic objectives
for scaling up a business.
For achieving growth in market area it is very important for organisation to plan
effectively. Company should develop an effective and efficient plan in order to attain business in
business. Planning will provide a proper direction to company with a clear picture of business
future. Business plan is a well written description which includes all strategies and business
objective that help business to grow. This document will help in providing direction to business
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and its activities. This will help in identifying steps that Guildford Tyre Company should follow
with how to implement this plan in order to achieve objective of organisation. Business plan of
Guildford Tyre for achieving growth is mention below.
Concept of business
It includes objective of operating business with long term and short term goal of
company. Concept of business will help in identifying idea on which company is operating its
activities (Mazzarol, Clark and Reboud, 2014). Business concept consist of basic information of
organisation such as its products and services, targeted customers or area, unique selling
proposition of organisation that help in achieving competitive advantages from other rival
companies. This organisation is using customer driven approach as its operational strategies.
This approach will help organisation in satisfying needs and wants of targeted customers.
Guildford Tyre Company strategies is to build a strong relationship with customer by providing
high quality products and services.
Products and services of company: Guildford Tyre Company is dealing in a tyre retail
company. Products and services offered by this company is tyres, battery suppliers, car servicing,
exhaust system, alloy wheel repairs, brakes repairs, car types, motorcycle tyres, garage services.
This company is providing high quality products and services to customers build strong brand
image and relationship with customers.
Mission and Vision statement: Mission of Guildford Tyre Company is to deliver high
value products and services to customers. Shot term goal is to attract more customers towards
company and build strong image of company in market. Vision of this organisation is to build
strong global presence and meeting expectations of customers. This company wants to become
highly respected and world class tyre company by providing excellent products and services.
SMART Objective: In order to develop a business plan for growth, Guildford Tyre
Company have to plan a strategic objective. An objective should be specific as well as
measurable and company should be able to achieve objective in set time period (Spaniol and
Rowland, 2018). Guildford Tyre Company company is planning to extend its services to
Germany with the aim of achieve growth. Objective of Guildford Tyre is:
To capture new market area within 6 months in order to achieve 20% growth in market.
To provide quality products and services to targeted customers in order to increase 30%
profitability within one year.
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Analysis of market
Analysing market is very important for organisation. In order to analyse market situation
company have to identify its strengths, weaknesses, opportunities and threats (Ozanne, Biggs and
Kurowski, 2014). For this SWOT analyses of Guildford Tyre is mention below.
Strengths Weaknesses
This organisation is provide different features
in its products products which help in
satisfying customers requirements. Effective
and efficient employees and team is its biggest
strengths. It is conducting proper research to
identify needs to customers and then develop
products according to research.
Weakness of this company is that it is not very
popular among customers and it does not
capture large market share. Business
operations require large amount of finance so it
leads to have direct impact on profitability of
business. High production and labour cost can
be consider weakness of this organisation.
Opportunities Threats
There are various opportunities for Guildford
Tyre as government of UK is take decision
which help small business to grow. Company
can take advantages of advance technology to
develop innovate products (Rauch and
Rijsdijk, 2013). High economic condition of
UK country will be very helpful in growth of
this organisation.
Guildford Tyre have threat from strong
competition in marketplace. There are many
strong rival company with strong brand image
as well as influencing customers. High
competition in industry is the biggest threat for
this organisation.
SWOT analyse will help in evaluating internal and external factors which affect business
and its operations. It will provide direction to company in identifying which factor will help
organisation to grow as well as area where company needs to change its strategies for better
performance of business.
Financial Plan
Financial plan is a document which includes each and every detail about the financial
requirement to achieve goals and objective of organisation. Guildford Tyre business financial
plan is mention below:
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Pre launch cash budget
Cash Flow budget
Particulars Jan Feb Mar Apr May June July
Cash inflows
Investment 8000
Credit sales 2000 3000 3000 4500 1500 3500 4200
Total inflows 10000 3000 3000 4500 1500 3500 4200
Cash outflows
Fixed : Equipment’s 2000 2500 1500 2000 1200 1500 800
Variable : Direct material 300 300 200 300 150 500 300
Total outflows 2300 2800 1700 2300 1350 2000 1100
Net cash flow 7700 200 1300 2200 150 1500 3100
Opening balance 0 7700 7900 9200 11400 11500 13000
closing balance 7700 7900 9200 11400 11550 13000 16100
August September October November December Jan
1000 2000 800 1200 1500 3600
1000 2000 800 1200 1500 3600
200 300 100 600 300 2000
400 500 100 100 400 300
600 800 200 700 700 2300
400 1200 600 500 800 1300
16100 16500 17700 18300 18800 19600
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16500 17700 18300 18800 19600 20900
Feb Mar Apr May June July
3000 3000 4500 1500 3500 4200
3000 3000 4500 1500 3500 4200
2500 1500 2000 1200 1500 800
300 200 300 150 500 300
2800 1700 2300 1350 2000 1100
200 1300 2200 150 1500 3100
20900 21100 22400 24600 24750 16250
21100 22400 24600 24750 26250 19350
Post launch cash budget
Particulars Jan Feb Mar Apr
Cash inflows
Investment 8000
Credit sales 1200 2000 7500 3000
Total inflows 9200 2000 7500 3000
Cash outflows
Fixed : Equipment’s 2500 1200 1500 2500
Variable : Direct material 350 300 250 150
Total outflows 2850 1500 1750 2650
Net cash flow 6350 500 5750 350
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Opening balance 0 6350 5850 11600
closing balance 6350 5850 11600 11950
May June July August September October November December
5000 6500 1200 3200 1500 8200 1250 3210
5000 6500 1200 3200 1500 8200 1250 3210
1100 1500 1200 600 500 500 1200 700
100 500 500 250 450 250 1300 500
1200 2000 1700 850 950 750 2500 1200
3800 4500 -500 2350 550 7450 -1250 2010
11950 15750 20250 19750 22100 22650 30100 28850
15750 20250 19750 22100 22650 30100 28850 30860
Jan Feb Mar Apr May June July
1200 5000 2500 4500 1500 3500 4200
1200 5000 2500 4500 1500 3500 4200
2000 2500 1500 2000 1500 2000 200
300 300 200 250 360 250 500
2300 2800 1700 2250 1860 2250 700
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-1100 2200 800 2250 -360 1250 3500
30860 32160 32360 33660 35860 36010 37510
29760 34360 33160 35910 35500 37260 41010
Monitoring and Control
The last step of business plan is to monitoring and controlling task and activities of
company. Guildford Tyre should not wait till completion of business completion of business plan
to measure its results. Company should evaluate and measure operations of business after each
and every task and analyse weather it matches with expectations or not (Ravetz, 2016). Company
have to take corrective measure whenever required.
TASK 4
P5 Assess exit or succession options for a small business explaining benefits and drawbacks
Exist strategies is refers to a contingency plan which can be executed when organisation
is not performing well and owner is planning to close the business. This strategies is useful when
business is not generating profits. Succession strategies are developed by business when it is
planning to resolve its issues. By this strategies company can survive for longer term and
increase its profitability (Rydin, 2013). Guildford Tyre should adopt succession strategies in
order to grow business and its operations. Different available option for this company is mention
below with their benefits and drawbacks:
Merger and acquisition
Merger is a refer to a process through which company can integrate its businesses with
another business. In merger Guildford Tyre can merge its business operations with another
business in order to create and build new business. Acquisition a process of taking over a
business by other business. When company is take over other business and all its operation that it
is know as acquisition. Merger and acquisition is a combination of combining together to form a
new company as well as total abortion of a company by another company. This strategies have
some advantages and disadvantages for Guildford Tyre company. So below mention is its
benefits and drawback for better understanding of merger and acquisition.
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Benefits: Merger and acquisition will help company to gain competitive advantages from
other rival companies. The biggest advantage of this is that it provide tax benefits to
company and help in increasing monetary leverages (Sahebjamnia, Torabi and Mansouri,
2015). By this strategies company will also merge its power and control over market area.
Drawbacks: This may leads to increase the amount of debts when both of the
organisation have some debts then in combining company it will increase the debts of
company. This process will have huge impact on employees of organisation as there are
chances of lay-off and it will also leads to differences in corporate culture.
Joint ventures
Joint venture is a refers as an business arrangement in between two or more parties for a
specific project or task. In this each and every party should be agree with rule and polices which
help in effective and efficient completion of task. Joint venture is a partnership in a colloquial
sense. Pros and cons of joint venture is mentioned below. Benefits: Joint venture will help company in accessing new market area as well as
developing distribution networks. This is also helpful to organisation in scaling up their
limited capacity (Schneider and Kitchen, 2013). It will create a separate brand name and
giving distinctive look to organisation. Joint venture will leads to increase in goodwill of
organisation.
Drawbacks: This will affect performance of employees due to different working style
and culture. In joint venture there are many chances of clash of culture as well as
management style. This many leads to poor coordination and co-operation between
companies and it will have direct impact on overall task.
Guildford Tyre company should adopt joint venture succession strategies for growth of
organisation. This strategies will help organisation in better utilization of resources as well as
company can also adopt new and innovative technology in order to increase its profitability.
CONCLUSION
The above report basically concludes that planning for growth is very essential for an
organisation. However, without a proper plan small business organisation cannot perform their
operation in the fast moving world. Effective planning helps in mobilising and allocating
resources in desired manner. Business plan also help in providing exact outline of all the
concerned business activities. Under this report the company needs to implement several growth
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strategies in order to capture good market share. Furthermore implementation of correct growth
strategy is very essential for an organisation because future is unpredictable and through correct
growth strategy the company can survive in tough competitive world.
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