Planning For Growth

This report discusses the key considerations for evaluating growth opportunities in a business, including cost leadership, differentiation, and focus strategies. It also explores the sources of funding with their advantages and disadvantages, and provides a business plan for the growth of the business. The document type is a report and the assignment type is planning for growth.

Planning For
Growth

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
TASK 1............................................................................................................................................1
P1. Analyse the key consideration to evaluate the growth opportunity in the business..............1
P2: Evaluation of growth opportunities using Ansoff's growth matrix.......................................3
TASK 2............................................................................................................................................5
P3. Identify the sources of funding with their advantages and disadvantage..............................5
TASK 3............................................................................................................................................6
P4 Business plan for growth of the business...............................................................................6
P5. Succession or exit plan for small business with its advantages and disadvantages..............9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Planning is the term which is used to make strategies in order to perform or execute their
work in order to achieve something. In context of organization, management plan each and every
thing and make sure to implement in well manner to achieve business goals & objectives. To
gain sustainability and growth, organization has to build plan which include various strategies
which required for the completion of their operational activities (Ashish and Narinder., 2015).
This report based on Airdri Ltd for the better understanding of this concept. Company deals in
range of Hand dryers and provide variety in it. This project report includes various topics such as
key consideration for SME which helps in evaluating growth opportunities; identify the potential
source of funding along with its benefits or drawbacks. In addition, develop a business plan and
communicate that how to intend its scaling and various ways where small business owners can
exit the business along with implementation.
MAIN BODY
TASK 1
P1. Analyse the key consideration to evaluate the growth opportunity in the business
In context of Airdri Ltd, Porter’s generic model helps the organization to identify the key
consideration. It farther helps in providing growth in the business operations as well as provides
competitive advantage. It includes some stages to enhance their overall performance which
mentioned below:
Cost leadership: It is refer to the low cost strategy where management set low price for
their products in order to target huge number of customers. It is beneficial for small organization
to gain competitive advantage. It context of Airdri Ltd, it can helps in attaining various benefits
such as attract large customers, increase demand which automatically increase the sales as well
as revenue through keeping low prices of their products and services.
Differentiation: In this strategy, business deals in the variation such as manufacture
different varieties of products to attract different perspective customers (Bakhtiari and et.al.,
2015). Managers of Airdri Ltd can follow this strategy through introducing new products with
attractive features at reasonable price.
Focus: In this strategy either company focus on cost leadership or differentiation because
both will be following at the same time is quite impossible. Small organizations such as Airdri
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have to make sure that which strategy is suitable for their business and which one provide more
benefits. Large organizations can adopt both strategies the same time because they have enough
capital to invest.
From the above discussion it has been concluded that Airdri should focus on cost
leadership strategy because initially they have to make strong customer base which increase their
products demand or provide reasonable profit. So they have to keep their product low in
comparison to their competitors.
PESTEL analysis:
Political: Under this factor, government make some policies which required following
such as trade or tariffing policy. In context of Airdri, UK has stable government which is
beneficial for them to operate their operations or maximise productivity or profitability.
Economical: It includes those factors which impact the overall profitability of the
economy such as GDP, inflation rate, exchange rate etc. UK is developing company so they have
opportunity to grow or increase their production as well as profitability. It helps the Airdri
Company to sustain in the market for longer period.
Social: It is the factor which includes the needs of consumers, their values, culture etc. So
Airdi Company has to focus on consumer’s needs and preference regarding product which
continuously change as per the individual or market demand.
Technological: Change in the technology always creates opportunity for the business or
make them able to attract large number of customers which maximise the sales or revenue
(Frank, Gray, and Schwartz, 2014). Use of latest technology will improve the overall output
which reduces the cost or maximise the profit margin. It helps the Airdri Company to provide
competitive advantage to their rivalry firm.
Environmental: It include those factors which impact the organization in favourable
condition such as business have to maintain consistency in the work through following all the
laws regarding business environment such as minimum wage law, discrimination, climate
change etc. In context of Airdri, company all the environmental rules which create opportunity to
move further or smoothly run their operations.
Legal: It includes all the laws or regulations which required implementing otherwise
government will interfere which is not good for them. Airdri Company follows all the rules &
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regulations which make them able to achieve business goals & objectives in order to maximize
productivity or profitability.
P2: Evaluation of growth opportunities using Ansoff's growth matrix.
Ansoff's growth Matrix: It is the strategic planning tool which help the top management
to build strategies for the future growth. With the help of it, organization able to get comparative
advantage and it adopted by the Airdri Ltd which discussed below:
Market Penetration: Under this strategy, organizations has less risk because they
promoter existing products in the existing marker. It makes them capable to get growth or
increase market share (Hellum and et.al., 2015). In context of Airdri Ltd, they can follow this
strategy in order to get sustainability in their business or maintain its position in the market for
longer period.
Advantage
 It helps in maximising sales as well as profit margin because they are families with the
existing market conditions or customer's demand.
 Offer products on low price as compare to their competitor which make them capable to
capture the large market share.
Disadvantage
 Chances of innovation reduce which limited the sales as well as revenue of the company.
It will also reduce the expansion of business operations in the new market.
Market development: In this strategy organization enter in the new market with existing
product. Basically, company geographically expand their business to target new customers. In
context of Airdri Ltd, they can follow this strategy to entered into new market with existing
products to maximise their sales and revenue.
Advantage:
 It helps in targeting huge customers which make them capable to increase their sales
through market development.
 It further beneficial in making strong customer base and able to achieve their vision or
goals.
Disadvantage:
 In order to enter new market is quiet risky which required more capital investments or
effective promotional strategies.
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 They required intense market research to know about customer's taste & preferences then
choose the market to enter.
Product development: In this strategy, business introduces new products in the existing
market which is beneficial for them because they already have existing customers (Light, Wang
and Gomez-Lobo, 2017). It enables the business to survive in the competitive market through
developing new opportunities which maximise productivity as well as profitability.
Advantage:
 It provides competitive advantage when they introduce new product in the marker along
with innovative feature. It further helps in maximising number of customers because of
new product development.
Disadvantage:
 At the time of developing new products for strong customer base they have to generate
demand through identifying their needs & preferences. If organization fail to know then it
negatively impact the business.
Diversification: In this strategy, business introduce new product in the new market
which is highly risky. It is kind of business expansion in the new market so they have to make
their strategies accordingly. This strategy can be followed by the Airdri Ltd in order to launch
new product in the newer market segment to maximise productivity as well as profitability
through targeting new customers.
Advantage:
 It helps in maximising sales as well as revenue or provide huge growth in the market with
the help of diversification (Lima, Almeida and Oden, 2015). With the help of
diversification, organization can capture market share.
Disadvantage:
 This strategy involves huge risk because entering into new market with new product is
very risky. Along with this, company required huge capital investment for diversification.
Above mention strategies help the Airdri Ltd to grow or maximise their sales as well as
revenue. Company should adopt market development strategy where they launching existing
products in the new market.
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TASK 2
P3. Identify the sources of funding with their advantages and disadvantage
In organizational context, they required finances in order to perform their operational
activities which help in maximising their final outcomes. There are various sources of funding
which used by the business to get financed and perform their activities. Some of the source of
funding mentioned below which is used to provide for small organizations such as Airdri Ltd
along with its advantage or disadvantage:
Internal sources of funding:
Owner's investment: In the beginning, owner use their money as capital investment
which is very important to have. Most of the organizations face the failure in the initial stages
because of lack of adequate finance in the organization.
Advantage:
 There is full control over finance and they make payment decisions as per the
requirement without taking permission from others.
 It improve the overall value of the project because it does not include the debt which
generate the risk.
Disadvantage:
 It may have negative impact because all the invested money it belong to owner.
 If they use external source of money then they get tax benefits from overall profit.
Most of the organizations limit their internal sourcing or they prefer to take finances from
outside of the organization which comes under external sources which mentioned below:
External source of funding:
Bank loan: It is the most common or best source of external funding which is used by
organization in order to fulfil their operational requirements (Padma and et.al., 2015). Airdri Ltd
can borrow money from banks for short term as well as long term duration with predefine
interest rate which organization have to pay. This source of funding has some advantage or
disadvantage:
Advantage: Banks provide money in terms of loans to the individual as well as
organization as per their requirement. Interest rate is fixed which they have to pay according to
the time period which they getting loan.
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Disadvantage: Banks will provide loan against the security, so if the not able to pay on
time then banks will repay through selling their assets.
Overdraft: It is kind of mutual agreement where parties get the facilities to extend their
credit limits. Agreement will be signed between companies or banks with some terms and
conditions. It has some benefits or drawbacks which need to analyse and it mentioned below:
Advantage: It helps in resolving their financial issues at the time of emergency when
business required money. For example: managers of Airdri get the money on immediate basis to
fulfil the requirement of money.
Disadvantage: If organization crosses their limit of spending then they have to pay
interest which is very high in comparison to normal rate. Small business such as Airdri enables
to afford it.
Airdri Ltd adopted bank loan as a source of funding for their organization. They can
borrow money from banks as per their requirement such as short term or long term period.
TASK 3
P4 Business plan for growth of the business
Business plan is the written document which is produced by the organization in order
achieves their business goals & objectives. This document includes the various strategies such as
objectives of the company, marketing strategy, financial analysis, budget etc. Airdri Ltd produce
business plan and its main purpose are to attract large number of investors to generate their
interest to invest in the new venture of Hand dryers with fragrance systems ( Rajesh and et.al.,
2015). All the relevant information for the business plan is mentioned below:
Vision: Is to expand their market or able to introduce range of products in the world or
improve their brand name in the global market.
Mission: Mission of Airdri Company is to attract large number of customers through
providing quality product which make their experience better.
Objective: Main objective of the company is to earn high profit margin through
increasing demand of their products. Airdri set their objectives to earn around 15% in the next
financial year.
Financial information: Airdri Ltd focuses on funding because in order to implement
their business plan they required enough money so they have to arrange it before introduction of
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new product. Company can raise funds from various sources such as taking loan from banks,
owner use their saving as capital investments, overdraft etc. Airdri choose the bank as sources of
funding, here they have to pay low rate of interest which help the business to launch their new
product successfully such as Hand dryer with Fragrance. Company also focus on promotional
strategy for new products which helps in maximising profitability of the business. Estimated
budget for the new product development is mentioned below:
Estimated Budget:
Particular 31/12/16 ($) 31/12/17 ($) 31/12/18 ($)
Employing technology
expenditure
10000 - 8000
Promotional cost 10000 6000 2000
Publicity cost 1000 6000 3000
Listing cost 9000 6000 5000
Grooming cost 9200 6000 2000
Total Cost 39200 24000 20000
Internal analysis: With the help of internal analysis Airdry Ltd able to identify their
strength, weakness, opportunity and threats. It help in providing competitive advantage which
help the managers to make their future decisions.
Strength Opportunities
Airdri Ltd has strong customers base which
helps in capturing market share through
providing quality work as per demand.
Company has greater opportunity to expand
their business through introducing new
products in the market with technology
advancements.
Weakness Threats
Company suffer from lack of knowledge Due to high competition in the market Airdri
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regarding consumer's needs. So they have to
include advanced features in their products.
affected because it influence their productivity
as well as profitability.
Income statement projection:
Particulars 2020 (£M) 2021 (£M) 2022 (£M) 2023 (£M) 2024 (£M)
Sales 19 22 20 17 26
Expenses:
COGS 7 9 5 6 7
Depreciation 0.8 0.8 0.8 0.8 0.8
Advertisement 1.2 2.5 1.1 2.3 1.8
Rent 0.5 0.5 0.5 0.5 0.5
Salary & Wages 1.8 1.9 2.1 2 1.2
Furniture & Equipment 3
Travel 0.1 0.3 0.4 0.2 0.1
Interest Exp. 3 3 3 3 3
Total Expenses 17.4 18 12.9 14.8 14.4
Net income before tax 1.6 4 7.1 2.2 11.6
Income tax exp. 0.2 1.5 2.8 1.2 2.9
Net income after tax 1.4 2.5 4.3 1 8.7
Cash flow projection:
Cash Flow
Particulars 2020 (£M) 2021 (£M) 2022 (£M) 2023 (£M) 2024 (£M)
Cash Inflow
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Investment 5000
Credit sales 2000 4500 3000 4500 1500
Total Inflow 7000 4500 3000 4500 1500
Cash Outflow
Fixed: Rent & Electricity 3000 2500 1500 2000 1200
Variable: Material 2500 350 200 3500 150
Total Outflow 5500 2850 1700 5500 1350
Net cash Inflow 1500 1650 1300 -1000 150
Opening balance 0 1500 3150 4450 3450
Closing balance 1500 3150 4450 3450 3600
P5. Succession or exit plan for small business with its advantages and disadvantages
In the business environment, every organization affected due to various factors such as
political, social, consumer's demand etc. These factors create challenges for the company such as
Airdri Company also get affected due to these elements, so they take necessary decisions
regarding exit plan or succession plan ( Zhang and Ying, 2015). There are various ways which
any organization used to exit market are mentioned below:
Liquidation: It is one of the common exit strategies from market where organizations
sell their business to interesting buyers. It is the permanent winding up the firm because
company unable to pay their debt.
 Advantage: Employees of the company perform without paid salary in the particular
time period. Such as Airdri company develop effective relation with their staff members.
 Disadvantage: Liquidation of business not allows the company to trade in the market
such as Airdri wind-up their operational so they are unable to perform in the trading
market.
Management But In: It is one of the corporate action where outside managers team or
managers purchase the control of ownership in outside of the company and replace existing
market management team.
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 Advantage: Buyers purchase undervalues shares which further provide the benefits when
price of shares increases. Aidri company can generate money through outside business in
the case of undervalue.
 Disadvantage: If new management team will fail to provide success then it will
demotivate the employees and impact their working relations. Change in the management
team will impact the employees of Airdri Company and their performance as well.
Floating shares: It is referring to those shares which can freely bought or sold in the
market without any restriction (Myronycheva, 2019). Shares available in the market for trading
purpose which attract investors to invest at higher floating rate.
 Advantage: Airdri Company can issues shares as per organizational requirements
through inviting people in the open market.
 Disadvantage: If company issue additional shares without any requirement then it will
impact the earning of the company (Minor and Arizpe, 2015). Such as increase in the
floating shares can reduce the earning per share of the company.
From the above exit strategy, organization focuses on liquidation method which helps in
winding entire business operations. It helps in paying unpaid amount such as employees salary,
debt etc.
CONCLUSION
From the above discussion it has been concluded that planning is most essential element
for the organization in order to archive their business goals & objectives. With the help of
various competitive tools such as Ansoff model, PESTEL analysis etc. It helps the managers to
evaluate the market and all the factors which can impact the productions as well as profitability.
So they make their strategies accordingly to achieve business goals & objectives. With the help
of effective business plan, organization performs their task in well manner.
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REFERENCES
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Cultural Communication,.
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