Planning for Growth

This document discusses the importance of planning for business growth and explores key considerations for evaluating growth opportunities. It covers strategic models such as Porter's Generic Strategic Model and analysis techniques like PESTLE analysis. The document also evaluates growth opportunities using Ansoff's growth vector matrix. Additionally, it discusses different sources of funding for businesses and their advantages and disadvantages.

PLANNING FOR
GROWTH

INTRODUCTION
Planning brings changes in the business and it looks so important for the business plan.
Planning helps in the connote of growing a business. It focuses on the business goals and
detailed information about the organisation. Preparation mention to the evolution of plan of
action, classification of goals and assumptions of cognitive state (Wynn, 2017). It is an
intellectual process which describes the objectives and build various course of action. Small and
medium enterprises are those companies who have fewer employees and share less market.
Small businesses is a concept of sole trade, start-ups etc. Purpose of these business is to survive
in the market with their strategies and initiatives. Generally, those organisations are considered
as a small business who have 500 or less than 500 employees according to Small Business
Administration (SBA). Airdri is one of the 100 successful businesses in Thames valley which
deals in hand dryers and elevator door detection and situated in Witney, UK. This projection
report consist different subject such as Porter's generic strategic model, PESTLE analysis,
Ansoff's growth vector matrix and origins of financial support etc. Business plan for maturation
which includes elaborated content and strategical impersonal for business and derivative for
successiveness or exit for small businesses with welfare and disadvantage.
TASK 1
P1. Analysis of key considerations for evaluating business growth opportunities and justification
of these considerations
Generally, companies use strategic plans for growth and these are in the form of written
document which is used to communicate goals with employees (Kumar, 2016). To gain the
competitive advantage Airdri can consider various strategic models. This model determines the
profitability of company in the sustainable environment. To analyse the competitive advantages
company can use Porter's Generic Strategic Model.
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(Source: Porter's Generic Strategies, 2019)
Porter's Generic Model: This model is related to the business actions and describe that they are
narrow or broad. Competitive advantages are owned by business over competitors by
contributing goodness and services at lower prices to customers (Kouba, 2017). When company
applies these strategies in product development then this result in three generic plan of action:
Cost Leadership: This strategy involves that being a leader in business environment by
cost fluctuation by which firm will become lowest producer (Denton, Forsyth and MacLennan,
2017). In this company target broad market and offer lowest price. Company keeps cost low as
much as possible and make sure that they will acquire large market within the average prices.
Airdri adopt this strategy by cutting down its production cost. In this company has two options,
either they can set high prices to earn profit or low prices to acquire market. There are various
ways by which company can adopt this strategy such as optimum outsourcing of goods, produce
innovative products at low cost etc.
Differentiation Strategy: It allows firm to be different and unique by creating attractive
and different products in comparison to its competitors (Sarin, 2019). To get success using this
strategy requires good creativity, by doing research of market segments and ability to deliver
high quality products. Uniqueness allows firm to change its premium price for their ideas,
innovation and company can develop its customer base as customers does not shift to substitute
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Illustration 1: Porter's Generic Strategies

products easily. The risk associated with this strategy is that business environment is dynamic so
taste and preferences of customers changes frequently. Therefore, company need to control its
actions in production process.
Focus Strategy: This strategy falls in narrow segment and has two variants cost focus
and differentiation focus. Company who uses this strategy enjoys huge customer loyalty and this
can discourage their competitors. This strategy focuses on dividing the market into different
sections (Pallagst, 2017). Airdri should decide that which focus strategy they will follow to gain
competitive advantage for growth. If company adopts focus strategy then they have high
customer base and loyalty. Company will get success as they build broad range of product
development strength in narrow segment. There is a risk in focus strategy that the company is
competing with better companies who is providing good quality products and services in targeted
segment.
PESTLE Analysis: This model is used to identify the external forces present in the business
environment (Levy, 2016). This analysis is done in the context of research of market, any
organisation who want to enter into a new market or start a business need to do this analysis to
get success and to know about external environment. PESTLE analysis should be repeated in
regular stages to recognise changes in external environment. Airdri uses this model to analyse
external factors before entering into new market and helps to evaluate and monitor the different
areas. Factors of PESTLE analysis are:
Political: This factor determines the government policy which impact the economy of
country. Different policies such as taxation policy, monetary policy, trade policies, political
stability etc. impact company and its policies. If new policy introduces in the business and
government is not stable then company's revenues may get affect.
Economical: This factor affects the economical state and performance of the company
which impacts organisation and its profitability. Analysis of this factor before expansion of
business gives company advantage over competitors. Economic condition of UK is very strong
so Airdri does not have threat in expansion and will not affect buying power of customers.
Social: Company need to analyse the social factors before expanding its business into
new market, identify rising trends, culture, trend, values etc. This can be done by conducting
research and development activity. Airdri need to determine demand of products and buying
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trends of the segment. Before expanding business into new market company need to develop
various strategies to get success.
Technological: This factor concerned with the technological aspects such as innovation
and development, R&D activities, awareness of technology etc. which impact business and its
operations (Daniels and Lapping, 2016). Airdri need to determine the technological aspects
before entering into new market and launch its products according to according to the innovative
technology.
Legal: In this factor, company need to understand what is legally allowed in their
operating territory. It is concerned with the laws which company should know and follow before
entering into a market. Government of UK has formed various laws which should be followed by
Airdri and company need to make sure that they formulates under these laws.
Environmental: This factor is concerned with the surrounding environment, ecological
aspects, and various environment protection acts that can impact business. Airdri is concerned
with the environmental security act and will make affirmative picture in the eyes of authorities
and customers which creates possibility for organisation to grow up.
P2. Evaluate the opportunities for growth applying Ansoff's growth vector matrix
This model helps the company to determine the appropriate marketplace for organisation
to actuation its products (Colantoni and et. al., 2016). It is enforced by different organization to
appraise different market segments to launch their products. This matrix includes four strategies
which is adopted by Airdri to introduce its products in the market. Various strategies are
discussed below:
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(Source: Ansoff Matrix, 2018)
Market Penetration: This Strategy describes merchandising of existent commodity and
services into existent marketplace. Marketplace Perception creates possibility to create net profit
by getting more customers in the existent marketplace portion (Ansoff Matrix, 2019). This
strategy has its saturation point and after that new strategies must be adopted in order to get
success or grow in the market. So, Airdri need to gain growth strategies to improve its market
share by focusing on quality of its products.
Market Development: In this strategy, existing product launches into the new market. It
includes the happiness of acquiring new market or geographical areas (Lambert and Oatley,
2017). When an organisation is willing to target different customers in contrastive market section
this strategy will assist to attract them. This strategy conducts SWOT and PESTLE analysis to
determine opportunities and threats of different market. Airdri need to target that area in which it
is not currently operating for growth.
Product Development: By this strategy, sale of new products are done in existing market.
This strategy helps organisation to increase quicker because governance already have cognition
of customers taste and requirements (Arzaghi and et. al., 2017). This can save the cost of
research and promotion if company has good image in the market. Airdri have good reputation in
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Illustration 2: Ansoff Matrix

the market and has loyal customer base which help company to launch new product in the
market.
Diversification: This strategy is very risky from the four strategies as in this product as
well as market both are new which means launching of new product into new market segment
(Siedentop, Fina and Krehl, 2016). It is costly as it involves market research and examining the
current buying power of customers before launching a product into market. If the product can
attract the customers it will help in growth of company. Airdri can adopt this strategy because
after doing research and PESTLE analysis company need to introduce new product to attain new
market segment and expand its business.
Brief Analysis: From the above discussed strategies, market development strategy is adopted by
Airdri because by this company can introduce its existing products into new markets and can
occupy new segment. Ansoff's models helps in determining the best strategy company could
adopt. The complete analysis involves PESTLE analysis, Porter's generic strategies model and
Ansoff's matrix helps the company to determine and understand the customers needs and use of
promotional tools to gain competitive advantage over market. But there is risk is associated with
every market strategy as it requires huge capital investment to launch its product into new market
segment. To minimise risk, company need to do market research which includes customers taste
and preferences. Business environment is dynamic in nature and customers preferences will
change according to trends so company need to do continuous research to get success in the
market and these researches will provide organisation to launch its product into new market
segment.
TASK 2
P3. Sources of funding of businesses with its advantages and disadvantages
Fund is a monetary term which provide financial resources to the company when it
executes its project or program. Fund is used when company uses internal reserves when the
need of capital arises (Sources of Finance, 2019). Financing is used when company owns capital
from external sources such as credit, donations, taxes etc. and these are the sources of funding.
Airdri requires £150000 to expand its business and this amount can be collected from various
sources of funds. There are some sources of funds which are:
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Internal Sources: These are the sources which are generated by the company itself for its
growth and expansion (Abolhasani and et. al., 2016). These medium of funds are available inside
the administration. Airdri will collect finances from sale of possession, maintained earnings,
profits etc. to grow its business concern.
External Sources: These are the origins which is generated from outside the organisation and
help in launching and running its business carefully. Various examples of outside origins are: Bank Loan: It is given by any bank or some financial institutions. By this way company
can bring forth finances for its business concern by giving any security to bank
(Rodríguez-Rodríguez and et. al., 2016). It is the easiest way of availing finance and are
used to run business, purchase assets or expansion of business. The owner of Airdri can
utilize for bank loan to expand its business concern with success. Bank loans are render
for constricted period of time and the recipient have to refund the magnitude before
matureness date.
Advantages: In bank loan, borrower need to worry about paying the regular installment
on time. Bank loans are always the cheapest options over credit cards and overdraft. Interest
payable on loan is tax-deductible expense for business. Interest rates are rigid so the receiver
have thought of existent owed assets. There is flexibility in it because banks does not monitor
how and when company uses the loan amount if they make payment on time.
Disadvantages: It is difficult to get bank loan because it requires many documents such
as Bank statement, latest ITR, balance sheet, proof of continuation, certified copy of
Memorandum of Association & Article of Association etc. Borrow too much bank loan can
decrease cash flow. Mostly, banks would not disburse the whole amount of loan which a
company applied for. If company will not able to provide collateral then bank will not approve
the company's loan. Irregular payable amount to bank will affect the exact future payments. Overdraft: It mention to extension of credit magnitude from lending bank which is more
than the equilibrium of the account (Bongaarts, 2016). Bank supply this facility to its
special consumers and in instrument it charge high rate of interest of these withdrawal.
Airdri can use this source of funding if there is an urgent demand of funds and able to pay
high interest rates. It is a way of borrowing money for broad range of purpose.
Advantages: With overdraft, cheque bounce can be prevented. It is flexible as in this
company only need to borrow the amount which they need. It cut down the load of material work
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and fulfil the imperative demand of organization. It is helpful for business to manage its cash
flows which might get mismatch due to timing.
Disadvantages: Overdrafts are secured against business assets. Interest rate on it is
variable and by this it is very difficult to calculate accurately the borrowing cost. Company will
only get overdraft if they maintain current account. Bank charges very high rate of interest on
overdraft and onetime business concern possession are appropriated by the bank when the
borrower neglect to refund the magnitude on due date. If Airdri will exceed its overdraft limit
with any permission then bank could charge some amount to it. Crowd Funding: It is a procedure of collection monetary system for business by various
contributors (Leick and Lang, 2018). It is achievable with the assist of different
application as owner can invite different investors with the assist of emails, social media
and many funding websites such as GoFundMe, Kickstarter etc. Airdri can raise funds by
implementing its plan in effective and interesting manner.
Advantages: It is the fastest way to collect capital for your business with no additional
charges and easiest way to gather investors. By this funding company can promote its brand
through their investors network as they can track their progress. Crowd funding is the best way
to check public's reaction towards the business or product.
Disadvantages: Crowd funding is a source of finance for small businesses but if
company does not have any patent or copyright then anyone can steal the concept. It can create
problems when company does not has good market image. If organisation gets fails in any
project then it generates a risk factor and can damage the reputation of business and the investors
who invest money. If company fails to collect its targeted amount then the remaining collected
amount will be refunded to the investors and the company will have nothing as investment. Angel Financing: It is an investor who invest in small business and start-ups to expand
the business and for survival (Perveen and et. al., 2017). They are designated as business
angel, informal investor and private investor. Airdri is a small business so they invite
various business angels to invest in their business by attracting them with excellent plan.
Advantages: It is less risky in comparison to loans and brings various expertise such as
director service, vertical expertise, business acumen etc. and does not demand any fees for it.
These firms are probable to survive at least four years. If company is funded by angel financing
then there is no need to pay interest and debts to other outsider parties.
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Disadvantages: It is quiet difficult to find a perfect angel investor. They does not take
follow up of their investments. The owner of the business have to share powers, authority,
control, shares and decision making with angels.
TASK 3
P4. Business Plan for growth which includes financial information and strategic objectives of
business
A business plan is a document which describes information about company and its
shareholders and investors (Kumar, 2016). It help businesses to form plan of action for future
and argumentation which reduces risk in various operational activities. Airdri is a hand dryer
manufacturer who deals in hand dryers and elevator door detection in UK so the establishment
should make decorous business plan to accomplish its organizational objectives and before
expanding its business.
Company Overview: It is a private limited company incorporated in 1974 which deals in
hand drying washroom equipments and provide different hand dryer range such as high speed
dryers, resilient dryers and durable which meet the requirements of disabled facilities. It is
situated in Witney, UK.
Purpose of Business: Airdri is dealing in hand drying equipments and want to expand its
business in new market segment. As a small business or start-ups its purpose is different from
other enterprises.
Vision: Its vision is to provide various products and offer them to the different segment
of the customers and become the leader of hand drying manufacturing industry.
Mission: Its mission is to determine the inevitably of customers and supply them
merchandise accordant to their need so it will assist to make positive market image and pull
various customers from various market place. Airdri always innovate new products which helps
them to acquire new market.
Objectives: Its objective is with success launch its business concern in UK by creating a
brand name worth over there. Airdri want to assume market share of Witney and fulfill the
customers by render commodity accordant to their necessarily and postulate. This can be
achieved by comely repair of business concern action and powerfulness over executing
procedure of enterprise.
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Promotional Strategies: Company will make plan according to the market, customers,
their preferences and the above discussed model of market development. In this strategy
company will enter into new market with existing products. Company can use it brand image
while promoting its products into the market as its reputation is strength for it. According to the
various situational analysis as described above company can expand its business in the various
regions of UK.
The government of UK is politically stable which helps in expansion of business and
foster its operations. There are some laws relating to the working conditions and employment
which protect their rights and prevent them from exploitation. Company need to follow these
regulations in order to operate and run successfully as they are abided by law.
Financial Information: Occurrence of business concern activities are wholly calculate
on the preparation and activity over operation of business (Kouba, 2017). Funding is important
for the business as it helps in the operations. Airdri need finances to execute all the act and funds
that can be bring forth from inner as well as outer beginning of money. While planning to expand
the business, management of Airdri have to prepare budget plan which will furnish of those
fields where finances are needed and how the monetary resource are departure are to be used.
This budget will show the expenses which may happen while enlargement of business such as
promotion, new technology etc.
Forecasted budget of Airdri
Particular 31/12/18 (pound) 31/12/19 (pound) 31/12/20 (pound)
Implementing
technology cost
100000 - -
Promotional expense 12000 10000 7000
Advertisement
expense
9000 9000 5000
Catalogues 21000 8000 9000
Training charges 8000 23000 16000
Total Cost 150000 50000 37000
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From the above budget plan Airdri will get the idea of expenses that may occur in future,
while expanding its business in UK.
Cash Flow Statement: This statement carries the financial information of the company
from beginning to ending year or previous years. It is a numerically detailed tool by which cash
inflow and outflow will be measured (Sarin, 2019).
TASK 4
P5. Exit and succession options for small businesses with its advantages and disadvantages
Airdri is a hand dryer manufacturer who wants to spread out its business concern in UK
by launching its products into different market segment. So, it is essential for the organization to
have successiveness or departure alternative to face forthcoming cognitive state. It alleviate the
determination devising of director by furnish them individual derivative to face issues that may
happen in forthcoming.
Exit Options: This option is used by companies when they want to discontinue their business,
close or hand over the powers and authorities to other person (Pallagst, 2017). These options
helps the owner to exit their business. If a company is in loss from a longer period of time then it
would be suggested to company to end or wind up its organisation. Following are the options of
exiting the firm: Winding up: It is the procedure of dissolution a organization in which owner selling out
all the possession, pay off all the individual and administer leftover finances and assets to
the stockholder and capitalist of the organisation (Levy, 2016). If Airdir does not get
success in its expansion then this alternative can be adoptive by the organisation.
Advantages: Hire purchase and lease agreements will gets terminated at the date of
winding up of the company. If company is suffering from any legal action then it will stop at the
time of voluminous up. The businessman will be free from the liability and the organisation will
not have to face more failure.
Disadvantages: Owner will lose the control over assets and management as liquidator
will undertake the entire winding up process. All the assets of the company will sold and the
company will lose effective workforce of the company.
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