LO1 1 Key consideration for Growth options

PLANNING FOR GROWTH

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1 .................................................................................................................................................1
Key consideration for Growth options ........................................................................................1
LO 2.................................................................................................................................................5
Assessment of the various ways in which organizations have access to finance and when
various types of funding must be used.........................................................................................5
LO 3.................................................................................................................................................7
Design a business plan for knowledge and understanding of Growth.........................................7
LO 4.................................................................................................................................................9
Exit or succession options for a small business...........................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Small business owners usually write plans that describe their business ideas. The business
plan contains information about the company's organizational structure, estimated income,
funding needs, and other relevant information. While a business plan outlines the initial process
for small businesses, the growth plan focuses on new growth opportunities or expanding
businesses. Business owners make growth plans to evaluate business expansion and new growth
opportunities. This report shows the consideration for the growth of Vectair Holdings which is a
small medium business in Basingstoke, UK and is main objective is to manufacture new hygiene
products like lotions, hand soap etc. The company has a very good credit rating and most lenders
inside and outside the UK will be happy if they need financing. At present, they have a bank
overdraft for their £ 2.0 million loan, which they never used. It also shows the various types of
fundings which can be adopted by Vectair Holdings in order to expand and grow its business
around the world. This report covers the various types of analysis which can help the
organization to give a competition in the marketplace like Porter and Pestle analysis and the risks
occuring during the each step of planning the business for growth and how to mitigate those risks
with the help of proper marketing and planning strategies for evaluating growth opportunities by
applying Ansoff's Matrix Model.
LO1
Key consideration for Growth options
Competitive advantage
The basis of competitive advantage as a basis for growth: resources and capabilities and
core competencies. At a high level, the hygiene products industry is quite mature. Five Porter's
Strengths depends on whether we see the industry or the end user market. The green industry for
hygiene products is a variation of Five of Porter's strengths because this movement is still in the
phase of growth it represents possibility to position the company as a leader in this field. From
this it will help to get to know the difference between traditional and hygiene product industries
and the gap between industrial and consumer markets. One of the main thing that gives Vectair
Holdings a competitive advantage is high quality of their products and low price but their main
focus is quality of their products. This gives them a competitive advantage over their rivals.
As per Porters Generic Strategies company will chose differentiation focus method to grow and
increase their profitability above industries average as this porters generic strategies helps in
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determining whether companies profitability is above their industry average or below their
industry average.
Porter's generic strategies
The use of these strategies helps the company to achieve competitive advantage within its target
marketplace. There are generally two types of strategies that a company can use to grow their
business all around the world which are as follows:
Cost Leadership Strategy — This type of strategy is known for the industry who are producing
at low cost with a given quality. Vectair Holdings can sell its products at higher prices to get
ahead of their competition and to gain market share. The company can maintain its profitability
while their rival suffers losses. This strategy usually targets the bigger market and the industry
who are selling cheap products can be more profitable with good quality. Vectair holdings can
sell good quality products at reasonable rates as they are operating in selling hygiene products
which are preferred by health conscious customers and can fulfil their regular needs.
Differentiation strategy — This types of strategy is generally used for development of new
products which is critically valued through customers and based on the review of customers on
products can help in comparing the products of competitors. The price covered for developing
the unique product can be managed by selling the product at higher prices in the marketplace and
customers will be willing to pay for the product as the quality of product is unique and excellent.
The company can use differentiation strategy to gain competitive advantage as the customers
will get the new tastes and substitutes products easily and its cost effective also as they need
access to the scientific research. It will help the company to gain the reputation related to quality
and innovative products and make them unique from other rivals and can pursue greater
differentiation in the marketplace.
In general, the analysis of porter generic strategies shows that it is a market for industrial
products far more profitable than the consumer market. Vectair Holdings hygiene products
department faces several major competition which are in the marketplace.
Pestle analysis
This strategical and evaluation technique analyses the external environmental factors
which influences the organisation. The structure of PESTEL is one of the best operational and
planning approach for analysing the business situation and the possibility of growth in the new
business environment. PESTEL analysis is one of the most important tool which helps
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organisations to develop and plan suitable growth strategies for business. The analysis becomes
of utmost importance when organisations aims to explore new markets or to transcend various
geographical boundaries (Wann-Ming, 2019). This helps the organization to observe reality that
covers all new environments and market characteristics, helps implement it with the most
effective strategic thinking and justification.
 Political - Each strategic plan must include the importance of policy implications to
develop effective strategies, to reach the right direction and to recognize the risk of
project failure due to political instability in alternative solutions. In this scenario, Vectair
Holding hygiene products in Basingstoke must analyse that political stability in the
country is quite safe. The political influence becomes more crucial when the production
and operational activities of organisation are not in alliance with the government and thus
several challenges are faced by the company to ensure the continuity and efficiency of the
organisation.
 Economic - This is because the economic influence of the country is beyond the control
of the organization and must reflect according to the economic situation. If the
organization is concerned about economic choice, there is no doubt that it can generate
profits even in a recession. In contrast, organizations that separate economic conditions
cannot even survive the economic boom. Vectair Holdings must contract with hygiene
product producers to control price fluctuations (Gapsalamov Vasilev, and Ilyin, 2017).
Increasing the cost of advertising and promotion will lead to higher sales margins and
profitability because customers are more interested in buying hygiene products. This can
help the company to gain competitive advantage which will eventually increase their
opportunities to grow and expand their business as they provide hygienic, high quality
and low cost products.
 Social - The country's socio-cultural environment has a significant impact on the demand
for products or services. This is the reason why organizations produce products especially
with the tastes and demand patterns of the countries where they work. Vectair Holdings is
an organization that dealt with the production of hygiene products like facial tissues,
cotton pads, lip gloss, hand shop etc. that is closely related to the health conditions
needed by the hygiene industry to penetrate the market with all the factors that cause
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health problems. In UK, customers are getting aware about their health and give hygiene
makers the ability to change products with various healthy ingredients.
 Technological – Vectair Holdings can sustain competitive benefits and greater
profitability by emphasising on technological factors. Hygiene products manufacturing
companies can be the most effective tool in product development, advertising and sales
promotion. It can also help organisation to improve the brand value and product portfolio
by using social media and digital technology for the promotion of its services and
products.
With the help of new laws, tax changes, trade barriers and demographic changes, the company
can get many opportunities to establish its firm across the world. The analysis will provide the
economic situation of the place where the company wants to operate. Political and
Techniological can boost the profitability of the business.
New Products and Services - Vectair Holdings are focusing on innovating new products which
can beneficial for the organization and customers both, Recently, they are planning to launch a
new lip balm which will keep the lips good all season. To expand their growth, then organization
must launch their innovative products in every part of their town through promotion and
advertisements.
Growth options - As part of a larger strategic planning initiative, the Ansoff's matrix is a
communication tool that can be used to identify potential growth strategies from Vectair
Holdings.
 The least risky strategy is that companies sell products that are in existing markets, get to
know their customers, build channels, and so on. This Ansoff's strategy is known as
"market penetration". The strategy is applicable only when there is continuous growth in
the existing market and when it is possible for the organisation to integrate marketing mix
elements such as social media promotion, discount offers and effective customer
management services.
 Another strategic option in the Ansoff's matrix is innovation or the new product
development for existing markets through product development strategies. Here, the
product elements consist of more deviation from the elements of marketing mix and thus
as compare to market penetration this strategy has higher risk. The success of this
strategy depends on whether the organization is able to conduct effective research and
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respond to customer and market needs, as well as internal capabilities and their own
competencies to stimulate innovation (Liepa-Zemeša and Hess, 2016).
 The third strategic option incorporates existing products into new markets through a
"market development strategy". This is also considered to have higher risk than entry to
new market, because it may be hard to understand the complexity of new markets. With
this strategy the major changes are introduced in the distribution channels and place
element of marketing mix. In addition, with this promotional activities are also extended
to new market segments.
 Ansoff's latest strategy at Matrix is Diversification, which develops new products for new
markets. This is considered the most risky strategy of the fourth because organizations
are engaged in foreign markets. However, this risk can be reduced by "related"
diversification and has the potential to produce the highest returns.
The Ansoff's matrix is used in the strategic phase of the marketing planning process. This
is used to identify comprehensive strategies that companies need to use, and then inform which
tactics should be used in marketing and sometimes organizations pursue two strategies to reach
different markets. The fourth strategy will be best for the Vectair Holdings as it aims to develop
new products in the new marketplace and the second strategy which is development of product in
the existing market will help them to connect to their customers and build loyalty.
LO 2
Assessment of the various ways in which organizations have access to finance and when various
types of funding must be used
Investment decision-making
Capital budgeting solutions are one of the critical decisions that business owners make.
The success of the business depends upon the factors such as product development, entry to new
markets as well as expansion strategy (Boulange and et.al., 2018). Companies use several
methods to make such decisions. Most of the organisations uses payment method or present
value approach.
 Net present value method - The Net Present Value (NPV) method analyses both
positive and negative cash flow for the existing as well as expected future projects. It will
help to adjust the expected future cash flow so that future needs can be aligned with the
present assets. For making this adjustment this approach uses discount rate which also
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takes capital lost, failure risk, interest rates and inflation into consideration. Finally, it
adds the current value of different and all types of cash flows to get the present value or
cash value. If the value of capital is positive, it is better to continue the project. If this is
not the case, the project must be rejected. The higher value of NPV makes projects more
suitable and safe for the selection. Payback Period method - Depending on the amortization method, organisations must
analyse the cost to initiate the business as well as the expected return to receive from the
project. Then count how long until the project is balanced or produce enough money to
cover the initial costs. Companies that use this method usually select a specific time
frame for years 2 or 5 years. If the project can "repay" the initial costs in this time
horizon, it's worth doing it; If this is not possible, the project will be rejected. When
deciding on a project, choose one project with a shorter payment period.
Sources of finance for growth
There are many financing options and lines for new and small companies. Worthy
options vary from company to company (Lee and Sener, 2016). However, here are general
options for companies that want to raise money to help with their daily work or invest capital for
growth.
 Bank Loan - There are many loan options for small or developing businesses, and this is
only a brief overview of the options available. Loans are classified into two categories
namely secured and unsecured loans.
Advantage - A collapsed loan uses company assets as collateral that can be recovered if
organization cannot repay the loan. The main benefits of this method is that it provides lenders
with greater security, which is why interest rates are often lower.
Disadvantage - On the other hand, unsecured loans do not require collateral in any form, but
may require personal guarantees based on credit rating rather than collateral. This can pose a far
higher risk to the Vectair Holdings if their business goes down (i.e. credit cards).
 Venture Finance – Vectair Holdings can contact venture company to get financial
support so that they are not involved in their business.
Advantage - This brings benefits from potential successful investors who can provide advice
and experience for your business. Venture finance focuses primarily on new fast-growing
companies that appear stable and less risky than new, less established companies.
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Disadvantage - However, one of the risks of acquiring venture capital is the competitive nature
of the industry, which can make it difficult for companies to finance their business. Most of the
time and effort involved is often in obtaining the support needed and may not be possible for
smaller and riskier companies.
 Angel investors - This source of finance are often known as high net worth individuals
who want to invest their own money and make their own investment decisions.
Advantage - They can often provide less funds than venture capital companies but have the
potential to support risky companies and Angels can also bring valuable ideas and tips for their
business.
Disadvantage - When looking for this type of funding, investment networks and angel unions
are a good start. The UK Business Angel Association (UKBAA) states that angels generally
invest between £10,000 and £500,000 in a company, investing £1.5 billion each year in UK
business angels (Financing Methods for Startups, 2017).
 Crowdfunding - There are several forms of "pending" that are best suited to finance
small and medium enterprises (SMEs), including peer-to-peer loans, joint loans, rewards
and cross financing.
Advantage - Reward-based is the crowdfunding which allows the company to receive funds in
small exchange for granting their investors a reward such as product sample or hosting an event.
Disadvantage - Peer-to-peer involve investors who give money to someone at a fixed interest
rate and comparisons are similar to joint loans, but corporate loans are given instead of
individuals, investors, companies, and government institutions.
 Personal savings – This can be borrowed by the relative, family and friends and it is the
easiest way to take money without any policies and can payback whenever they want.
Advantage – Easy borrowing of money without any problem as it is easy to contact.
Disadvantage – Can't afford a lot of money as some of them may not have good financial status.
LO 3
Design a business plan for knowledge and understanding of Growth
Business plan is the framework it is the format and written document every firm makes
this business plan to achieve the goal of the firm. This plan helps to identify the operational and
profit and loss objectives of a business and it also describes the accurate information about the
plans and budgets. That means this plan describes how the goal are to be achieved. It is the actual
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map to the success the business. A new firm can adopt this business plan to establish the
financial and other activities of the business. If any person want to establish the new ventures
with new and innovative product. Therefore, a business plan can help firms to determine
business idea is viable. There are different components which makes the business plan effective
(Keough, 2015). Therefore, Vectair Holdings makes this business plan to success the business
they include the different components in their business plan which is described below.
Mission: Wants to expand our business globally and adopt all kinds of innovative ideas which
will increase opportunities for business to expand globally and attract new customers.
Vision: To operate in different markets and serve customers by providing them with low cost
and good quality of products.
Executive summary — vectair holdings formulates the business plan for the purpose of
providing the hygiene product to the customer in order to increase the number of customer as
well as attracts the customer toward the hygiene product. Vectair holdings launch the Eco-
Friendly Bath Accessories like, soap, sanitizer, floor cleaner including the organic and eco
friendly ingredients. Therefore, this innovative product is creates the demand so, to achieve the
goal and objective of the firm they make the financial and budget statements to manage the
business activity.
Market analysis — Marketing analysis is the tool which helps to identify the needs and
requirements of target market. vectair holdings plc use the STP strategies in the business to
identify the target market. Thus, firm targets all types of people who are child, adults and
teenage, they all are use the hygiene product. Therefore, the prices of product is low so firm
target the low and high income class group of people who really willing to buy the hygiene
product. Therefore, this new and innovative product easily attracts the consumers and this
strategy enhance the demand of the product.
Competitive analysis — It is also the best tool which helps to identify the competition in the
market. vectair holdings plc use the porter five forces and swot analysis to identify the
competition and also this model helps to determine the strength, weakness, opportunity and
threat of the firm. Therefore, to recognize the competition firm can improve their strategies and
plan to reduce the competition. Thus, competitive analysis examine the strength and weakness of
the competitors. Therefore, by identifying this factors vectair holdings plc implement the new
strategies such as high quality of product, low prices techniques etc. this satre3gies is helps to
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reduce the competitors as well as it can lead to enhance the level of competition with other
competitors in the market (Hollander, 2018). Thus, the best strategy to reduce the competition in
the market which is reduced the prices on the product and improve the quality of product and
services. This strategy helps to generate the high profits and enhance the sales value.
Marketing plan — Marketing plan is helps to identify the suitable pricing and promotional
strategy. vectair holdings plc can use the penetration pricing strategy for launch the product in
target market, this strategy is best because firm launch the product on low prices with quality of
product. Therefore, this strategy is suitable for the new Bath Accessories like, soap, sanitizer,
floor cleaner. Thus, vectair holdings use this strategy to attracts the customers. On the other side,
firm can use the social medial marketing strategies to promote the product in the market.
Therefore, social media marking strategy is the best strategy who easily attracts the customer
because in current trends usually many people use the social media platform. Therefore, firm
promote their product in social media for enhance the demand of the product
Management plan — The management plan helps to vectar holding to plan the business
structure, management, and staffing requirements. Therefore, management plan helps to identify
the best staffs for the suitable job. vectar holding recruit the employees by the use of interview
and personality test. This is the best way to identify the skills and knowledge among the
employees, therefore firm can choose this method to hire the best people who meet the
requirement of customer as well as achieve the goal and objective of then firm. Therefore,
holding requires specific employee and management expertise to achieve the goal of the firm.
Enterprise can use the best strategy for finding and hiring qualified staff and retaining them.
Operational plan — This plan is useful because this plan describes the facilities, material,
stocks, and supply requirements etc. vectar holding identify the location, supply chain and
production process to manage their business activities. Therefore, firm require the raw material
to mange their production process, so they find the supplier who provides the raw material. Firm
contract with retailers who communicate with customer and provide the new product to
customers. Therefore, this plan helps to identify the requires parts or stocks and goods to produce
goods to be sold to customers so, firm will need to investigate potential Supply chain.
Financial plan — This plan helps to identify the requirements of funds. This plan determines
different factors firm can use as a financial source mad implement in the business to run the
business. Therefore, vectar holding receive start-up money in the form of equity, own funds,
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public funds or debt financing from banks, angel investor, or venture capitalists. Thus, vectar
holding use different funds to managing all the activity of the business (Li Mobin and Keyser,
2015). But there are different issues which faced related to using the funds. For example, high
loan and liabilities is creates the negative impact on the business so, vectar holding make sure
that they use few amounts of money that means they not increase the liabilities which creates the
positive impact on the firm performance.
CASH FLOW STATMENT
WEEK 1 WEEK 2 WEEK 3
Opening cash balance 10000 9000 12000
Total cash inflow 2000 5000 2500
Cash sales 1500 1500 1500
Account receivables 500 1000 1000
Others 0 2500 0
Total cash out flow 3000 2000 4000
Rent 800 800 800
Payroll 1000 0 1000
Account Payable 1800 1000 1000
Insurance and utilities 200 200 200
others 0 0 1000
Net change in cash -1000 3000 -1500
Cash Forecast 9000 12000 1500
Interpretation — From the above table it can interpret that vectar holding plc obtain the loss
in week 1 due to requirements of employees resources. Further, in week 2 firm achieve the profit
and week 3 the cash flow is negative because of fulfil the other requirements of firm.
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LO 4
Exit or succession options for a small business.
Exist and succession option these both option are valuable because this option provide
the valuable solution to business owner. Exist option are those which firm want to leave and quit
within the business die to high losses (Frenchman, 2017). On the other side, succession option is
provided the ideas that how to improve the performance of business. There are different exit
option such as -
Exit option
Selling the business to third party — This option is also the best option when owner want to
leave this business, and they not manage the work and generate high profits, so they transfer all
the rights to another business who want to acquire the business.
Advantages
 This process is reduced the involvement of third party.
 It is the best option because It reduces the miscommunication.
Drawbacks: Customers might not like the new buyer of the business which can affect the
business negatively like sales of the business can be reduced.
Passing the business to successor — This is also the best ideas for pass the business to family
member or business partner that mean owner of the business transfer all the rights to the
responsible person who manage all the business activity and generate high profits.
Advantages
 The main advantage of this process is that the business is generate high profits in the
future.
Drawbacks: Way of running of business to successor might be completely different which sales,
liquidation and overall operations of the business.
Transferring ownership through management and employee buyout — The team of people
or higher level team pools resources to purchase all or a part of the firm(Hunt and DeVries,
2019). This is one of the best options for owners who provide the opportunity to the owners.
Benefits
 This process is legal process so it reduced the level of fraud.
 This process is protects legacy and business independence
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 It gives the long tern support to the firm because the high level of employees organize the
business activity.
Drawbacks: Can reduce the trust of the organization within employees.
Merger- A merger is an agreement between two parties that unites two existing companies into
one new company.
Advantages
 Better Fulfils Consumer Needs.
 Product Innovation and Development
Drawbacks : Employees are not satisfied with the change management and policy.
Succession
Provide preparation and guidance programme to the employees — This is the best option to
success the business. Firm can provide the training programme to the employees for generate
high production and quality products. Therefore, through training facilities employees improve
their work, and they make the best and qualitative products which satisfy the needs of customer
(Janin Rivolin, 2017).
Revalidate the strategies — To expand the business and generate the growth of the business.
Firm makes a new strategies and re-evaluate a new strategy which helps to steerage the high
profit and increase the performance of the firm.
CONCLUSION
After the complete analysis of this report it had been concluded that marketing strategies
continue to grow and adapted to changing market conditions. Within the company, results from
various types of businesses continue to be reviewed and evaluated. Decisions are then entered
into the decision-making process. This has enabled the development of new strategies to improve
operations. However, when the strategy changes, one aspect of the business remains. This is a
constant focus on a high level of customer service and employee relations. This strategy allows
the Vectair Holdings to continue to grow for more than 55 years and prospects for further growth
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in the future. The organization can adopt these marketing and planning for growth strategies in
order to gain a competitive advantage which would expand their business and increase the
growth rate with high revenue and productivity. It also highlighted the plan that is helpful for the
growth of the business which consists of objectives and information related to their financial
budget which help them to improve their marketing strategies.
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