Planning for Growth: Strategies and Funding Options for Davison Canner SME
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This report discusses the planning for growth for Davison Canner SME, including different strategies available for growth, potential sources of funding, and exit or succession options. It also explores the impact of internal and external factors on growth planning.
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Planning for Growth 1
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Table of Contents INTRODUCTION...........................................................................................................................4 TASK 1............................................................................................................................................4 TASK 2..........................................................................................................................................10 Business plan.............................................................................................................................10 TASK 3..........................................................................................................................................15 Discuss about the exit or succession options for Davison Canner SME, Also describing the advantage and disadvantages of each option.............................................................................15 CONCLUSION..............................................................................................................................19 REFERNECES..............................................................................................................................21 2
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INTRODUCTION Planning for growth is a process in which company undertakes various activities through which it can develop suitable and effective planning for the growth of organisation. This involves identifying and understanding impact of several internal and external environmental factors and analysing various considerations while planning the growth for the organisation. this planning is very important for the company as this guide and provide direction to the company regarding what next step they need to take in order to achieve the objectives for the growth. Concerned with planning for growth company can also utilise the developed theories and strategies for the purpose of growth of the organisation. This report is based on planning for growth forDavison Canner. The organisation and company is leading producers and innovators of the fruits. Company started their business as fruit producers but later on their product range kept increasing and now the company also provide jams, curds, sauces and several other processed products. This report will discuss about company and their planning for growth including different strategies available for growth, and potential sources of funding that can be utilised for growth and later exit and succession options will also be discussed. TASK 1 Key Considerations for Evaluating Growth Opportunities Ansoff’s growth vector matrix Sources of Funding With Its Benefits and Drawbacks Resourceandcapabilities and Core Competencies This is one of the key factor forthesuccessofthe companyintheirgrowth. While evaluating growth it is importanttoconsider resourceandcapabilities Growth matrix of Ansoff provides some of the strategies that can be utilisedbytheorganisationsto implement while they are planning forgrowth.Thegrowthmatrix involvefourdifferenttypesof strategies that are based on new and existing product and market that company will consider in their Banks This aspect of raising orcollectingfunds will help the sources that are major so that whenevertheyneed or require money for copingupwiththe level of expansion or Benefits DavisonCannercan easily avail the benefit of getting the loan in a personalized manner. Also it is helpful and reasonabletothe businessbecausethe rate of interest can be 4
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requiredforimplementing theopportunities.Along with this core competencies and their evaluation is also important as they allow for strategicbenefitsand competitiveadvantageto Davison Canner. growth.startuptheirplan they can consider it. Itisconsideredas oneofthesafest methodthatiswhy everyonetruststhis aspect.Davison Canner can engage in a meeting with bank sothattheycan decidetheformof repaymentwiththe rateofinterest charged on it. bared by them. Theschedulethatis fixedforpaymentis donewithamutual understanding Market Penetration Company when intends to expand their sell and profit without developing product and market in suchcasecompanyutiliseand implement this strategy for growth. This means that company without developingnewmarketand product,focusesonexisting product and market. This means companyundertakepractices throughwhichorganisationcan increase its sell and profit through existing market. In order to do this, Drawback Theaspectof foreclosureforloan turns out to be a bit expensiveforthe company. EMI that is charged is not fixed it varies on thepowerofthe economyifthe economyofthe country is strong then it will be difficult for them to cope up with it. 5
companiesoftenutiliseeffective marketing planning. This is also suitable to increase product cycle oftheorganisation.Thismeans with help of effective marketing companyincreasesitsselland profitandalsoextendproduct cycle. Innovation Thisisanotherimportant elementandfactorto consider while implementing andevaluatinggrowth opportunities.Innovation plays key role in success of the organisation and this is why innovation capabilities of the organisation is very important to be considered by theDavison Canner. Financial Institution Manyofthe companiessuchas DavisonCanner considers this method also when they want tocollectfundsso that they can cope up withthechanging needsofmarket. Financialinstitution arealsotrustworthy as many of them such asBarclayshave beensuccessfulin establishingtheir base so that they can earnthetrustof peopleandcaterto the needs of business. Itisbelievedthat theyprovidebetter schemesand packagesofloanin comparisonwith bank.Thiscanbe helpfultothe business. Benefits Betterschemesare provided if compared with bank. People also trusts on thisaspecttocollect fundsfortheir development needs. Theprocessingof financeisfasterin comparisonwiththe bank. Drawbacks Sources of finance are turnedouttobe expensive. Varioustypesof documentsand formalitiesare collected in the form of collection of loan. 6
Risk Thisisanotherimportant factor to be considered when companyemploys opportunity.Thismeans identifyingandevaluating risk and associated benefits. This is important to select andimplementan opportunity in which risk is comparativelylowerthan benefits.Thisisalso importanttoconsiderthat riskassociatedwith opportunitycanbedealt when it comes to negative effect for the risk. Product Development This is another strategy in whichDavison Canner will require to develop new product that can be offeredtoexistingmarket.This means that this is a growth strategy in which company with help of new products attempt to increase their sell and grow the profits and customers of the company. Market inthisstrategyremainssame which was being catered by the company earlier. This strategy is oftenutilisedbythecompanies whoarefocusingoninnovation and attemptto attract customers with help of innovation and new productdevelopment.Thisis Crowd Funding Thisaspectis believedtobea major source when it comestocollection of funds. In order to raisefundsDavison Canner needs to sell some of their shares so that they can get moneyforit.This way then can take the use of the money that they have gotten for their shares. In order tousethisaspect successfullythey consider the aspect of marketingsothat Benefits Consideredasatool thatishelpfuland effective and open up thesourcesof investment. Companieskeepa checkonthese activities so that they can allocate the funds in the right and useful area. 7
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effectivestrategywhenproduct cycleofthecompanywithits earlier products ends and company need to provide something new in ordertosurviveincompetition. Companies many times also bring products with different name and identity and Davison Canner can bringitsproductsindifferent flavours. more people invest in theportfolioofthe company Drawbacks Because of complying withthissourceof investment it leads to maketheownership into pieces so that a part of it can be sold as their shares. Technologicaluseand expansion of the network Thisisanotherimportant factortoconsiderwhenit comestoevaluating opportunities for the growth. Thismeanscapabilitiesof theDavison Canner. This is becausetechnologyand effective use of technology anddigitalservicesis playing key role in success Market Development This is a strategy in which companies undertake development ofmarketasopposedtoearlier productdevelopment.Market developmentstrategyofthe company involves using existing products that company sell in new markets.Thisisusedwhen productsofthecompanyare accepted in existing market and are able to be presented and served in Justification It has been evaluated that the most viable and beneficial source of finance for the business is banks and financial institutions. 8
of the organisations. This is the reason that technological and digital use along with capabilities of the company to expand their network is alsoimportanttobe considered while evaluating growth opportunities. new markets. This is a strategy in which companies need to identify and understand market which are similartoexistingmarketsand possesshigherpossibilitiesof acceptance in new markets. Strategic option available Thismeanswhatarethe strategicoptionsthatare available when company is willing to grow the business. Strategicoptionsavailable involvemergerand acquisition options available and along with this what are theirpositiveandnegative pointsandfactors. Considering these elements canhelpcompanyin identifyingand understandingeffectiveness of opportunities. Diversification This is a strategy in which companiesneitheruseexisting marketsnorexistingproductis utilised for the purpose of growth. Company develops new market as well as product that can be used for growth of organisation. This is similar to starting a new business however in this strategy company can utilise their image and brand goodwill. Amongallthestrategiesofthe Ansoff MatrixDavison Cannercan employandimplementmarket development strategy. This means that company has enough range of products which can be served in similarmarketandusedfor nationwidegrowthofthe company. 9
TASK 2 Business plan Executive summary It has to be consider as conventional wisdom, which mainly focused on planning a new business and also give more prior to their SMEs. The renowned Brexit consulting firm will give an advice to develop the effective business plan. It may include brief information about the SMEs enterprise and their specific objective. In order to give right direction for establishing the strongpositioninmarketplace(Davern,BuckleyandBucello,2020).Thus,itwillbe investigating the impact of enterprise planning within growth of SMEs, enhance the poverty alleviation and encourage towards innovation. The Davison Canner is based on the small enterprise, which make a profitable and strike to obtain the better market share in global world. This organization is providing the bakery product as well as service to potential consumer. It must ensure the dominance in its current operational areas which begun its innovative product development. It plays important role to increase long term goal and objective. Mission The mission of Davison Canner willgive the option regarding quality of goods and services. When running the enterprise in market that require suitable right path or direction. In this way, it help for start-up business to achieve the desirable goal and objective. Davison canner firm will focus on the customer need or requirement so that they always tried to improve customer services(Gunder, Madanipour and Watson, 2017. Sometimes, it also consider the online mediumtoshareinformationordataofparticularitemthroughwebsite,application. Furthermore, Canner will be treating their potential customer in professional way to give effective environment or culture. Objective ï‚·To increase the rate of profit rate within 1-2 years. ï‚·To achieve the demand of potential consumers in regards of bakery product and services. ï‚·To enhance the overall business performance while implementing modern Information technology. 10
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ï‚·To improve the customer service and encouraging the potential client towards product as well as services in marketplace. ï‚·To increase sales 5% for business expansion in global world. Success parameters ï‚·To encourage the consumer towards large variety of services. ï‚·To enhance the better customer service and also resolve queries. ï‚·To maintain the quality of product and service. SMEs Summarise Davison Canner firm will be considered the financial information or data through combination of investment. In order to gain the competitive advantage. Moreover, SMEs will be including the expenses so that it will require to consider marketing approach for purpose of advertisement or promotions. Therefore, it can easily fulfilling the need or requirement of SMEs in marketplace. On the other hand, Davison Canner firm will be filling the legal fees, designing the overall structure or layout of organization. Market analysis As per analysis the market trends towards bakery enterprise whereas it has identified that increase profit margin. There are large number of potential customer attract towards the product and service. It intend to apply an appropriate pricing strategy that will motivate different customers (Daniel,OluyomiandDaniel, 2020). The price/ cost will attract the client because many people want to buy the item at reasonable price, also available for everyone. Generally, Davison Canner will target the people who will have a lower income portion. It involved elderly, working class and student. Market segmentation Davison Canner is based on the small enterprise so that they will provide the better shopping experience of lower income families, who will have annual earning approximately $20,000. Other hand, it also including the student that always strict about their spending budget (Rahadi,2020). In this way, Davison Canner will consider this market segmentation and then provide better quality of bakery item in order to increase profit rate 10% to 20%. 11
Target the segment strategies DavisonCannerwilltargetthestudent,workingclasspeoplesothatitwillbe implementing the price strategy. That’s why, it always attract the people who want to more valuable product at reasonable price. This type of pricing strategy is consider as more efficient for providing the better discount, offers. Therefore, it will increase the production and sales in marketplace. Competitive analysis The competition level is high in markets, because it has already established the enterprise who will target more and more people towards product as well as service. in this way, it will increase the demand of convenient location, areas and fair pricing. Nowadays, there are various option to switch from one brand to another. In context of competition, Davison Canner is becoming tough to maintain the position in marketplace. SWOT analysis Strength Achieve the short-term goal and objective Increase the profit margin in marketplace. Weakness Lack of promotional and advertisement Ineffective use of online mode 12
Opportunities ï‚·Expansion of business in both national and international level ï‚·improve customer service Threat ï‚·High competition level Marketing strategy Davison Canner firm will be consideration of marketing strategy that help for increasing the demand of enterprise among different segmentations. The marketing strategy will support for establishing the strong coordination with client. In order to provide the accurate information to customer (Mazzarol and Reboud,2020). At that time, Canner will use different essential resources such as website, email and other distribution channels. It is useful for sharing the detailed about particular product and service through online medium. Financial Statement ï‚·Davison Canner SME will gain more profit into financial marketplace. ï‚·The sales of business will increase 150 per annum ï‚·The rate of SME development that will be moderate. 13
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Cash Flow In Davison Canner firm, it will be determined the medium risk, threat and also maintai the steady cash flow. In order to identify the sales and cash flow. 14
Budget analysis As per analysis, it will be estimating the overall budget of new business establishment into marketplace. it may include all expenses that will support for generating accurate result or outcome. The overall budget of SME development $750 . TASK 3 Discuss about the exit or succession options for Davison Canner SME, Also describing the advantage and disadvantages of each option. The enterprise exit approach is based on the strategic procedure that support for selling ownership in the organization. This type of strategy will be used by Davison Canner, which give an enterprise owner a way to reduce or liquidate his stake in organization (Bokhari,Muhammad and Zakaria,2020). Exit strategy is also depends on the current Davison Canner size, type. It is also beneficial by selling to one of another existing enterprise. 15
On the other hand, Succession strategy that can take into different forms. The Davison Canner SME is placed into the marketplace.It will be establishing the business but it is very difficult to replace them. The organization is mainly focused on the desirable goal which possible through exit of leadership role at certain level. Thus, it automatically improve the current business condition or situation in marketplace.The succession strategy isbasically involved different family member, partners and other staff members. Succession and exits of enterprise which means transferring the enterprise firm to third party. It also identifying the specific involvement of different stakeholder such as enterprise partner, staff member and other family members. Both exit or succession that are possible when selling the business. It always concerned about the business capability and ability whereas how they will acquire more information about the customers. Therefore, it always maintain the coordination between staff member and other potential consumers. There are various succession or exit option with its draw backs and benefits. Selling or floating the enterprise It can be occurred into different forms, which mainly including the hybrid succession strategy. Davison Canner can be sold to the student, family member and third party. Initially, it may consider if various consumers are looking towards selling business as exit strategy in order to achieve desirable goal or objective. Drawback ï‚·It also realised the significance of cash to fund retirement, also starting another enterprise and safeguard staff jobs. Benefits ï‚·It may loss the control on the future direction of enterprise, which may have involved in the friends as well as families. Liquidations When it consider the exit strategies, there is no one to by enterprise because Davison Canner owner shut down, sell off their assets, pay of bills and other debt. It is remaining to distribute the cash to other shareholders. Sometimes, it is consider one of best option when it cannot received for enterprise intangible assets. 16
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Drawback ï‚·The drawback of exit strategy is that when it cases the price of liquidating is becoming high. Benefits ï‚·Another way, the advantage that can be implemented for short time intervals in order to predict the specific time frames. Merger SellingthebusinessintothirdpartybyimplementingtheprocessofMerger& acquisition. The owner of Davison canner will gain the more opportunity to increase cash out and value. M&S sale process will provide the access of other strategic buyers (Oluwaseun Mathewand Charles, 2020). In order to generate the competitive bids and also maintain the internal buyer at affordable range. Drawback The drawback of Merger option is that when it cannot be prepared to run the enterprise. Sometimes, it is not difficult to replace at immediately. Benefits It also providing the advantage to increase the overall business productivity as well as profitability in marketplace. In order to maintain the cash flow process. Selling enterprise in open market It is one of the most common exit strategy that will be adopted by enterprise owner.in order to sell the business at reasonable price or cost. It is an important that can support for giving the better value of SME. In order to maintain the overall business performance and efficiency. Drawback ï‚·It is associated with business, who will success to provide the better product or service at reasonable price/ cost. In order to exchange the sales of SME. Benefits ï‚·It is becoming easy to exit the business into marketplace. Initial public offering 17
It is mainly referred as an organization become public. Sometimes, it may include the SME which offering its share to public form purchase at first time. When Davison Canner will consider IPO as an advantage for achieving the success (Oluwaseun Mathewand Charles, 2020). This type of exit strategy will be useful for SME to sell the enterprise into public firm but don’t advice ongoing public. Drawback The disadvantage is that when it unable to get money as quickly manner. Usually, multiple investors also insists that all money profitable increased by IPO. Benefit The advantage of SME is to maintain or control the financial information. In order to generate more revenue and also achieve the desirable enterprise goal. Keep enterprise in family In some situation, enterprise owner will give the responsibilities of Davison Canner into their children. The owner of enterprise that will be transferred into next generation. Draw back The challenge in this option when mixing the family dynamic with enterprise. It may perceived the favouritism among different children. In this way, it will be increasing the financial risk within organization. Planning will help for minimising the organizational risk, threat. Benefit The primary advantage of this option is to include family members, which providing the better career growth and increase earning income. This can be possible when family member can perform the enterprise operation and function. CONCLUSION From above discussion, it concluded that growth planning is to be consider the efficient way to evaluate the growth opportunities. It has summarised about the key considerations for evaluating growth opportunities within competitive marketplace. By using Ansoff’s growth vector matrix, it will describe about the growth opportunities in the business development. Furthermore, it has identified the potential sources of funding that available for SME, Also 18
discussed about the drawbacks and benefits of each sources. It has explaining the business plan for growth, which may include the different financial information and other strategic objective for scaling Small enterprise. At last, it has been assess the exit or succession option for Small enterprise of each options. 19
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