Planning for Growth

This document discusses the key considerations to evaluate growth opportunities, potential funding sources, business plan, and options of exit or succession for business growth. It includes a case study of Trading Scents, a cosmetics and skincare products company. The document provides insights into competitive advantage, growth opportunities, and Ansoff's Growth Vector Matrix.

Planning for Growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Key considerations to evaluate growth opportunities............................................................1
P2. Evaluation of growth opportunities by applying Ansoff's Growth Vector Matrix................5
TASK 2............................................................................................................................................6
P3. Potential funding sources with benefits and drawbacks........................................................6
TASK 3............................................................................................................................................8
P4. Business Plan comprising strategic objectives addition to financial information.................8
TASK 4..........................................................................................................................................10
P5. Options of exit or succession including benefits and drawbacks........................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Planning for growth enables organisational owners to plan addition to track revenue
growth (Banks, 2013). It helps in allotment of restricted resources in context to centralised
efforts so that pertaining changes within industry are adopted in effective manner. Effective
growth plan allows to become efficient in generating more revenues through emphasising
towards customers values and distinguishing business from rivals. Growth plan helps in
analysing market situations and framing strategies so to build more profit margins. To gain
knowledge about the concept of planning for growth, Trading Scents is hand-picked which is
situated at Iver, England, United Kingdom. The company mainly deals in cosmetics, perfumes
addition to skincare products. The report includes essential considerations considered by SMEs
while evaluating growth opportunities. It further discusses potential funding sources that are
available with business. In addition, it involves business plan that constitutes financial
information together with strategic objectives. It also describes various ways through which
business owners exits business.
TASK 1
P1. Key considerations to evaluate growth opportunities.
Planning is done to create blue print so to attain business growth in the competing
scenario. It is an activity which is performed to build various options or alternatives to face
uncertainties that can arise in future. Small businesses needs to frame strategies so that
opportunities are grabbed for business expansion (Baran, 2019). In context to Trading Scents,
grabbing opportunities through proper planning can determine success with growth in
competitive marketplace.
Competitive Advantage:
Situations or circumstances that allows business to generate more sales as compared with
market rivals are termed to competitive advantages. In such conditions, entities manufactures
goods having balanced values at lower rates in desirable manner. This is crucial for Trading
Scents to formulate plans, strategies, programmes addition to strategies to gain competitive
advantages. Following are the strategies opted by management of Trading Scents:
Competitive advantage as Growth Foundation
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Competitive advantages in context to growth includes resources, capabilities as well as
core competences. Analysis of considerations through Porters Generic Model as used at selected
firm is as elaborated:
Porter Generic model: The model assist the ways that can help in following competitive
advantages across selected market scope. It helps managers to analyse market conditions and its
position as to make alterations in policies or programmes (Porters generic model. 2019). Its
strategies are as elaborated:
Cost leadership: Organisations goes with the strategy with the objective to produce
products at lower costs and become famous with the name of lowest cost producer within the
industry. Gaining competitive advantages by Trading Scents requires to enhance profitability by
reducing prices of perfumes or cosmetic products. The organisation by adopting such strategy
can supply unique services with innovative commodities at affordable prices in the market. The
company has resources such as efficient logistics with cheap labour addition to monetary funds
to make technological investments which can lower costs of key products and supplying same
below competitors prices.
Differentiation: It comprises producing goods which are attractive and different from
those of rivals. Trading Scents has capability to perform research, innovation development and
delivering high quality commodities. Attaining competitive advantages through differentiation
strategy can help in producing innovate perfume products for targetted audiences. It will help in
manufacturing products that are different from competitors and attracting larger customer base to
achieve competitive advantages (Brooks, Donaghy and Knaap, 2012).
Cost Focus: It emphasis on consumers addition to niche market to offer goods at lowest
manageable prices. The strategy will help management of Trading Scents to prefers to point clear
niche market through properly understanding market dynamics together with consumer wishes in
order to ensure that they delivers products at low costs. The organisation posses skilled and
qualifies human resources who analyses market situations to understand consumer requirements
so that products are produces accordingly.
Differentiation Focus: It concentrates on manufacturing unique featured product with
proper analysis of specified market. It includes powerful brand loyalty and faithfulness between
consumers. Trading Scents can gain competitive advantages by producing unique commodities
that are different from competitors. The company has core competence of high skilled human
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resources who utilises their creativity for producing innovative products by ensuring that the
keep the costs as low as possible.
From the above analysis of numerous strategies, it can be said that Trading Scents
administrators should go ahead with focus strategies which are cost and differentiation so to
produce commodities that are different from rivals and involves low possible costs. Adopting the
strategies will help the organisation to sale perfumes and beauty products at reasonable costs and
attracting larger customer section as well as retaining existing customers.
Competitive Advantage with Growth Opportunity
Growth opportunities to attain competitive advantages can be achieved through PESTLE
analysis. Such analysis is considered as strategic tool to analyse pertaining macro environment of
business. It helps in gaining knowledge about external environment together with its impacts on
functions addition to operations of company (Pestle analysis. 2019). Trading Scents managers
uses such tool to identify where opportunities exits for the expansion of business. Following are
its factors:
Political factor: It constitutes political stability, trade regulations, corruption level and
legal frameworks. In UK, the government has levied various rules, policies addition to
regulations for firms performing operations in cosmetic industry. For Trading scents
administrators, it is very crucial to be aware about changes in policies or regulations so to
perform operations and expanding business. Awareness about trade regulations helps in grabbing
opportunities and making trade agreements with government so that subsidies are provided and
tariffs are reduced to deliver products at distant places that impacts of expansion of business in
positive manner. In case of ignoring political regulations or failures in following laws,
organisation will be penalised which will impacts in negative aspects on profitability.
Economic factor: Various impacts of Brexit are experienced by UK that put stressful
circumstances on investors addition to financial institutions as the value of currency which is
pound is decreased against dollars. In context to Trading scents, investors who made investments
on the company have started to force the owners to return the money back that impacted on
corporate image due to making unexpected payments to investors. It impacted on organisational
functions with operations due to rises in investors pressures as well as exchanges rates from
financial hubs.
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Social factor: Healthy lifestyle, education level, entrepreneurial spirit, attitudes, skill
levels and leisure interests are elements of social factor. The population of UK are more
demanding and changes their preferences about products in limited time. Consumers wants all
products to be available at one store so that it becomes convenient for them to buy products as
per their choices. Trading Scents committee members have made various departments of
products such as perfumes, skincare and cosmetics commodities that benefits to attract larger
customer base. Management of firm carefully understands market trends as well as forecast
future ones so to produce distinct and unique goods accordingly which can help in enhancing
opportunities to increase sale together with customer satisfaction that can impact in positive
manner on business profitability.
Technological factor: Market of UK in context to technology is attaining huge growth as
various digital technologies are attaining attractions. Trending technologies consists of network
agility, SaaS denial and artificial intelligence helps in driving operations of any company.
Information technology department of Trading Scents adopts latest technological innovations in
order to grab opportunities to attract larger customers by providing them information about
unique or distinct products and can build relationships at workplace as artificial intelligence
helps in catering services to customers (Bryson, 2012). For instance, IT team provide full
information about products available at store and if customer want perfume bottle then they can
communicate with robots and robots provide them demanded commodity without wasting any
time which impacts on expansion of business through satisfying customers and retaining them.
Legal factor: Legal environment boost sustainability of business. Federal Food, Drug
and Cosmetic Act, Fair Packaging and Labelling Act are some legislations that are governed at
UK. Trading Scents mangers have to comply with all the essential legislations related with
cosmetics ad skincare so to run operations, activities, tasks and functions in proper manner. If
company violates any legislation, then they have to face numerous hurdles to manage functions
and expand it in competitive market which impacts on business in negative manner.
Environmental factor: Beauty industry of UK is emphasising to go green. Their aim is
to become eco friendly so that less stress is on the environment and for this, there is ban on usage
of plastic. In context to Trading Scents, various eco sensitive products are manufactured and
wastages are reduced that provide growth opportunities for expansion. Administration committee
also makes sure that no plastic is used while packaging but while manufacturing skin care
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product various plastic ingredients such as microbead (which exfoliate dead cells and brightens
skin) are used that impacts in negative manner and creates problems to expand in competitive
market.
Trading Scents determines PESTLE analysis so to understand all factors and start
working in effective manner so to grab opportunity for competitive advantage for business
expansion.
P2. Evaluation of growth opportunities by applying Ansoff's Growth Vector Matrix.
Growth is essential for all business despite of their types. Business growth refers to
boosting revenues with greater service incomes as well as product sales by minimising costs.
Evaluation of opportunities to grow can be done with application of Ansoff's matrix. The model
is a planning tool which is generally used by marketers, executives together with senior
managers to devise growth strategies (Channon and Jalland, 2016). Top level management uses
Ansoff Growth Vector model to formulate strategies for growth opportunities. Explanation of
the model is under beneath:
Market penetration: This strategy is less risky as it leverages existing resources along
with capabilities of business. Herein, existing business commodities are sold in current market
segments only. Trading Scents marketers can use the strategy to attain growth by supplying
existing products in current market segments through promotions channels or pricing strategies
so to reposition brand and promoting beauty care along with perfumes. It will benefit in building
strong customer base addition to increasing market share. At the same time, the strategy has
some limits that hampers growth of business.
Market development: In this, current products are introduced in brand new market. To
adopt the strategy, focus of Trading Scents marketers is towards advance technologies and
analysis of new market so to boost sales so to enhance profitability. With market development
strategy, selected entity can cater distinct customer segment or expanding regionally or
internationally. It will benefit the company to grab attention of new audiences as well as
improving market shares that can add numerous business opportunities for growth. In contrary,
the strategy is more risky as entering in new segment and attaining success is more risky as there
are more chances of failures.
Product development: Herein, new products are manufactured to target existing market
segments. With proper research for expanding product range, management of Trading Scents can
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use this strategy for understanding current market needs as well as providing innovative
solutions so to meet the demand in satisfactory manner. It benefits in minimizing risks associated
with costly mistakes as well as improving profitability (Coale and Hoover, 2015). At same time,
various unrealistic expectations are build which fails organisational new products unexpectedly.
Diversification: In this, new commodity is launched into new marketplace. It is risky
strategy as the organisation do not have any experience or information about needs or
requirements of new market place. Marketers of Trading Scent have enlarged their team so to
research and collect information about new market segment and according produce new
commodity which is preferred by customers. It benefits to the company to gain growth
opportunities through mitigating risk of loss, preserving capital as well as generating more
returns by attracting new audiences. Diversified organisation fails to react rapidly towards
changes in market.
As per the evaluation of opportunities for growth through applying Ansoff's Growth
Vector Matrix it can be said that management of Trading Scents should follow product
development strategy to launch a new product with low prices in the current market. It will help
in attracting wide customers which results in massive expansion. Product development strategy
assist in grabbing attention of audiences as well as enhancing profit margins by increasing sales
to capture competitive edge at market place.
TASK 2
P3. Potential funding sources with benefits and drawbacks.
Funding is characterised to an act to supply financial resource in terms of money. It is
allotted for short or long term purposes to companies. It assists in carry forwarding business
activities without any delays. Various sources of funds available to finance department of
Trading Scents are the followings:
Bank Loan: It is most common and simple source to take funds from bank. It refers to
extension of money to another party from any financial institution with the agreement that all the
funds taken will be repaid within specified time duration (Dyker, 2013). Finance managers of
Trading Scent can opt the source due to its secured nature. Shortcomings as well as benefits of
the source are as follows:
Benefits: It includes:
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 Bank loans are easily procured.
 Trading Scent if opts such source then they have to repay money on low interest rates.
Drawbacks: It involves:
 Borrowing money on huge quantity results in decreasing cash flows. Huge penalties are levied on the companies who does not make repayments on time.
Crowd Funding: It is featured as practice of funding a venture through raising money in
small amounts from large size people as well as through Internet. Another name for it is
crowdfunding addition to alternative financing. Benefits with limitations are:
Benefits: It constitutes:
 One of the fastest way for raising money excluding upfront fees.
 Trading Scents by choosing such source will face minimum or low legal compliances
while sourcing funds (Frank and Reiss, 2014).
Drawbacks: It includes:
 While sourcing finance through crowdfunding, organisation must posses good market
image which is not possible for small sized companies and it limits in raising funds. Business like Trading scents needs more efforts and time to gear up with market or
community and publish their project in order to bring investors before raising money.
Angel Finance: These are the affluent individuals who mainly provides capital for small
enterprises so to attain growth in exchange to ownership equity. They provide support at the time
when other investors are not in the condition to deliver capitals.
Benefits: It comprises:
 Financing with such source are suitable as they involves less risks as compared with other
sources.
 If Trading Scents opts the source of fund then they will be benefited in raising funds
without any collateral securities as well as guarantees (Friend, Power and Yewlett, 2013).
Drawbacks: It includes:
 Angel finance demands profit share as well as stake that creates burden on small
business.
 In competing market, it is difficult for small company to find and attract such source or
borrower who can share capital for long term without any agreement.
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From the discussion it can be analysed that the suitable funding source for Trading Scents
is bank loan as repayment of money at lower rates can save revenues of business. Such source
also provide capital to maintain daily operations along with cash cycle.
TASK 3
P4. Business Plan comprising strategic objectives addition to financial information.
Business plan is characterised to written description about methods or ways through
which a business can reach towards achieving its key objectives. It lay outs plans according to
marketing, operational addition to financial viewpoints. It is very crucial for all organisations to
layout their objectives together with attracting investments (Frisch, 2012). It comprises industrial
overview of which the company will be a concern as well as distinguish the business from
potential rivals. The plan provides detailed information about business nature, background,
financial projections as well as organisational strategies for achieving standard goals.
Management of Trading Scents are planning to expand its product range in ongoing market and
for such the formulated business plan is as follows:
Executive summary: Trading Scents delivers beauty products in Thames Valley of UK
and managers of firm are thinking to increase existing product line and for this, business plan is
prepared. The plan constitutes objectives, Situational analysis, budget statements addition to STP
approaches.
Organisational overview: Trading Scents is one of the top perfume wholesaler in UK.
It comes under small and medium sized business which deals with skincare, perfumes with
cosmetic commodities. The company provides online delivery services to distant location
customers and prefers customisation concepts.
Vision and mission: Mission statement of Trading Scents is to design best aromas in
partnership with potential clients to manufacture commodities preferred by consumers. Vision of
the company is to become leader by grabbing sensations with aromas in order to promote
happiness together with well being (Ganguly, Sahoo and Das, 2013).
Goals: To goals of the entity is to expand operations by launching new product which is
Trading Secret Mineral 99 which is a hydrating face cleanser that will clean, hydrate as well as
protect skin from dullness.
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Objectives: Strategic objective of Trading Scents is to manufacture unique products
within industry as to attain growth. The company has objective to capture 20% market sales,
increase 23% sales addition to 18% market sales by 2022.
STP Framework: At the time of preparing business expansion plans, STP framewoek is
also analysed. It includes:
Segmentation: Herein, market is divided into distinct and homogeneous segments so to
increase profits with market share. The company is expanding product line and for it the
segmented aspects are:
Demographic: Marketers of Trading Scents makes segments as per age group and their
interests. The individuals above the age of 14 years who are interested in maintaining their
beauty as well as fragrances are segmented under demographic aspects.
Behavioural: According to consumption, purchase and usage is done in behavioural
segmentations. Trading Scents segments the market as per huge consumption and more purchase
aspects (Inam, 2013).
Targeting: Trading scents targets middle with high class population above the age of 14
years who prefers skin care, perfumes with cosmetic products.
Positioning: Building position of company in the mind of customers is very important.
Trading Scents adopts planned strategies for positioning new product using paper articles and
social sites.
Situation analysis: Current situations of market are properly analyses with SWOT model.
SWOT analysis of Trading Scents is below:
Strength Weaknesses Opportunities Threats
 Reasonable
prices that
attracts more
customers.
 Trading Scents
delivers high
quality
products in the
market.
 More
competitors in
same field.
 The company
is more
dependent on
funding
sources.
 Launching new
product such as
Trading Scents
Mineral 99 in
existing
market.
 Offering
discounts
addition to
 Changes in
customer
attitudes or
perceptions
about Trading
Scents product.
 More rivals
hampering
sustainability
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other attractive
services (Pred,
2017).
and existence
of business.
Resource allocation: With proper consultations with finance department, Trading Scents
Management has allocated funds after preparing budget estimates. Following is budgetary
estimates for Trading scent Mineral 99:
Monitoring and controlling: Time to time all the performances are analysed and if
deviations are found then proper controlling tools are selected so to get best results. Trading
Scents managers provide training and development to marketers when their performances are not
up to the set standards (Song, 2012). Other then this, key performance indicator tool is also used
to evaluate success of business at reaching targets in order to expand massively without any
hurdles.
TASK 4
P5. Options of exit or succession including benefits and drawbacks.
At the time difficult situations are faced, organisational managers goes with succession or
exit options. The decisions for such options are made after analysing all the circumstances. If the
firm is attaining success then they opts succession options other wise in times of failures, exit
options are chosen. For instance, Trading Scents performing activities to distribute new with
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existing products for massive expansion will opt succession options. Following are the some
succession options with advantages and disadvantages:
Merger and Acquisition: When companies gets consolidated, they are said as merger
and acquisition. At the time when two or more business combine their skills, resource, liabilities
and assets to form single entity, it is characterised to merger. In contrary, when individual
company is taken oven by some other company it is termed to acquisition (Todes, 2014). Both
takes place by purchasing assets, exchanging shares for assets or purchasing common shares.
Trading Scent in order to expand can either get merge with other company or should acquire
small enterprise so to accelerate growth.
Advantages: Merger and acquisition options will provide taxation advantages, greater
financial power, eliminating competition, better approaches to wider market and diversifying
product portfolio of Trading Scents.
Disadvantages: The options results increasing debts addition to liabilities and
understanding ways of performing activities among both companies will lead to loss of
productivity for Trading Scents as after merger or acquisition employees requires reskilling and
it takes much time to provide exhaustive reskilling which takes too much time and hence non
productivity of company.
Business Integration: Another succession option is business integration where managers
aligns technology with goals as well as synchronize business culture, information technology
addition to objectives. If Trading Scents adopts such succession option then they can leverage
their current technology, processes, information and people to stay ahead against rivals.
Advantages: It will benefits to Trading Scents with improved data accessibility, better
communication, Robust growth, facilitating better decisions and improving productivity. It is key
catalyst for massive expansion.
Disadvantages: The option will increase difficulties as well as builds capacity building
problems which will decrease flexibility of Trading Scents (Young, 2016).
From the evaluation, it can be stated that Trading Scents can opt succession option of
merger and acquisition which will helps the firm in massive expansion and grabbing
opportunities in marketplace. Other than this, the company will have greater financial power and
can also avail taxation benefits.
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CONCLUSION
From represented discussion it have been summarised that effective planning for growth
is key for accomplishing massive expansion. All organisations should plan growth so to reach
towards success. Porter Generic model helps to evaluate growth opportunities through various
strategies or considerations such as Cost leadership, Differentiation, Cost Focus addition to
Differentiation Focus. PESTLE framework is used for analysing external market situations in
order to find out opportunities associated with business expansion. Organisations can also
evaluate growth opportunities through Ansoff's Growth Matrix that constitutes strategies such as
market development, diversification, market penetration along with product development.
Potential funding sources are crowd funding, angel financing as well as bank loan. Business plan
is usually formulated to launch new product and it constitutes strategic objectives as well as
financial information so to scale up business. Various succession options are business integration
together with mergers and acquisition that will help in running activities smoothly.
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