Planning for Growth Report

This report examines the growth opportunities for R Robson (Guinot), a cosmetic company, using various analytical frameworks. It analyzes potential funding sources, designs a business plan, and assesses exit or succession options, recommending a merger or acquisition as the most beneficial strategy for the company.

PLANNING FOR GROWTH

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1. Analysing key considerations for evaluating growth opportunities and justifying them.1
P2. Evaluating the opportunities for growth applying Ansoff’s growth vector matrix..........4
M1: Options for growth using a range of analytical frameworks..........................................5
D1: Critically evaluating specific options and pathways for growth.....................................5
LO 2.................................................................................................................................................5
P3. Assessing the potential sources of funding available to businesses and discussing its
benefits and drawbacks...........................................................................................................5
M2: Potential sources of funding and justification.................................................................7
D2: Evaluating potential sources of funding with justified argument....................................7
LO 3.................................................................................................................................................8
P4. Designing a business plan for growth including financial information and strategic
objectives................................................................................................................................8
LO 4...............................................................................................................................................10
P5. Assessing exit or succession options for a small business with explaining their benefits
and drawbacks......................................................................................................................10
M4: Evaluating exit or succession options for a small business comparing and contrasting the
options and making valid recommendations........................................................................12
D4: Critical evaluation of the exit or succession options for a small business and appropriate
justified recommendations to support implementation........................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Planning plays an important role for an organization in order to manage their work
effectively and properly. Planning includes all the factors which can affect their system, such as,
managing their employees, products and services, etc. Without proper planning it becomes
difficult for the company to improve their overall performance. Planning for growth in business
is a strategic activity which helps the firm to make innovative ideas through which they can
increase their revenue.
Present report will study about R Robson (Guinot) which is a cosmetic company situated
in Ascot, Berkshire, United Kingdom. It will also assist in evaluating the overall growth of firm
through Ansoff’s growth vector matrix. This study will discuss about different sources of
funding which is available in market with their advantages and disadvantages. It will also design
a business plan which will include their financial data and strategic objectives of the firm and
explains exit or succession options for small business.
LO 1
P1. Analysing key considerations for evaluating growth opportunities and justifying them
R Robson (Guinot) is a cosmetic company which provides beauty treatments products to
their customers. It is a business to business (B2B) organization that is running its company
successfully in beauty industry. Now this company is planning to introduce some herbal product
range for the treatment of skin related issues, such as, acne, dark circles, wrinkles, etc. For R
Robson, it is very important to have a good planning so that it can help them in introducing their
product effectively in market. For this they can implement various analysis to analyse the growth
opportunities that are present for them in market (Wu, 2015). For example, they can use Porter
generic strategic model to evaluate their competitors that are present in industry and from
PESTLE analysis they can understand the different factors which can affect their product, such
as, political, economic, technological, etc. These approaches are explained in detail below:
 Porter’s Generic Competitive Strategies: This is a process which is helpful in
explaining the strategic planning of their competitors that can affect their marketing and
business as well. This method will help in introducing their new organic range effectively
(Keough, 2015). There are three elements present in this model, i.e.,
1. Cost Leadership: In this method, it basically focuses on introducing their products at lower
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cost as compared to their competitors. This will help an organization to attract more customers
and can earn a good profit.
2. Differentiation: In this strategy, company focuses on creating a product that is totally
different from other products that are available in market already. For R Robson it is very
essential to introduce their herbal product range with some uniqueness so that it will help them
in attracting more customers (Grover, Bokalo and Greenway, 2014).
3. Focus: This is the factors which basically focuses on selected target market which is
beneficial for them. This will help them in increasing their sales and revenue as well. This
strategy is divided into two sections, i.e.,
3a. Cost Focus
In this method, company tries to focus on the
cost factors of their products to make it
affordable for their customers.
3b. Differentiation Focus
In this process, organization seeks
differentiation in its target segment, such as,
young group, ladies, etc (Darroch, 2014).
 PESTLE Analysis: This process plays an important role in the identification of growth
opportunities that are available in industry which can help them in introducing their new
herbal treatment cosmetic products range. This analysis helps in analysing different
factors which can have a huge impact on their products range, such as, political,
economic, social, technological, environmental and legal which is explained below:
Political Factor These factors have a huge impact on any business activity as it is very
important to follow all the regulations that have been made for such
companies, such as,
 They have to properly register their products before launching
it in the industry (Ying, Chaolin and Xiaojiang, 2014).
 R Robson has to follow all the taxation policies, laws, etc. in
order to work properly.
Economic Factor These are the economic factors which can affect their business in
numerous ways, for example,
 The most important economic factor is impact of inflation rate
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in market.
 They also have to cope up with increased interest rates which
can affect their products.
Social Factor Such factors are related to the behaviour of customers which can have
a huge impact on R Robson, such as;
 Change in the purchasing behaviour of customer is a huge
factor for such industry.
 Element based on age, gender, lifestyle, etc. is another issue
for R Robson to deal with.
Technological Factor It is very essential for a cosmetic company to have all the latest tools
and technology which can enhance their product and can help them in
increase their sales effectively. These can include,
 Products with new herbal constituents (Zalengera and et.al.,
2014).
 No chemical cosmetic range, etc.
Legal Factor There are various legal factors which can affect their business, for
example,
 They have to properly follow all the laws and regulations that
are mandatory for R Robson to implement efficiently in their
company.
Environmental Factor This plays an important role for any organization. R Robson has to
ensure that they are not harming the environment in their
manufacturing processes.
 They have to make sure that they are using biodegradable
packaging for their products.
For R Robson it is very important to focus on the cost leadership strategy as this will help
them in reaching maximum number of customers. This will increase their sales and overall
generated revenue as well.
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P2. Evaluating the opportunities for growth applying Ansoff’s growth vector matrix
To evaluate growth opportunities for business it is very important to understand all
aspects of their industry that can have a huge impact on their product range. This can be studied
by applying Ansoff’s growth vector matrix in their system to thoroughly study the respective
market. Ansoff growth matrix is a model which is used to understand possible growth strategies
for firm (Rastogi and Trivedi, 2016). From the analysis of this model it will help them in making
growth strategies which can help them in introducing their new herbal cosmetic treatment
products range effectively. There are four elements present in this growth matrix, which is
explained in detail below:
Market penetration Market development
 This strategy helps to analyse the
market in which they are operating
their business. This will help them in
making their services effective.
 In this process, it basically focuses on
their existing products in market.
 In this process it focuses on delivering
their new products in the existing
market.
 This will assist them in increasing their
overall performance and sales as well.
 It will also increase their customer rate
for R Robson (Hopp and et.al., 2018).
Product development Diversification
 This is the factors in which company
focuses on targeting their existing
market with new products.
 This is very useful for R Robson in
introducing their herbal product range
effectively in market.
 This is process which can have a huge
impact on business activities of R
Robson.
 This method helps in introducing an
entirely fresh product in new market.
 This process also has a lot of risk
factors in it.
As R Robson is planning to bring an herbal range in their cosmetic treatment products, it
will be very beneficial for them to choose market and product development strategy. These two
methods will help them in reaching to maximum number of customers. This will also increase
their overall revenue.
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M1: Options for growth using a range of analytical frameworks
Using various models and analysis can help them in analysing their growth opportunities
which is very useful for them in improving and expanding their business in market. There are
various theories and studies which can be used by R Robson, for example, Ansoff matrix,
PESTLE analysis, Porter generic model, etc.
D1: Critically evaluating specific options and pathways for growth
From Porter’s generic strategy model, it is clear that for R Robson cost leadership plan
will be very effective as from this scheme they can reach to maximum number of customers in
less time. And from Ansoff growth matrix, they have chosen market and product development
strategy both as it will be useful for them in introducing their herbal cosmetic treatment products
effectively. Other factors of these models are very risky to implement in their business activity as
they are unable to understand reaction of customers at initial level. So it is better for them to use
safe strategy.
LO 2
P3. Assessing the potential sources of funding available to businesses and discussing its benefits
and drawbacks
For any new business planning funding plays an important role as it will help in
providing the firm financial support. It is very important to have effective source of funding
which can help them in achieving their target successfully (Denton, Forsyth and MacLennan,
2017). They have only £20000 to invest in their business plan. They want a total amount of
£200000. Remaining £200000 can be collected through funding by company. There are various
methods through which this funding can be achieved, such as:
Internal sources
Personal investment: investment of personal resources in business in the common source of
funding is the most cost-effective way to provide financing rather than other sources (Rastogi
and Trivedi, 2016).
Advantages of personal investments:
 A person knows the specific amount to be invested in own business.
 It gives much more control on business.
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 Personal investment will give full ownership of businesses; it will help to retain all
profits.
 Disadvantage of personal investment:
 There is a risk of losing all the personal saving if business plan fails. Using money will have a strain on family and personal life.
External sources
Bank loans: taking loans from bank are most common and easiest method of granting
loans for start-up businesses. Banks provides loans on basis of amount of funds. Loans can be
given for a specific period depending on tenure of loan. Banks takes regular interest on amount
of fund, this involvement have benefits in tax deduction. Unlike other sources banks wants
personal commitment or collateral security for granting loans.
Benefits of bank loans:
 In raising funds from bank one should only worry about the statement, banks don't
monitor how they use the amount as long as they make payment on time, so an owner can
invest the amount they want.
 In terms of interest rate., bank is more cost-effective than any other sources, lower bank
rates help to save the profit.
 Banks only demands their instalment and principle amount; they don't require and share
of profit. So all the earnings can be retained.
 Bank interest are tax deductible cost which helps in showing more expenses while
preparing tax (Gurcaylilar-Yenidogan and Aksoy, 2018).
Disadvantages of bank loans:
 They are very lengthy process to accomplish.
 Repayment burden: periodic instalment in banks is a hectic process. Different interest rate can cause irregular payment amount.
Government grants: Government agencies provides financing such as grants and subsidies
that may be available to your business. But there are lot of competition for taking subsidization
through government. Grants can easily be rewarded to start-ups, government wants some detail
description of projects and how it will be beneficial to society and economic development.
Advantages of government grants:
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 The main advantage of government grants is; the company need not have to pay back
their funds.
 The government will also help in increasing networking that would help in starting
business.
 Grants from government is not taxable amount.
Disadvantages of Government grants:
 There are lots of competitive firms which have applied for government grants.
 The paperwork for application of grants is a complex process and time consuming. Company may not get the expected amount of funds for new business.
Crowd funding: The crowdfunding is the use of amount of capital from numerous
individuals to finance a new business venture. It is easy to access the use of large network to
bring investors together.
Advantages of Crowd funding:
 Sharing business idea to investors will help in getting feedback and advice to improve
plan.
Disadvantages of Crowd funding:
 It is a lengthy process and time consuming to choose right platform of investors.
M2: Potential sources of funding and justification
For R Robson, personal investment and crowdfunding will be a great option to choose for
their business planning effectively. As this will help them in achieving their target and objective
in short time.
D2: Evaluating potential sources of funding with justified argument
Various sources of funding are available for R Robson to get sufficient amount for their
business planning. From all the above sources, personal investment and crowdfunding are very
useful for them and easy to implement in their business. All the other processes that are present
in funding, such as, bank loans, capital investment, government grants, etc. all are time
consuming and lengthy process. These processes will delay their plan in introducing their herbal
cosmetic products in market.
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LO 3
P4. Designing a business plan for growth including financial information and strategic objectives
For any organization or small business, it is very important to have effective business
plan which can help them in achieving their objectives. It is very essential for R Robson to
calculate all the aspects and issues which can affect their company. Various elements that are
present in a good business plan includes,
 Executive Summary: This has a huge importance for an organization. This will include
all the details of company and will help in explaining every information of their business
plan. R Robson has to describe all the functions that will be included in their plan
effectively.
 Business Description: This will include the details of their business plan and how they
will execute it. In the present plan R Robson is introducing a new range of herbal
treatment cosmetic products range for skin treatment, such as acne, pimple, dark circles,
etc. in market.
 Mission and Vision: Their mission is to reach maximum number of customers through
their products specifically. Mission and vision has to be clear for R Robson in order to
plan their strategies. And vision of this company is provide their customers some good
and herbal products which can help them in treating their skin problems effectively
(Ghezzi and et.al., 2015).
 Product or Service Description: This part of business plan includes the detailed
description of their products. For example, in their herbal products range it will include
all the naturally extracted products to make it more effective and good.
 Competitor Analysis: This method will help R Robson to analyse their competitors.
From this analysis it will be very helpful for them to make improvements in their
products to make it more successful. For example, Herrco Cosmetic Limited can be a
competition for them. To compete with them they have to deliver their products better
than them.
 Market Analysis: To implement any business plan it is very important to perform an
industry investigation as this helps in understanding their respective market. For R
Robson, it has a huge impact as it will enable them to provide their service as per their
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customer's preferences which will assist them in increasing their overall sales. For
example, interacting with people and getting a knowledge of their preferences in
cosmetic product will be very helpful for R Robson.
 SWOT Analysis: This method helps in evaluating strength and weaknesses of an
organization along with its opportunities and threats that are present in market. Strength
of R Robson is that they are introducing an herbal product range which will not affect
their customer's skin in any ways possible. Financial status of R Robson can create a
huge hurdle in the execution of their business plan.
 Strategic Objectives: This will include all strategic objectives which is required in
achievement of their plan effectively. The primary objective behind this plan is to
introduce a new product range which is herbal and effective for skin treatment. This will
also help them in expanding their business more and increasing their overall generated
revenue (Okagak and Dean, 2016).
 Financial Planning: Financial status plays an important role for any organization as it is
mandatory for them in successfully executing their business plans in market. As R
Robson has only £20000 in their accounts and they are funding £200000 for their
business. They have to manage their work accordingly. Following is the financial
statement for company:
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Figure: 1
LO 4
P5. Assessing exit or succession options for a small business with explaining their benefits and
drawbacks
Exit or succession options are very important for any small business if they are planning
to close their business. There are numerous reasons behind this, such as, retirement, health
issues, not interested to continue the business (Succession planning: 3 exit strategies for
entrepreneurs, 2016). There are various options that can be useful for them for exit or
succession, such as: Mergers and acquisitions: In this process it basically helps in combining two companies
together. This can also be considered as effective option for small business to choose
from. Merger basically happens when two different companies of same size merges
together in order to increase their sales, efficiencies, etc. Whereas, in acquisition process,
one company buys another firm.
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Benefits: It adds more value to the combined entity as compared individually. It will also help in
opening up a new market for both the merged companies. It is cost effective method and helps in
creating new growth opportunities for them.
Drawbacks: It can increase the amount of debt that is owed. There are sometimes when both the
companies have different opinions. (Mergers and Acquisitions (M&A), 2016) Liquidation: This can also be a great option for small businesses. In this process, the
company gets closed by selling all their free assets to convert them into cash to pay the
firm's unsecured creditors and shut down their company. This can be a very effective
method that can be used for small businesses in shutting down their company.
Benefits: This helps in allowing directors to focus on new ventures. Any legal action against the
company will be resolved easily. Relatively low costs are involved in this process of liquidation.
Drawbacks: All assets will be sold for repayment of company’s creditors. In case of a liquidation
liquidator of company will make all employees redundant. Directors can become liable of the
company’s debts as well. Selling the business: This is the easiest option for small business to opt for exit or
succession plan. In this method they can sell their business to their family members or
relatives or friends who are interested in taking it further. In this way it will also give
them liberty to take care of their business if needed. Other than this they can also sell it to
their trusted employees or to a third party through the process of employee stock
ownership plan (ESOP).
Benefits: Getting maximum returns at the time of sales due to valuation of goodwill and assets.
This is the easiest way through which any small business can be sold out.
Drawbacks: Valuation of business is a difficult task and helps in finding an appropriate buyer
may take longer period (Advantages and Disadvantages of Company Liquidation, 2016). Initial public offering (IPO): In this process, all the shares of a company are sold to
institutional investors and usually also retail investors. An IPO can be a suitable and
ultimate exit strategy because it provides the business long-term capital, improved
financial position, prestige and public awareness.
Benefits: It helps increase public awareness and it can generate huge capital as well.
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Drawbacks: It requires lots of resources. Selling stock through an initial public offering is very
costly for small enterprise. Initial public offering (IPO) is also a very lengthy process to
accomplish.
M4: Evaluating exit or succession options for a small business comparing and contrasting the
options and making valid recommendations
Various options are available for small businesses to choose from if they want to shut
down their business, for example, selling their business, liquidating it, merger or acquisition, etc.
For R Robson merger and acquisition is a good option as it will help them in improving the
overall performance of their company and it will also assist in increasing their sales and can
generate a good revenue.
D4: Critical evaluation of the exit or succession options for a small business and appropriate
justified recommendations to support implementation
All the options which is being mentioned above have its advantages and disadvantage as
well. As for R Robson merger or acquisition will be a good option as it has more benefits as
compared to all the other options available. Other methods like, liquidation or selling their
business in family or to friends will not give them huge benefit which merger and acquisition
will provide them. This is also helpful in expanding their business more in industry.
CONCLUSION
From the above report it can be concluded that planning plays an important role for any
small business to make it successful in respective industry. Having an effective business can help
an organization in assessing the opportunities and risks. It also explained various strategic
models which has helped them in evaluating their growth opportunities, for example, PESTLE
analysis, Porter generic model, Ansoff matrix, etc. For R Robson it is very essential for them to
have good financial status for which they have used personal investment and crowdfunding
option so that they can effectively execute their business plan in market.
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REFERENCES
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planning to growth and yield. The Forestry Chronicle, 90(1), pp.35-43.
Gurcaylilar-Yenidogan, T. and Aksoy, S., 2018. Applying Ansoff’S Growth Strategy Matrix To
Innovation Classification. International Journal of Innovation Management, 22(04),
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Hopp, C. and et.al., 2018. Revisiting the influence of institutional forces on the written business
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Keough, S.B., 2015. Planning for growth in a natural resource boomtown: Challenges for urban
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Okagaki, L.H. and Dean, R.A., 2016. The influence of funding sources on the scientific method.
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Rastogi, N.I.T.A.N.K. and Trivedi, M.K., 2016. PESTLE technique–a tool to identify external
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Wu, F., 2015. Planning for growth: Urban and regional planning in China. Routledge.
Ying, W., Chaolin, G. and Xiaojiang, L., 2014. Research progress of urban growth boundary at
home and abroad. Urban Planning International, 4, pp.1-11.
Zalengera, C. and et.al., 2014. Overview of the Malawi energy situation and A PESTLE analysis
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Advantages and Disadvantages of Company Liquidation. 2016. [Online]. Available through:
<https://www.begbies-traynorgroup.com/articles/closure-options/what-are-the-
advantages-and-disadvantages-of-company-liquidation>
Mergers and Acquisitions (M&A). 2016. [Online]. Available through:
<https://www.shopify.com/encyclopedia/mergers-and-acquisitions-m-a>
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