Planning for Growth Assignment : Tile and Stone Depot Ltd

Planning for growth

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................7
TASK 3............................................................................................................................................9
TASK 4 .........................................................................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Planning for growth helps small business units for growing there business in right
direction, as it is a tool that guide the business owners where to go and what strategies they can
implement to grow there business and achieve the objective of the firm. Present study is based on
a private limited company of UK that is Tile and Stone Depot Ltd which was incorporated in the
year 2011 in Greater London. Company is having one active director and have less than 10
employees with a turnover under £2 million and includes the retail sale of hardware lines like
different tools, housewares and appliances. Report includes key considerations for evaluating
growth opportunities within an organisation. Further study is based on Opportunity for growth by
applying Ansoff's growth vector matrix on the given company. There are potential sources of
funding for business that have been explained in the report by further giving benefits and
drawbacks of these sources. Business plan for growth is also design in the given report which
include financial information and different strategic objectives of the business. At last study on
exit and succession options for SME is done that further include benefits and also some
drawbacks of each option(Albert, 2017).
TASK 1
Key considerations for evaluating growth opportunities within an organisation
For having growth opportunities in an organisation firm must work on its resources,
capabilities and its core competences. They are competitive advantages of a firm that means firm
can have advantage over the competitors by offering customers such products which are at lesser
price or higher in quality so that consumers have a feeling that they are getting benefits out of it.
There are four strategies which porters have defined as Porter's Generic Strategies which help in
getting competitive advantage which leads to growth of the firm. Tile and Stone Depot Ltd can
use these strategies for growth opportunities of the firm(Angotti, 2018).
Cost leadership:- With this strategy company becomes lowest cost producer in the broad market
and in this way they are able to lead the market by lowering the price of the offerings. By
discounting the products, sales of the Tile and Stone Depot Ltd will increase and in this way
market share of the firm will also increase. For the same coordination in functional areas of
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business must be there and effective technology is required with good distribution channels and
this strategy will lead to increase in productivity of the business(Arzaghi and et.al., 2017).
Figure:-1
Cost Focus:- In this strategy business take advantage of lower cost in small market segments.
Tile and Stone Depot Ltd can minimize the costs in the areas where there products are not
differentiated and they can follow focus strategy as by applying this strategy companies only
focus on few segments where opportunity for growth is more(Baschat, 2018).
Differentiation Focus:- This strategy is some what same to cost focus but here the market will
not be broader but they will be focusing on quality products introducing just in a specific niche
market. Tile and Stone Depot Ltd can either sale there products as least expensive or most
expensive but in a particular niche market. If customers are getting a quality product at higher
price they will go with that offering only. This strategy helps the company to target a group of
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Illustration 1: https://www.google.com/search?
q=porter+generic+strategies&oq=porter+gene&aqs=chrome.0.0j69i60j69i57j0l3.1117
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customers by competing in market with help of quality products and in this way they will be
having competitive advantage for growing business(Bridge and Dodds, 2018).
Differentiation leadership:- With the help of this strategy Tile and Stone Depot Ltd can have
competitive advantage by differentiating there products all over the market. Company can have
the product as superior in quality, function or features that make them differentiate from other
products. These products are basically comes in luxury brands. It is not an easy task but with
help of effective technology products with high quality can be made and different marketing
plans can be used to extract potential customers(Daniels and Lapping, 2016).
Another frame work which can be used for generating opportunity for growth of Tile and Stone
Depot Ltd is PESTEL analysis.
Political Factors:- There are many political factors like change in government policies, foreign
trade policies, tax policy, labour law, environmental law etc. which affect growth opportunities
of a firm. For example Political stability in UK will help in bringing new opportunity for Tile
and Stone Depot Ltd to grow smoothly in market and reduces the challenges for making different
strategy and implementing it on whole market(Duncombe, 2017).
Economic Factors:- The Economic factors like economic growth, exchange rates, interest rates,
unemployment etc. affect each and every organisation in certain way. These factors may affect
purchasing power of Tile and Stone Depot Ltd as it affects the products and services
price(Mason, 2015).
Social Factors:- There are many social factors like norms, customs, population growth, age
distribution, lifestyle, attitude of customers which affect growth of Tile and Stone Depot Ltd.
People are now a days very conscious towards there health so company have to provide such
products which do not harm there heath and are also eco-friendly. For targeting the customers
social factors have to be taken in consideration as every individual have there own attitude
towards the offering. There are many cultural barriers which are in need of consideration during
targeting(Rodríguez-Rodríguez and et.al., 2016).
Technological Factors:- For having growth Tile and Stone Depot Ltd have to innovate such
products which can help the company to compete in market and grab huge market share.
Technology used in firms affect is operational part so Tile and Stone Depot Ltd have to focus on
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research and development so that they can launch different products which can increase the
competitiveness.
Environmental Factor:- The environmental factors like pollution, carbon footprint or scarcity
of raw material can directly or indirectly affect the business growth. Tile and Stone Depot Ltd
have to develop such products which do not impact environment as this will generate awareness
and company will get competitive advantage. Company will have opportunity to improve
business performance by making the organization environmental friendly(Rudolf, Kienast and
Hersperger, 2018).
Legal Factor:- There are legal factors like employment laws, consumer protection law, patent
law, safety law etc. Tile and Stone Depot Ltd should consider these legal factors as important
part for growth opportunity as patent law can help the business to reduce the patent related issue
as no other organisation can not copy there ideas. To increase the customer service quality
company must have a stronger consumer rights so that they can bring opportunity for the
firm(Sarin, 2019).
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Opportunities for growth applying Ansoff’s growth vector matrix
Figure:-2
Ansoff's matrix is used as best strategy if the firm want to increase there sales. It has four
different options to grow a business by matching existing and new products with existing and
new market so that risk related to particular strategy can be determined. Which strategy will be
best for the business is depended on resources the company have. For getting best results
company need to take different risks for which a good budget is required then only Tile and
Stone Depot Ltd can have good position in market(Trasobares and et.al., 2016).
The strategies are as follows:-
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Illustration 2: https://www.google.com/search?
q=ansoff+matrix&oq=ansoff+&aqs=chrome.0.0j69i57j69i60j69i59j69i60j0.554
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 Market penetration:- When more of an existing product is sold in existing market by
just improving the order process or extending the business hours for improving the
performance of the business so that customers become loyal towards the product and
services and business can run for longer duration. By using this strategy Tile and Stone
Depot Ltd can reduce the risk related to the business activities and there market share
will increase which will bring competitive advantage to the firm. Initial stage when
company do not have much fund in hand it can just make improvement in process part or
provide value proposition that will help in competing to there rivalry. But this can also
become negative when market is saturated because of which growth of products get
diminished(Wu, 2015).
 Market development:- When existing product is launched in new market it will lead to
market development. Firms which have capability as well as resources can use this
strategy to increase there scope of market and have growth of the firm in right direction.
This strategy is risky as compared to market penetration as company will be entering new
market and is not that much aware about the customers behaviour in that market. For the
same they have to do proper research which will increase the cost of business. But this
may also be beneficial to Tile and Stone Depot Ltd as there market will extent which may
result in increase in market share of the firm and become tough competition for other
firm of the same market(Wynn, 2017).
 Product development:- When a firm is already having a good brand image they can go
with product development strategies where new products are launched in existing market
under the brand name. To keep the brand value in market company have to launch such
products which can match customers expectation as they will purchase the product due to
brand image it is having. There are companies like Unilever, Nestle which launch there
new products in existing market with there brand name and the result is that there new
products are in recognition due to good experience of customers related to previous
offerings that created brand value in eyes of customers. This strategy is more risky as
there are chances that customers are not satisfied with the offerings as they do not match
with previous products. Cost will also increase as for developing new product research
and development will be require and advertising cost will also be included as product will
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be new in market. It require lot of efforts to convince the customers for new products and
make them satisfied so that they can become loyal towards the offerings(Albert, 2017).
 Diversification:- When new product is launched in new market diversification is seen as
new product have to be developed with help of new technology and market is also new
which will require market development strategies so that more and more people can get
attracted toward the products. This strategy will help in increasing the market share if
results are positive. Here new products are targeted to new segments of customers which
may require huge cash flow, so company who are having enough cash and resources only
use this strategy. Tile and Stone Depot Ltd should use this strategy as it can help in
bringing new scope for the business and market share will also rise. It is risky for Tile
and Stone Depot Ltd to use this strategy but if the company is having good supply chain
and if the company easily adapt new geographical market then this will result in bringing
new opportunity for the firm and have smooth growth of there company(Angotti, 2018).
TASK 2
Potential sources of funding available to businesses and discuss benefits and drawbacks of each
source
Potential sources of funding are as follows:-
Bank loans:- Small and medium enterprises basically take funds from banks as it is easiest way
to get sources and no trust issues arise during the loan process. Banks usually give loans to
company that have good credit and track record as just having an idea is not enough to give loan
as it become risky for the banks, so a proper business plan is required. Banks give loans to start-
ups but at a guarantee or on basis of collateral they give to banks(Arzaghi and et.al., 2017).
Benefits:-
 Certain tax breaks and lower rate of interest is there if one take loan from banks.
 Flexibility:- Here the owner of company need to worry only about making regular
installment payment on time that is advantage over overdrafts. Bank only monitor how
you use loan till you pay your last installment.
 Cost Effective:- They provide the cheapest loans as compare to credit cards or overdrafts.
This help the companies to save money.
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 Retained Profits:- There are businesses which issue equity to raise capital and they give
percentage of profit to share holders, in such case borrowers have to pay only principal
value and interest amount amount will be on loan(Baschat, 2018). Tax benefits:- When owner of business take loan from banks it is tax deductible expense.
Drawbacks:-
 While taking loan from bank there is a strict requirement of collateral and if one need to
have unsecured loan then interest rate is very high.
 There is a periodic repayment procedure and failing which may result in asset seized.
Late payments may affect your credit score and in future you will not get loan.
 Irregular payment amounts:- When you get loan on variable rate then it become difficult
to understand the future payments as rates changes according to market
conditions(Bridge and Dodds, 2018).
Retain earning:-
The profit of company that is not distributed among the shareholders but retained by
company to use it for business purpose is retained earning. The use of retain earning avoid cost
related issues and no legal formalities is required(Daniels and Lapping, 2016).
Benefits:-
 It is the cheapest source of funding as no acquisition cost in involved and no obligation is
there to pay anything.
 With this financial stability of the firm is there and it give strength to the business.
 Stable dividend is given to shareholders if company is not able to earn profits. With this financial position of the firm increases along with the market
shares(Duncombe, 2017).
Drawbacks:-
 Here funds are not utilised properly and there are chances that funds are spend uselessly.
 Here over capitalization may be there which may also result in improper business
practices.
 As in retail earning shareholders are not getting the benefits they deserve so this may
result in dissatisfaction in shareholders and market value may decrease(Mason, 2015).
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Crowdfunding:-
Here funds are raised with help of large number of people which contribute in smaller
amounts with help of internet.
Benefits:-
 There is no upfront fees and it is the fastest way to raise the funds of a business.
 It can become a valuable marketing process also as media will be giving full attention.
 For improving it company can get feedbacks or expert advice.
 Public reaction can be seen whether they are happy or not this helps in tracking progrees
of the business. Investors may become loyal customers and with use of this no struggle for getting loan
from banks will be there(Rodríguez-Rodríguez and et.al., 2016).
Drawbacks:-
 There are chances that project may get flopped.
 Here lot of efforts to build interest of people is required for which funds and times is
necessary.
 Failed project may lead to lower down of your reputation in market and next time people
may not trust the company.
 Some people may steal your ideas if patent of your business ideas is not there(Rudolf,
Kienast and Hersperger, 2018).
TASK 3
Design a business plan for growth that includes financial information and strategic objectives for
scaling up a business
Executive summary: The Tile and Stone Depot is a London, United Kingdom based medium
scale company. The Depot company is specialised in production and sales of tiles and bricks.
The company is the best seller of ceramic tiles in the entire United Kingdom. The company
wishes to evaluate its strategies and introduce biodegradable tiles and for this purpose it needs to
prepare a business plan so that it can achieve its objectives effectively and efficiently(Sarin,
2019).
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Company information: Tile and Stone Depot Ltd. was founded by Baris Tarakci and Yomtove
Jacobs and it has specialised in sourcing and supplying high quality tile and brick design to all
sectors of industry and architectural market. The company's main aim has always been to satisfy
consumer needs and wants. As of today, the company has been successfully running for 8 years.
Vision: The company wishes to go public after 3 years and its main vision is to increase its
operations in countries like India, China, Canada and Australia(Trasobares and et.al., 2016).
Mission: The company's mission is to constantly grow and maximise its profits by providing
customer satisfaction which can be done through producing good quality products.
Objectives: The company's diverse portfolio aims towards manufacturing of bio-degradable tiles
and stones that do not harm the environment. Its long term objectives include establishing a
priority based strategy(Wu, 2015).
SWOT analysis:
SWOT analysis is mandatory for every company especially in today's time and age. It helps in
identifying the strength and weakness of the company. It also includes preparation of strategies
to overcome the weakness. The strategy forecasts the future by tapping the potential
opportunities and countering the future threats(Wynn, 2017).
Strengths:
 Huge variety of products made up of different materials
 The Oldest manufacturer of wooden and ceramic tiles in the entire UK which makes
them so experienced.
 Moderately priced products as compared to its competitors(Rudolf, Kienast and
Hersperger, 2018).
Weaknesses:
 Limited geographical access
 Does not sell the product online and as a result lose out on big market share.
 Use of traditional technology has led to increased fixed cost(Rodríguez-Rodríguez and
et.al., 2016).
Opportunities
 Countries like China and India are developing economies therefore the real estate is
booming.
 Bio degradable tiles have a good potential because of rising environment concerns
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 Introducing architectural and interior designer services will boost their business
Threats
 New competitors are entering the market with cheap prices.
 Traditional technology can swipe out the company from the market.
 BREXIT will affect the European market of the company(Mason, 2015).
Financial plan
Month Jan Feb March April May June
sales 15000 16000 17000 18000 15000 20000
total cash inflow 15000 16000 17000 18000 15000 20000
cash outflow
rent 2000 2000 2000 2000 2000 2000
salaries 5000 5000 5500 5500 5500 5500
administration cost 1500 1500 1000 1000 1200 2000
total cost 8500 8500 8500 8500 8700 9500
Net profit 6500 7500 8500 9500 6300
10500
Monitoring and controlling: Monitoring and controlling is concerned with evaluating the
performance of the company. It then involves comparing the actual performance of the company
with set standards. The company then analyse the deviations and take corrective actions.
Key performance indicator: KPI as the name suggests is a tool that determines how efficiently
and effectively a company is achieving its organizational objectives. It analyses business
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performance of all the departments like sales, human resource, finance and
marketing(Duncombe, 2017).
Benchmarking: Benchmarking is very important especially for a manufacturing company like
Tile and Depot Ltd. The company sets a benchmark for its product's quality, time and cost. Later
on it compares the actual performance with standard performance and takes corrective decisions.
TASK 4
Succession options for small business and its merits & demerits
Tiles and Depot Ltd. is a medium scale company and has a lot of potential to grow. The company
also aims to grow in other geographical locations over the world. This will be beneficial for them
as it will lead to profit maximization and would also increase the worth of the company(Daniels
and Lapping, 2016).
Some options for succession are
 Joint Venture: Joint venture as the name suggests means collaborating with another
company operating in a different market. The partnership can help the company to enter
into a new market with minimum risk and maximum profit. It is the best strategy for
medium scale companies that want to expand but do not have enough funds to do so.
 Acquisition: Acquiring another company is also a suitable option for a medium scale
company. In this situation the company can acquire a small company and take it under its
own shadow. Some medium scale companies purchase their supplier company in order to
cut the raw material costs. Tiles and Depot has the option to buy their supplier company.
This can reduce company's overall production cost and increase the profit(Bridge and
Dodds, 2018).
 Partnership: Their exists a hair line difference between partnership and joint venture.
Partnership is done as per the partnership act and the partnership firm operates in the
existing market whereas joint venture company operates in a new market. Both are
beneficial depending on the needs and wants of Tile and Depot Ltd.
 Go Public: Tile and Depot has the option to list itself in the London stock exchange or
any other stock exchange. This will contribute to the growth of the company by leaps and
bounds. It will increase the capital of the company which will help them to diversify its
operations and increase its activities(Baschat, 2018).
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 Product development: In order to grow as a company as well as overcome its
competitors, it is important to develop a new product by identifying customer needs and
wants. After identifying needs, the company needs to invest in research and development
and then develop a suitable product accordingly. Tile and Depot plans to adopt this
technique of growth and is aiming to manufacture bio-degradable tiles in the near future.
 Market Expansion: Market expansion means entering into a new market to sell the
existing product. Tile and Stone Ltd. plans to expand its business in countries like India
and China. This is not advisable for the company because they are a medium sized
company and are entering a new market without any collaboration. It is highly risky but
worthwhile if it implements the plan successfully(Arzaghi and et.al., 2017).
Advantages of Succession
 Innovation and development: Succession and growth leads to development of
innovative product. Growth leads to increase in profits which helps the company to
contribute towards research and development. Development of innovative product not
only increases the profit but also enhances public image of the company.
 Financial power: It improves the financial power of the company. The primary
objective of every company is to grow because they wish to maximise their profits.
Increase in financial power leads to increase in spending ability, development of
better quality product and offering more salary to its employees(Angotti, 2018).
 Satisfaction of customer needs: Continuous market research and analysis of consumer
demand can help the company in growing. Customer satisfaction is a win-win
situation for both the parties and it plays a very important role in their overall growth.
Disadvantages of succession
 Instability: The biggest disadvantage of growth is that many companies fail to handle
succession. As a result, it increases the instability in the company. Growth also leads
to increase n expenditure which leads to instability in the company.
 Disturbed working environment: Sometimes, during merger, acquisition and joint
venture, the work culture in a company gets hampered because the employees of both
the companies fail to get along with each other. As a result the efficiency and
productivity reduces and it leads to downfall of the organization(Albert, 2017).
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CONCLUSION
From the above study it has been concluded that company evaluate there growth
opportunity by focusing on competitive advantage which includes Porter's generic strategy and
Pestle analysis of the business. Ansoff's Matrix also helps in finding opportunity for growth of
the business as it is used as best strategy if the firm want to increase sales of there business.
Every organisation is in need of different sources for finance so that they can have growth in
there business. The best sources which SME go with are Bank loans, Crowdfunding and retain
earning. All the sources are having some drawbacks and benefits. Further report concluded about
business plans development which includes mission and vision of Tile and stone depot Ltd. And
also about the strength and weaknesses of the firm so that strength can be enhanced and
weaknesses can be overcome to grow the company in direct direction. A business case is
developed which will help Tile and stone depot Ltd to take there business ahead by attracting
potential customers towards them by offering good products that match the customers
expectations. At the end report concludes on various options regarding exit or we can say
succession period of a firm including its drawbacks and benefits.
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REFERENCES
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ONLINE
Porters generic strategies. 2019. [ONLINE]. Available. Through
<https://www.google.com/searchq=porter+generic+strategies&oq=porter+gene&aqs=chrome.0.0
j69i60j69i57j0l3.11170j0j7&sourceid=chrome&ie=UTF-8>
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q=ansoff+matrix&oq=ansoff+&aqs=chrome.0.0j69i57j69i60j69i59j69i60j0.5543j0j7&sourceid=
chrome&ie=UTF-8>
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