Planning for Growth

This document discusses the importance of planning for growth in business and explores various strategies and considerations for achieving growth. It covers topics such as evaluating growth opportunities, different sources of financing, and the application of Porter's generic strategy model and Ansoff's growth matrix model. The document also includes a case study of Vectair Holdings, a small medium enterprise, and provides insights into their growth planning and business expansion.

PLANNING FOR
GROWTH

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.Evaluation of opportunities of growth after analysing important considerations in an
organisation. ..........................................................................................................................1
TASK 2............................................................................................................................................5
2.Different sources of financing with their usefulness and drawbacks in an enterprise........5
TASK 3............................................................................................................................................7
3.Composition of Business plan for growth of business........................................................7
TASK 4............................................................................................................................................9
4.Valuation of Exit and succession planning for business ...................................................9
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................13

INTRODUCTION
Planning the growth is the business strategy that involves the tracking and designing for
the growth in the profits. Growth planning aims to take the businesses to greater heights. It
alludes checking the value of the company for the customers, determining the loyal customers,
examining the ways through which the revenue is generated, concentrating on the strengths of
the firm and working hard to eradicate the weaknesses (Abel-Smith, 2018). Collecting the data of
the availability of the opportunity present in the external environment. Investing in the
employees who will assists the business concerns in achieving the targets and utilising the
opportunities for expansion.
The small medium enterprise ''Vectair Holdings'' is taken in this study. It has its head
office in Basingstoke, United Kingdom. It provides the aircare and hygiene products worldwide.
This study includes understanding and evaluation of growth options through the application of
Porter's generic strategy model, Pestle analysis and Ansoff's growth matrix model. It also
consists of assessment of the financial sources with their use and flaws which are used for
fulfilling the funds requirement of the company. Business plan is made for the expansion and
growth of the selected organisation. Appraisal of various options available for exit and
succession for a small business concern is also conducted in this study.
Main Body
TASK 1
1.Evaluation of opportunities of growth after analysing important considerations in an
organisation.
An assessment of activities of businesses is needed to obtain necessary information about
the production of the company and to determine various factors that affects its performance. In
order to improve the business acumen , there is necessity of recognising the growth opportunities
which helps in long term survival in the environment. Competitive advantage is attained by
supplying the customers products with greater value, which is possible through less priced
products or high priced products with advantageous services as per the competition in the market
(Adams, 2016). Porter characterized two ways through which a business can accomplish
competitive advantage over its challengers. Application of Porter's generic strategy is as given
below:
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Porters Generic Strategy Model
Cost leadership- It is a strategy that businesses applies in order to reduce the costs and
make least costly products in the market to increase their share in the market area (Baschat,
2018). It means to lead in the market in costs controlling with two options. The first is that a
company can supply its goods at lower costs as compared with the competitor and second is
managing to reduce the costs in the production process and providing products at ordinary prices.
Vectair Holdings may attempt to limit employees number in their various shops as well as
permit customers to suffice themselves so as to reduce operational costs. Such measures can let
them to provide brands at certain quality and affordable price. It is used to receive high degree of
loyalty of customer so that other competitors do not even try to think to compete with the
company.
Differentiation- In this strategy an establishment looks for such position in the market
where it is identified as unique with a superior pricing and with such concepts that are highly
valuable for the consumers in the modern period. In this strategy the businessman focuses and
select the target market which is to be used for the selling activities of the firm to attain
differentiation or cost advantage. The special requirements of the customers can be kept in mind
by the Vectair holdings while selecting the target area where all the operations of the
organisations can be carried out smoothly with respect to selling the goods to the end user.
Analysis of the external environment to determine the growth and expansion opportunities.
Pestle analysis to assess the opportunities of growth-
Political factors-It alludes certain tax policies, employment laws, political instability,
framed rules and regulation by the government of the country (Berkowitz, 2016). Government
may modify the policies and rules whenever requirement of controlling the trade activities arises.
There is a wide competition in the UK market. Therefore Vectair Holdings can use the strategy
of competitive pricing to gain competitive advantage.
Economic factors-The economic factors refers to economic growth, alteration in interest
rates, monetary policies, inflation, foreign exchange rates, flow of import and export, economic
conditions, etc. The micro factors of environment like competitive norms affects the competitive
advantage in the market. Vectair Holdings may utilise the elements like inflation indicators,
market economy indicators, growth rate of industry and consumer spending data to predict the
growth of the company.
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Social factors- It includes the factors like growth rate in population, country people, their
beliefs, health, culture, age, transformation in the educational necessity and dynamic career
attitudes (Caldeira and Holston, 2016). They may have an impact on the operation and growth of
the company if not properly considered. These factors are not easy to handle. In the marketplace
where Vectair holdings operates the factor like shared belief and population's attitude play an
important role. The company can launch the products after considering the culture,
environmental consciousness, need and health of the population.
Technological factors- It includes technological change, automation, research and
development,etc. It has an impact on the promotional activity of the company. Technology
changes from time to time. All the companies are turning towards Social Media. The explosion
of social media lead to increase in engagement of the customer's interaction with instant
feedbacks on the products. Vectair holdings can do critical analysis of these factors to understand
the reaction of the customers to the trends in technology. The company can utilise these trends
for their benefit and growth by staying ahead in social media technology and all the new
technologies emerging in the market.
Environmental factors- These environmental factors can be weather, laws concerned
with pollution, climate change (Channon and Jalland, 2016). They are natural born elements and
hence can affect the business at anytime. In Europe the government provides healthy breaks in
tax to the organisations that work in sectors such as renewable. Vectair holdings may examine
the environmental standards of the areas where it has to expand its business.
Legal factors- Elements like consumer rights, law and protection, health & safety,
regulations and standards are called as legal factors. In UK, Europe and North America legal
framework are not strong enough for protecting the property rights of the establishments.
Vectair holdings can perform analysis of anti-trust law, health and safety, Copyrights law,
Consumer protection, Intellectual property, e commerce to protect the customer's as well as
firm's data so that rivals do not use the information of the company against it to reduce
competition in the marketplace.
Hence, by taking into account all the above aspects it can be stated that Vecatir Holdings
Ltd can get competitive edge by placing emphasis on sustainability aspects. Accordingly, by
performing operations in an eco-friendly manner firm can get competitive edge over rivals.
Along with this, by offering products or services at affordable price firm can influence customer
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decision making. Thus, by taking into account external environmental analysis business
organization can develop competent strategic as well as policy framework and thereby get the
desired level of outcome or success.
Utilization of Ansoff's model-
Ansoff matrix is used to make strategies for the growth of the company. It helps the
marketers and business leaders to use quick and simple way to make intellection about the risks
associated with growth. It is a marketing planning model. It consists of four strategies that can
be used to grow the business.
They are as follows-
 Market penetration.
 Product development.
 Market development.
 Diversification.
The application of Ansoff matrix to Vectair holdings is given as under:-
Market penetration-This strategy is used to grow the business by increasing the share
in the existing market with the existing product (Deng, Fu and Sun, 2018). This can be done by
providing offers, special discounts, encouraging people to increase the use of the existing
product, by taking over the company of the competitor, etc. This strategy can be extremely used
by Vectair Holdings in market by providing great deals, offers, Vectair coupons, Aircare
products prime, hygiene products freedom sale.
Product development- Product development refers to the strategy which is used for the
development of new product in the existing market (Frenchman, 2017). It includes ideas about
how new product can be developed according to the current needs of the customers. Vectair
holdings may carry on product development from time to time with the help of the third parties
so as to exist in the market for the long tenure. The customers of a range of products made
available by the company will increase in number if this strategy is adopted successfully. Now
Vectair Holdings is providing the ranges in products like infant, feminine, toiletries, fragrances,
washrooms, multi-phasing air freshner, etc. This strategy may result in greater customer
satisfaction and therefore increase in the sales of the company.
Market development-It includes the searching and development of new markets with
existing products. It can be done by attracting new customer base by modifying the price and
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packaging of the existing product .Vectair Holdings has increased its presence to 130 countries
and may develop its existence further with different prices in different location with this strategy.
Diversification- It involves introducing new products in new markets. This strategy
involves high risk with it. Vectair holdings may use this strategy by providing diversification in
its services. The different services provided by the company are refills, aircare products,
washroom products, soaps, surface care goods, feminine hygiene and infant care commodities,
etc.
Vectair holdings can apply the market development strategy to enhance the growth of the
business. This strategy application will assists in increasing the number of new customers and
revenue and the development of the company. It will also benefit in dealing with the
competition present in the current market.
TASK 2
2.Different sources of financing with their usefulness and drawbacks in an enterprise.
Every type of business needs funds to improve the capacity and adapt new technology
arising in the market, to minimise the costs and to be able to compete with the competitors
(Kinossian, 2018). Other requirements of finance may be felt by the firms in purchasing assets,
hiring employees and buying raw materials. There are various sources through which an Vectair
Holdings may get financial support for its operations. They are given as follows-
Bank loan- It is the form of financing often used by the businesses. It supplies the
organisations medium and long term loans (Jones, Lieberknecht and Qiu, 2016). The period for
loan, its interest rates, repayments amounts all these factors are decided by the bank itself. Bank
loans are more accessible to the large businesses that are well established and the growing
enterprises. Start-ups are not provided this service by banks due to presence of risk factor in
financing them (Secured and unsecured borrowing, 2019).
Merits-
 It provides tax advantages like tax savings due to its deduction from firm's taxable
income.
 The organisations get the benefit of guaranteed money for a fixed period to carry out the
business activities effectively.
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 The businesses gets benefit in accounting in budgeting as well as in making plans for the
expenditure incurred in the firm on monthly basis. Unionized and organized bank loans are rendered to the enterprises at minimum interest
rates.
Demerits-
 For the purpose taking bank loan there is requirement of partial funding to be provided by
the borrower, in absence of it the bank may reject the plea of loan.
 The business has to provide access to bank to check the internal statements in case of late
repayment of interest.
Overdraft – It is one of the facility of the funding where the money can be withdrawn
from the savings account or the current account even though the account balance of the account
holder reaches zero (Lee, 2016). They are kind of short term lending which are offered by the
banks and in return they do not charge any interest but levies fees for providing fund.
Benefits-
 There is no requirement of security and collateral to utilise this facility.
 Less documents are needed to avail this benefit with easy repay characteristic. The used amount can be paid at anytime and the interest has to paid on the used amount
only.
Drawbacks-
 Extra fees in the form of arrangement fees is needed to extend the usage of overdraft
financial instrument.
 For the long term requirement of fund an overdraft may be liable to cost than loan
facility.
Crowdfunding- It is an important option to fund an undertaking, and this is possible
without the task of giving the equity or collected debt. It is the exercise of financing the project
or undertaking by raising money amounts from large population through the use of internet
crowdfunding websites (Lines and et. al., 2015). Nowadays crowdfunding on the basis of equity
is increasing its popularity due to its advantage of providing the chance of raising to the start-
ups.
Advantages-
 It assists the businesses in hedging the risks like challenges in areas of market and uneven
economic conditions.
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 The businesses gets the expert guidances and responses which help them in improving
the activities. The reaction of the public on the products of the enterprise can be known through
crowdfunding.
Disadvantages-
 Reputation of the firm can be damaged through the failure in specific projects.
 The control of the investors increases when the company receives less rewards and
returns.
Peer to Pear lending- It is the type of crowdfunding in which the people who are in need
of funds are provided finances by the investment collected from the individuals who wants to
invest their funds (Murdoch and Abram, 2017). It allows the businessman to directly collect the
funds from taking loans from the number of people. It reduces the costs needed to acquire the
finance from various sources.
Benefits-
 It renders lower rate of interest in comparison with credit cards and some other
traditional institution.
 No requirement of providing collateral as the loans are in unsecured form. It does not have prepayment charges if the businesses wants to repay the amount before
the due date.
Drawbacks-
 This type of loans carry the risk with it as they are not insured.
 If the businessman wants to get higher return then the business may require to hold the
fund for a long period of time.
From all above sources of funds, the most effective source for the Vactair Holdings is
Bank loan. It provides both short term and long term monetary resource as per the need of the
company on the base of satisfactory return for the investments.
TASK 3
3. Composition of Business plan for growth of business.
Business plan assists the owner of the firm in resolving the difficulties faced during the
operations. Analysis of business plan helps the business operator in focusing on the marketing
efforts to develop the company.
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Business Plan
It is a written document of the company and related with the future of the business of the
firm. It help in developing and monitoring the policies and plan of action which are formulating
by the management to cope up all the essential matters that will make their contribution in the
growth and development in business (Murphy and Fox-Rogers, 2015). Vectair holdings will use
market development growth strategy and expand its business in Ireland with its existing
products. The business plan is explained as following:
Company overview- Vectair holdings are renowned manufacturer, provider of hygiene
goods and air care products and innovator. It has been engaged in this business from over thirty
years and supplies to 130 countries the sanitary and fragrance solutions. It renders its products
across UK, North America and Europe.
Mission- The mission statement of the company is to provide better quality products to
gain competitive advantages at market places.
Vision- The vision statement of the company is to offer products of the company at
affordable prices for the maximisation of customer base and gaining their loyalty till long time
period.
Strategic Objective-It refers to those aims and objectives which are set by the company
regarding the success of the company (Rodwin, 2017). Vectair holdings SMART objectives are
as following:
 To increase the market share of the company by 5% within 2 years. To maximize revenue of the organisation by 7% within 3 years.
Source of investment- There are various source of investment which are beneficial to
establish a business. Vectair holdings can raise fund from financial institutes such as banks,
investments firms and friends, family and others. The firm collected the fund for execution of the
project from the Loans taken from the banks and reserves of the company.
Action plan-It is the component of the business plan that lists out the actions to attain
peculiar goal of the business. It clarifies the type of resources and amount of resources with time
period needed to perform the action. The Vectair holdings will utilise the strategy of Market
development for the expansion of the business in new market that is in Ireland. The plan of the
company is to involve selling of the existing products in new marketplace. The company will try
to attract new customers with the brand value and high quality products with competitive pricing
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in Ireland market. The product line to be used will be Hygiene care. The taste requirements of
the customers will be analysed and thereafter the products range will be decided. Future sales
prediction will be determined and according to the estimation allocation of the resources will be
done. The firm will check whether the working of the company is helping in being successful or
not. Vectair holdings will make use of social media marketing and direct marketing to increase
the awareness and interest of the new customer base. This plan will aid in creating brand loyalty
and generating sales of the establishment.
Budget planning-It refers to a process through which an organisation or person evaluate
their earnings and expenditures and task their monetary fund intakes and outtake’s for the future.
In Vectair holdings, the management of the company can make budget in context of its task
activities and operations that how much cost required for exploring business in Ireland. In this
regard, company requires fund of £5000 for operating and managing business operations at
Ireland.
Budget Amount (in £)
3 months
Amount (in £)
3 months
Amount (in £)
3 months
Amount (in £)
3 months
Work manpower 2500 3000 3500 4000
Tools 1500 2000 2500 3000
Resources
Expenditure
1000 1500 2500 3000
Direct and
internet
marketing
6000 5500 3500 2500
Advertising 4000 4000 5000 5500
Total 15000 16000 17000 18000
TASK 4
4. Valuation of Exit and succession planning for business
Exit strategy plan is essential for the businessman to sell the company. It is the plan in
which the owner of the company decides to pass the ownership of the enterprise either to friends,
9

family, another companies, competitors or investors. There may be various reasons for the
entrepreneur to leave the current businesses. Exit plan helps in the smooth functioning of the
processes of exit. Vectair holdings may choose any of the following options for exiting the
businesses.
Exit Strategies
Voluntary/Compulsory winding up- Voluntary wind-ups happen when the owner of the
establishment becomes insolvent and before the legal action of the creditors they voluntarily
liquidates (Sadun, 2015). It is the common decision taken by the shareholders of the company in
resolution in the proceedings of the company. Shareholders passes the judgement of winding up
in order to avoid the situation of bankruptcy and another reason may be attainment and
fulfilment of the objectives of the enterprise.
In Compulsory liquidation takes place when a firm cannot meet the expenses of paying
the debts. Henceforth, the creditors seek legal action for the attainment of their money. The
entity is legally ordered by the court to wind up. To carry on the process of the winding up the
company has to arrange a liquidator so as to manage the overall tasks of closing the company
like sale of possession and to distribute the proceeds to the creditors (Wang, 2016). The creditors
of the company are the individuals who realize the insolvency of the business concern.
Advantages-
 Winding up convey an end in the chance of legal action so that focus can be on applying
efforts elsewhere.
 All the hire purchase and lease agreements come to an end with liquidation. The debt repayments are minimised by the activity of writing off.
Disadvantages-
 Through liquidation the company loses the most valuable assets which will be generally
used in settling the debts.
 It is not necessary that all the debts related issues are solved through liquidation. The
owner of the firm may be held liable for some amounts to be paid for personal
guarantees.
Selling- For the purpose of clean exit a director of the company may sell the business to
competitors, family, friends, employees, etc. The selling company should be advantageous for
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the buyer (Silva, 2015). Several selling options are available for the businessman who wants to
sell the company. They are private equity, initial public offering and sale to another company.
Benefits-
 Selling the business leads to gaining much profit as compared with the net worth of the
business.
 It can be carried on to explore better business opportunities. It is useful when the businesses are continuously facing the unavoidable losses.
Drawbacks-
 The time and money invested on the establishment of the business gets ruined.
 The process of selling the business consumes much of the time which may increase the
further losses.
Merger & Acquisition- It is called as external growth strategy. Both the terms merger
and acquisition are considered as same but they have different meaning. In merger various
companies integrates and form a new organisation (Sophia and Owuor, 2015). They are more or
less of same size and joins together to move progress at next level. It is also called as 'merger in
equivalent.' Both the participative companies surrender their stocks and thereafter the stocks of
the new business concern is issued (Merger, 2019). It is further classified into two types-
Takeover & amalgamation.
In acquisition and takeover an establishment acquires the other company to strengthen it,
the acquired concern provides its majority shares in return of cash and securities. The buyer of
the company absorbs the operating business concern and introduces self as the brand-new owner
and the target firm discontinue to exist in the environment. The stocks of the buyer company are
traded in continuation in the stock market whereas the seller firm's stock give up trading.
In amalgamation two firms submerge into one with mutual understanding and same
strengths. A complete new firm is established to utilise the liabilities and assets of the
enterprises. Amalgamation has been replaced by the words consolidation or merger in various
places. It is generally used by the smaller and larger concerns.
Merits-
 More effective and optimum use of resources can be possible.
 The company can enter into brand-new business enterprise lines speedily.
 Diversification is possible through merger.
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 Assists the companies to cope up with the multinationals threat and to compete in
global scale.
 Merger can aid the entity in increasing the size and advantage through the use of
the technical economies, bulk buying, and financial factors.
Demerits-
 The task of efficacious control and co-ordination gets over difficult and may
decline profitability.
 Mergers can lead to monopoly and thus concentration of economic power in one
hand in the market.
 There may arise a conflict due to presence of different people with culture and
style of management.
The Vectair holdings can adopt the business exit strategy of selling the establishment to
the known individual. It will benefit the company in collecting cash through the sale of business.
The available cash can be utilised in paying the dues to the investors and to preserve for self. In
addition to this, usually investors prefer to purchase business that has high customer base and
market share. Referring this, it can be stated that selling of business strategy will prove to more
beneficial for concerned entity.
Exist business strategy and its impact on business
12
Exist strategies
Finish working
activities
No sales distribution Dissolve
company
name
No customer
existence
No market
interactions
Now market
share

CONCLUSION
It is concluded from the above study that to improve and create reputation and goodwill
in the place of market business growth is necessary. An enterprise can attract the customers only
if it has a good image in the eyes of the customers. A company can grow by devising proper
planning for growth and that can be attained through expansion. There is need of assessing the
growth opportunities from time to time so as to make proper use of it in the development of the
company. Certain analytical frameworks like Pestle analysis, Ansoff's model and Porter's
strategic model helps in understanding the competitive advantage and in appraisal of growth
opportunities. Any firm can use the benefit of several financial sources provided through Bank
loans, crowdfunding and peer to pear lending. Designing of business plan for expansion can
benefit in studying the rate of growth and verifying the working of the enterprise. There may be
different reasons for the organisation to stop its functioning and the way through which it can
exit are Merger, acquisition, selling the firm and winding up either voluntarily or compulsorily.
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<https://www.merriam-webster.com/dictionary/merger/>.
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