This document discusses the importance of planning for business growth and operations. It covers key considerations for evaluating growth opportunities, sources of funding, and business planning for growth. The document also explores methods of exits and succession planning for small businesses.
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PLANNING FOR GROWTH
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Table of Contents INTRODUCTION...........................................................................................................................3 TASK1.............................................................................................................................................3 P1: Key consideration for evaluating the growth opportunity...............................................3 P2: Evaluation of growth opportunities using Ansoff's growth matrix..................................5 TASK 2............................................................................................................................................8 P3. Sources of funding with their advantages and disadvantage...........................................8 TASK 3..........................................................................................................................................10 P4 Business plan for growth of the business........................................................................10 TASK 4..........................................................................................................................................15 P5.Succession or exit plan for small business with its advantages and disadvantages........15 CONCLUSION..............................................................................................................................18 REFERENCES..............................................................................................................................19
INTRODUCTION Planning is termed to be the most vital component for the business which supports the association in deciding in advance about the business growth and operations. Planning is predetermined activity whichbusiness needs to perform in order to identify what should be the goal of the business and what necessary steps towards the achievement of that goal must be taken. To gain sustainable growth and development it is crucial for the association to plan for their organisation growth. SME's are coined as small and medium size enterprise which deals in operating their business operations on a small scale. The assignment is based on Airdri Ltd. That deals in the manufacturing of Hand dryers. Completion of the reports will consist the study about various sources which is required for the funding and key consideration for the growth. Additionally the reports also focuses on the formulation of business plan so that the expansion of association can be done in the most significant manner. Along with this the study also examine the methods of exits and succession of the organisation from market.
TASK1 P1: Key consideration for evaluating the growth opportunity. Planning is refers to as the foundation for the association as this would supports organisation in attaining their goals and vision which have been targeted. This provides organisation withappropriate plans and strategies. Predetermined plans will also empower the associationinanalysingtheiractualbusinessperformancetotheirstandardsetforthe performance(Barbour and Deakin, 2012). Association like Airdri Ltd. Will also give their emphasis on the development of the correct idea and scheme so that defined vision can be attained. Below mentioned are the ways which are implemented and adopted by the business of Airdri Ltd. - Porter's generic strategy: Porter's generic model is considered to be the most valuable model used within the business associations in order to earn a competitive advantage in comparison to their rivals. Implementation of Porter's generic model will also assist the business to undertake steps for enhancing their performance in the competitive era. These stages are as mentioned: Cost leadership strategy :This is also refers to as the low cost strategy. Adoption of this strategy will enable the organisation of Airdri Ltd in easy attainment of the competitive benefits in compare to their potential competitor. This will also allow the business to capture larger section of the market by keeping low prices of their products and services. Differentiation :This strategy of the model calls for the manufacturing of the products with some unique features and qualities according to the demand of the customers. Production of the product with some innovation will also leads to the increased customer base, increased competitive advantage of the Airdri Ltd. By increasing the profitability too(ZHANG, ZHAO and CHEN, 2013). Cost Focus-Cost focus is termed to be the strategy which is being implemented on the niche or the narrow segment of market. this strategy is most probably used buy the business to gain the competitive advantage within the niche marketso that the business of Airdri Ltd. Can produce the product considering their customers demand and satisfaction level. Differentiation focused:This is the most important stage of the porter's generic model which is considered by the association as this strategy will enable the business in their documentation of the appropriate plans and strategies so that the customers mind can be captured
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and the name and image of the brand in the mind of the customers can be strengthen. This will also empower the association to make plans to expand their business by launching new product so that customer base can be built. Conclusion: As per the above mention all the strategy the Airdri limited will focus on the cost leadership strategy in order to gain competitive advantages and customer base through keeping the prices of their product lower than the rivals. This strategy helpful to achieve growth and compare their product with another organisation and according to that prepare effective strategy. PESTEL analysis Every business is affected by some factors while their operations these factor can either be external or internal. To determine these factor the PESTLE Analysis is done where all the factors associated with the political,economical,social,technological, legal and environmental are considered. Airdri Ltd. Will focus on the adoption of the PESTLE analysis in their business in order to reduced the risk that are associated with these factors and are also impacting the business revenues and sales margin(Fahlvik, Elfving and Wikström, 2014). Components of PESTLE analysis are : Political factor :Political factors are the one which are under the control of the government. This involves the formulation of the policies and plans . Business of Airdri Ltd. Will be benefited with benefited with the political factor by gaining a sustainable growth and opportunity as the economy of the UK is stable so this will be advantageous. Economical factor :Economical factors are those which are related to the factors which are for the development of the economy such as inflation rate, growth rate, GDP rate etc. as the economy of the UK is developing very rapidly it will be advantageous for the business of the Airdri to grow and develop their business with increased amount of profits. This will also support association in sustaining their business in the competitive market for the longer duration of time(Li, Mobin and Keyser, 2015). Social factor :Social factors are those which involves the needs, customs, belief, values etc. So the business of Airdri must focus on the frequently changing demands and expectation of the client so that the business can retain in the competitive market by fulfilling all their customers needs.
Technological factor :These factors are those which involves technology innovation and up gradation. The business must focus on the manufacturing of the products with new and updated technology so that business can full fill their customers needs by the installation of the new and up graded technology in the business. Environmental factor :This involves all those factors which impact the business in a consistent manner either in favourable manner or unfavourable manner. So in order to maintain the consistency and better environment the business of Airdri Ltd. Must give their emphasis on the following of all the laws and systems in the best possible manner. Legal Factor :The business of Airdri must focus on the implementation of all those laws and regulation which have been enforced by the government in order to protect the employees as well as their customers wants needs, desire etc. Conclusion: As per the PESTLE analysis it is determined that there are different factors that impact on the business operation in positive and negative manner so according to that take further steps and prepare strategies. P2: Evaluation of growth opportunities using Ansoff's growth matrix. Ansoff's growth Matrix :This matrix is the one which has been framed in order to aid senior managers, employees, marketers to plan the strategies which will leads the business towards the growth and development. It also helps the business in gaining some advantage that will support the association in competing other rivalry firm(Lu and Yu, 2014). Strategies of Ansoff's matrix adopted by the business of Airdri are as following : Market Penetration :This strategy of the Ansoff's matrix involves less risks as the association here seeks to grow their business with the existing product in the same market so that the business can grow their market share significantly. Organisation like Airdri Ltd. Will adopt this strategy so that the sustainability of the business in the market can be maintained for a longer span of time. Advantage This will increase the sales and revenue margin of the business as the association is already familiar to the to the existing market situation and their customers demand. By providing the products at the lower prices than the competitor the business can easily capture the large market share. As customers are more attracted towards the lower prices of the items.(Sharifi and et. al., 2014).
Disadvantage As the in the market penetration the company seeks to grow with their existing products in the existing market the chances for the innovation in the product reduce and new market can not be covered. Decreased in the level of goodwill of the firm. Market development:Market development is the concept which involves the growth of the market to the other market segment so that the brands image of the company can be strengthen. By the adoption of this strategy the business of Airdri can also expand their organisation to the areas where the they are not operating. Advantage: Development of the market will leads to covering of the larger section of thecustomers as through market development the business can increase their customer base. The vision and the standard goal of the firm can be achieved easily within the given span of time. Disadvantage: Installation of the appropriate tool for the advertisement of the products should be done so that the changing taste and preferences of the customers can be understood andcan get attracted towards the items easily(Grover, Bokalo and Greenway, 2014). Product development:As the name suggest itself the strategy seeks to launch new products in order to build their existing customers base in their existing market. This strategy of the product development will enable the business to survive in the competitive market by rendering them with number of the opportunity to grow their firm as well as the profit margin. Advantage: The business will be termed as the higher competitors to their rivals by the launch of the product with the unique and innovative feature so that the profit as well as the customer base for the product can be increased in the best possible manner(Glock, Jaber and Zolfaghari, 2012). Disadvantage: The company needs to focus on building the customer base for the creation of the demand and preferences for the new product in the market.
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Diversification: This strategy of the models focuses on the manufacturing of variety of products and services so that the expansion of the organisation and profit ratio can be done in the best way. This strategy will support the business of the Airdri to introduce their new product in the newer market segment. Advantage : Through the concept of the diversification the business can easily increase their profit and sales margin and can also attain a position of the growth and development by the introduction of the new products in the same old market. Disadvantage: Frequent changes in the demand will also leads to the decrease market value of the firm and less profitability . This will also hinder the success of the business as due to much fluctuation the standard and the actual performance can not be matched properly. Conclusion: As per the above strategies it is concluded that Airdri Ltd. apply market development strategy for larger section of the market. According to that covered and the launch of the new product with increased mass and build in the most effective manner. The introduction of the new item by the firm will also leads to increase level of the competition as the the product which the firm is introducing is already existing in the market(Arzaghi and et. al., 2017). Along with also select product development strategy due to provide product in existing product in existing market because Airdri have experience and know how to handle of customers. TASK 2 P3. Sources of funding with their advantages and disadvantage. Funds for the business is very essential as this involves allocation of these funds in such a way so that organisation can operate their operations in the best possible manner. Proper allocation of the funds may leads the business towards a stage of success. The association of the Airdri Ltd will focus on the allotment of the funds to their different functional department in such a way so that from limited availability of the funds activities can be performed smoothly. To generate funds the business have focused on the generation of funds from the different sources these sources of funds are as mentioned below : Internal sources of the funding :Internal sources of the funding is refers to the arrangement of the funds in the organisation within its boundaries only. This includes extracting
of the funds from the sale of an assets, debt collection, credit collection, reduction in the working capital of the business(Zhang and et. al., 2013). External sources of funding:It refers to as the process where the funds are raised by the organisation from the outside environment. These includes the extraction of the funds from bank loan, overdraft, crowdfunding etc. Some sources of external funds are as mentioned beneath : Bank Loan: This is the best source of funding as in this the amount is borrowed from the bank and is promised by the client to pay the amount within the specific period of time which have been stated. These amount can be borrowed either for the longer durationoftimeoreitherfor theshorterdurationoftimeaspertheindividual requirement. Advantage : Bank loan is advantageous as this will provide the organisation as well as the individual with the exact rate of the interest which has been fixed so that they can easily pay it within the short duration of time. Example:Raising funds from the bank will enable the business of Airdri Ltd. To repay it within the specific period of time as the burden of the business to repay the loan will increase due to which the effectivity to perform the operation smoothly will also increase(Wey, 2015). Disadvantage: And the disadvantage of the Bank loan to the business is that if the business is not able to pay the amount of their loan to the bank all the assets of the business can be seized. Example :If Airdri fails to repay its amount of loan than the amount borrowed by keeping assets as an security will be sold by the bank due to which the aim of the firm cant be achieved. Overdraft:Overdraft is termed as the mutual agreement between the parties regarding the extension of their credit limits. This agreement is generally signed between the company and the bank. Some pros and cons which are attached with the overdraft for the business of Airdri Ltd. Are as follows: Advantages : With the aid of overdraft the business can easily resolve their issues related to the arrangement of the funds.Example :Through the help of the overdraft the business can
easily attain their vision as overdraft to the organisation of Airdri will leads to immediate availability of the funds(Porter, 2012). Disadvantages: Overdraft may be sometime leads to disadvantage to the firm as to extent the limits of the credit the business here is required to pay extra amount.Example: The association like Airdri has to face the problem of the increased Debt ratio as the rate of the extra fees is charged high. Crowdfunding:It is the process which involves raising of the funds in the small amount through the support of each and every individual. This process is valuable for the business as well as the individuals. This scheme of raising funds is generally used by various social media industries so that the money can be extracted from different different persons. Pros and cons attached to crowdfunding are : Advantages : This will enable the business of Airdri Ltd. in building their brand image in the mind of customers by raising funds from each and every single within a short duration of time. Example- Extraction of large amount of funds can support the business in successfully attaining their goals and targets(Stanilov and Sykora, 2012). Disadvantage : This concept of raising funds from the public is quite challenging as the general public do not show much interest in this crowdfunding.Example-As the relationship with the general public is not much strong this will create a huge problem for the business of Airdri Ltd. To gather the funds(Sharifi and et. al., 2014). Conclusion:Therefore, the above discussed various sources of finances enable Airdri limited to acquire best positioning within competitive marketplace. However, crowd funding is more suitable for business as it very cheap and effective with various benefits that leads them to maintain their financial position among industry as well as provide positive perceptive over public that improves the overall performance and helps them to gain competitive advantage. For other sources required to pay extra interest rate which is not good for the business.
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TASK 3 P4 Business plan for growth of the business Business plan: Executive SummaryThis business plan summarise the overall details of the company which include vision, mission and strategic objectives. In addition, this plan include the industry or market analysis, customer value proportion, marketing strategy or operation plans. Business DetailsNew product: Hand dryers with fragrance systems Vision:Airdri Ltd. Aims to capture the larger section of the market with the expansion of their business through the introduction of their new venture. Mission:The Mission of Airdri Ltd behind operating their business operation is to render their customers with the high quality of the products so that their needs gets satisfied. Objectives :Business operates their operations with the objective to earn higher sales as well as revenue margin within the time period of 4 months by 10%. The business of Airdri Ltd. Also gives their great emphasis on the covering 15% market share by 2021. In order to satisfying their customers company implement SMART objectives(Lu and Yu, 2014). Internal or market analysis Company is small size which expected to grow market share by 15 % before 2021. Competitive Analysis: InternalAnalysis:Todeterminetheinternalcircumstancesthe businesswillmainlyfocusontheSWOTanalysiswhichinvolves strength, weakness, opportunity and threat which the business is facing from its competitors Strength The business of Airdri Ltd enjoys large customers base and market Weakness The Association may suffer from thelackofknowledgetothe
share as it provide the customers with higher quality of products as per their demand. customers regarding the advanced features and technology prevailing in the market. Opportunity Airdri has the great opportunity for the expansion of their business by launching this advance technology product in the market(Güneralp, Perlstein and Seto, 2015). Threat Hugemarketcompetitiontothe business of Airdri can be a threat as this will leads to decrease in the profitability of the firm. Segmentation: Company segment the group on the basis of demographic factors where it classify according to age, gender or education. Targeting: Airdri target the demographic segment where they target the young age group people. So they required hand dryer to dry their hand and reach the place where they wanted to go. Customer & value proposition It is beneficial for all group of people because at time of using wash rooms they need to dry their hands before going outside of the toilet. So Hand dryer withfragrance system help the customers to go out earlier with good smell in their hand. Market strategyProduct: Company introduce Hand dryer with fragrance systems. Price: £100. Promotion: Product promotion should be done online, television or other social media sites. Place: This product placed in the Airdri stores as well as available online through company's website. People: There are various people include to the delivery of this product suchassalespersons,workersinthemanufacturingunits,digital marketing team to handle online orders and customer query. Process: Company follow the simple process to deliver their product
such as distribute products to their retail shops or online. Physicalevidence:Hand dryer with fragrance systems is the product which offer to the customers. Operations PlanInventory required:Clean Air, HEPA filter which made with bonded glass fibers. Suppliers: They required material from those suppliers who provide quality material to build Hand dryer. Manufacturing process: Company order the raw material from their suppliers and send it to the manufacturing units where they produce hand dryer. Further distribution team send it to the retail stores along with it, marketing team done promotion to attract more customers. Management team & company structure Airdri limited follow the Flat organization structure with few or no levels of management in between management and employees level. This structure supervises staff members less due to advertising and increased engagement in the decision making procedure. The key people of the business such as: 1. Bruce Philipps (President) who is care of new product development strategies. 2. Tony Wall, CEO, Responsibility of quality, R&D, supply chain management 3. Andrew Hunter, Group finance director, Responsible for all finance matters across the Airdri audit, foreign exchange management. ResourcesBusinessphysicalLocation:TechnologyHouse,OakfieldEstate, Eynsham, Oxford, Oxfordshire, GB Machinery&Equipment:HandDryers,ReducedEnergy Consumption,NoiseReduciton,Design,Manufacturing,Global Logistics Staff: 51- 200 employees. FinancialThe business of AIRDRI Ltd. Will focus on the arrangements of the funds to start up their new venture. The requirement of the funds will be
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fulfilled by the company by raising their funds from different different sources such as bank overdraft, crowdfunding, bank credits etc. the business here will foster their great emphasis on raising the funds through bank credit as this will aids the business to pay low rate of interest so that the business can successfully launch their new product of Hand dryer with Fragrance. The business is also required to focus on the promotional tools for the new products as effective way of promoting will also increase the profitability of the business(Boddy and Hickman, 2013) Financial projectionIncome statement projection: Particulars2020 (£M) 2021 (£M) 2022 (£M) 2023 (£M) 2024 (£M) Sales1922201726 Expenses: COGS79567 Depreciation0.80.80.80.80.8 Advertisement1.22.51.12.31.8 Rent0.50.50.50.50.5 Salary & Wages1.81.92.121.2 Furniture& Equipment 3 Travel0.10.30.40.20.1 Interest Exp.33333 Total Expenses17.41812.914.814.4 Netincomebefore tax 1.647.12.211.6 Income tax exp.0.21.52.81.22.9
Net income after tax1.42.54.318.7 Cash flow projection: Cash Flow Particulars2020 (£M) 2021 (£M) 2022 (£M) 2023 (£M) 2024 (£M) Cash Inflow Investment5000 Credit sales20004500300045001500 Total Inflow70004500300045001500 Cash Outflow Fixed:Rent& Electricity 30002500150020001200 Variable: Material25003502003500150 Total Outflow55002850170055001350 Net cash Inflow150016501300-1000150 Opening balance01500315044503450 Closing balance15003150445034503600 RiskAirdri company face the three different types of risk such as financial, market or product risk. Financial risk can be mitigate through borrow money from their family & friends. Market risk can mitigate through effective research of market trends and last product risk also mitigate through ensuring product quality and feedback from customers. Total estimated Budget
Thus, the above mentioned estimated budget will empower business to decide how much to spend on what activities so that the cost can be controlled and maximum profit can be earned. TASK 4 P5.Succession or exit plan for small business with its advantages and disadvantages. The business of Airdriis also affected through various factors such as political, social, rapid changes in technology, demands of the customers. Due to which the challenges in front of the business increases. To overcome these challenges the business may undergo certain decision regarding their exit plan or for their succession plan to sustain the business in this competitive market. Various ways to exit the market for the business are as mentioned below: Ways to Exit : Liquidation :Firms decides to Liquidate their operation of the business when they are not able to pay their own debt. It involves permanent winding up of the enterprise. Advantage : The advantage of the Liquidation of the business is that all the employees working within that particular organisation gets their unpaid salary or the amount which is due to the business at that particular period of time.Example– Airdri can build strong relationship with their employees by paying them the due amount so that the employees relation with the business sustain for longer period of time(Fahlvik, Elfving and Wikström, 2014). Disadvantage:
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Liquidation decision will not allow the business to further trade in the market place. For instance- once the Airdri Ltd. Decided to wind-up their business their chanced to increase their trade and profitability will be diminished. Sell of the business in Open market :This involves the selling of the business to the third party in the rather than closing it permanently. The business can be sold either to the existing employees of the firm or the manager of the firm. Advantages: The business can easily operates their operation as the existing employees of the organisation are already familiar to the business environment and can operates the function in the best possible manner.Example- The business of Airdri can easily grow their business operation and profitability in the market with the engagement of their employees(ZHANG, ZHAO and CHEN, 2013). Disadvantages: Due to the sell of the business the firms suffers from the lack of trust level among their clients.Example- The business of Airdri Ltd may suffer from the decreased customer base towards the business as the business is being sold in the open market. Management Buy In: It is one of the corporate action where managers or management team of the organization raise funds from outside of the business. This action will be taken when firm is undervalued and required to manage their finances. Advantage:Most of the time it happen that buyers purchase undervalue companies share and then hold for the period when it provide higher value for that. For example: In the Airdri company, management can raise the funds from outside business in the condition of undervalued. Disadvantage: It is normal that new management team also fail to provide required growth after changing the management. In context of Airdri, change of management team will demotivate the employees which further affect the individual performance as well as productivity.
Manageability Buy Out: It is an act of management where they purchase operations and assets of the business. It is mostly used by the higher level managers who receive greater rewards as owning the business rather than serving as employees. Advantage:It will encourage the staff members of the company to perform better and commitment from members involvement. In context of Airdri, management use this exit way which encourage other employees to perform well. Disadvantage: Management buy out required individual responsibility & goals which required to complete group task. In the Airdri, people are not responsible on individual basis which impact the group efforts as well. Floating shares: It is refer to the shares which can freely brought or sold by the public without any restrictions. Total shares which available in the market for the trading purpose and investors tend to invest in the stocks which is higher floating. Advantage:Floating shares help the investors to understand the number of shares available for trading in the open market. For example: Airdri company can use this method to buy or sell stock from the open market. Disadvantage: Company may issues additional shares just to increase floating stock if organization does not required for additional shares. If Airdri use this method then it may reduce the earning per share of the company due to issues additional share without requirement. Conclusion: Thus from the above ways to exit the firm must focus on the Liquidation where the full and final winding up of the business will be done so that the firm can easily claims for any unpaid amount of funds, salary, holiday package from the funds of the governing authorities(Barbour and Deakin, 2012). It is difficult to select because every option provide different benefit and it is mainly based on the structure of the business and according to that select it. CONCLUSION From the above inferred report it can be summarised that planning for the growth of the business will enable and empower the organisation to formulates various strategies and plans for
the success of the business. Along with this the use of Ansoff's matrix and PESTLE analysis will also help the business to determine the factors which are impacting the business and will also aids in the evaluation of the growth opportunity for the business. Additionally the preparation of the business plan will also support the business in successfully estimating all the information about budgets , plans and strategies so that the launch of the new ventures can be done systematically. This report also focuses of the succession and exits plan of the business in the near future.
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