Airdri: Planning for Growth - Business Strategy and Funding Report

This report provides a comprehensive analysis of Airdri's growth strategy, focusing on options for gaining a competitive advantage, sources of funding, and the development of a business plan for expansion. The report begins by exploring Porter's Generic Strategies, including cost leadership, differentiation, and focus strategies, and recommends a differentiation strategy for Airdri. A PESTLE analysis is conducted to assess the external environment, identifying opportunities related to government support, increasing disposable income, social networking, technological advancements, legal frameworks, and environmental factors. The Ansoff Matrix is applied, recommending a product development strategy for introducing touch screen hair dryers. The report then examines various funding sources, including personal investment, venture capital, overdrafts, angel investors, and government grants. Finally, the report addresses exit options for the business, providing a complete overview of Airdri's strategic planning for growth.

PLANNING FOR
GROWTH

Table of Contents
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
Options for growth used to gain competitive advantage for Airdri........................................3
LO2..................................................................................................................................................6
Sources of raising funds.........................................................................................................6
LO3..................................................................................................................................................8
Business plan for proposed growth option.............................................................................8
LO4................................................................................................................................................12
Evaluation of various types of exit options..........................................................................12
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Growth planning refers to the strategic activity that allows the owners of businesses for
planning and tracking their organic growth in the company's revenue. The growth plan ensures
that all resources available with the company centred their efforts together to adapt that change.
The strategies that are involved in the growth plan focus on the customer's, the key mechanism
of revenue generation. Owners of small businesses tend to make plans for growth as they know
that this is a efficient tool that will not only help the company in growing but through this
company can know where they were and by far what they have achieved. Airdri is the world's
renowned leader for hand dryer manufacturers(Bertozzi, Ali and Gul, 2017). The products
developed are comfortable and reliable for the customer's. Products are beneficial as they have
low consumption power and make less noise. The report highlights the opportunities that should
be taken by Airdri company to expand their businesses and the funds required to expand the
business. A business plan is developed that describes what new will company be introducing and
how they will market the product, what strategies they will adopt to bring the product in the
market. Further the exit options for the business are described.
LO1
Options for growth used to gain competitive advantage for Airdri
Porter's Generic Strategy is used to evaluate the competitive advantage by using the
resources and competence of the company. The model analyse that how a firm pursues
competitive benefit in it's chosen market. This includes 3 strategies from which company can
choose one and implement it in the organisation. Airdri is bringing a new product that is hair
dryers in the market.
Cost Leadership:- This technique pursue market share that is cost conscious or has price
sensitive consumers. This can be achieved by offering lowest prices for the products in the
chosen market or offering price lower to what the customer's are already receiving. To achieve
success at offering the lowest price and still achieving the profits and a high return on
investment, the organisation must be operating at a lower cost as compare to it's rival. This will
be an opportunity as the company can maximize it's sales by offering the product at the lower
prices as compared to the rival firms and thus the profitability will be maximised. It can be an

opportunity as people are price sensitive so they will switch as a lower cost substitute is
accessible, this will increase the revenues of Airdri.
Differentiation Strategy:- This strategy is useful in the market where the customer's are
not price sensitive, market is saturated, customer's has unique needs & the company has different
resources that can satisfy those needs . This strategy is said to be successful when the company
achieves premium price for the product that will help in increasing revenue per unit. This can be
an opportunity as differentiation drives profitability that means the added price outweighs the
added expenses of the product.
Focus Strategy:- It is a suitable strategy for small businesses that needs to avoid
competition. This strategy focus on few target market. These are groups that have specialised
needs. The offering choice depends on the demand of selected market segment and the resources
available with the firm. Focus strategy must be targeting the market segment that have less
chances of availability of substitutes and where competition is weak so that firm can earn return
on investment above than average.
Airdri is focusing on differentiation strategy as they have opted product development
where they are offering touch screen hair dryers, different from their own product that they were
previously offering and from what others are offering.
Pestle Analysis is done to analyse the external environment and for identifying the opportunities
for Airdri in their chosen business that they plan to expand.
Political Factor:- This includes the tax policies, government regulations prevailing in the
country. The government is supporting the companies in data security, eventually which supports
the businesses in online operations. Government is even developing additional measures to help
the online business. This would be beneficial for Airdri in developing their online business.
Economical Factor:- It includes the inflation rate, foreign exchange rate of the country.
The disposable income is increasing that is beneficial for Airdri as the new product developed
will be purchased by the consumers as they have the power to buy the product.
Social Factors:- Society's culture and an individual's behaviour affect the culture of a
company. Through social networking sites, Airdri can analyse the perspective and attitude of the
customer's and can change them by promoting the product with featuring some special points
like less damage from heat, will attract the customer's (Atighechian and et.al., 2016).

Technological Factors:- Technological advancements is at peak in the industries. Airdri
has high growth opportunities as the individual dependence on digital technology is increasing
day by day. This will increase the demand for digital technologies for individual and will
increase the sales of the organisations. This will be beneficial for Airdri to introduce the new
product that is Touch screen hair dryers.
Legal Factors:- This includes the legal framework such as laws, patents and copyrights
for the industries. Government and Non government authorities are putting efforts to protect
patents so that the businesses do not have to face the challenges of their information and design
being copied, so this will be advantageous for Airdri (Leitch, Welter and Henry, 2018). This will
benefit Airdri as their innovation of touch screen hair dryer can't be copied by the other rival
firms and Airdri can enjoy the profits generated out of it.
Environmental Factors:- It considers the laws that regulate the environment pollution,
the weather change. Airdri can develop the new product in such way that it is environmental
friendly so that will attract more customer's.
Ansoff Matrix Model
It is a planning tool that gives a blueprint to help the executives, managers and marketers
to plan strategies for future growth. The model was named after Igor Ansoff, a mathematician .
The model describes four growth options for expanding the market share of any business in
existing or new market & with new or existing goods.
Market Penetration:- In this strategy, firms try to capture market share by using existing
offerings that could be products & services in similar market (existing). The business intend to
increase the present market share while using the same product. For making this strategy
efficient, the company has to sell more products or they can find new customer's that belong to
the existing market. This can be achieved by the company through high promotion and increase
the investment on advertisement of the products.
Market Development:- In this technique, the firm tries to develop the market share by
entering into new markets (countries) but by using their existing products and services with
nominal development in the product. This can be achieved by having different customer section,
and introducing the product in the foreign market. It can be successful to choose this strategy
when the company has unique product technology, the new market in which company is going
deal is known (Perera, 2017).

Product Development:- According to this technique, to achieve growth the company
tries to introduce new product in the similar market (existing). This includes increasing the range
of products that are offered by the company in the existing markets. This can be attained by
investment in R&D of the introduced product.
Diversification:- In this strategy, the organisation seeks to develop new products that
they will be offering to new market. This strategy is the most riskiest one as both the product and
the market is new to understand.
Airdri should choose product development to expand their business as the company
wants to introduce touch screen hair dryers and they are offering to the existing markets. As this
strategy help Airdri to develop a new product in this changing world of technologies and where
people are dependent on the digital technologies or electronic appliances. By introducing new
product Airdri have the potential to attract new customer's and increase the consumption by the
existing. This will increase the market share and revenues of the company and eventually the
profits and provide an competitive advantage to Airdri(Salavou, 2015).
LO2
Sources of raising funds
Personal Investment
Personal Investments are money that the owner puts from their own pockets either by
cash or by giving assets. This shows that the person has long term commitment in the project and
this can make a good impression in front of investors.
 Advantages :- Owner knows the exact amount needed to introduce the new product and
there is no need to depend on others for investment. Self financing provides more control
as compare to other forms like bank loans. The owner will have full ownership of the
company and will not avoid excessive spending.
 Disadvantages:- By putting own money in the business will put strain to the owner's
family and personal life. It is possible that company may need more money for any other
purpose. The worst case where business fails, the owner can loose everything.
Venture Capital
This source of financing is most important for businesses. The money is given by the
investors to start a business or to bring something new. They prefer giving money to the

businesses who have strong potentiality of having high growth and profitability(Stead and
Hastings, 2018).
 Advantages :- New product are financed by the venture capitalist which offers high
profitability and in addition to this, they even provide information that is valuable,
resources, technical assistance to give the company a competitive advantage. So this will
benefit Airdri as with the fund, the experts knowledge and resources will also be useful
for the company in expanding their business.
 Disadvantages:- The owner may loose the control and the ownership that is the major
drawback of this source. Investors wants result, they don't want to invest when there is
too much risk in the market.
Overdraft
These are short term finance sources that are helpful in financing day to day business
activities. Overdraft financing is given to the businesses when payments are done from current
account that are exceeding the cash balance available. The amount of overdraft will depend on
the cash inflows and outflows of the organisation (Wallmeroth, Wirtz and Groh, 2018).
 Advantages:- It is helpful for meeting day to day requirements of the company. This
source has less formalities to do and involves less procedural work. It can be raised
urgently and the funds can be used for urgent projects or expansion plans.
 Disadvantages:- It is expensive for the companies as interest rate on overdrafts are higher
as compare to bank rates. It does not carry pre conditions so can be misused by the
management.
Angel Investor
These are wealthy or retired executives of the company, who invest directly in the small
firms that are owned by others. They are experts of their field and they not only support
financially but also contribute their knowledge and experience to the company. In exchange of
their money, they hold the rights to guide the company's management practices.
 Advantages:- It is less risky than debt financing. The angel investors contribute their
money along with their experience and guidance that benefit the companies in planning
growth as the investors have a long term view.
 Disadvantages:- The owner may losses the control over own company as the investors
reserve their rights to control the management of the company. The investors will have a

right to say in every decision of the company and will also have the right to receive
profits when the business is sold out.
Government grants & Subsidies
Government provide finance in way of grants and subsidies to the businesses.
 Advantages:- The benefit of government grants is that the company does not have to
repay the money back. It is free for the organisation. This reduces pressure from the
owners of the company and the amount can be put in other areas like improving the
quality of the product.
 Disadvantages:- The plan proposal should be solid and convincing to the government.
There are various things the company need to consider for using government grants as the
firm needs to submit the reports with the rules implied (Wallmeroth, Wirtz and Groh,
2018). So for providing every small detail it takes a lot of time and thus delay the funds
approval and eventually the expansion plan will be delayed.
Airdri should use overdraft facility to develop the new product (Hair Dryer) as the
company already had a overdraft facility arrangement of £ 2 million with the bank and which
they have never used for any purpose. Less formalities are needed to fulfilled by Airdri as they
already have it and it will urgently granted to the company without any legal procedures and will
reduce time wastage.
LO3
Business plan for proposed growth option
Executive Summary:
Business plan means the document that specify in detail that how the organisation will
attain its aim and objectives. It also covers the details from operational, financial and marketing
point of view (Keough, 2015). The below plan is related with launching a new product that is
“Hair dryer ” by Airdri Ltd. Business plan will outline business vision, mission, STP analysis,
SWOT analysis, methods that will be used by the firm to secure funds for new growth option.
Vision:
Vision statement of Airdri Ltd. is to become a global level company by offering variety
of electronic goods at different locations.
Mission:

The mission statement of the company is to develop various options for promoting
growth of the business, stakeholders by creating innovative products and creating value for the
buyers.
Strategic objectives: Strategic objectives of Airdri Ltd are as follows-
 To increase the turnover of new product by 15% till year 2022.
 To increase current level of gross profit by 10% till year 2021.
 To reduce the cost of operations by 5% till year 2020.
STP:
It refers to the process that helps the organisation to analyse the product it is offering in
the market and the way in which company will communicate the benefits to target segment of
customer's.
Segmentation-
Firstly, Airdri company will segment the whole market into different segments on the
basis of various factors for launching hair dryer. It will divide whole market on the basis of
demographic factors like income, age of the population etc., geographical factors like cities etc
(Kumar, 2016).
Targeting-
After segmenting the whole market, Airdri Ltd. will target a particular market segment to
offer the new product to the customer's. In case of demographic segmentation, firm will target
people that falls under medium to high income group. Further, it will also target people on the
basis of geographic segmentation. Airdri will target people from 18-40 years age group. Under
geographic segmentation, company will target people on the basis of cities, colleges etc.
Positioning-
After targeting a particular market segment, company will develop various strategies for
creating image of the product in the minds of existing and potential customers. It will develop
effective product, price, place and promotional strategies that will help to influence customer's to
purchase hair dryer (Wu, 2015). Company will positioned itself through penetration pricing
strategy, promotional strategies like marketing campaign etc.
SWOT analysis:
It is a tool that firms use to evaluate internal strengths and weaknesses and also help to
identify opportunities and threats that are existing in external business environment. It will help

Airdri to determine risk, competition, potential of the business etc. SWOT analysis of Airdri is as
follows-
Strengths- These are the strengths that separates the organisation from other companies.
Strengths of Airdri company are as follows:
 It is offering various types of hand dryers such as Classic+Mkll, ultra slim hand dryer etc.
with advance technology. Airdri Ltd is having strong team for research and development that helps to create
innovative products that consumes less energy.
Weaknesses-It can be defined as the areas in which company has to improve itself to gain
competitive advantage over other firms. Weaknesses of Airdri Ltd. are as follows:
 Financial resources of the company are not adequate. Therefore, Airdri Ltd have to
influence the shareholders for raising funds to develop new product. Limited capacity to produce innovative electronic items for the customer's (Levy, 2016).
Opportunities- Opportunities are the favourable factors that helps the firm to compete with other
companies in a better way. Company is having an opportunity to develop new products for existing and potential
buyers. This will help Airdri to improve current level of sales.
Threats-Threats are the unfavourable things that have the ability to create negative impact on the
performance of the company.
 Airdri is facing intense competition from other companies that are using advanced
technology for developing electronic goods. Competitors of the firm are Veltia UK Ltd,
Excel Dryer etc. Therefore, company should develop effective product, price, promotion
strategies to gain competitive advantage over other firms.
Methods for securing funds:
There are various methods through which a firm can raise funds. Airdri will issue equity
and preference shares to the shareholder's or combination of different methods for securing funds
for launching new product. Further, owner of Airdri will convince the shareholders through
social media platforms like Twitter etc. Methods like personal investment, venture capital will be
used by the company. Firm will also utilize the facility of overdraft to fulfil the requirement of
funds.
Marketing Mix:

It refers to the methods or actions that are used by organization to promote the new
product or brand in target market. It consists of four P's. Marketing mix for Hair Dryer of Airdri
is as follows-
Product-
Airdri will launch Hair Dryer as a new product in UK. After gaining success in the
market it will launch the product in other countries. The product will be available in different
colours with different designs. It will have multiple heat settings to dry wet hair.
Price-
The product will be available at reasonable price to the customers. Company will adopt
penetration pricing strategy for initially offering the new product at low price. Hair Dryer will be
available in different price range for different categories of customer's. The price of new product
will start from £9.6 (Schlegelmilch, 2016).
Place-
Firstly, product will be sold by the company to dealers that will sell them to retailers that
are operating their business in UK. Retailer will further sell Hair Dryer to customer's. Moreover,
customer can buy the product from website of company.
Promotion-
Airdri will invest funds for promoting the sale of new product through various channels.
Such as social media platforms like Instagram, Facebook etc. It will also conduct marketing
campaigns for influencing target customer's to buy the product.
Budget:
It is a plan that may include costs and expenses, cash flows of the business for a
particular period.
Expenses Amount (£)
Plant and machinery 10000
Salary and wages 4000
Fixed overheads 3500
Raw material 1500
Miscellaneous expenses 1000

Total 20000
Cash flow analysis: Amount (£)
Particular Year 1 Year 2
Cash Inflow
Cash generated from sales
15000 20000
Interest received 1000 1000
Total cash inflow 16000 21000
Raw material 1500 2000
Dividend paid 2000 2000
Salary and wages 4000 4200
Total cash outflow 7500 8200
Net cash inflow 8500 12800
Monitoring and Controlling:
Monitoring and controlling is a process that helps to monitor the metrics and activities
that are essential to ensure that project will be completed on time, within scope and as per the
given budget. So that, project will continue with minimum efforts.
Monitoring and controlling is very essential for the success of business plan. Dates will
be fixed for reviewing the business plan. Review dates will be integrated with strategic
objectives of the business. Further, Airdri Ltd. will use tracking system to track the sale of Hair
Dryers. Tracking system will help the company to track important elements of business plan like
revenue etc. (Andaleeb, 2016).
LO4
Evaluation of various types of exit options.
Exit strategies are used by owner to reduce or liquidate the share in the business. If, the
business is not gaining success in the market, in that case owner may exit from current business