Planning for Growth Report: Airdri Business Growth Strategies

This report focuses on planning for growth, specifically examining the case of Airdri, a small-scale business in the UK. It begins by exploring key considerations for evaluating growth opportunities, including market surveys and competitor analysis, and introduces Porter's generic competitive strategies (cost leadership, differentiation leadership, cost focus, and differentiation focus) to assess Airdri's approach. The report also delves into external analysis using PESTLE factors, highlighting political, economic, social, technological, legal, and environmental influences. Furthermore, it applies Ansoff's growth vector matrix (market penetration, product development, market development, and diversification) to identify growth strategies for Airdri. The report then assesses potential sources of funding available to businesses and discusses the design of a business plan for growth. Finally, it evaluates exit or succession options for small businesses, providing a comprehensive overview of growth planning for SMEs.

Planning for Growth

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Key considerations for evaluating growth opportunities..................................................1
P2 Apply Ansoff's growth vector matrix to evaluate growth opportunities...........................4
TASK 2............................................................................................................................................6
P3 Assess potential sources of funding available to business................................................6
TASK 3 ...........................................................................................................................................7
P4 Design business plan for growth.......................................................................................7
TASK 4............................................................................................................................................9
P5 Assess exit or succession options for a small business.....................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Planning for growth is an important aspect which helps business concerns so that they
can expand or develop their overall market share. Small and medium business concerns are
greatly expanding in markets of UK. Also, these firms have numerous growth opportunities and
options available that further enhance their overall customer base and market share. Managers of
companies in this context plan and direct employees so that they can further achieve excellence
in business operations (Abolhasani and et. al., 2016).
This report is based on Airdri which is small scale business near Thames Valley region, UK.
Managers have recently over drafted a special facility arrangement with the bank of an estimate
value of 2 million pounds. This report examines various consideration along with porter's generic
model and Ansoff matrix. Different potential sources have also been identified in this report.
Lastly various exit and options for SME's have also been stated here.
TASK 1
P1 Key considerations for evaluating growth opportunities.
SME's in today's world has number of opportunities which further help them in
enhancing their overall sales and profitability levels. For grabbing opportunities available
entrepreneurs timely get a market survey done so that they can gain information about what all
opportunities are available in competitive market. Also, it helps in identifying what products and
services are being offered by competitors so that they can further assess their own products and
services. In present context, Airdri is a small-scale business unit that deals in manufacturing and
supplying hair dryers.
There are a number of business firms that are operating currently in market hence it is
quite important that entrepreneurs of these businesses carefully assess and examine resources
required, skills of employees that will be helpful, etc. Launching new product to substitute
products of competitors is the biggest growth opportunity which can be attained by Airdri by
managing diversification in products. For this manager have decided about launching new
products in men's range. These products can either be hair wax, gels, etc. All these factors can
further be assessed by an effective model known as porter's generic model (Albert, 2017). This
has further been explained in detail as under:
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Porter's Generic Competitive Strategies: It is an effective tool that was initially
developed by Professor Michael Porter. It is generally a structural design that explains
management strategies that are stressed or used by Airdri. There are basically four techniques
which are considered by an entrepreneur. These four tactics have further been stated as under:
(Source: Porter's Generic Competitive Strategies, 2018)
Cost leadership: Cost leadership is an effective approach which is used by business
concerns so that they can achieve a competitive edge over their rival firms. Entrepreneurs may
even use a strategy which includes cost lowering behaviour so that products can further grab
attention of customers thereby enhancing productivity and profitability. In the present context,
entrepreneurs of Airdri use new and innovative tools and techniques which helps in lowering
production and advertising rates (Angotti, 2018).
Differentiation leadership: In respect of differentiation leadership it is an approach
which top level managers in a firm consider so that they can further differentiate their goods and
services from rival firms. In context of Airdri it has been stated that it is an effective tool by
which brand image of Airdri has constantly risen. Differentiation between products and services
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Illustration 1: Porter's Generic Competitive Strategies

provides customers with a choice or options so that they can further choose best suited as per
their needs.
Cost focus: Cost focus is another key approach which a firm uses so that they can
conduct their business operations in their current niche market (Bridge and Dodd’s, 2018).
Managers in this factor undertake new and innovative tools and techniques so that they can
reduce their production and other business costs. This factor plays a quite important role in
maintaining effective pricing strategies in respect to other rival firms.
Differentiation focus: In context of present business concern Airdri uses this factor so
that they can further provide cheaper priced goods and services to their customers. For this they
will further have to employ more technically skilled employees. This also helps in developing
initiative advertisement channels which will lead to quicker promotions.
From all the above stated strategies entrepreneur of Airdri focusses on cost leadership
approach. This tool will help personnel’s in using new and advanced technology so that they can
market their information to customers (Bunker, 2015). Since it is a small-scale business concern
it is known that it is quite difficult for them to further increase their outlets in other nations due
to shortage of funds. Thus, it can be said that cost leadership will help Airdri in helping top level
managers so that they can further enhance their productivity and customer base.
External Analysis: Entrepreneurs will even need to assess external market factors before
designing policies and procedures. For external analysis entrepreneurs of Airdri have decided
about getting a PESTLE analysis done so that they have certain growth opportunities available in
current market. This will further help Airdri in assessing decision making related to external
factors. These external factors have been stated as under:
 Political factor: Factors that are related to policies and rules formulated by government
or political conditions that affect governing of a business are referred to as political
factors. In context of Airdri, political factors play an important role as they need to take
registration and licensing permission from government authorities. This will further help
in systematic and stable functioning of a government and business simultaneously. In
UK, laws and rules are quite liberal and free for small business concerns. This further
helps in business expansion along with promotion of SME’s.
 Economic factor: This factor infuses various monetary elements such as interest rates,
inflation, exchange rates, growth rate etc. These are various components that lay a
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significant impact on overall functioning of a business concern. In context of Airdri,
there are a number of factors such as growth and inflation rates which further affect its
business functionality (Colantoni and et. al., 2016). Due to growth rate and inflation there
are higher opportunities which help in growth of Airdri.
 Social factor: Factors that affect society as a whole are referred to as social factors. This
component states that almost all business concerns provide goods and services as per
needs and requirements of customers. In context of Airdri it is known that they provide
customer friendly hair dryers so that customer base can enhance. In context of social
factor, it is analysed that customers who have a medium to low lifestyle do not use such
expensive styling tools which may be quite an issue for company as it will further affect
its overall growth. Targeting new customer base is the growth opportunity for Airdri with
the help of which firm will be able to remark its presence, increase customer base and
manage competitive advantage. This issue can only be resolved when managers of Airdri
bring about cheaper quality goods which can be afforded by both lower and medium
status people. This also saves any extra advertising time. Entrepreneur of Airdri
undertakes social media platforms for promoting their goods and services.
 Technological factor: Factors that are affected by technology or innovations are referred
to as technological factors. It is an important factor by which small scale business
concerns are capable of using resources and technology in their business operations in an
effective manner (Roo, 2017). In present day context entrepreneurs of Airdri undertake
new and advanced technological platforms for producing their goods and services at
cheaper prices thereby leading to productivity enhancement. Implication of social media
advertising is another opportunity which will support robust growth of firm and will
assist in increasing rand awareness.
 Legal factor: Legal factors include various acts, laws and legislations that have been
passed on by government of UK. These acts or laws mainly promote growth and safety of
employees. In context of Airdri it is important employees get a positive and healthy work
environment along with equal and fair treatment. This further helps in employee retention
of employees and also their skill enhancement as well.
 Environmental factor: Environmental factors states that production of goods and
services should be done in an ethical and environment friendly manner thereby enhancing
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growth. When small businesses work as per guidelines it leads to higher growth and
productivity enhancement. Entrepreneurs of Airdri should use environment friendly tools
and techniques for production so that environment does not get degraded or affected
negatively which will further provide a competitive edge to Airdri against other rival
firms. One major risk or weakness in this context is that environment friendly tools are
usually expensive as compared to other tools hence managers of Airdri may face shortage
of funds while adopting or buying such tools.
P2 Apply Ansoff's growth vector matrix to evaluate growth opportunities.
Entrepreneurs or business individuals of small-scale business concerns critically examine
business operations so that they can further adopt business practices as per current market
situations. Airdri is a small-scale business concern which basically manufactures and supplies
hair dryers and other such machinery tools (Denton, Forsyt and MacLennan, 2017). Hence, in
order to carefully identify expand and grow their overall business operations as per growth
options managers have further carried out Ansoff's growth matrix. This is an essential tool which
helps in changing their production system by adopting new and technologically advanced
software which enhances productivity as well as profitability.
Ansoff's growth vector matrix: Ansoff's growth vector matrix is an important tool which
was founded or initiated by H. Ignor Ansoff. This growth vector matrix infuses various strategies
and policies that can be considered by entrepreneurs for fulfilling their growth objective. In this
case, present market conditions are critically evaluated by entrepreneurs so that they can
understand what changes are to be brought in policies (The Ansoff Model. 2018). There are
basically four major components of growth matrix which has been explained as under:
 Market penetration: Market penetration is an important aspect that is used by business
concerns for promoting or advertising goods and services to their existing customer base.
In this factor management repositions or renovates brand image of ZARA so that they can
further enhance their loyal customer base. In context of ZARA, it has been noted that
entrepreneurs need to adopt policies and strategies that will lead to longer market
sustainability of a firm. For this manager may even need to maintain balanced
relationships with their customers and clients.
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Illustration1: Ansoff Matrix
(Source: The Ansoff Model, 2018)
 Product development: Product development is an important approach which states or
explains changes that may occur in products and services. These changes are usually
initiated by top level managers so that they can effectively meet needs of people. In
context of Airdri, it is seen that they have adopted changes or alterations in software as
well as technologies so that they can further bring new innovations in their products and
services. This is quite helpful as new products attract higher number of customers
(Gunder and Hillier, 2016).
 Market development: This strategy or process is often used by business concerns so that
they can enhance their overall customer base and profitability. For expanding customer
base, business units generally promote or advertise their products and services to a new
competitive target market. This also leads to increase in sales volume as well as overall
enhancement of profitability. Airdri is a small-scale business concern located in UK yet
due to innovations and online platforms it has become easy that they can expand their
business in different parts of world.
 Product diversification: Product diversification is an important concept which is used by
entrepreneurs of Airdri whenever they wish to diversify or launch a new range of
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products and services. The firm has focused on growth opportunity where the
management will aim at diversifying its product range to men’s hair care. This will
further enhance customer base of Airdri and assist in attaining competitive advantage.
Entrepreneur and managers use new and environment friendly ways for producing new
and innovative goods and services.
Thus, from the above strategies market development is appropriate for Airdri which help
entrepreneur to increase market reach and customer base. With aid of digital technologies that is
mobile and social media which benefit them to enhance sales volume and profitability.
TASK 2
P3 Assess potential sources of funding available to business.
Monetary funds are needed by almost all business concerns so that they can improve their
overall profitability situation (Hess and Sorensen, 2015). In relation to Airdri it has been seen
that company needs to bring in funds from various sources so that expansion can occur at a faster
pace. Airdri has now decided about launching a new variation products and services and bringing
in new haircare products in men's range. Various sources of funding that are available for
small business entities have been listed below:
Personal saving: It is a personalised sum of money which a business man saves to be
used by him at any future point of time. Also, owners of Airdri does not need to infuse any
external individual in this.
 Advantage: Personal saving is beneficial for this organisation as whole control of
business is owned by the owner only.
 Disadvantage: Major drawback of personal saving is that it misses valuable advice of
other investors which can be beneficial for Airdri (Krueckeberg, 2018). In addition to
this, if in any case business suffers from loss then whole invested amount of owner
will going to be wasted.
Bank loans: Bank loans are most preferred form of funding by small business concerns.
In this bank provides loan amount of small business concerns at a nominal rate of interest which
can be paid on later. In context of managers of Airdri it is important that managers are well
aware about market interest rates.
 Advantages: It is the easiest and most secure form of funding.
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 Disadvantages: A lot of information and documentation needs to be done before
taking loans. This consumes a great amount of time of business men.
Friends and families: Another significant way of collecting funds which is adopted by
Airdri is by friends and families. In this there is no hard and fast rate of return which is to be
paid.
 Advantages: It is most time effe3ctive method in which on compulsory documentation is
required. It saves time and cost of business men.
 Disadvantages: Amount raised from friends and family might impact negatively on
mutual relationships between them. As if amount is not returned on the given time with
decided interest rate then it may affect their relations (Leigh and Blakely, 2016).
Managers of Airdri have all above stated ways in which funds can be raised. But they
prefer to raise funds from medium of bank loan. This mode of raising funds is chosen by
managers as it is easier and safer way of raising funds that too at a very nominal rate. It can be
recommended that Airdri should use bank modes as it is easier and safer way of raising funds.
Also, by doing so they will be able to expand their business at a quite faster pace. They are
making bid of £80,000, in which they have £20,000 and remaining £60,000 they will take from
bank. This is quite an important element in growth of Airdri as without an appropriate amount of
funds no organisation can function effectively.
TASK 3
P4 Design business plan for growth.
Business plan is an important document which is present in written form (constructed or
framed by an entrepreneur so that information or knowledge can be provided to stakeholders). A
business plan records various details such as description about enterprise, mission and vision
statement, objectives, information related to finance etc. This further proves helpful for
executives as they can guide and direct staff members for conducting their business operations in
an effective manner. Also, this helps in bringing about any sort of changes that may occur in
business due to time.
Business plan of AIRDRI:
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Company Description: AIRDRI is small scale business concern which has its
headquarters in Thames valley, UK. This is a business concern which deals in manufacturing and
supplying hair dryers and other styling tools such as curlers, straighteners etc. Managers will
further have to employ effectively skilled and talented employees who can bring in new and
innovative ideas about manufacture or production process (Levy, 2016). Currently the business
has an overdraft of 2 million pounds with the bank which they have never utilised. This firm has
a quite solid lending and borrowing image and is also mentioned in in 100 SME's list.
Mission and Vision: Mission of Airdri is to supply and manufacture specialised and
innovative hair styling tools which can further enhance its overall customer base whereas vision
of Airdri is to enhance productivity and market reach thereby leading to enhanced customer base.
Strategic objectives: Entrepreneurs of Airdri have set certain objectives as per SMART
tool which have been stated as under:
Objectives:
 Enhance productivity and profitability rate by 10% leading to an increase in overall
customer base.
 Execute government contract to create appropriate image and goodwill in market.
 Increase revenue by 20% in next 2 years (Mason, 2015).
Products and services: Airdri are a hairstyling tools manufacturing brand that
manufactures and supplies hair styling tools such as hair dryers, straighteners etc. In present
context managers of Airdri have focussed on bringing new innovative hair dryers that are skin
friendly and do not affect quality and texture of hair.
STP Model
 Segment: Segment of new product range will be done on the basis of demographics and
chosen segment will be men
 Target: Segment will be target on the basis of age that foremost target will be young
boys of age group 15 to 25.
 Positioning: This will be done on the basis of buying ability and behaviours of targeted
group.
Marketing mix: Marketing mix infuses 7P's of marketing which have further been stated
as under:
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