Berkshire Labels Growth Strategies: A Strategic Report

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Planning for Growth
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Executive Summary
The concerned report stresses on the frameworks that are necessary for the
accomplishment of the business of Berkshire Labels through identifying and mitigating
the risks. The frameworks, which are discussed, can be stated as Porter’s generic
model, Ansoff’s matrix and Pestle analysis. The several funding processes that
contribute to the growth of the business are elaborated. Thereafter a cash flow analysis
of the business plan is sorted and eventually the influencing strategies of terminating
the business are inferred.
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Table of Contents
Introduction...................................................................................................................... 3
1. Key considerations for Growth options(LO1).............................................................3
2. Sources of Funds and their Implications to the Business(LO2).................................7
3. Business Plan(LO3)...................................................................................................9
4. Existing Strategy (LO4)........................................................................................... 14
Conclusion..................................................................................................................... 15
References.....................................................................................................................16
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Introduction
In the present analysis, the organization, Berkshire Labels has been chosen for the
process of developing strategic plans for its growth in the target market. As the Junior
Manager, the report has been organized with key frameworks depending on the risks
affecting the potential of the company. Different sources of gathering funds and their
necessity for the functionality of the organization has been discussed as well. A
business plan has been developed with clarity of objectives, safe and secure tactics of
investment and considering other essential factors detrimental for the development of
the business. Thereafter, strategy for existing has been cited along with a course of
action.
The company, Berkshire Labels is situated in Hungerford, United Kingdom (Berkshire
Labels. 2019). It has created its benchmark in producing adhesive materials, sleeves
and other labels. The organization has earned many reputed certifications. The hot foil
labelling has made long lasting impression in boosting customer loyalty and heightened
the satisfaction level. The labels are imbibed in cosmetic items, beverages, food
products and many more.
1. Key considerations for Growth options (LO1)
Basis of competitive advantage
The organization, Berkshire Labels can gain competitive advantage by proper allocation
and utilization of resources like operating costs, product and service differentiation as
well as by creating strategies based on niche markets. The company can gain more
customer base by influencing the buyers with lower price and good quality products.
According to Brinckmann and Kim, (2015), the competence level of the chosen
organization with other similar brands is analyzed and accordingly significant strategies
are made. Identifying the core strengths, focussing on the needs of the customers,
reducing the prices as well as the operating costs can help the company to leverage its
competitive edge. Specific analytical frameworks like Porter’s analysis, PESTLE
analysis and Ansoff matrix are implemented for better development of the strategies
that would analyze the risks and thereafter come up with the risk mitigation policies. The
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Porter’s analysis has helped the organization, Berkshire Labels to develop cost
advantage, together with a differentiation advantage. Accordingly, the company invests
in the expertise needed for the accomplishment of the objectives, make innovations in
the products and services and win the battle amongst the competitors. The competition
among the different brands of label enables positive benefits for both the buyers and the
business organizations. As per Barraket et al., (2016), the experience of the customers
is the main issue of the company and due to this the company keeps on innovating new
ideas and makes strategies that would enhance the brand value. In order to sustain in
the market, it is highly necessary for the company to give tough competition to the other
organizations. Therefore, the risks, which can pose as hindrances to the success of the
business, had to be targeted and eradicated immediately so that other industries do not
go ahead. The frameworks for developing the competence factor are given as follows:
Porter's generic strategy model
This model of analysing the competition between the various brands including the
Berkshire label can be formed through the strategies of cost leadership, differentiation,
cost focus and differentiation focus.
Cost leadership
Here, the company, Berkshire label has to form strategies to lower the cost of the
products that are sold to the customers. Issues as economies of scale, technological
investments and other preferences to raw materials are identified (Sahebjamnia et al.,
2015). Enabling low cost helps the organization to gain competitive advantage. The
leadership formed helps in maintaining these cost factors and achieve a commanding
role in the market.
Differentiation
In this stage, the firm, Berkshire label defines all the dimensions in which the business
performs and the ways the competitors can overpower these factors. The buyers who
want to make purchases had to determine the several attributes, which the products of
the company possess. The company has to constantly innovate in these attributes to
stand out in the competitive market (Gilding et al., 2015). The capabilities, resources,
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other core competencies are sorted accordingly so that the operating costs stay
lowered, and the competitive advantage gain manifold.
Focus
The generic strategy of Porter’ also helps in choosing the scopes in the market that
would help the organization to augment its competitive advantage. A particular segment
is chosen by the industry and strategies are made to make the company, Berkshire
Label to be the most exclusive brand in the target industry. The cost focus element
emphasizes on gaining cost advantage in the industry whereas, the differentiation focus
works on the aspect of differentiating the product ranges and service collection
significantly different from the others. The segments, which are formed, are focussed
upon and the company invests accordingly (Wirtz et al., 2016). These target markets
have buyers who have variable needs, which are different from the service quality of the
competitor grand. Hence, the company, Berkshire label gets the chance to make plans
that would satisfy these demands and make the company grow on a large scale.
Competitive advantage PESTLE
The factors in PESTLE are political, economic, social, technological, legal and
environmental. The company, Berkshire Label come across during the operations
carried out for the growth of the business these external macro economic factors.
Political
These factors include several laws regarding education, employment, intellectual
property and many more. The stability of the government is one of the critical issues
that the company, Berkshire Label has to focus upon. The legal consequences can be
huge if the company does not follow the political obligations.
Economic in order to competitive advantage, the company has to oblige to the taxes,
rate of inflation, trends in the stock market, labour costs and so on.
Social the social factors include trends or choices of the customers, population rate,
cultural and lifestyle patterns of the buyers and the affordability criteria of the
consumers.
Technological changes and advancements in the technological factors highly influence
the company, Berkshire label to stay ahead in the competitive market (Ellett et al.,
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2017). Several communication strategies and prices of the technological growth help in
the success rate of the organization.
Legal policies regarding the demands of the customers, viable operating costs and
patent management are the aspects involved in the legal issues of the business. Laws
regarding consumer safety, health regulations are few examples that are integral for the
continuation of the business.
Environmental factors related to weather, climate and eco friendly behaviour of the
products of Berkshire Label helps the business, Berkshire Label to dominate in the
industry (Singh and Vinodh, 2017).
The rationale of the company is that the company, Berkshire Label has to enhance its
customer base unlike the previous years. It has to overcome the competition in the
market that has made the company invisible to the customers. In order to tackle the
problem, the company has to consider all the external factors and make developments
accordingly.
Ansoff’s matrix
The factors associated in the Ansoff’s matrix are market development, diversification,
market penetration and product development. These can be very helpful in locating the
risks that arise in the business and accordingly set strategies that would be beneficial in
tackling the different forms of risks or any other crisis.
Market development
In this stage, the company, Berkshire Label, in order to be safe from crashing of the
existing market, tends to look for new untapped markets. Thus, if any kind of mishaps
happen in the present market, the company would not face any severe losses as it
would have already expanded its customer base in the new regions and enhanced the
sales level (Suomalainen et al., 2015). Yet, there can be risks like changing cultural
orientation as well as ramifications in the trends of the customers. However, the
company can mitigate these risks by developing new franchises, thus making market
develop a lot easier.
Diversification
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This strategy of Berkshire Label is by far the riskiest as changing the products and
services completely can lead to negative reaction from the customers. Thus, the
company has to make implementation to convince the customers regarding their need
of product diversification and how it would benefit the consumers.
Market penetration
Identifying the right distributor channel and make decisions of reducing the prices are
some of the strategies meant to penetrate the company in new market segments (Karia
et al., 2015). To overcome these risks and difficulties, various mitigation tactics can be
used like crating loyalty schemes, offering discounts and expanding sales staff.
Product development
It signifies in selling different variety of products to the existing customer base. There is
a chance that the consumers may not like the changes made in their usual product
ranges. Therefore, the company, Berkshire Label has to integrate features in their
products that would satisfy the necessities of the consumers.
While evaluating all these frameworks, it can be stated that the aforementioned
discussion has been about the advantages that would help the company, Berkshire
Label to lead itself in the competitive market. However, the disadvantages of Porter’s
are that the company managers would spend relatively less in advertising processes.
Similarly, the PESTLE analysis has the drawback of collecting too much information that
would eventually retard the strategy of competitive analysis. Ansoff matrix, on the other
hand, has the disadvantage of being over simplistic and isolated in the overall context of
the organization.
2. Sources of Funds and their Implications to the Business (LO2)
Finances sources
Bank loan
The benefit of gaining bank loan by the Berkshire Label is that any short-term amount
can be obtained. As per Dolgui et al., (2015), the assets of the company heightens and
thereafter the loan can be repaid in due time. Opening franchisees also requires
accruing bank loans. However, the drawbacks present in gathering loans is that a
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number of collateral has to be kept during the time of getting the loan. And if loan is not
repaid, then the collateral would not be returned.
Overdraft
The advantages present in the overdraft facility are the flexible and organized system of
funding. That is the amount borrowed can be changed and the interest that needs to be
paid happens only with the amount that has been taken on loan. However according to
Wolf and Floyd, (2017), there are certain limitations with these sources of funding, like it
cannot be borrowed and limit based funding are provided to business organizations, like
Berkshire Label.
Crowdfunding
The processes of crowd funding is required for the organization. Berkshire Label when
the company needs money for a pitching purpose. Also, during times of marketing, the
methodologies of crowd funding are easy to achieve and deal with money related
challenges.
The disadvantage associated with this form of funding is the if the business fails due to
some issue, the whole reputation goes at stake and the company has to struggle a lot to
earn back the lost brand value. Maintaining long lasting relationship with the customers
becomes a challenge and therefore the company has to ponder a lot before initiating in
this process.
Peer to peer lending
The pros of peer to peer lending is that it is an effective process of online lending,
requires lower rates of interest and the borrower, Berkshire label remains anonymous to
the lenders and the social considerations are also given. As stated by Tarling et al.,
(2017), the cons are that there is a specific level of risk associated with this kind of
lending, such as there is a high risk of losing the money and various diversifications
need to be made.
Angel finance
The angel investors do not want any monthly payments and the company, Berkshire
label shares its profits when the company gets to work as per the expectations. The
small ventures or operations can be enhanced to meet the demands of the customers
with the help of angel investors. The disadvantage can be stated as these investors
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often set the bar high for the companies, who have to work and make strategies
complying the rules of the angel investors.
Venture finance
The funding through venture capital has benefits like the small business ventures of
Berkshire Label gets financial advantage with the help of money related guidance and
consultation. As mentioned by McDONALD, (2016), the disadvantages of this form of
funding are that the financial process can go out of control and the status of ownership
is considered minor.
The financial ownership of the company, Berkshire Label can be taken as shares,
properties, defensive investments or in the form of fixed interest rates.
The legal ownership processes of companies like Berkshire Label are in the form of sole
proprietorship, partnerships, corporations and limited liability company(LLC). On being
specific, it can be stated that the chosen organization follows the norms of sole
proprietorship.
3. Business Plan (LO3)
The business plan of the company, Berkshire Labels can be elaborated as a written
form of documentation that helps in gaining clarity about how a newly formed
organization can attain the goals and objectives in a strategic and time specific manner.
The plan also states the funding processes with the help of which the company gets
loans, develop strong leadership skills and models of operations. The plan comprises
elements like market analysis, management of the organization, strategies for
increasing the sales and the modes of financing.
The main purpose of the business plan is to develop a strong vision, make a roadmap,
developing objectives for improving the sales generation and develop marketing
strategies that paves the way for increasing the possibility of success (Covin et al.,
2018). The products and the services offered by the company have to be discreet and
distinctive enough to stay way ahead of the competitors and meet the requirements of
the customers in an extensive manner.
Mission
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The mission of the company, Berkshire Labels is to heighten its standard of operations,
involve more number of customers into the company working procedures, gain
competitive advantage in the market and ensure to retain the employees, allocate the
resources effectively and procure mote number of revenues. The philosophy of the
mission is to determine the reason behind the company’s existence and ascertain the
goals of the company that can be achieved with the help of effective and reliable
strategies.
Vision
The vision of the organization, Berkshire Label solely focus on the ways the company
has to attain the business objectives and meet the financial goals that enables the
organization to make strategies that would help the organization to get a competitive
edge.
The strength of the company, Berkshire Label is that it follows the economic and
environmental protocols because of which the customers rely on the brand and think
twice before switching to any other organization for their product labelling. According to
Philbin and Mallo, (2016), the company has also demonstrated market penetration in
the new markets and thus enhance its standard of brand equity. The ability of managing
the risks is yet other strength of the organization, Berkshire Label in the aspects of
product development and diversification protocols.
The weaknesses that need to be kept in mind, while making the business plan for
developing its services and the quality of products in new market segments is that the
company ranks poor in making market development as the marketing strategies
involved in identifying the primary needs of the customers are critically low, which
consequently reduces the trust of the customers of the existing market on the service
loyalty of the brand. Further, the company needs to work on the safety issues of both
the customers and employees working for the company so that the employees can be
retained for a longer period and their productivity reaches new heights.
Strategic objectives
The objectives of the organization, Berkshire Labels is
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● To develop its finishing line with the help of Digicon finishing technology. This
would enable the organization to engage higher number of employees, accrue
more revenues and thus gain a competitive advantage over the entire business
industry. The business plan would ensure that the objectives stated by the
company meets all the company values, traditions and beliefs.
● To make the company sustain for a longer period in the market, procure more
brand value and recognition from the existing as well as the viable customers
(Burns, 2016). The graphics of the digicon project would be more alluring to the
customers, thus opening up new possibilities of the brand. The labels which are
self adhesive are to be used in toiletries and products of the cosmetic range.
● To reduce the wastages generated from the production of these labels and thus
ensure the sustainability of the environment and reducing the carbon emissions.
The customer experience level would reach new heights due to the hygiene
maintained by the company policies and the customer service given to the
consumers.
● To provide all the products to the customers at a competitive pricing range and
thus gain boost in the growth of the firm, Berkshire Labels.
Frameworks
The frameworks for developing strategic business objectives of the company, Berkshire
Labels deals with choosing the right strategies that would be the best in targeting the
opportunities available in the target market. These frameworks are further given for the
development of the goals. These frameworks also help in reviewing the plans that would
help in accruing more benefits for the organization. Some of the frameworks are given
as follows:
McKinsey’s Strategic Horizons
The horizons involved in this model are of core business, the opportunities, which are
emerging, and the blue-sky approach. In the core business approach, the activities,
which are related to the primary functions of the business, are dealt with to generate
increased revenues (Cardon et al., 2018). In emerging opportunities, the cost involved
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