Market Analysis and Financial Planning for New Car Deals

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PLANNING FOR GROWTH
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Table of Contents
Introduction...................................................................................................................... 3
1. Key considerations for growth Options (LO1)..............................................................4
2. Sources of funds and their Implications to the business (LO2)..................................10
3. Business plan (LO3)...................................................................................................13
4. Existing strategy (LO4)...............................................................................................18
Conclusion..................................................................................................................... 21
References.....................................................................................................................22
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Introduction
Small and Medium sized companies have to undergo specific procedures to attain
proper effective growth in the market. New Car Deals is a United Kingdom based SME
Business Company, which provides products like commercial vehicles and their parts to
the consumers (simplyvehicleleasing.co.uk, 2019). Moreover, the firm is known for their
services and maintenance programs for their consumers. Further, corporation aims at
attaining proper market growth through enhanced marketing and by expanding their
outlets. This study will focus on the various considerations that are required to be
determined by the corporation for growth. This will be evaluated with the help of Ansoff’s
growth matrix and Porter’s generic strategy. Moreover, the study will provide firm
knowledge about the various sources of funds that can benefit the firm in a financial
manner. For the business expansion, a specific business plan will be developed in the
study along with proper exiting strategy that the firm needs to practice.
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1. Key considerations for growth Options (LO1)
They always look forward to provide special care to the clients so that they can build
and improve relationships with them, which will ultimately result in making a strong
customer base. However, expansion in the business is a very complex and challenging
process. One of the growth opportunities for SME’s is Porter’s generic Strategy; this
strategy helps the business organisation to pursue various competitive advantages
within the targeted market scope. Three approaches are there of generic strategies
namely Cost leadership, Focus and Differentiation.
Cost Leadership strategy refers to the method of gaining competitive advantage over
the rival firms by changing the average prices of the industries operating in the same
field. It also helps the business organisation to charge lower prices and increase the
market share benchmarking its competency level. Cost leadership helps in the
development of edge by increasing their sales (Linton and Kask, 2017).
Differentiation Strategy refers to the process of making the product different as well as
attractive more than the rival firms as well as the competitors. However, the
differentiation process refers to industry’s nature where the products and services can
be developed by adding various features, durability, functions, brand image as well as
the support in order to enhance the customer’s value (Hernández-Perlines et al., 2016).
Focus strategy refers to the process of making a particular niche within the consumer
market by identifying as well as understanding the niche within the market by fulfilling
the unique needs of the customer. It helps organisation to increase brand loyalty within
the customers. Focus is a broad strategy of marketing that includes both cost leadership
and differentiation strategy (Buckingham.ac.uk, 2019).
In context with the New Car Deals, the business organisation should look forward to use
focus strategy by involving both cost leadership as well as differentiation focus in order
to effective results by serving the targeted market. It is not at all enough for the New Car
Deals to target upon either cost leadership or differentiation strategy because it is too
small for serving a broader market. However, implementing any one of the strategies of
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cost leadership or differentiation can increase the risk of operating and competing
effectively into the market. The New Car Deals should look forward to adding extra
attributes to their services through the knowledge of their specialists’ suppliers and by
understanding the customers in order to increase the uniqueness of their services by
using focus strategy effectively. The company will get various benefits by implementing
the Focus strategy, as it will help the organisation to satisfy the needs of the customer.
It will help new car Deals to establish and build strong relationship in the market. It will
also help the organisation to improve pricing structure as well as the products and
services. Implementing Focus Strategy will be very much advantageous for the
organisation as it will helps the m to benchmark their products and limit the competition.
Figure 1: Porter’s generic strategy
(Source: Ifm.eng.cam.ac.uk, 2019)
Business organisations face potential challenges and difficulties without proper research
and survey to ensure that they can gain success with their expansion. Various growth
options are there that can help the business organisation to expand and gain success.
However, it is necessary for the business organisation to know about the macro-
environment factors so that they can operate within the market smoothly. The PESTEL
analysis helps the business organisation to know about the potential macro
environments that can influence or affect their business processes, operations and
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function. It helps in the deeper understanding of Political factors, environmental factors,
legal factors, Economical factors, technological factors, as well as the social factors.
Elements Analysis
Political factors UK is one of the powerful countries all around the world.
Its political stability helps the business organisation to
operate at a greater level and strength. However, the
emergence of Brexit is creating unimaginable chaos for
the automobile industries. The new political influences,
creation to new policies, principles and regulations as
well as the political corruption is affecting the profits as
well as the growth of the New Car Deals.
Economic factors According to the nominal GDP rank of World Bank
(2018), UK is been in the 5th rank of the largest economy
in the world. The government of the country always looks
forward to take the necessary steps in order to improve
country’s economy. The fluctuations in the economy due
to the frequent inflations are affecting New car deals
within the consumer market. However, It leads to the
changes in wage rate and interest rates, which
encourages the New Car Deals to take risk and expand
in the market.
Social factors The society of UK is one of the most educated as well as
standardised population. The UK is very much influenced
by the social class concept, However the population is
being very much diversified as well as multicultural that is
influences the New Cars Deals to develop new products
and the markets to grab various opportunities to expand
and explore.
Technological factors UK is one of the technological hubs in the world where
the New car Deals also looks forward to adopt various
innovations and technologies in order to provide effective
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value of the customer’s money.
Environmental factors UK has a challenging whether condition. The government
of UK also looks forward to take various initiatives in
order to create environmental awareness so that the
negative impact on the growth will be reduced. This
influences the New car Deals to contribute effectively
towards the eco friendly economic growth. Considering
the environmental factors the New Car Deals will develop
the current market trends so that the organisation can
gain success in the market.
Legal factors UK has a wide as well as strong legal landscape. The
profit margins, as well as the viability of the certain
market, are been influenced by the legal matters of UK.
Expansion into the new market requires various legal
documents and formats which influences the new car
deals operations into the consumer market. The
Employment law of UK provides labour relation with the
business organisation as well as collective bargaining. It
sates all the principles that what are the things that
employers should expect from its employees and the
right of work of the employees (CIPD, 2019).
Table 1: PESTEL Analysis of UK
The main routes to expansion and growth are been determined by the Ansoff Growth
vector-matrix where there are four factors namely product/ service development ,market
penetration, diversification, and market development which ultimately helps in
identifying as well as mitigating the risk. The company is continuously growing through
various strategies however; the Ansoff Matrix Suggests 4 alternative strategies that can
be used effectively to grow the share in market and customer base of the business
organisation. The four alternative strategies of Ansoff Matrix are been stated below:
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Market Penetration: This refers to the sale of established services and products into
the already existing market by increasing endorsements, promotion, advertisements,
reducing the prices as well as the better routes to market.
Product development: This strategy can be termed as the advancement of modified
services and the products in the new market.
Market development: This involves the selling of existing goods and services into
another market industry (Gurcaylilar-Yenidogan and Aksoy, 2018).
Diversification: This refers to strategy of developing new goods into the new market.
This strategy is full of complexities however currently it is not at all appropriate for New
Car Deals to implement this strategy within their business organisation
(Businesscasestudies.co.uk, 2019).
New car deals are currently performing at a sustainable level in the UK by satisfying
wide range of customers. It should always look forward to develop goods in the already
existing industry. However, services and products development is appropriate for
New Car Deals to implement within their organisation in order to higher its customer’s
base as well as their loyalty. The New Car Deals should look forward to expand itself
into the new market with their existing products and services. It will help the business
organisation to grow and expand into the new market. However implementing marketing
development strategy within the business organisation will be appropriate for New Car
Deals. However, both market development as well as product development strategy
within their organisation of New Car deals will be appropriate.
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Figure 3: Ansoff Matrix
(Source: Schawel and Billing, 2018)
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2. Sources of funds and their Implications to the business (LO2)
The Small and the medium sized businesses in United Kingdom are vastly dependent
on the various significant financial sources for their profitable growth in the market. The
different types of sources of this financial funding are:
Loans: The loans provide an opportunity to managers of UK based SMEs to borrow a
certain amount of money from the UK banks and pay it back to them within a certain
timescale. In general, there are two types of loans, which are:
Secured business loans: The manager assigns some collateral like shares, house, and
personal items against the loan. In case he or she fails to repay the loan, the bank will
cease his collaterals (Lee, 2015).
Unsecured business loans: The loan is assigned to manager based on his or her
current financial conditions.
This can be termed as a beneficial sourcing as the UK provides firm tax benefits for the
repay of loans. Further, the manager is not required to sell his equity and further, can
initiate proper marketing.
Grants: The government authoritative or charities generally assign the grants. This
allows the SMEs to meet their financial requirements through vetting procedures. The
major benefit of grants is that the managers don not have to repay the money to the
organisation (Cavusgil, 2014). However, these are only approved for minimal number
of firms operating in selected business fields. The Innovative UK is a prime example of
UK based financial organisation , which provides this type of financial sourcing.
Invoice Finance: This type of financing will provide New Cars Deal with an opportunity
to borrow funds against the cost of invoices, which are due from consumers. A firm can
achieve almost 85% of funds directly and the remaining part from the consumers
(Ngoasong, 2015). This can be termed as a highly beneficial technique for the firm, who
has large scale of consumers clear their corporate payments as late as possible.
Further, the invoices can also be acquired in the form of debts. However, these are only
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provided to the corporations who have an efficient financial record of accomplishment or
history.
Crowd funding: This procedure includes receiving proper investments from more than
one individual and it is a highly developing technique in the UK market. This technique
is highly incorporated by corporation related to highly effective technique methods for
the production of their goods (Clinton, 2019). However, the corporation is required to
have a proper nominee structure. Further, this is highly beneficial for corporations,
which aim at launching new products in the market.
There can be two types of crowd funding, which are:
Equity-based: Manager provides equity on behalf of received investments
Rewards-based: Manager provides parts of the financial benefits in form of rewards to
the investors.
Venture capital (VC): This is the capital, which can be received by the New Car Deals
in exchange to their equities. The VC money allocated for the UK based companies is
from 500k to 50 million (Spiess-Knafl, 2015). This can give profit to a firm that is in the
growth phase and it requires proper development. The firm must have scalable and
updated verified transactions. However, the existing firm is required to determine proper
partnerships for equity, which has the ability to invest in a profound and professional
manner. The huge amount of allocated money leads to increase in responsibility and
market pressure.
Angel Investments: This is the investment in a small scale, which will provide New Car
Deals with emergency financial situations. The investments scale from 10k to 500k.
Moreover, fund raising angels is easier than established financial organisations. The
angels also provide assistance for the development of the existing business. However,
the angel must belong from the same sector as of the business (Gilmour, 2015).
However, there is less diligence in this funding, and therefore, firms need to provide
accurate financial tracks and records. Moreover, the manager of SME firm must have
proper networks and relationships to attain an effective angel investor.
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Asset Finance: These investments provide proper financial assistance to a SME, which
aims at satisfying their extensive requirements of inventories for their operations. There
is a unique procedure for the asset financing (Ramsinghani, 2014). The asset-financing
firm will authorise the SME with the funds for inventories and further, the small company
will agree to lease those equipment for the rest for their usage period.
To ensure proper market growth and attain success through introduction of new
products in the market, the most favourable financial sourcing for New Car Deals are
Crowd funding and bank loans. The firm will be provided with a vivid opportunity to
achieve proper financial assistance and initiate their operations.
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