42 Planning For Growth: A Business Growth Strategy for Carfulan SME

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42 Planning For Growth
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Table of Contents
Introduction......................................................................................................................................4
L01 Analyze the Key Considerations SME’s Should Consider When Evaluating Growth
Opportunities...................................................................................................................................4
P1 Analyzing Key Considerations for Evaluating Growth Opportunities and Justifying These
Considerations within Carfulan...................................................................................................4
P2 Evaluation of the Opportunities for Growth by Applying Ansoff’s Growth Vector Matrix..5
M1 Discussing the Options for Growing Using a Range of Analytical Frameworks to
Demonstrate the Understanding of Competitive Advantage Within an Organizational
Structure.......................................................................................................................................6
D1 Critically Evaluating Specific Options and Pathways for Growth, Taking into Account the
Risks of Each Option and How They Can be mitigated for Carfulan.........................................6
L02 Assess The Various Methods Through Which Organizations Access Finding And When To
Use A Different Type Of Funding...................................................................................................7
P3 Assess the Potential Sources of Funding Available to Businesses and Discuss the Benefits
and Drawbacks of Each Source...................................................................................................7
M2 Evaluate Potential Sources of Funding and Jurisdiction for the Adaptation of an
Appropriate Source of Funding for Carfulan...............................................................................9
D2 Critical Evaluation of the Potential Sources of Funding With Justified Arguments for
Adaptation of a Particular Source or Combination Of Sources, Based on Carfulan...................9
L03 Developing a Business Plan (Including Financials) and Communicating How it can be
Scaled Up.......................................................................................................................................10
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P4 Designing a Business Plan for Growth That Includes Financial Information and Strategic
Objectives for Scaling Up a Business........................................................................................10
M3 Develop an Appropriate and Detailed Business Plan for Growth and Securing Investment,
Setting Out Strategic Objectives, Strategies and Appropriate Frameworks for Achieving
Objectives..................................................................................................................................11
D3 Presenting a Coherent Detailed Business Plan That Demonstrates Knowledge
Understanding of How to Formulate, Apply and Achieve Business Objectives Successfully. 11
L04 Assessing the Various Ways a Small Business Owner Can Exit The Business and the
Implications of Each Option..........................................................................................................16
P5 Assessing Exit or Succession Options for a Small Business Explaining the Benefits and
Drawbacks of Each Option........................................................................................................16
M4 Evaluating Exit or Succession Options for a Small Business Comparing and Contrasting
the Options and Making a Valid Recommendation...................................................................17
D4 Critical Evaluation of the Exit or Succession Options For Small Business and Deciding an
Appropriate Course of Action with a Justified Recommendation to Support Implementation.17
Conclusion.....................................................................................................................................18
References......................................................................................................................................19
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Introduction
In an economically diversified world, the rise of the corporate sector is an obvious choice either
be in a lucrative financial investment or pursuing a job. The Small and medium enterprise has
been in the picture for a long time but recently they have seen much investments in this sector as
there is notable growth in these sectors. They have a growth opportunity and this will help us
evaluate further in this study of how the SME’s can grow as compared to the large scale
industries. How the SME’s can actually get funding from the various group of investors and how
the business plan is to be structural for them. This study will also help in understanding the
various ways of routes that the organization can take for the rapid growth of the business
(Bouazza, Ardjouman and Abada, 2015). The organization that we will take into consideration
will be the Carfulan which is a UK based SME with growing potentials.
L01 Analyze the Key Considerations SME’s Should Consider When Evaluating Growth
Opportunities.
P1 Analyzing Key Considerations for Evaluating Growth Opportunities and Justifying
These Considerations within Carfulan.
The Carfulan is a company which deals in various products which helps the manufacturing
companies produce more products. They use the innovative 3D printing, tool presetting and the
measurement of the shaft. The company has a competitive advantage as they have been using
the resources more efficiently and effectively against its competitors (Bouncken, Pesch and
Kraus, 2015).
The analysis of the various forces like the Rivalry of the competitors, the threats of the new entry
in the market, the power of the Buyers power, the supplier’s power and the substitutional threat
have always been a major concern but the Carfulan has been tackling them efficiently and have
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overcome the hurdles as they have the leadership in the cost with the differentiated products and
the focus and dedication towards their work. The organization has been increasing the
diversification so that they can have a competitive different product and increase their sale by the
innovative product for the manufacturing industries (Bouazza, Ardjouman and Abada, 2015).
The company has a robust product cycle where the products have been used more efficiently for
maximizing the sales of the company and the marketing is done efficiently for which the
company tackles the decline of the product demand (Bouncken, Pesch and Kraus, 2015).
The collaboration of the company with JCB academy has been an edge for the company for
competing for effectively and growing at a subsequent pace. The organization have been hiring
more engineers and have been listed in the top 1,000 SME companies to work for in
2018(Bouncken, Pesch and Kraus, 2015).
P2 Evaluation of the Opportunities for Growth by Applying Ansoff’s Growth Vector
Matrix.
An organization cannot stick to the usual business as it will be more effectively subdued by
competition. A growing concern company needs to keep on focusing and growing where we
come across the Matrix which is provided by Ansoff and the growth vector matrix. The matrix
consists of the various parts which are Market Development, Diversification, Market Penetration
and the Product Development which will be evaluated for further clarification.
The market development looks for the target of a new market and the areas where the product
has not been sold yet. The company will be able to sell when they choose a new market for
expansion and they will be able to grow professionally. The Diversification will be the ability to
sell new products in the market with no substitute to create an opportunity (Bouazza, Ardjouman,
and Abada, 2015). Carfulan has done the same by using 3D printing for its products. In market
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penetration, the use of a good marketing strategy will create an opportunity for the organization
and increase the sale. The product development, on the other hand, helps the company like
Carfulan to create diversification and more robust approach for selling a differentiated product
with various variants to attract new growth opportunities.
M1 Discussing the Options for Growing Using a Range of Analytical Frameworks to
Demonstrate the Understanding of Competitive Advantage Within an Organizational
Structure.
The use of the various tools of Diversification, Market Development, Product Development, and
the Market Penetration is very important for creating a competitive advantage as they will be
more beneficial for the organization as they will be able to boost their revenue in a various way.
The Product diversification is to be done in such a manner that the risk of non-acceptance is
minimum and the use of the cost-efficient resources is important. The market Penetration mainly
depends on how the pre-existing market will be used to capture more efficiently and the Products
will be marketed (North, Bergstermann and Hardwig, 2016).
All the factors are depended on the internal and the external factors which affect the business.
The company will use the various factors like the political, economic, social, technological, legal
and environmental will be used to create a robust opportunity will help the company to capture
the market. The Carfulan will be able to channelize its various factors of strength, deal with the
weakness, create and capture opportunities and finally be able to eliminate the threats using the
various strategies and grow more prominently (North, Bergstermann and Hardwig, 2016).
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D1 Critically Evaluating Specific Options and Pathways for Growth, Taking into Account
the Risks of Each Option and How They Can be mitigated for Carfulan.
The factors that affect the company and its working are mostly the factors that have been
described above. The company needs to focus on the Diversification, Product Development,
Market Development and the Market Penetration for the increase in the sale and the growth
which will result in the increase in the revenue. The factors are very important as they will help
in channelizing the factors and the risks for them are required to be addressed accordingly. The
risk of the market penetration is that the company is actually trying to boost its sale but on the
other hand the company may face a problem when the sale does not grow in the same manner
(North and Varvakis, 2016).
In the diversification, the risk that arises is the lack of sale as the product is completely different.
It can be overcome by the implementation of a better marketing structure. The development of
the market can be of a risk as the organization will target a new audience and a new market and
the risk of limited sale is something which is obvious because of different culture and society. In
product development, the sale of the product is risky as they will be selling a different product to
the same people. This will also affect the organization as they have been limited customers who
preferred a different kind of product (North and Varvakis, 2016).
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L02 Assess The Various Methods Through Which Organizations Access Finding And
When To Use A Different Type Of Funding.
P3 Assess the Potential Sources of Funding Available to Businesses and Discuss the Benefits
and Drawbacks of Each Source.
The SME’s are limited but still have various sources of funding that the organization can adopt
for the increase in the business working condition on an overall basis. The various funds will be
discussed accordingly and they will be evaluated on their benefits and drawback for Carfulan.
Bank Loans: the banks have been a major provider and source for the funds in the SME’s. The
company will be able to realize loans form the banks which will be paid on a periodic basis. The
bank has minimum criteria for the loan that is to be granted to them. The banks have their own
set of rules for granting loans. The benefits of taking a loan from the bank are the easy
availability and the mode of payments are very flexible and the rate of interest is reducing which
does not add up to the organization. On the other hand, the drawback the organization can face is
the hassles of various documentation and the lengthy process for the loans.
Crowdfunding: The method of crowdfunding is easier and flexible compared to bank loans. In
this method, the company uses the way of raising the fund through a large group of people in a
small amount for a particular project. The organization can make proposals which are flexible in
nature and they pay off in small interest to the investors. The benefits of crowdfunding are the
easy availability of it is compared to the bank loan, whereas the organization will be affected as
there are norms and regulations of which firms can gain access to them.
Peer to peer lending: This a new mode of the lending money for the organization where the
organization is brought together with a lender who is willing to finance the organization and they
are brought together through an online service and is easily available. It is not as complicated as
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the banks or another service as both the parties are taken into consideration and they willingly
accept the funds over conditions. The benefits of the Peer to peer lending is very robust and
flexible whereas it brings a threat of online problems and risk of fraudulent.
Angel and venture finance: this type of finance is typically a method of getting funding for the
organization which is at the startup process and they can avail the grant of funding from the
capitalists who invest in the companies. They hold a share in the company for the amount of
funding that was allowed to them and they will be holding a part of the organization. The main
benefit of the angel and venture finance is the flexibility that they offer and the way they provide
huge funding. The drawback is that not every organization gets this funding and most of the time
the decisions are to be taken into consideration of what the capitalist has said.
M2 Evaluate Potential Sources of Funding and Jurisdiction for the Adaptation of an
Appropriate Source of Funding for Carfulan.
Since Carfulan is a company which supplies product to the manufacturing companies for
creating large machines and equipment’s, they need constant investment in there research and
development for an innovative product at a low cost as well as to produce a diversified product
so that they can compete and have an edge over the other competitors. The need for funding
arrives when the organization needs to adopt new machinery or wants to expand their business
effectively. The company will use various ways for increasing productivity where they will be
able to compete accordingly.
There are various sources of finance as Carfulan is a well-recognized organization in the UK
who provides products to the manufacturing companies. The organization is very likely to face
any problems because of their brand name for the availability of a bank loan. The organization
will have to adapt accordingly for the bank loans and work accordingly to the bank norms and
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the jurisdiction. Most of the time the assets that are purchased are leveraged towards the loan that
the organization has taken. The Crowdfunding cannot be taken from any individual as there are
norms under which circumstances they can be taken and accessed. The venture capitalists have
strict laws of how the operation must be done and the potential way of control they have.
D2 Critical Evaluation of the Potential Sources of Funding With Justified Arguments for
Adaptation of a Particular Source or Combination Of Sources, Based on Carfulan.
The various source of funds have been discussed above and the limitations and the benefits have
been also stated. Since Carfulan is on a healthy stage and has a good reputation in the market
they must address funding from the angel and the venture capitalists and from the crowd finding.
The focus of the organization should be on expansion as they have a recognizable name and they
can infuse it to get listed in the stock market which will not only get the funding of a large level
but also open up a new market to compete with large players of the group.
L03 Developing a Business Plan (Including Financials) and Communicating How it can be
Scaled Up.
P4 Designing a Business Plan for Growth That Includes Financial Information and
Strategic Objectives for Scaling Up a Business.
The organization has a plan for expansion and the business needs to grow accordingly to attain
the company’s mission and the vision of the organization. The vision of the organization is to
grow effectively and penetrate the global market and be dominant in the industry that it operates
accordingly (Moen, Heggeseth and Lome, 2016). The mission of the organization on the other
hand hare very clear where the company will focus on the following two points:
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Market share: The organization has a strong mission to increase the market share in the domestic
market by providing high-quality products at a low cost. The company will be able to increase
the market share by the use of better service and low-cost design of their products which will
have a direct impact on the scale of revenue (Moen, Heggeseth and Lome, 2016). The
organization has a strong mission of increasing its market share by the next two years by 35% in
the country and the local market in the state which it operates is supposed to go up by 12% in the
current year with a reduction in cost by 2.9%.
Profitability: The Company aims at the increase in its profitability where it shows an estimated
increase in earnings by 24.7% in the next two years and the sales will go up by 32.87%.
M3 Develop an Appropriate and Detailed Business Plan for Growth and Securing
Investment, Setting Out Strategic Objectives, Strategies and Appropriate Frameworks for
Achieving Objectives.
The organization will be able to analyze its strength, weakness, threat and the opportunities to
craft a better business plan for the organization accordingly. The company has a proposal of
following the niche marketing strategy for an increase in the sale and the revenue annually. The
marketing strategy is simply a strategy which uses advertisements as a key and the target market
which are unique in nature are focused on for it (Miocevic and Morgan, 2018). The organization
will be able to use this strategy to channelize its strength of the differentiated product, the
weakness of increase in cost and competition, the opportunities of new market and the threat of
new innovative product used by the competitors. The strategy is unique as it focuses on the
various factor of the business which is the behavior of the organization, the demography, style,
occasion, lifestyle, geographical area, need of the product. The strategy will help in determining
in constructing a structural and robust plan for the business future. The growth in the company
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will attract new investors who will be able to fund them and help grow the organization
effectively (Miocevic and Morgan, 2018).
D3 Presenting a Coherent Detailed Business Plan That Demonstrates Knowledge
Understanding of How to Formulate, Apply and Achieve Business Objectives Successfully.
The following balance sheet and the income statement are provided as a detailed explanation for
the current year and for the project next year with the various financial ratios which shows the
condition of the company.
Carfulan Income
Statement
For the Years Ending [Dec 31, 2019,
and Dec 31, 2020
Revenue 2019 2020
Gross sales 222,50
0 305,000
(Fewer sales returns and
allowances) 5,000 1,000
Net Sales 227,5
00 306,000
Cost of
Goods
Sold
Beginning inventory 2,000 25,000
Goods purchased or manufactured 125,00
0 110,000
Total Goods Available 89,000 70,000
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