Analyzing Growth Opportunities at CM Downton-Thatcham

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Planning For Growth
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Table of Contents
Introduction...........................................................................................................................................3
LO1.......................................................................................................................................................4
P1 Analyze key considerations for evaluating growth opportunities and justify these considerations
within an organizational context........................................................................................................4
P2 Evaluate Opportunities for growth applying Ansoff’s Growth Vector Matrix..................................7
LO2.......................................................................................................................................................9
P3 Assess the potential sources of funding available to the business and discuss the benefits and
drawbacks of each source......................................................................................................................9
LO3.....................................................................................................................................................12
P4 Design a business plan for growth that includes financial information and strategic objectives
for scaling up a business..................................................................................................................12
Key Financials.................................................................................................................................13
LO4.....................................................................................................................................................17
P5 Assess exit or succession options for a small business explaining the benefits and drawbacks of
each option......................................................................................................................................17
References...........................................................................................................................................19
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Introduction
This report is prepared in order to understand the business plan and strategies used in order to
plan for the growth of an organization. There will be made the discussion regarding the small
and medium enterprises. Such category of these enterprises is made up of the enterprises
which have fewer than 250 employees employed. There is no exceeding turnover of 50
million euro and the annual balance sheet of such an enterprise is not exceeding 43 million
euro. There are being established more and more enterprises in the UK each year. In the year
2016, there were approximately 5.5 million of the private sector businesses in the UK. Such
companies grow through raising the funds to. These company either at the starting of the
journey or in the midface the requirement of the funds. Most of the SME businesses raise
their funds through external funding. There can be included government-backed business
loans as well as business start-up loans. This report is regarding the company CM- Downton-
Thatcham which was previously known as QTR Transport. This company is operating
throughout the British Isles which provides the professional services of distribution as well as
warehouse storage solutions. This report is prepared in order to make the planning for the
growth and expansion of such company. The company is having a good credit score and it is
required to make a massive expansion. This report will analyze the key consideration of this
company in order to evaluate the growth opportunities of such a company. Further, the
sources of funds for such company will also be utilized. At the end of this report, the business
plan for the company will also be made.
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LO1
P1 Analyze key considerations for evaluating growth opportunities and justify these
considerations within an organizational context.
Different business organizations can effectively & efficiently improve the quality of their
whole business organization, including their competent employees with the help of grabbing
the unique business opportunities for ensuring & enhancing the long term sustainable growth
as well as the development. The leading business organization of CM Downton – Thatcham
must enhance & implement the following key considerations of for increasing the business
growth opportunities in a sustainable manner:
 Deciding upon the company or the organizational structure for implementing the
innovative & creative decisions effectively & efficiently
 Securing the organizational rights & ensuring that all the organizational departments
of CM Downton – Thatcham should use the organizational assets in a critical manner
 Controlling or possessing the rights to the intellectual property along with involving
all those people who have worked with the business organization & engaging or
building something innovative for the whole business for the purpose of assigning all
the rights to the whole business
 Effective agreement with shareholders needs to be made for enhancing the combined
vision & keeping the business going on. All the scenarios should b effectively
considered for identifying & dealing with all the major disputes with all the
shareholders
 Getting all the compliances sorted for not getting the business organization of CM
Downton – Thatcham into trouble involving the major competitors, regulators as well
as the potential investors & hence leading the whole business towards the compliance
culture
 Providing incentives to all the organizational employees for highly performing in
accordance with the organizational structure in the effective as well as in an efficient
manner
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 Considering the best & unique ways or getting the whole business into proper funding
along with analyzing all the pros & cons in the context of raising finance through the
ways of equity or by debt
In all the above ways, the business organization of CM Downton – Thatcham can effectively
& highly enhance or evaluate the growth opportunities in the long term sustainable manner
along with enhancing the competitive advantage. The term competitive advantage is that
unique & effective advantage which is being gained by the business organization over its
large competitors by not only considering all the above illustrated growth considerations, but
also by offering al the potential customers with the greater value of satisfaction by either
reducing the amount of prices or by delivering the great level of benefits & efficient services
which can justify their higher amount of prices (Anderson and Eshima, 2013).
The business organization of CM Downton – Thatcham possesses various effective
competitive advantages. The first one includes the organizational philosophy according to
which the company will deliver anything to the customers, no matter what request will be
demanded by them. This major competitive advantage has led the business organization
towards the long term contracts with major leading organizations at the global level & hence
achieving significant growth.
The PESTEL analysis of the CM Downton – Thatcham is being described as follows:
 Political factors: Political stability, legal framework, protection to the intellectual
property, anti-trust laws, lower amount of taxation, employee benefits are some of the
favorable political factors that have helped the business organization of CM Downton
– Thatcham to enhance the long term growth opportunities.
 Economic factors: Stable economic system within the country of U.K., the stability
of the host currency in the country, a higher level of efficiency among the financial
markets, skilled human resources, higher productivity of the company, standard level
of interest rates positively impact the competitive advantage of the whole business
organization.
 Social factors: Powerful & stable structure followed by the CM Downton –
Thatcham, increasing level of education in the logistics industry, higher
entrepreneurial spirit & favorable attitudes are some of the social factors that play a
great role in understanding the potential customers.
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 Technological factors: The digital & technological developments in the logistics
industry help the company of CM Downton – Thatcham to strongly face all their
major competitors effectively & efficiently. The company not only analyzes the
technological advancements but also considers the speed of the technology that is
disrupted by the logistics industry.
 Environmental factors: The effective & legal laws for regulating the environmental
pollution, recycling, favorable & positive attitude towards the ecological products as
well as the supporting the renewable energy helps the company to enhance the long
term competitive advantage.
 Legal factors: Anti-trust laws, legal rights related to the consumer protection,
employment laws, health & safety laws & data protection are some of the legal factors
which help the company of CM Downton – Thatcham to secure or highly protect the
intellectual property.
Porter’s value chain or the generic model is completely based upon the process view of CM
Downton – Thatcham. It is basically the idea of manufacturing on which the business
organization will work & which is made up of the sub-systems including inputs,
transformational processes & outputs. Its primary activities include the inbound logistics,
operations, outbound logistics, marketing & sales & services. Its secondary activities include
the procurement, human resource management, technological development & infrastructure
(Kogan, et.al 2017). The CM Downton – Thatcham focus majorly on its inbound logistics,
which builds up & maintains the strong relationships with all the suppliers, among all its
primary activities. The company focuses upon the recruitment, hiring, training & the overall
human resource management among all the secondary activities for getting a competitive
advantage.
Some of the major risks involved/ associated with the business organization of CM Downton
– Thatcham includes the carrier delays, theft, hijacking, laws & legislation of safety affecting
logistics, the bankruptcy of all the transport providers, lack of security procedures & liability
for loss or delays.
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P2 Evaluate Opportunities for growth applying Ansoff’s Growth Vector Matrix
The main objective of every business is to have growth and further increase the profitability
of the business. The Ansoff Matrix tool is considered as an effective way to offer the solution
by assessing the risk for the company Downton- Thatcham. It can be considered through this
matrix that whether to seek growth through the existing services or new services in the new
or the existing market. Following is presented the Application of the Ansoff Matrix on such
Downton- Thatcham company:
Market Penetration (Existing market, Existing product)
This strategy generally involves the efforts to make increment in the market share within the
industry which exists. It can be done through providing more and more services to the
established customers and it can also be done through finding the new clients in the same
market. This can be done through adopting the promotion element which is an important
element of the marketing mix (Filippov, 2017).
Product Development (Existing Market, New Product)
There is being involved in the development of the new products for such existing market by
just thinking about the new services or the products meeting the requirements of the
customers through outperforming the competitors. The company Downton- Thatcham will
require making the expansion in its services to meet the requirements of the customers for the
further expansion of its business. There can be included new services or the products by the
company to be offered to the customers (Ajani and Ibrahim, 2018).
Market Development (New Market, Existing product)
This is an effective market development strategy which entails finding the new customer’s
group for the products or the services they are offering. There can be developed a completely
new market by the company Downton- Thatcham through offering their existing services to
them. There can be an increased appeal in the new market for the warehousing services
provided by the company.
Related Diversification (Newmarket, new product)
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There is involved in providing the new category of the services or products of the new
products that can complement the existing portfolio of such an organization. There can be
jumped to one sector to another sector in order to have the growth and expansion in the
business of the Downton- Thatcham (Yin, 2016).
Unrelated Diversification (Newmarket, new product)
This entails the entry into the new industry that lacks the crucial similarities with the existing
market of such company. There must avoid the risky adventures into some unknown
territories and the brand strength of the company can also be utilized to continue growing in
the warehouse storage and distribution industry.
Out of these different strategies the company Downton- Thatcham should go for the market
penetration as well as the market development strategies. It will be helpful for the company to
have a wide base of the customers. This will ultimately help the company to plan for the
growth in the existing as well as the new market and the profitability of the company will
also ultimately be increased.
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LO2
P3 Assess the potential sources of funding available to the business and discuss the
benefits and drawbacks of each source
There are several numbers of the sources of funds through which a company can raise the
funds. These funds are raised in order to help the business to get established and then
facilitate the day to day activities of the business. There is a need for collecting the funds for
the company Downton- Thatcham for its expansion plan and the following are provided
different sources for such purpose:
Owner’s Fund
This is considered as the money which is being kept into the business by the owner of such a
company. Such money can be used to be invested in the business for the purpose of its
growth and expansion. There are several numbers of the benefits as well as disadvantages of
such funds. Following are these:
Benefits
 There might not be any need to pay the interest on such money.
 There is no need for extra formalities to use such money in the business.
 There is a lack of risk associated with such funds as the owner is himself responsible
for such money.
 There will be no extra administrative expenses in order to use such money.
Drawbacks
 This money could be invested somewhere else for earning other higher profits.
 The owner might not have enough funds to meet the requirements of the business.
 There might be a lack of adequate funds (Higgins, et. al., 2019).
Bank loan
This is the amount which is being raised through the bank or other financial institutes which
are being repaid with the interest amount. This amount is paid within a set period of time.
Such an amount can be used for the day to day activities of the business.
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Advantages
 This amount can be got through easy and quick methods.
 There can be borrowed a large amount of the money from such bank institutes.
 There is the structured repayment system of such amount.
 The requirement of the businesses can be fulfilled through such raised money (Micah,
et. al., 2018).
Disadvantages
 There is interest payable on such amount which is borrowed from the bank.
 There is a risk in the payment of such amount.
 There can be a risk of the poor credit rating in the case of non-payment.
Overdraft
This is the amount allowed by the bank to draw more money from the account which the
company actually possesses it. This facility is provided on the basis of the good credit of the
account holder on the current bank account. This method of raising source has its own
drawbacks and the benefits:
Benefits
 This amount can be arranged very quickly without any delay.
 This can solve some short cash flow problems in a smooth and easy manner.
 There is no need of doing a lot of formalities to get such amount of money (Cuervo-
Cazurra, et. al., 2018).
 The working capital requirements of the company can be fulfilled with the help of this
amount.
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Debentures
This is the long term borrowing similar to the share issues and there is the promise of
repaying such amount lent at a fixed period of the time. There is a set rate of interest which is
needed to be paid. Following are its pros and cons:
Benefits
 This is a structured method of raising money.
 There can be raised the adequate money required for the business through this
method.
 There are no complications in calculating the interest amount on such value of the
debentures.
 These debentures are generally secured in nature.
Drawbacks
 There can be a risk of non-payment of such amount on debentures.
 If the company is not earning profits, such an amount can be a burden on the
company.
 This is no longer a popular method of raising the funds.
 The debenture holders have the right to claim the property in the case of non-
payment of interest and debenture amount.
These are the main methods of collecting the funds and the company can use the most
suitable method to raise the funds for its expansion plan.
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LO3
P4 Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business.
Based on this company, the business plan for CM Downton – Thatcham showcases its wealth
and financial health (Kim, et. al., 2019). The business plan for CM Downton – Thatcham
indicates its future planning and tactics which include some critical decisions and provision
that are forcing. Although planning the most critical function of any business organization.
Somehow their managers have prepared it in the most effective manner. Based on this
business plan, their managers have discussed the strategic objectives and financial statements
& information of their organization.
Executive summary
A business plan of an organization basically showcases its key statistics and objectives. After
all, any organization will set up its strategic objectives before implementing any action or
approach. The main purpose of proposing this business plan is to define the impacts of their
strengths and opportunities on their strategic goals.
About the company
CM Downton – Thatcham is basically a transportation company headquartered in
Gloucestershire, the UK founded in 1955. Their services are explored in across the UK by
operating more than 600 tractors and more than 1800 trailers out daily for providing their
services. They acquired more than 10 major distribution hubs in the UK and also acquired
more than 1500 employees to operate the business.
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