Business Growth Strategies for Colourgen: A Report

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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)...................................9
3. Business Plan (LO3).................................................................................................. 12
4. Exiting Strategy (LO4)................................................................................................17
Conclusion..................................................................................................................... 19
Reference List................................................................................................................ 20
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Introduction
The need for small and medium sized organisations for expanding their business in the
competitive business scenario is to gain better scope of earning profits and to serve the
needs of a wider buyer base. It can be identified as the attribute related to the influence
of globalisation on business organisations that the requirement for expansion is
identified as an effective growth strategy for SMEs of a region. The study provides a
detailed understanding of the growth strategy that would be beneficial for the
organisation. Funding opportunities and business plan for the company would be
provided in the study as well as an effective exit strategy would be identified in the study
to ensure the company is able to grow their business efficiently.
The study will be performed for Colourgen, a digital print solution provider situated in
Maidenhead, UK. The organisation was established in 1985 and aims to provide their
consumers with services through professionalism, integrity and honesty
(colourgen.com, 2019).
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1. Key considerations for Growth options (LO1)
The aspect of growth in business is beneficial for businesses if the strategic application
and allocation of resources are done appropriately within the organisational framework.
The scope of growth for SMEs in the UK market segment is determined through the
steps the companies consider during their expansion strategies. Colourgen has to
consider the following aspects for expanding their business in other areas of the
country. Competitive advantage for the company could be developed through the
effective planning of the following aspects of their business:
 Resources- Colourgen needs to ensure the available resources including
financial, human and physical resources are optimised in their business
operations to achieve the necessary level of competitive advantage that would
facilitate growth for the company.
 Capabilities- The business operates with the integrity of providing their
consumers with the best quality of services and products and ensures that the
services they provide are at par with the price the customers pay. The skilled
employees and effective technological advances within the organisation ensure
the competitive advantage for the organisation is higher in the market sphere.
 Core competencies- The core competencies identified for Colourgen are the
integrity, skill set of employees, financial stability of the organisation and the
variant product portfolio the company offers to their consumers.
Colourgen’s plan for growing their business in the competitive business scenario would
be effective if they maintain their competitive advantage in the business sector of UK
despite their small size. The company can identify their possibilities of growth in the
competitive business scenario through the evaluation of the business scenario using
Porter’s generic strategies. Colourgen can enhance their business growth in the
competitive environment by availing strategies of cost leadership in their business
planning process. The application of a business strategy that apply tenets of cost
leadership in expanding their business in the market sphere would be beneficial for the
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organisation as it would help the company to attract a broad consumer segment
(Salavou, 2015).
Ansoff matrix for business growth
Figure 1: Ansoff matrix
(Source: Dawes, 2018)
The process of organisational growth is identified through the strategies the company
applies in conducting their transactional activities in the competitive market sphere. The
success of companies in a competitive business scene is according to the various
quadrants the company applies in conducting their business. Market penetration,
market development, diversification and product development are growth tactics that
SMEs can apply in enhancing their business growth (Chereau and Meschi, 2018).
Colourgen would benefit in gaining a better competitive advantage against their
competition as well as develop better chances of gaining profit through strategic
application of market penetration. Diversification of products and services through
product innovation, product life cycle and effective diffusion of innovative business plans
would help Colourgen to increase their scope for growth through expansion in new
markets (Murdock, 2017).
Balance scorecard for business growth
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Figure 2: Balance scorecard framework
(Source: Dudin and Frolova, 2015)
The utility of following the balance scorecard model for achieving business growth in the
competitive market environment is effective for SMEs as it allows them to develop
tactics that are in alignment with the vision of the organisations. Creation of an effective
strategy would help the SMEs to develop their business operations according to the
various aspects of their organisational framework. In order to achieve growth in their
business methods the companies need to apply strategic methods that would lead to
continuous improvement, innovative products and services and an empowered
workforce (Massingham et al., 2019).
As a popular SME of Maidenhead, Colourgen can develop their business planning
strategy for growth in ways that would facilitate their business transaction efficiently in
the competitive business scenario of the country. Continuous improvement of business
procedures within the company as well as the development of an empowered workforce
would help the company to generate innovative services and products that would be
beneficial for the company’s success in expanding and growing their organisation’s
operations in the market sector.
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Colourgen operates in the market by providing the consumers with solutions for digital
print. Their services and products include laminators, printers, software, window
displays and a variety of other products (colourgen.com, 2019). The company would
benefit if they implement the digital platform for communications and growing their
business on a larger scale. The growth frameworks and models would ensure the
company is able to grow their business within the business sector of the UK, however, if
the company aims to expand their business on an international scale, digital media and
exploitation of technological advances would be beneficial for the company.
Risks and mitigating measures
The success that companies experience through the application of various growth
strategies in their business plans is effective only if they follow remedial tactics to
reduce the hindering factors that prevail in the business context. There are multiple risks
associated with the application of cost leadership, market penetration, diversification,
continuous improvement of business procedures through product innovation and
empowering workforce.
Colourgen could experience the following risks associated with diversification in their
business expansion procedures:
 Operational stress would affect the efficiency of the company if they decide to
diversify their product portfolio and develop variety of products.
 A wide range of products that are newly created could affect the brand image of the
company negatively as consumers are not associated with the presence of too
many products that Colourgen has to offer.
The organisation has to develop business plans in accordance with their available
resources and develop measures to reduce the impact of these risks. Creating efficient
and valid supply chain management as well as improved marketing schemes would
help the company to implement better diversification plans in their expansion
procedures.
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Colourgen’s application of market penetration as a growth strategy would provide the
organisation with the risk of garnering huge production cost and the issue of entering a
saturated market sphere. The company can mitigate these risks through the various
financial opportunities present for the company as well as the unused £2million
overdraft facility. Acquiring financial aid from banks and other stakeholders would help
the organisation reduce the negative impact of this risk. The application of cost
leadership as a business growth strategy would present the company with the risk of
high competition from the business environment. Since the company is an SME,
operations in a competitive business environment as well as developing growth
strategies against larger competitors would prove harmful for the organisation. In order
to mitigate the risk associated with cost leadership the company can avail partnership
or collaboration with another organisation that shares a similar business sentiment.
The growth strategy of continuous improvement of business procedures through the
application of product innovation and workforce empowerment generate the risk of high
operative costs as innovation and training the staff require huge payments from
investors and stakeholders. Considering Colourgen’s stable and favourable financial
situation, the company would be able to reduce the negative aspects of the risk through
financial aid and loans from banks. Application of total quality management in
business operations would also enhance their scope of business growth in the
competitive business scene of the UK.
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2. Sources of Funds and their Implications to the Business (LO2)
The business growth strategy that companies apply in order to expand transactional
procedures in the competitive market segment require various forms of financial aid
from different sources. The financial aid received from various sources ensures the
company is able to conduct their operations efficiently. Funds provide the companies
with the opportunity to create innovative business plans that would be successful for
their expansion aim. Internal financial activities of the company help the business
planning procedure to develop effective plans that would generate better profits. The
presence of liabilities and assets within the financial statement for a company provides
their investors with the scope of recognising the risks associated with funding their
operations in growing their business operations.
There are several sources of funds for an organisation such as Colourgen to continue
with their business development plans in the competitive business sector of the UK:
Bank loans
Gaining funds from financial institutions such as banks would provide the company with
the benefit of acquiring appropriate cushion of advantage in developing business
strategies that ensure their success in expanding their business. There are varieties of
bank loans that the organisation can acquire for their business expansion plan such as
working capital loans- that would provide the company with cash flow during
emergencies, fixed asset loans that ensures the company is able to purchase assets
that act as collateral for the loan payment. Factoring and hire purchase loans provide
the organisation with the benefits of repayment according to the profits generated
through business transaction. Timely payment and managing shares of the company to
lending authority reduces the stress for the company in generating better profits through
business operations (Rostamkalaei and Freel, 2016). The drawbacks of having unpaid
loans in their financial statements provide the company with added assets that need to
be paid after a certain time. Interest rates for different banks reduce the ability of the
brand to generate higher profits and implementing in their operations.
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Considering the financial situation Colourgen, availing bank loans would not be an issue
for the company. The unused overdraft facility of the company provides the organisation
with the opportunity to claim the funds from different banks or lenders in the market
segment in order to develop their business procedures for growth and expansion.
Crowdfunding
The process of generating funds from the market in smaller amounts presents the
organisation with the opportunity to acquire large funds for a greater cause.
Organisations prefer to use this technique for peer-to-peer lending as well in order to
provide funds to the organisation’s plan for expanse in the market environment
(forbes.com, 2019). The process of crowdfunding is beneficial for organisations as it
provides the company with the opportunity to gather funds directly from the sources
rather than acquiring aid from other organisations. The lenders prefer to donate
generous amounts when they realise the money would be provided directly to the
organisation and not to external groups. The benefits of crowdfunding are majorly drawn
by start-ups and SMEs as it allows companies to provide for their expansion and growth
plans by acquiring donations rather than loans. However, the drawback that affects the
implementation of crowdfunding as an authentic fund-raising activity is the long drawn
process of generating results.
Since Colourgen is an established SME, crowdfunding their necessary financial needs
would not be feasible since the company already has an outstanding £2million overdraft
facility that the company has not applied in their business growth.
Angel and venture finance
The presence of angel venture capitalists provides organisations in the business
scenario to gather effective funds for the successful operation of the company in the
competitive market. This form of fund raising activity provides the organisations with the
opportunity to generate better relations with the shareholders and other fund-providing
elements within their operational framework (Wallmeroth et al., 2018). The benefits of
implementing this form of funding for business growth are identified through the
improved relationship with other stakeholders and moneylenders. The drawback of this
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fund raising tactic is that it reduces the scope of the organisation to develop flexible
business operations. Venture and angel finance reduce the freedom of the organisation
in operating according to their choice and require the opinion of the fund providers in
developing expansion plans.
It is recommended for Colourgen to apply for bank loans as the financial stability of the
company provides the brand with a reliable outlook in gathering funds for expansion
plans. Considering the unutilised £2million overdraft-funding opportunity the company
can avail from the banks and other financial authorities of the country. Bank loans are
the best opportunity for Colourgen due to the justified financial situation of the
company and the lack of previous debts the company has acquired during their
operational years.
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3. Business Plan (LO3)
Business Description
It can be seen that Colourgen having headquarter in UK is offering graphic
printing solutions to its customers. Highest degree of professionalism along with
integrity and honesty can be expected from the employees of this company. The
management of Colourgen is planning to expand its business in Oxford and provide
Inkjet Printers, Applicators as well as Software.
Market Analysis by using Porter's Five Forces
Competitive Rivalry (High)
As commented by Noe et al. (2017), the companies cut their product price in order to
compete with the other organisations. In case of Colourgen, the organisation can
encounter competitive rivalry in Oxford and for this reason; the management would be
unable to achieve the expected profitability. For example, Minuteman Press Oxford
and HOLYWELL PRESS LTD are the best printing organisations of Oxford who are
creating tough competition for the other companies by offering high quality of printing
products. Hence, competitive rivalry in case of Colourgen is high.
Supplier Power (Low)
According to Hawkey (2017), the business entities need to build effective relationship
with suppliers of raw materials to get faster delivery from them. In context of Colourgen,
supplier power is low as the company is maintaining good relationship with many
suppliers. Colourgen does not dependent on any particular supplier. Due to this reason,
there is no delay in manufacturing the products and offering on time delivery to the
potential customers.
Buyer power (High)
As stated by Burns (2016), the customers prefer high quality products with low price
rate. Buying power of Colourgen is high as the target customers have many options
from where they can purchase the printing products. Due to this reason, the staffs of
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