Crocus: Detailed Report on Planning for Business Growth

This report examines Crocus, a UK-based gardening website, and its strategies for business growth. It analyzes key considerations for evaluating growth opportunities, including Porter's Generic Strategies (cost leadership, differentiation, cost focus, and differentiation focus) and PESTLE analysis (Political, Economic, Social, Technological, Legal, and Environmental factors). The report also applies Ansoff's growth vector matrix (market penetration, product development, market development, and diversification) to identify potential growth strategies. Furthermore, it assesses potential sources of finance, develops a business plan, and explores exit or succession options, including their merits and shortcomings. The analysis aims to provide a comprehensive understanding of how Crocus can expand its market share and achieve sustainable growth in the competitive online retail landscape.

PLANNING FOR
GROWTH

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Key consideration for evaluating growth opportunities and justify these consideration.......1
P2 Opportunities for growth applying Ansoff's growth vector matrix........................................4
TASK 2............................................................................................................................................6
P3. Assessing Potential Sources of Finance in the light of their merits and demerits.................6
TASK 3............................................................................................................................................9
P4 Develop a business plan..........................................................................................................9
TASK 4..........................................................................................................................................12
P5. Exit or succession options along with merits and shortcomings.........................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Planning is regarded to be the most important function of an entity which is essential for
carrying out accomplishment of organisational goals as well as objectives in a timely manner.
This can be referred to as the procedure of creation of plans along with strategies in order to
attain business growth in the future course of time so that the market share of business entity can
be significantly enhanced, thereby rendering it opportunity to inflate its market positioning. By
enhancing its market positioning as well as share, such SME’s contribute to a great deal to the
economy of a country. In this regard, a pre-planned plan provides assistance to entities in
attainment of desired amount of growth as well as development so as to smoothly carry out its
functioning within market place.
The present assignment is carried out to gain knowledge of planning for growth within
the premises of Crocus. This is the biggest gardening website carrying out its functioning within
the confines of United Kingdom and consists of plethora of varieties of plants. It provides 4000
varieties of plants to customers in order to satisfy their needs and wants. Further, this entity has
won 25 gold medals in last 25 years of its service depicting the contentment that people derive
from the botanical products offered by the respective corporation within marketplace. The report
consists of key considerations for evaluation of growth opportunities, ANSOFF matrix, ways to
source funds, business plan and ways of exiting and succession.
TASK 1
P1. Key consideration for evaluating growth opportunities and justify these consideration
Growth is considered as an imperative aspect for every business organisation as it
provides assistance in ensuring sustainability in market place for a long duration of time period.
Further, it aids the entity in enhancing its market share. With respect to Crocus, this is the biggest
gardening website of UK that intends to expand its operations and functioning within different
parts of globe with the help of its high quality offerings and diverse set of plants. This will result
in availing maximum satisfaction from consumers by offering them botanical products of
optimum quality. Owing to its strong market presence and positioning within the confines of
United Kingdom, this enterprise stands a large chance for carrying out its expansion in other
geographical locations. To facilitate this in the desired manner, effective planning is the key as
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this will render a direction to the company in deciding upon its future course of activities and
processes which would provide aid in current objective of corporation.
Crocus is capable of expanding its sales and market share by offering new varieties of
plants to customers in a timely manner. Further, the firm attains competitive advantage in
marketplace by offering high quality products over online website where it can reach a large
number of persons at the same point of time. The resources taken into use by Crocus within the
organisational premises comprise of strategic location (online channels), human resources (staff),
financial resources (funds for operational activities and expansion), technical resources
(technologies used). In this regard, there are a number of considerations that provide aid in
attaining growth and success in near future in a feasible manner. These are briefly explained
below with the help of Porter’s Generic Strategies as well as PESTLE analysis as follows:-
Porter's Generic Strategy
This is a framework that consists of a number of strategies that are used by organisations
in order to attain rapid growth and competitive edge in market over rival firms. Such strategies
provide aid to an entity in gaining comprehensive knowledge of the position of business in terms
of whether it is able to earn satisfactory profits or not. This framework comprises of four basic
forms of strategies which render help as well as support to small business in raising their
organisational performance and developing a relevant brand image in market place. This
facilitates the corporation to carry out its expansion in various geographical locations and also
conduct an analysis of the current growth and performance of company. The four strategies as
laid down by Porter in this model are given as follows:-
Cost leadership: This is a growth strategy that proposes that an organisation in
concerned in relation to the quality of its offerings and thus develop them at affordable pricing.
Here, with the adoption of this strategy, the main concern of Crocus will be to gain cost
advantage by providing customers satisfaction in terms of optimum quality products and
reducing overall cost of production with the help of adoption of quality maintenance approaches
as well as frameworks.
Differentiation: Within this type of strategy, an entity gains a competitive advantage in
market place by rendering unique and innovative products to customers. This provides assistance
to an enterprise in capturing the trust and belief of customers and instilling a sense of loyalty and
trust among them. In relation to Crocus, company can render new variety of plants and feasibly
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implement this strategy in their organisational premises. When an array of offerings of entity is
made accessible as choices to customers, this enhances the image and positioning of entity. This
directly results in gaining larger share in market and building a loyal base of customers who do
not intend to buy such products from other companies.
Cost focus: Here, in this strategy, the major emphasis of company is upon the niche
marketplace and thus entity offers products at low prices within such locations. With the help of
this strategy, Crocus can cater to the requirements and demands of people optimally.
Differentiation focus: This is a type of strategy that renders emphasis upon developing
an atmosphere of uniqueness and creativity within the organisational premises. The adoption of
this strategy within Crocus would lay focus upon provision of new varieties of plants to
customers so as to gain contentment from them.
Crocus will make use of differentiation in order to gain competitive edge in market
thereby attaining growth. This has been chosen because this strategy would provide assistance to
entity in provision of unique and innovative offerings to public which are distinguished from the
offerings of prevailing rival firms.
PESTLE Analysis
This is a strategic framework taken into use by an organisation to gain knowledge of the
influence of external environment over the operations as well as functioning of business. In this
regard, PESTLE has been applied to Crocus as follows:-
Political: This is ascertained to be one of the most crucial factors of external analysis
which demonstrates the extent of governmental intervention in the activities and processes of
business by way of policies such as taxation, environment laws etc. In this regard, the stability of
United Kingdom presents opportunities to enterprise in enhancing the scale of its operations,
thereby facilitating growth and expansion. Government regulation may impact the Crocus Ltd in
order to restrict trade over other market region or by implementing high tax on special occasion
like valentine's day and mother's day
Economical: This consists of factors associated with economy of a nation such as
inflation, interest rate, foreign exchange rate, growth rate etc. Being an economically strong
country, UK fosters the growth of small companies who are innovative and bring up unique
offerings for customers in market place. This is so because with the help of unique offerings. The
GDP as well as growth of UK gets a boost. Economical factors such as economic growth in
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online selling the different species of flowering plants of crocus. Organisation needs to add more
species of growing plant in winter and spring season
Social: This consists of the latest trends and lifestyles of people of a specific country. In
this regard, Crocus takes into account the latest types of plants that are being liked by customers
and thus offer them at optimum pricing to inflate its existing sales volume as well as revenues.
General environment represent
P1- what gives the company com the different geographical region and their custom values.
Crocus sell its product as per requirement of customer and their income distribution.
Technological: Advancements in technology and innovations present opportunities for
entities operating in all business sectors to take advantage of these and gain a larger share in
market. In this regard, Crocus provides wide variety of plants and keeps them fresh by making
use of certain unique technologies. This provides assistance to entity in enhancing its share in
marketplace and facilitating growth. Crocus is online marketing retail organisation that pool the
customer base by selling tech-based services. It needs to implement in their product range as per
choices of the customer.
Environmental: This factor is concerned with the measures as well as initiatives
undertaken by business in order to give its contribution towards preservation of environment. In
this regard, Crocus is a sustainable company as it offers plants of different varieties which do not
hold any kind of ill effects for environment. By acting in the interest of society as well as
environment, the respective company can feasibly attain growth. This factor includes ecological
aspects such as weather, climate. Company sell traditionally species like snow crocus, autumn
crocus in special occasion as per weather condition like winter, autumn and spring. That's the
reason crocus is captured valentine's day market.
Legal: This comprises of laws related to employment, health and safety, workplace
regulation, minimum wages etc. Crocus is seen to be abiding by all such laws in order to avoid
any kind of bad name to the company, thereby positively facilitating growth of business at the
marketplace. Crocus does not overlook employees safety. It package its product in special pack
so it looks really different from other and follow the safety laws or consumer protection act.
P2 Opportunities for growth applying Ansoff's growth vector matrix
Ansoff matrix refers to the strategic tool which is being used by marketing department of
businesses in order to enhanc
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P1- what gives the company come their knowledge over different growth strategies. The matrix
include in total of four growth strategies that is market penetration, product development,
market development and diversification which are basically used by business organisations to
grow their business in quick manner. With reference to Crocus, it has been seen that its owner is
wishing to grow their business effectively outside the nation. For this, they have planned to
conduct an effective Ansoff matrix analysis so that growth can be attained by them in quick
manner. All of the basic strategy of this matrix is described as below in context of Crocus so that
best feasible among them can be identified effectively:
Market Penetration: This strategy depicts that if businesses want to grow with minimal
risk they are required to sell their existing products in the existing place. In context to Crocus, it
can be said that this business organisation is dealing gardening. Therefore, in order to grow
effectively, it is essential for the company to find out new customers in the existing areas so that
their profitability can be increased. It can be said that increase in number of customers will help
them in improving their revenue which leads to increase in profitability in effective manner. It
can be said that if Crocus wants to influence interest of customers then they are required to focus
on delivering quality of services to customers at minimal price range so that they can reamin
loyal to them.
Product Development: In this strategy, businesses are suggested to launch to new
product or services within the already existing area. In context of Crocus, it can be said that idf
his company wants to grow their business they are required to increase its product portfolio
range. In addition to this, the company can also add on certain value added services with its
products for grabbing attention of customers in effective manner. Here, the company can also
provide post delivery services to customers which will definitely raise interest of customers
towards the company in effective manner. This will result in improvement of sales performance
of the company that maximises their profitability effectively.
Market Developmen
P1- what gives the company comt: Market development growth strategy says that business
organisations can grow faster by offering existing product at new geographical location. This
means that when can company expands they business in new area they have huge option of
attracting customers belonging to new areas. Therefore, chances of growth are higher. In context
of Crocus, it has been analysed that owner of this company can easily use this strategy by
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expanding their business outside UK so that they can easily approach new customers in outer
areas. This approach to new customers will improve their sales performance. As a result, they
can achieve their business objectives and maximise their profitability ratio.
Diversification: It is seen as the non suitable strategy for Crocus as it mainly focuses on
introducing new product in the completely new area. Crocus is successful company but still it
belongs to SME criteria. Therefore, it would not be possible for this company to go for
Diversification growth strategy as it will require huge investment and chances of failure are also
higher.
According to the above mentioned growth strategies, it has been analysed that market
development is best growth strategy for Crocus as with this they will get opportunity to approach
new customers. This approach to customers will increase their sales performance as well as
profitability in quick manner.
TASK 2
P3. Assessing Potential Sources of Finance in the light of their merits and demerits
In order to achieve growth, a business may or may not rely on the sources of funds
available with them. Hence, it is important to make sure that one is able to review various
alternatives available to them at a particular period of time. Source of Funds, essentially, refer to
the diverse set of options that are available to a business entity in order to facilitate as well as
fulfil the financial needs of the firm. When considering or planning for growth, it is important to
critically analyse the current as well as the future needs along with the risks and benefits
associated with each of them. This is important to ensure that a feasible level of liquidity in terms
of cash-flows is maintained throughout the organisational levels.
In the context of given case scenario, Crocus is aiming to implement a strategy which
will help in attainment of sustainable growth in the forthcoming years. Keeping this in mind, the
following options of financing are deemed to be appropriate for the company:
External Sources of Finance:
 Angel investors:
They are the investors who provide financial back support for small start-ups and
business. The monetary resource which they provide may be a one time investment to give a
push to a business in order to get off the ground level.
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 Merit:
They are less risky than debt financing. Before investing in any company they take in-
depth knowledge of business and take futuristic approach.
 Demerit:
The major demerit of angel investor is loss of complete power as a owner. Sometimes
they can inter fare in company business.
 Bank Loans and Overdrafts:
One of the most common form of financing is by availing Bank Loans from financial
institutions. For a medium-sized business, a bank may provide loan in the form of an overdraft
facility which is applicable on the current account of the company that is active with the
respective Bank. Overdraft Financing entails fulfilment of short-term financial needs of the
company by making payments on this account in excess of available cash-balance maintained by
the company with the Bank.
 Merit:
This source of funding is beneficial due to its flexible nature as one need not go through the
hassle of bank restrictions. This facility enables one to change the amount borrowed within
certain limits. On the other hand, a Bank Loan also has lower interest rates in comparison to
overdrafts or any other mode of financing. Hence, making it an attractive choice for business
enterprises throughout the world.
 Demerit:
Even though it is a cheap source of finance, this alternative is unsuitable for those cases where
large amount of capital needs to be borrowed. In addition to this, the flexible nature of overdrafts
or loans for that matter turns out to be an imposition in the long-run, thus, hindering the
sustainable growth for the company.
 Venture Capital:
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Another option that is widely popular in present day scenario is known as 'Venture
Capital'. It can be defined as form of private equity that includes an initial 'seed funding'
provided by various established investors who are of the view that a particular business holds
potential to achieve high growth in the near future.
 Merit:
Apart from financial backing, adoption of venture capital can ensure impartation of new or
advanced level of business expertise which may prove to be effective in the performance of
organisational functions as well as decision-making.
 Demerit:
The deciding factor for such investment grants depends largely on the perception of the lender.
Hence, there is a high possibility of failure as no one one can predict future accurately. Also, the
owner of such may be at the mercy of the venture capitalists, thus, resulting in loss of control
over the operations of the firm altogether.
Internal Sources of Finance:
 Selling of Old Business Assets:
It is possible for a business to have old assets such as abandoned building, land,
equipments and furniture which are lying around for a long-period of time with no specific use.
A business can achieve financing through selling of such assets which is cost-effective and
prompt at the same time.
 Merit:
It not facilitates disposal of unused assets but also enables in accumulating cash in a quicker
manner without any hassle to look outside the business when it comes to fulfilling an
organisation's financial needs.
 Demerit:
One may not be able to accumulate a substantial amount of funding from this source as the assets
are usually old with low fair market value. Additionally, one may not possess such assets in the
first place.
 Personal Savings:
Utilization of personal savings in order to achieve the organisational goals or objectives
is another suitable option for a small or medium-sized enterprise. It is usually in the form of
funds, specifically cash-in-hand, which is accumulated by the owner over the years.
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 Merit:
Through the employment of personal savings so as to fulfil the financial needs of owns business,
one can avoid incurring of additional costs in the form of interest expenses. Also, these are a
much more liquid source of finance in comparison to other alternatives mentioned above. It also
doesn't require to be repaid.
 Demerit:
Injecting personal finances in the company can also result in increasing the personal financial
risk for the owner themselves which may also end in the form of bankruptcy for the owner as
well as the business itself.
Through critical evaluation of the various alternative financial sourcing options, it can be
ascertained that Crocus can adopt one or more of these mentioned above while planning for
expansion.
Evaluating Potential Sources of Funding appropriate for adoption by Crocus
Crocus is a gardening website operative in the UK as of April 2000 with a wide array of
plants. For the purpose of expansion, the business can consider external as well as internal
sources of funding. Wherein the external sources identify Venture Capital, Bank Loans and
Overdrafts as appropriate options for Crocus, internal sources include utilization of Personal
Savings and Selling of Old Business Assets.
Critical Evaluation of sources of finance based on organisational needs of Crocus
As Crocus is looking for those alternatives which will ensure achievement of sustainable
growth in the near future, the company can adopt overdraft facility of which remains unused £2
million on its account. Apart from this it can also sell some of its old business assets which will
help in maintaining adequate level of liquidity in the daily operations of the company.
TASK 3
P4 Develop a business plan
A business plan is considered as the written document that is prepared by management
team of company. The main reason behind producing this document is to grow and develop their
business plan in effective manner which the help of step to step guidance. The business plan also
guides individuals about each and every step that is required to be taken by company for
improving their business performance at market place in effective manner. In context of Crocus,
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