Business Growth Strategies for SMEs: A Case Study of The Ginger Pig

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Planning for Growth

Table of Contents
Introduction............................................................................................................................. 2
Company Overview..................................................................................................................2
LO1........................................................................................................................................... 3
P1......................................................................................................................................... 3
P2......................................................................................................................................... 7
M1........................................................................................................................................ 9
LO2......................................................................................................................................... 12
P3....................................................................................................................................... 12
M2...................................................................................................................................... 15
LO3......................................................................................................................................... 16
P4 and M3.......................................................................................................................... 16
LO4......................................................................................................................................... 20
P5....................................................................................................................................... 20
M4...................................................................................................................................... 22
Conclusion.............................................................................................................................. 23
Reference List.........................................................................................................................24
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Introduction
In the United Kingdom, the European Union Definition of SMEs is usually used. The
European Union considers any organisation an SME that has less than 250 employees and a
maximum turnover of 50 million Euros (Wright et al., 2015). On refining further, the micro
businesses are the ones with maximum 10 employees and a turnover of maximum 2 million
Euros, the small business have fewer than 50 employees and a turnover of maximum 10
million Euros. The SMEs encompasses micro, small, and medium businesses (Wright et al.,
2015). The assignment consists of four tasks. The first task is analysing the key consideration
that needs to be considered by an SME to evaluate the growth opportunities. The second
task focuses on the sources of funding available to SMEs and ways of accessing funding. The
third task involves business plan development along with financials while the last task
focuses on ways of exiting the business and their implication on the SMEs.
Company Overview
The Ginger Pig is a traditional style butcher shop that raises its own sheep, pigs, and cattle.
The Company raises its livestock at North Yorkshire while their shops are at Loughton, Essex,
and London. The company also deals in supplying meat to other restaurants and specialist
butchers (Hummerston, 2013). The Company is owned by Tim Wilson who comes from a
farming background. He started dealing in Real Estate and antiques before acquiring a farm
at Nottinghamshire. He opened a stall in 1998 at the Borough Market in London with a
friend to sell sausages and after its success established The Ginger Pig in London with Chef
Paul Hughes (Hummerston, 2013). At the end of March 2017, the company had a turnover
of £ 15.61 million and employed above 100 employees.
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LO1
P1
Analyse Key Considerations For Evaluating Growth Opportunities And Justify These
Considerations Within An UK Organisational Context.
The Ginger Pig is an SME and it's an artisan butcher that raise livestock belongs to the
butchery and animal husbandry sector (Hummerston, 2013). An SME needs to consider
different factors while evaluating opportunities for growth. One such factor is a competitive
advantage and it's of critical importance for the company's survival and growth. So, an SME
like The Ginger Pig needs to create growth strategies and plans while keeping in mind
certain key considerations like the competitive advantage and new products and services
(Urbancova, 2013).
Competitive Advantage
The company needs to change continuously to assimilate itself to the external changes in
the business environment. This is necessary to establish and maintains a competitive
advantage by maintaining its industry positioning. Whenever two or more businesses of the
same sector compete, the competitive advantage of one of them over others is decided on
the basis of its market share and the profit generation (Urbancova, 2013). Over 99% of
businesses that exist within the United Kingdom are SME’s. In 2016, the number of SME's in
the food and drink sector was over 6400 out of which over 1200 belong to meat and dairy
product sector. This shows the need for maintaining a competitive advantage for the growth
and survival of a butcher like The Ginger Pig. An SME can use various tools to attain
competitive advantage and Porter's generic strategies are one such important tool
(Urbancova, 2013).
Porter's Generic Strategies
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Michael Porter suggests three generic strategies that can help an organisation like The
Ginger Pig attain competitive advantage in its chosen sector (Baroto et al., 2012). These
three strategies are Cost Leadership, Differentiation, and Focus. The Ginger Pig can opt for
the Differentiation strategy and use the available resources and capabilities to gain a
competitive edge in its market segment.
Source: Competitive Advantage Porter's Model
In terms of resources, the company has its own livestock raising farms that raises high
welfare, naturally reared, and native breed animals. This allows it the capability to supply
and maintain quality meat products in all of seven of its London retail shops. The company
also employs experienced people for animal husbandry and butchering ensuring its
capability of maintaining the availability of quality products available in its retail shops and
supplied to other businesses like restaurants (Baroto et al., 2012).
The relationship between the development strategies and competitive advantage
The assessment of external business environment by The Ginger Pig is necessary to attain a
competitive advantage. This assessment is done through the PESTLE analysis of the
company. The growth opportunities of The Ginger Pig can be negatively affected by the
political instability and the changes in government policies. For example, the British exit
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from the European Union will affect the business environment of the country (Rothaermel,
2013). The economic environment is also a major influencing factor. The Ginger Pig's
marketing strategy for its product and services should be in alignment with the prevailing
market conditions of the country. The factors that need to be considered include inflation,
growth, and unemployment rates of the country.
Source: PESTLE Analysis
Social factors like religious beliefs and education levels also affect the market demand of
products and services of the company (Rothaermel, 2013). The technological factor affects
aspects like product quality and productivity of the company. The technological advances
facilitated efficient animal husbandry and increased product shelf life thereby helping the
company in various ways. The last two factors are ethical and legal. The ethical factor is
related to the corporate social responsibility of the company and it influences the aspects
like the branding of the company. The legal factors involve the laws and rules governing the
business sectors of meat processing and animal husbandry. Compliance with these rules and
laws are necessary for the smooth functioning of the company (Rothaermel, 2013).
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The new products and services are another key consideration for identifying growth
opportunities. These include product life cycle, innovations, growth options, and
collaborations. The product life cycle includes introduction, maturity, growth, and decline of
new products. The aspects of the product life cycle are influenced by changes in the market
scenarios. Hence it’s a critical aspect of the marketing mix and marketing strategy
(Rothaermel, 2013). Innovations involve improving existing products or services. In the case
of The Ginger Pig, innovation in ways of product supply such as a home delivery alternative
will influence its market positioning. Improving the product by different ways of seasoning,
animal rearing will be a game changer. Collaborating with suppliers and companies that sell
the products can help in improving the market positioning and profits of a company like The
Ginger Pig (Rothaermel, 2013).
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P2
Evaluation of the opportunities for growth by applying Ansoff’s growth vector matrix
The Ansoff's growth vector matrix is a planning tool that can help an SME business like the
Ginger Pig in identifying a viable market and product growth strategy. According to Ansoff’s
growth vector matrix, the growth of a business depends on its decision to market existing or
new products in existing or new markets. Ansoff’s growth vector matrix suggests the
following four business strategies (McLean, 2012)
Source: Ansoff's Growth Vector Matrix
Market Penetration: This focus of this strategy is selling existing products in the existing
markets. The Ginger Pig can focus on increasing the sales in its existing market base by using
activities like loyalty schemes. The company can also employ activities like sales,
promotions, and competitive price strategies to increase its market share. It can increase
the aggressiveness of its promotional campaign to drive out its competition. This strategy
doesn’t require much investment since the company already possesses the resources and
information required for the execution of this strategy (McLean, 2012).
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Market Development: This strategy focuses on seeking new markets for an existing product
line. The Ginger Pig can use this strategy by introducing mail orders and home delivery
options. The company can also explore new locations for opening its stores to reach a larger
customer base (McLean, 2012).
Product Development: This strategy focuses on introducing new products to existing
markets. This involves the modification of existing products or innovating new ones that
appeal to the existing market base. The Ginger Pig can alter its product line by introducing
different flavours and textures to the existing line up (McLean, 2012).
Diversification: This strategy involves marketing new products to new markets. The Ginger
Pig may face certain problems while incorporating this strategy due to a limitation to the
new products that can be created and lack of information about the new market that poses
a risk to its success in the new market (McLean, 2012).
The Ginger Pig can utilise the market penetration and market development strategies to
pursue the available growth opportunities successfully. This will allow the company to
expand into the new market successfully while increasing its existing customer base
(McLean, 2012).
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M1
The Generic Techniques by Porter can be successfully utilised by the Company to analyse
the growth opportunities and use it to compete with other companies in the same sector to
attain a competitive advantage.
Porters Generic Strategies
The three strategies suggested by Michael Porter can be instrumental in the improvement
of the company’s performance and attaining a competitive advantage (Tanwar, 2013). The
three strategies are Cost Leadership, Differentiation, and Focus. Cost Leadership strategy
involves attaining the competitive advantage by becoming a leader in terms of cost in their
chosen sector. This is done by minimising the cost of the products and services being offered
by an organisation. This will not be an effective strategy for The Ginger Pig since there's a
limit to cutting costs without affecting the quality of the product being offered and that cost
will not allow it to become a market leader (Tanwar, 2013).
Source: Porter's Generic Strategy
The second strategy is Differentiation, it involves making the products, and services being
offered unique and attractive as compared those being offered by the competition. While
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opting for this approach an organisation needs to have resources dedicated to innovation,
the ability to deliver quality product and services, and efficient sales and marketing of
products and services being offered. The last strategy is the Focus strategy. It involves
developing well-specified or low-cost products on the basis of an understanding attained by
concentrating on the customer needs and dynamics of a particular market niche (Tanwar,
2013).
The Company can also utilise the Porter’s Five Forces tool to understand the external
market conditions and its impact on an organisation’s future. It considers five different
forces that are related to the competitive scenario (E. Dobbs, 2014). They are as follows
Suppliers: It considers the effect of suppliers on a business. In the case of The Ginger Pig,
the major part of the raw material that’s the meat itself is supplied by the company itself.
So, it makes the company mostly immune to other suppliers since they cannot affect the
business in a major way (E. Dobbs, 2014).
Buyers: The strength of buyers is a major factor for a business like The Ginger Pig.
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Source: Building Competitive Advantage
Substitutes: The capability of the competitors in substituting the existing products of a
company like The Ginger Pig is a major consideration. The meat market has limited product
alternatives and range that allows the replication and substitution of the products easier for
the competitors (E. Dobbs, 2014).
New entrants: The potential of new entrants in the existing market place affects all the
competitors and the imminence of this threat needs to be estimated (E. Dobbs, 2014).
Existing Rivalry: The competition level of the industry to which a company belongs is also a
major factor (E. Dobbs, 2014).
An organisation like The Ginger Pig needs to estimate the above factors on a scale of 1 to 10
to identify the power bases and profitability of the market. This tool allows in identifying
new markets with fewer competitive forces (E. Dobbs, 2014).
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